ROLE OF INTELLECTUAL PROPERTY FOR
PROMOTING INVENTION, INNOVATION AND
GROWING ROLE OF INTELLECTUAL PROPERTY RIGHTS (IPRs) .
THE ROLE OF INTELLECTUAL PROPERTY RIGHTS IN PROMOTING SOCIO-ECONOMICDEVELOPMENT .
FUNCTIONS OF THE INDUSTRIAL PROPERTY SYSTEM .
Function to Stimulate Inventive and Innovative Activities .
Function to Encourage Development of New Technology .
Function to Encourage Commercialization of Inventions andInnovations .
Function to Facilitate Access to Latest Technological Information .
THE INDUSTRIAL PROPERTY SYSTEM AND MARKET ECONOMY
THE IMPACT OF THE INDUSTRIAL PROPERTY SYSTEM ONINVENTION AND INNOVATION .
INDUSTRIAL PROPERTY RIGHTS IN TRANSFER OF TECHNOLOGY .
Forms of compensation in Transfer of Technology .
COMMECIALIZATION OF INVENTIONS: THE FINAL STAGE OFTHE INNOVATION PROCESS .
Today, nobody challenges the importance of creativity, inventions and innovation to economic and
technological development. Ever since man appeared on planet Earth, one of his major weapons forsurvival was the ability to find innovative solutions to the problems he encountered. The development ofcivilization over the centuries has been marked by countless inventions and innovations facilitating the lifeof mankind and making it more comfortable and easier. Indeed, we cannot imagine today’s world everhaving evolved without all those inventions and innovations.
Over the past two hundred years with the acceleration of technological progress, the life of
mankind has changed in a radical way, and innovation has become an important part of our everydayreality.
If, in the past, a son had to wait until his father’s death to introduce an innovation in his trade,
today as knowledge develops, accumulates and spreads so fast that as a result a person will see technologyand production methods, communication tools and processes, behavior patterns, etc., change more thanonce during his life. Also, the knowledge and professional skills that an individual has acquired during hisyears at school and university will have to be updated several times during his or her lifetime.
Every day we see and use products, which five or ten years ago were not even imagined. Some
forecasts show that, in five years time, half of the products we are using today and are seen on the shelvesof the shops and all around us will have disappeared and been replaced by new ones, i.e., every year morethan 25,000 new products are being introduced on the US market. All these developments are the result ofinventive creativity and the innovation of mankind.
Long-term economic growth is the result of an increase and accumulation of scientific and
technological knowledge, i.e., increased knowledge about useful goods and how to make them.
With new opportunities present, the critical role of technology as the driver of economic progress
has been widely acknowledged. The value added to most new products comes basically through intangiblecomponents, including technology.
The last decade has witnessed sweeping economic changes all over the world, particularly in
developing countries. Restrictive policies with respect to controls on trade and industry, foreign investmentand technological collaborations have been discarded. As country after country has liberalized itseconomic regime, new competitive pressures have come into play.
Economic progress requires a constant stream of new ideas and products to improve the quality of
life, regardless of whether the innovation is a simple gadget or a sophisticated invention. There is nowoverwhelming empirical evidence that innovation and creativity bring competitive advantages to nationsand companies. Per capita
economic growth of countries is driven increasingly by innovation, not byaggregate capital investment per se
The recent economic achievements of many countries have not sprung from their natural
resources. Prosperity is no longer based on tin, rubber or timber. Countries rich in natural resources, i.e.,oil producing countries, are no longer necessarily the great economic powers of today.
III. GROWING ROLE OF INTELLECTUAL PROPERTY RIGHTS (IPRS)
Intellectual capital is often of considerable value because it is unique. It comprises, inter alia
patents for inventions, trademarks, industrial designs, utility models, appellations of origin, integratedcircuits topographies, copyrights, but also know-how, trade secrets, proprietary technology, talents, skill
and knowledge of the work force, training systems and methods, customer lists, distribution networks,quality management systems, etc.
As nations and companies elaborate on new strategies where technological superiority determines
success, the question of assessment and valuation of intellectual property rights (including inventions,industrial designs, trademarks, know-how, trade secrets, etc.) assumes increasing importance.
