Section 5: Intellectual property - Commercialisation

The ways in which Innovation ANU can help creators commercialise their inventions
Figure 7: The ways in which Innovation ANU can help creators commercialise their inventions

How does Innovation ANU help creators commercialise their inventions?

IP protection for an invention is a major accomplishment, but it is only one part of the technology transfer process. Finding a potential partner/licensee for the invention and getting it to market requires a whole new set of challenges that are often contrary to the academic research mindset. This is where Innovation ANU, in active participation with creators, will step in and facilitate the effort on their behalf. There are many ways in which a Technology Transfer Manager can provide assistance to creators (see Figure 7), including commercialisation planning and strategy, market research, targeted invention marketing, start-up (early-stage business) advice, industry/investor relationship development, data collection, financial resources to facilitate proof-of-concept and prototype development, and license negotiation, and contract management.

How does Innovation ANU market inventions?

Step 1: Market assessment

Detailed analyses, sometimes through the engagement of outside advisors who connect with industry experts, add to Innovation ANU’s understanding of the potential market for the invention and help determine marketing actions. By conducting market research for a specific invention, it enables us to gain a better understanding of the target market(s), the customers and their needs, and what competitors are doing, as well as enabling identification of potential licensees.

What outside advisors do Innovation ANU engage with?

Innovation engages with various organisations and networks to assist with our market assessment processes. These include, but are not limited to:

  • Innovation ANU is a client of IN-PART. IN-PART is a matchmaking platform for university-industry collaboration that provides the initial introduction for new partnerships in technology transfer. Being introduced to the right industry partner, or gaining their feedback, IN-PART helps Innovation ANU find more effective routes to commercialisation
  • Innovation ANU is a client of Invention Evaluator and Fuentek. Both companies assists Innovation ANU in technology evaluation and market strategy development.
  • Innovation ANU has a subscription to several proprietary market databases that offer thousands of market research reports, over many prominent fields. 
  • ANU is an IP Group partner. IP Group is a leading IP commercialisation company which focuses on evolving great ideas, mainly from its partner universities, into world-changing businesses, to bridge the gap between cutting edge scientific innovation and commercialisation. IP Group works in partnership with its University partners to identify the most ground-breaking innovations which have the most promising commercial potential.
  • ANU (through the John Curtin School of Medical Research) is a member of the Medical Research Commercialisation Fund (MRCF) Collaboration – an innovative investment collaboration that invests in early stage development and commercialisation opportunities emanating from Australian medical research institutes and allied research hospitals.
  • Patent Attorneys. Innovation ANU engages 0.2 FTE in house patent counsel to assist with patenting processes and engage with a range of Australian top tier firms for patent filings.

Step 2: Seeking partners

Innovation ANU engages in a variety of marketing activities to promote University research and IP. These activities include:

  • Using the ANU website to market inventions
  • Attending tradeshows, conferences and industry events, e.g. TechConnect World Innovation Summit and SPIE BiOs Expo and Photonics West Exhibition, AusBioTech and BioEurope
  • Attending professional meetings
  • Direct contacting of companies
  • Producing marketing materials around your projects
  • Using industry events and social media to cultivate contacts
  • Networking via the Canberra innovation ecosystem (see Section 6) and existing professional relationships between ANU and past/present industry partners
  • Marketing inventions via intermediary platforms, e.g. IN-PART
  • Media releases and ANU stories
  • Inventor publications and presentations are often excellent marketing tools as well

How are partners identified?

Research and consulting relationships are often valuable sources for identifying potential partners. Partners are also identified through existing relationships of Innovation ANU staff. Innovation ANU attempts to broaden these relationships through professional networking, market research and engagement, industry events, cultivating existing relationships, etc. What is important to note is that it can take months and sometimes years to locate a potential partner depending on the attractiveness of the invention, stage of development of the invention, the strength of the market need, and the size and intensity of this market. It is often challenging to attract a partner because most University inventions tend to be very early in the development cycle (TRL 1-2) and require substantial investment to commercialise them.

What are potential partners looking for?

The biggest challenge is not convincing industry how innovative the invention is, but rather why it is better (e.g. cheaper, faster, smaller, etc.) than existing solutions to the problem it is solving. The invention must solve a significant problem that the partner or the market has that offers a significant, long-term business opportunity to a potential partner, otherwise why should they care? 