The role of intellectual property rights (IPRs) is therefore significantly increased in international
economic and trade relations. Today intellectual capital is recognized as being among the most importantassets of many of the world’s largest and most powerful companies.
The transfers of technology, licensing agreements and joint ventures are based on IPR assets.
Novel-financing techniques and mergers have emphasized of the role of intellectual property portfolios incompanies. IPRs are now pledged as security for loans and the assessment of the real worth of companiesmore often requires the valuation of their intellectual property portfolio.
At the corporate level there is an increasing awareness that active and full control over technology,
new products and processes secures the way to competitive advantage. Companies focus on innovation andinvention-based design. Since product competitiveness falls with time, the upgrading of these products andthe introduction of new ones demand well-planned innovative technology inputs.
The neo-classical economic theory assumed technology progress essentially as an exogenous
phenomenon. A current understanding of economic growth is at variance with this view which regardstechnology as a “free good.” It is now widely acknowledged that, technological progress occurs preciselyas the result of entrepreneurial activities in anticipation of profits from innovations. The intellectualproperty system contributes to the transfer of technology by providing a legal environment, which isconducive to such transfer and the application of technology.
As creations of the human intellect, intellectual property relates to the information, which can be
incorporated into tangible objects, reproduced in different locations and used by several persons at the sametime. Similar to the law on movable and immovable property, intellectual property law is characterized bylimitations, i.e., limited duration of copyrights and patents.
IV. THE ROLE OF INTELLECTUAL PROPERTY RIGHTS IN PROMOTING SOCIO-ECONOMIC DEVELOPMENT
In highly competitive international trade, increased importance is placed on planning and
forecasting, and development of appropriate commercial and industrial strategies by enterprises, industrialgroups, and countries. This strategic planning is an increasingly important part of the successfulimplementation of the product marketing policy of companies, and of the establishment and developmentof an appropriate technological base that is appropriate to the capacities and opportunities of each country.
Recently, increasing importance has been given to the role of the industrial property system as an
analytical instrument for such strategic planning and decision-making. The two main reasons are:
First, the information aspect of the patent system: an awareness of the state-of-the-art in a
particular technical field can avoid duplicative research work if the desired technology already exists. Alsoit can stimulate further improvements and provide an insight into the technological activities of competitorsor, by reference to the countries in which patents have been taken out, it can reveal the marketing strategiesof competitors. A state-of-the-art search will identify newly-developing areas of technology in whichfuture R&D activity should be monitored;
Second, as a tool for industrial planning and strategic decision making, the industrial
property system may be very useful through analysis of the statistical aggregation of patenting activity asrevealed through published patent documents. The degree of patenting activity provides an index ofcountries or companies which are active in various fields, and of which industries technology is progressing
and in which the technology is stable, and which are the enterprises active in particular technical fields.
Registered trademarks bear witness of commercial interest in the market of a country or group of countries.
Analyses of IPR and their presence in different countries provide a means of testing the soundness of manypolicy and investment decisions.
Inventions, as a fundamental part of technology, are by nature both private goods in creation, and
public goods through productive use or consumption. They are private goods insofar as their creationconsumes both mental and physical resources that are thereby diverted from other production orconsumption activities. However, once technology or inventions become available in the form ofinformation and public goods, they can be used without loss to any person, and without further investmentin recreating it for new users.
A dilemma exists, if everyone is free to use the technology and inventions created, and who will
bear the costs associated with their creation? One of the basic rationales of the patent system is to providean incentive for the creation of new technology and inventions, by offering inventors exclusive rights tocommercially exploit patented inventions for a limited time, in return for the disclosure of the inventions tothe public.
The exclusive right to exploit the invention commercially permits its creator to work it without
fear of interference from imitators who have not incurred the investment in research and development,which produced the invention. The inventor will thus have the opportunity to recover research anddevelopment costs through a competitive advantage. The patent grant in this respect acts as an instrumentof economic policy to stimulate further risk taking in the investment of resources in the development ofnew products and technology.
Patents are granted on technical criteria. The exclusive rights which are conferred by the patent
relates to the commercial exploitation of the invention, and the patent holders are not protected againstthose who derive from the disclosed invention a perception of a market need which may be satisfied by thelegitimate adaptation or improvement of this technology, or through the discovery of a different technicalsolution to satisfy the same market need.
It is generally acknowledged that society derives satisfactory compensation for the exclusive rights
it temporarily confers on certain individuals, since this exclusivity generates benefits that, in the long run,offset any economic disadvantages or risks which “exclusive rights” might entail. In general, the industrialproperty system is a means to:
encourage and safeguard intellectual creativity;
promote investment, by giving a guarantee against unauthorized use of the
patented inventions to those who accept the risk of advancing from the prototype stage to massproduction;
provide consumers with the fruits of inventive and innovative activity, by the large-
scale production and distribution of higher performance and higher quality goods;
disseminate quickly and widely new ideas and technologies, by creating a public
“database” of new inventions and technologies.
Furthermore, the IP system provides the necessary framework for the transfer of technology by
contributing to an increased confidence and transparence in transactions.
The patent system contributes to economic growth and development, by creating conditions for
the economic and commercial use of inventions in several ways:
it gives an incentive to the creation of new technology which will result in, inter alia
products, inventions and commercial opportunities, or ;
it contributes to the creation of an environment which facilitates the successful industrial
application of inventions and new technology and the legal framework which encouragesinvestment, including from foreign countries;
it acts as a catalyst for the commercialization of inventions and their transfer to productive
it is an instrument of commercial and industrial planning and strategy.
The patent system must be understood as a policy instrument that encourages developing
indigenous technological capabilities by providing an incentive to local inventors, research anddevelopment organizations and industry. In fact, it represents a strong shield for the development ofinnovative domestic industry, however small it may be at that moment.
The patent system does not constitute an instant remedy, but rather a long-term infrastructure
investment in the development of a national market. Without a patent system, inventors, entrepreneurs andcompanies would have no effective protection against the imitation of their inventions, and less incentive toinvest in the development and strengthening of their technological capacities. It might, therefore beexpected that the number of inventions produced by local inventors would be even less, in the absence of apatent system.
The patent system must be seen as a long-term infrastructure investment to develop the national
V. FUNCTIONS OF THE INDUSTRIAL PROPERTY SYSTEM
The main functions of the industrial property system may be summarized as follows:
to stimulate inventive and innovative activity;
to encourage the development of new technology;
to encourage the commercialization of inventions and innovations;
• to facilitate access to the latest technological information.
Some explanations of the above-mentioned functions of the industrial property system are given in
Function to stimulate inventive and innovative activities
A patent right is granted to a person who has invented (created, developed) an invention and who is the
first one to file an application for the grant of a patent. As already mentioned, the exclusive right granted for theinvention makes it unique and thus the inventor can expect to commercialize it on favorable terms. All kinds ofinventions, fundamental or improvement type benefit equally from the exclusive protection. While fundamentalinventions are very important for new products and industries, the so-called improvement-type inventions arealso important, especially actual appliance for industries, often resulting in cost reduction or an improvement inthe quality of the products.
The patent system provides a protection to the inventor and an incentive to continue his work,
because he can be sure that if his invention is patented he will be the only one who, for a limited period oftime, could legally exploit the invention and has, at the same time, the right to exclude everybody else fromusing his invention. This means that there will be no free ride on his invention by others who would justlike to copy and use the invention free.
Function to encourage development of new technology
Inventions are created in the process of the development of new technology or when solving technical
difficulties. They are utilized by enterprises, which apply the above-mentioned technological policy.
The proper protection of inventions by an industrial property system guarantees inventors an exclusive
right of working inventions on a commercial basis. It makes enterprises develop and utilize inventions for theirown development. The period of exclusive rights of the invention is limited to a certain time period. Thereafter,the knowledge becomes part of the public domain. Therefore, enterprises make further efforts to developadvanced technology as follow-up activities in order to keep their products competitive and profitable.
Function to encourage commercialization of inventions and innovations
A mature industrial property system will support accelerated introduction of technology (domestic or
foreign) through the proper protection of patent rights. New technologies can be transferred more easily tocountries with established and well-functioning industrial property systems. The industrial property system is aguarantee for the inventor that, when transferring his invention to an industrial user, it has been done a legalbasis.