Some factors that partners may consider before taking on an invention may include:

  • Why is the invention a good opportunity for their business?
  • How much time, effort and money will it take to get the invention to market?
  • Are there are regulatory, insurance, certification or other hurdles that may stand in the way of taking the invention to market?
  • What are the risks and pitfalls of the invention?
  • Does the invention complement their R&D program/portfolio?
  • Will the creators’ help further develop the technology once licensed? (assistance in using the IP, training, active involvement in the R&D process)
  • Would the invention present a first-to-market advantage? Is the competitive advantage sustainable?
  • Would the invention lead to only one product/service or multiple products/services?
  • Does the price point fit the partners’ business model?
  • How crowded or niche is the market?
  • Will the potential end-users of the invention be willing to pay a price sufficient enough to allow for an appropriate return on investment?
  • How much will the license cost? Can they have an exclusive license? 
  • Is there a clear chain of title? What due diligence has been performed?
  • What is the freedom to operate?

What is the creator’s role during marketing?

Creators themselves often help enormously in finding interested partners, because they already cultivated many industry contacts through the conduct of their research. Creators are encouraged to work closely with Innovation ANU to market their invention. Creators are expected to be involved, e.g. in the exchange of information and materials, attending exhibitions, drafting of marketing material, etc., in all stages of engaging commercial partners and licensees, as their expertise is critically important.

What is licensing?

In brief, a license is a technology transfer agreement granting some (or all) of the University’s rights as owner of the IP (licensor) to a company who has agreed to certain obligations and responsibilities to commercialise the IP (licensee). Whether licensing to an existing business or a start-up, the ultimate goal is to get the invention to market, creating new goods and/or services, for the benefit of society. 

What does a typical license negotiation involve?

The process of negotiating a license is seldom linear (although often depicted that way) and success is dependent on the creator(s), Tech Transfer Manager and potential partner being collaborative and open with each other, flexible in their thinking and prepared to engage in a meaningful relationship. The process of working with a partner to negotiate a license is described below, but keep in mind that this process is variable and largely dependent on who is involved in the negotiations. Some of listed steps may or may not be required, while other steps may be required multiple times.

The process of negotiating a license is seldom linear (although often depicted that way) and success is dependent on the creator(s), Tech Transfer Manager and potential partner being collaborative and open with each other, flexible in their thinking and prepared to engage in a meaningful relationship. The process of working with a partner to negotiate a license is described below, but keep in mind that this process is variable and largely dependent on who is involved in the negotiations. Some of listed steps may or may not be required, while other steps may be required multiple times.

  • Step 1 - Exchange of non-confidential summary: An exchange of non-confidential information to launch discussions, e.g. handing out marketing material at a conference or exhibition.
  • Steps 2 & 3 - Execution of NDA and exchange of confidential information: More detailed, confidential information may be exchanged following the execution of a confidentiality agreement with the potential partner.
  • Step 4 - Visit(s)/meeting(s): The partner may request a visit and/or online meetings – they may be interested in having discussions around the science behind the invention, available supporting data, development plans, potential applications, etc., as well as getting to know the ANU team.
  • Step 5 - Due diligence: The partner may launch a due diligence investigation, i.e. a review of the business assumptions that are critical to determining the commercial value and potential of the invention. In some cases, the partner may enter into an option agreement whilst it conducts due diligence.
  • Step 6 - Evaluation: The partner may need to evaluate the invention to see if it is fits their purpose. In these cases, the partner may enter into an evaluation agreement with the University to perform the necessary testing.
  • Step 7 - Term sheet drafting: If the partner is satisfied with its due diligence and/or testing, the University and the partner may enter into a preliminary negotiation of licensing terms, detailed in a term sheet. Typically the University provides the partner with a proposal, outlining a specific research plan including a time frame for invention development and an estimated budget – which is reviewed by the partner. Many rounds of discussions may be necessary to finalise a proposal.
  • Step 8 - Partner funding acquisition: It may be a proviso within the option or term sheet, that the partner must capital raise (or get internal approval) to fund further research and development (R&D) of the invention.
  • Step 9 - License agreement drafting: The University and partner may then launch into the negotiation of a full license agreement. Most license negotiations are the collaborative effort of Innovation ANU, ANU Legal and Research Services with support from the creators. Many rounds of discussions may be necessary to finalise a license agreement. It is also worth noting that not all negotiations result in the execution of an agreement (impasses happen). 
  • Step 10 - Legal review: The legal team of both parties (University and partner) preform a final review of the agreement.
  • Steps 11 & 12 - License approval and execution: The appropriate delegates from both parties review and approve the final agreement and endorse (or execute) the agreement by signing it, therein making it an effective legal document.
  • Step 13 - License obligations reporting: License compliance. After an invention is licensed, Innovation ANU manages the license’s reporting and financial obligations. Some performance obligations (by both parties) may also be a requirement of the license agreement.