The industrial property system provides security for investors. While a financial institution or an investor
is interested in investing in R&D, and they would like to be sure that while they are investing in R&D related tothe new invention or process, that nobody else would do the same and that they would be working “competitionfree” for a certain period during which they will not be suffering from similar developments by competitors anddevelop safely their products and offer it to a receptive (because unsaturated) market.
Function to facilitate access to latest technological information
One of the basic principles of the industrial property system is that protection may be granted only
in return for full disclosure of inventions (which, otherwise, could have been kept secret, at least for acertain time). This could be called the information function of the industrial property system. Originally,this information function was hardly more than a collateral effect of the industrial property system since, byand large, patents are taken where and when inventions cannot be kept secret any more. But with time theinformation contained in patent applications amounts to a stock of technological knowledge which, due tosystematic and precise documentation and classification, constitutes a valuable national asset in its ownright.
The patent system provides a unique and, by far, the most complete collection of technological
information and data on what is going on in the different fields of technology. By studying patentdocuments, everybody working on the development of new products, or in R&D in specific fields oftechnology, can know what developments are taking place inany company or firm in the world. He can also identify the state-of-the-art of the research in specifictechnological fields and learn about the progress of competitors, what their most recent inventions are andwhere protection for such inventions is being sought.
Awareness of the state-of-the-art in a particular technical field can avoid the duplication in
research work by indications that the desired technology already exists. Also, it can provide ideas forfurther improvements and can give insight into the technological activities of competitors and, by referenceto the countries in which patents have been taken out, the marketing strategies of competitors.
A state-of-the-art search can identify newly developing areas of technology in which future R&D
VI. THE INDUSTRIAL PROPERTY SYSTEM AND MARKET ECONOMY
The establishment of markets, where demand is competitive and innovation-minded, is a
prerequisite to the proper functioning of the industrial property system and a stimulus to socially desirableinventions and innovations. In other words, as an instrument of infrastructure intended to support theinventive and innovative activities of enterprises, the industrial property system depends on a well-functioning, complementary infrastructure upstream from the inventor, i.e., a science basis and workablecompetition as well as downstream. But it is the industrial property system which, for the most part, servesas an effective catalyst between both sides.
As regards the economic and institutional framework within which the industrial property system
can operate satisfactorily, two considerations have to be borne in mind.
The first is that the granting of a patent for an invention normally does not amount to the grant of a
monopoly and, indeed, talking of patents as of monopoly rights is grossly misleading. For one thing, thereare only very few, if any, inventions that may not be replaced by alternative technologies. In addition, thepatent grant itself contains the seed for the development of substitute technologies in that the disclosure ofthe invention facilitates the understanding of new technological knowledge, its circumvention or adaptationto specific needs. In this way, the patent is a self-destroying exclusivity.
This limited nature of the exclusive protection granted by the industrial property system leads to the
second and more important consideration, which is that the industrial property system operates oncompetitive markets and, indeed, will yield its maximum benefits on competitive markets only. Thegranting of exclusivity permits that a portion - but only a portion - be excluded from an otherwisecompetitive market replete with rivals ready to imitate the invention. The limited term of the patentprotection makes sense only in view of the prospect that upon lapse of the patent term competitors will infact imitate the invention.
Companies that already dominate markets may not need patent protection for the introduction of
innovations. IPRs may, however, allow fresh entry into oligopolistic or monopolistic markets forcompanies offering new products or processes, which due to their exclusivity, cannot be imitated atpredatory prices by the firms dominating the market.
In other words, the efficient functioning of the industrial property system depends on the existence
of a dynamic competition on the market. This, of course, does not necessarily mean that a system ofexclusive patent protection will work in a market economy only, but it will produce the totality of itsbeneficial effects only under conditions of effective competition among enterprises.
This complementary function of the industrial property system, i.e., to spur competition, means that
governments cannot introduce patent protection as a means to promote technological development, unlessthey also allow for at least some effective competition among enterprises, and unless they do not take careof the maintenance of competitive market structures by also controlling economic concentrations andrestrictive business practices which sometimes may be based on the use of IPRs.
It is not only the reward structure of patent protection which depends on the establishment of
competitive markets, but also its very function as a means of stimulating and selecting commerciallysuccessful inventions. Patents are granted purely on the basis of general technical considerations such asnovelty and non-obviousness; they are not granted because of a particular economic or social value of theinvention. This value is to be determined exclusively, by what the market yields for the exploitation of theinvention, after due efforts by the inventor. Patents do not directly reward inventions. The success ofinventions on the market place will generate the reward, and the function of a patent is no more than tooffer a basket for the collection of such reward.
The industrial property system provides a relatively safe guarantee that the inventive and innovative
potential of any given company or country will in fact be activated. By covering all fields of technology,patent protection as a tool of selecting opportunities for innovation operates on a basis as broad as possible
using the interests and efforts of all people in a decentralized way. What is most important is that it leavesthe difficult problem of how to determine the economic and social value of an invention to the marketplace, i.e., to the actual user or consumer of the new process or product.
Finally, as patents pro tect only the opportunities to invent and innovate that the market offers, there
must be a demand, which, if met by the invention, will bring the expected reward. Markets, however, maybe imperfect in at least two respects. Firstly, there may be insufficient competition on the demand side.
Secondly, markets do not always support a demand for socially desirable inventions. Consumers do notpay for new processes or products if these yield an advantage to society at large rather than to theindividual consumer himself. This phenomenon of inventions that produce larger social than individualbenefits is well-known in the areas of environmental protection, safety and public health. The appropriateremedy is to regulate the market by establishing environmental and safety standards, to which anyprocesses and products have to conform so that new processes and products, which correspond to thesestandards, will find a demand. Exhaust emission standards for automobiles are one of the best-knownexamples.
VII. THE IMPACT OF THE INDUSTRIAL PROPERTY SYSTEM ON INVENTION ANDINNOVATION
The preceding explanation of the economic rationale and function of the industrial property system
as a necessary policy-planing instrument that will encourage invention and innovation may appearsomewhat theoretical. It is not infrequent that in many countries disappointment is expressed as to theyield of their own industrial property system and their patent statistics indeed indicate that it may benefitforeign applicants much more than the domestic inventors.
However, dominance of national markets by foreign technology may not be attributed to the
industrial property system alone. Such dominance cannot be successfully defeated by refusing patentprotection since, in any event, patent protection is indispensable for the establishment of innovativedomestic industry. In fact, availability of patent protection represents a strong shield for the developmentof domestic industry however small it may be at the moment. As already mentioned, the industrial propertysystem does not constitute an instant remedy, but rather a long-term infrastructure investment in nationalindustrialization.
All along the innovation process, right from the definition of a project to the conception of an
invention and its transformation into a prototype and finally into a marketable product, patents play a roleas a source of information and as the instrument to protect the investments necessary at any given stage.
This role, however, varies somewhat according to whether inventions and innovations are developed andintroduced by one and the same enterprise, or whether they are contracted out totally or in part to otherinstitutions or enterprises.
It is difficult to identify socially desirable inventions, which may not reap sufficient rewards under
patent protection, by a precise economic test. However, by political judgment, at least three kinds ofsupport are commonly the subject of specific government intervention. Such interventionist measures arenot, however, intended to replace the industrial property system, but rather an attempt to establish theconditions necessary for the proper functioning of the industrial property system or to give an adequatemessage to inventors or innovators that their efforts in specific directions will not be in vain.
In order to exploit the market opportunities for invention and innovation, the inventor must have the
necessary scientific and technical skills, i.e., he must be able to find adequately trained personnel and hemust have access to a broad scientific and technological basis. The advantages offered by patent protectionare insufficient to support all these costs (as distinguished from the actual costs of labor and of laboratoryequipment).
What is at stake, in fact, is the establishment of the basic infrastructure of industrialization and of
the operation of the industrial property system, which governments must provide in the form of an efficienteducation system and the establishment of competent research institutions.
In addition to providing the educational and scientific infrastructure for industry, governments of
many countries have been led to directly support the inventive and innovative activities of industry bygranting all kinds of financial assistance to individual R&D or innovation projects. The measures differ intheir form, by beneficiaries and by subject matter.
The reasons for such financial assistance are manifold. In part, they relate to inadequacies in the
industrial property system; patents may be granted too slowly in areas of fast technological development orthey may not afford sufficiently broad protection for technologies of large intersectoral applicability. Morefrequently, R&D projects are considered to be too risky or too expensive to be undertaken on the basis ofpatent protection alone. In this respect, it should be noted that patents provide for rewards only at a latestage of the innovation process so that inventors and enterprises have to make advance outlays. Dependingon the size of the enterprise and on the substance of the project, the necessary capital may be difficult tofind.
Some experts argue that patent protection may be superseded rather than reinforced by other
systems of incentives to invention and innovation. This risk is often related to cases where direct subsidiesare granted for R&D investments and related costs without paying attention to the subsequent business andcommercial implications. If not finely tuned to the operation of the industrial property system, suchsubsidies may impair the function of patents as an instrument for the demand-oriented selection ofrewarding opportunities for invention and innovation.
Patentable inventions provide a perfect opportunity and a very good reason to reward the in-house
inventor, i.e., the employee who was capable of concretizing technical knowledge into an invention.
Indeed, rewarding employee inventors is not only a matter of justice, since they afford a means to theenterprise of excluding competitors from making or selling the same product or from using the sameprocess, i.e., they provide the enterprise with a well-protected competitive advantage, but indeedremuneration for employee inventions calculated as an equitable share of the profits made on the basis ofthe patented invention (with, of course, due account taken of the respective contributions of the employeeand the enterprise to the invention) will operate as a strong incentive to inventive and innovative activitieswithin the enterprise itself. Inventions present clearly defined situations for remuneration and they mayeasily (and should) be calculated on the basis of the enhanced potential profit of the enterprise rather thanon the basis of mere cost saving (as is done in many cases). A well-remunerated inventor becomes anactive participant in the running of the enterprise since he has a stake in it.
VIII. INDUSTRIAL PROPERTY RIGHTS IN TRANSFER OF TECHNOLOGY
The framework of the patent system also provides a necessary element of certainty for a
technology transfer transaction. If a potential technology recipient were located in a country which did notmaintain a patent system, the supplier of the technology would need to rely on purely contractualarrangements seeking to guarantee non-disclosure and use of the invention by third parties. Sucharrangements establish an element of commercial risk for technology suppliers, which is more pronouncedthan in circumstances where the transfer transaction can be linked to a patented invention or technologyguaranteeing protection against illegal exploitation by third parties.
The existence of a patent also introduces another measure of certainty to the commercial transfer
transaction by enabling the potential recipient of the technology to sight the essence of the technology,which he is wishing to acquire. In the absence of a patent, such initial sightings of the technology, which itis proposed to transfer, must take place through disclosures under secrecy and confidentiality agreements,which can again introduce an element of commercial risk of the leakage of the technology to third parties,thus undermining both the value of the technology from the point of view of the supplier, and the value of
the technology for which the recipient will be paying. Furthermore, to cover such high risks the supplierwould calculate it into a higher priced technology.
Contrary to secret technological know-how, patents perform several simultaneous functions, which
are critical for the efficiency of the network transferring and disseminating technology, namely:
patents provide information on who possesses which technology;
patents give evidence of the technological strength of the respective partners because they
are easy to investigate and, by their very nature, represent R&D efforts resulting in an advancein the art;
patent claims allow one to define precisely the technical and territorial scope of any
technology transfer transaction, as well as the technology to be transferred and clearlydistinguished, from any other technical knowledge of which a partner may learn during thetransfer contacts. This is particularly important in contract research and in cooperative researchprojects where the background knowledge of each partner must be distinguished from thejointly developed new technology, and where the jointly developed technology must be dulyattributed for exploitation to each partner;
the exclusive nature of patents, which transforms ubiquitous technical information into an
appropriable asset, makes it possible that inventions can actually be transferred from one ownerto another for monetary consideration in respect of the contract performance, the cooperativeefforts or the commercial value attributed to a particular technology.
Therefore, the transfer function of IPRs is as important as is their information and incentive
function, and is by no means limited to the grant of licenses as an additional source of income or as aninstrument to serve markets into which an enterprise is not able to enter itself.
Forms of compensation in Transfer of Technology
The relation between licensing fees or royalties and the technology costs embodied in inventions
is often not simple. A license fee or royalty should always be expressed in relation to a stated base, forexample the sale price or manufacturing cost.
Usually royalty payments are not based on carefully worked out technology costs. They are more
an outcome of negotiations between the licensor and the licensee. “A reasonable royalty—
according to oneUS Federal Court judgment—is the amount a person, desiring to manufacture, use, or sell a patentedarticle as a business proposition, would be willing to pay as a royalty and yet be able to make a reasonableprofit.
A license usually includes a royalty payment by the licensee. For exclusive licenses , the licensee
acquires the sole rights within the specified territory. It may call for an initial payment followed by aminimum annual guaranteed amount of royalty. The minimum payments are included as an incentive forthe licensee to promote the active use of the licensed technology, product, etc.
The ingenuity of financial specialists in setting up compensations in license or technology transfer
agreements is vast and they finally determine the value assigned to inventions or technology. Some of theoptions are:
payment for services of licensor’s staff;
payments for training of licensee’s staff;
amount of expenses incurred in traveling and subsistence of licensor’s staff;
payment for the services of outside professional experts, such as patent agents and
payments for continued information exchange.
Some of these methods are just as creative as the inventions they attempt to value for
IX. COMMERCIALIZATION OF INVENTIONS: THE FINAL STAGE OF THE INNOVATION PROCESS
Technology and inventions are important parts of the innovation process, which transforms
inventions into marketable products. This complex process requires specialized professional knowledge.
The marketing and commercialization phase defines the success of any innovative invention. The returnsin terms of profit upon its commercialization are the ultimate proof of its success.
If we look closer at the innovation process we will realize that it consists basically of four
overlapping and interrelated main phases: the idea generation and conception phase; the development anddesign phase; the prototype and pre-production phase; and, the production, marketing andcommercialization phase.
This is the critical point in the innovation process; the production, marketing and
commercialization stage, when the invention, new product (or process based on it) meets the trial of themarket. Only upon its acceptance on the market by consumers and users, will the invention or new productbegin to generate income, which will compensate inventors and manufacturers for their investment, andhopefully generate some profit. The returns in terms of profit are the ultimate (and eventually the mostimportant) proof of the success of any invention or new product or technology.
The innovation process is by no means a linear process; its different components overlap to a
considerable degree. The commercialization and marketing of an invention could begin at a very earlydevelopment stage, i.e., the idea generation and conception phase. However, for the inventor or hiscompany to begin commercialization at such an early stage is not advisable; certainly not before havingfiled a patent application. The price someone could offer for such an inventive concept would be very low,if any, regardless of its ingenuity and market potential, since more of the development work will have to bedone, before the invention may be used in practice and could generate any income.
The income an invention may generate will depend directly on the investment made for its
• the highest return (or benefit) for the inventor may be expected when he decides to start its own
production based on the invention, but this approach will also require the largest investment;
• the benefit for the inventor will be much lower when he decides to license or even to sell his
patent rights at an early stage of the development of his invention.
A common mistake of many inventors is that they try to sell their invention without taking the
necessary steps to at least obtain legal protection and to develop the inventive concept into something moretangible, i.e., to file a patent application and to produce a working prototype before trying to commercializeit.
Commercial and marketing strategies depend on the relation between the invention and th e field of
technology. Strategies will be different for mass products than for an invention in a specialized field,applicable only in the production of a few manufacturers. The market environment, the customs andtraditions, the purchasing capacity and power of people (consumers) in the area also defines the methodsand approaches taken.
The successful marketing of inventions and technology means to marry a new invention to a real
existing need. It demands an extensive and very close collaboration and cooperation between three groupsof people: those who create inventions and technology, those who explore and create markets and thosewho use inventions and technology. Inventors are advised to seek, as much as possible, professional expertassistance when they are involved in that process.
From the viewpoint of the inventor, or invention owner, there exists several ways in
• to start their own manufacturing and marketing of the product based on the invention;
• to license the rights of the invention;• to sell the patent rights, or
Deciding on which way to choose will depend on a variety of factors, among which the cost and
benefits analysis will often be decisive.
Well-prepared business plans and convincing prototypes are indispensable for attracting investors,
Patent protection, if available and strong enough, can be a very powerful tool in the
commercialization process, in particular on foreign markets.
Usually commercialization should begin on a local scale, close to the user and only upon success
should one embark on large-scale commercialization and marketing (including also for export in foreigncountries).
Today, besides the creators of technology (inventors, R&D centers, universities) and the users of
technology (industry, the business community and the consumers), the entrepreneur (broker, finder/creatorof markets) has an increasingly important role in the commercialization and transfer process.
Sometimes governmental agencies could also act as brokers or promoters of inventions; however,
such institutions should have an independent status with respect to business decisions existing outside thegovernmental or administrative system.
Inventors often entrust the search for partners and the commercialization of their inventions to
commercial brokers. Before entering such arrangements, however, inventors should obtain as much aspossible information on the activities and experience of the commercial broker and ask also for referencesfrom other independent sources. It is advisable that inventors retain the rights of the invention (patent,industrial design or utility model registration, trademark registration) and agree with the broker on acommission to be paid to him upon accomplishment of the task.
Practice has shown that, in order to be successful in the commercialization or marketing of
inventions, the inventor or his company will need to have access to several or all of the following services:
• technical and technological evaluation of inventions and innovative projects;
• economic evaluation and market studies (i.e., feasibility studies);
• legal advice and assistance;• contacts with potential users;
• contacts to mobilize and attract seed and start-up capital or venture capital;
• assistance in obtaining industrial property titles, including patenting of inventions or registering
• assistance in publicity matters and the preparation of public relation campaigns;
• advice and assistance in prototype manufacturing, etc.
In several countries, associations of inventors provide expert assistance on the different aspects of
commercialization of inventions such as written information on general and specific business practices andethics, on economic, financial and other laws and regulations affecting commercialization, including listsand addresses of experts in the various fields, such as patent practitioners, patent lawyers and inventionbrokers.
Finally, it can be said that, today it is generally accepted that invention and innovation are crucial
for the successful participation in our very competitive global market place. A well-functioning nationalintellectual property system will contribute substantially to encouraging invention and innovation. It willalso serve public welfare by upgrading the technical and technological base of the country, and prepare theground for the creation and exchange of technology, and the fostering of greater human resourcesdevelopment in technical fields. In short, the stimulus of expanding a country’s stock of technicalknowledge will be materially increased and the stimulus of investment in useful development of thatknowledge will be likewise increased.
We are witnessing growing interdependence in global trade and technology as the costs and risks
of developing new products and processes increase. Strategic alliances between companies such aslicensing agreements, joint ventures, mergers, acquisitions and cooperative R&D agreements, areproliferating, cutting across national borders and cultures. Alliances seek to learn and acquire from eachother technologies, products, skills, and knowledge that are not available to other competitors. Newrelationships between enterprises and countries are setting new standards in making it easier to do businesstogether. The increasing role of technology in economic growth and the growing transfer of IPRs forcompetitive performance within and across borders makes this an important issue.
Osteoporoseschulung Modul 5 – Medikamente und Schmerztherapie © Lutherhaus 2006 Osteoporoseschulung Modul 5 - Medikamente und Schmerztherapie - In diesem Modul werden die medikamentöse Therapie der Osteoporose und einige Grundelemente der Schmerztherapie zur vorgestellt. Medikamente gegen die Osteoporose Es gibt heute eine Reihe von Medikamenten, mit denen man wirksam die Festi
Tetrahedron Letters 49 (2008) 4461–4463Chemoenzymatic synthesis of 4-diphosphocytidyl-2-C-methyl-D-erythritol: asubstrate for IspEPrabagaran Narayanasamy *, Hyungjin Eoh, Dean C. Crick *Department of Microbiology, Immunology, and Pathology, College of Veterinary Medicine and Biomedical Sciences. Colorado State University, 1682 Campus Delivery,Fort Collins, CO 80523-1682, USAEnantiomerica