How long does it take to negotiate a license?

This depends on how quickly ANU and the partner can agree on licensing terms. Types of terms generally addressed include: scope of license rights, license fees, royalties (including minimums and calculations), sub-license rights, patent reimbursement, performance (diligence milestones), contract length, dispute resolution, exclusivity, renewal rules, how to deal with improvements, among others. These negotiations, especially IP terms can be complex. Factors that influence the negotiation time include:

  • A partner’s prior experience working with an academic institution – the more experience the partner has with academic partners and an understanding of an academic institutions concerns, the more likely we will come to agreement quickly.
  • ANU’s experience with the partner – sometimes previous agreements can be re-used.
  • Legal review by the partner – even when business and academia negotiate terms in principle, many companies require legal review and approval which can be extensive.

Is there anything creators can do to help expedite the negotiation process?

Creators can help facilitate the process by: 

  • Familiarising themselves with the ‘IP Decision Framework’, ‘Project Road Map’ and ‘Statement of Work’ documents available from Innovation ANU
  • When required, promptly complete the proposal to be offered to the potential partner, including a statement of work and University budget.
  • Making introductions and helping their Tech Transfer Manager establish a working relationship with the partner (if a pre-existing contact of the creator).
  • Starting early to obtain University approvals for using certain materials (if working with animal or human subjects)
  • Explaining sticking points to their scientific counterparts at the partner’s company if negotiations stall.
  • Knowing their priorities and relaying that information to their Tech Transfer Manager.
  • Promptly responding to their Tech Transfer Manager with input/information when requested.

What activities occur after the invention is licensed?

Most partners/licensees continue to develop an invention to enhance the technology, reduce risk, demonstrate (or validate) reliability and satisfy the market requirements for adoption by customers. The process can involve additional testing such as: (i) prototyping for manufacturability, durability and integrity, (ii) clinical trials for safety, toxicity and efficacy, and (iii) further refinement to improve performance and other characteristics. The licensee (under the terms of the license agreement) will invest time, funding and other resources towards the commercialisation of the invention and the creators may continue to be involved in the development activities via research funding, consulting contracts, responding to patent examinations, and more. Typically, only once a product and/or service is on the market, does the University starts to receive commercialisation income.

What revenue can creators expect if their invention is licensed?

As a rule, revenue less any expenses relating to the commercialisation activities (such as costs for IP protection) is distributed according to the ANU IP policy; the proportional splits at the time of writing are presented in Table 12. If the IP is jointly-owned, then a negotiated percentage will also go to the co-owner and their creator(s) prior to distribution to ANU creators according to the ANU IP policy. Agreed allocations are formalised prior to licensing, in some form of agreement, e.g. Inter-institutional Agreement, Proceeds Distribution Agreement, Collaboration Agreement, etc.

How is the creator distribution determined?

  •     Agreed amongst the creators and signed off by each individual
  •     In the event that an agreement cannot be reached amongst the creators, then the PCVI or DVCR of the relevant institution(s) will determine creator distribution.

Table 12: ANU’s revenue distribution model

Entity Up to $50,000 (AUD) Over $50,000 (AUD)
Creator(s) 100% 50%
University - College(s) that supported the creator(s) 0% 25%
University - Central Admin (managed by Innovation ANU) 0% 25%

What is a start-up?

Starting a new company is one way to further develop and commercialise inventions created at ANU. If the creators themselves wish to establish a start-up, or an experienced management team can be sourced, a new company may be formed to commercialise an invention. There are many reasons for choosing to form a start-up:

  • The invention provides both a large competitive advantage and large potential market (so potential returns are high).
  • There are great number of complex development risks that existing companies may not be willing to take on.
  • It can provide the professional guidance and development needed to demonstrate commercial viability, and thus improve the chances that an early-state invention reaches the market.

Innovation ANU will work with creators to determine whether this is the best route to market. Many factors are involved in the decision to license an invention to a start-up company. Considerations include optimisation of stakeholder positions, improvement of the probability that the invention will reach the market, and techniques to accomplish further commercial development outside the research environment. Numerous resources and expertise exists within Innovation ANU to support the development of a start-up. Starting a company takes considerably more time and effort than licensing, and is both a personal and work commitment that needs to be carefully considered. Creators who are considering getting involved in a start-up should make every effort to gain knowledge on the topic: talk with those who have done it before (and get more than one perspective), take advantage of training programs run by the University and others such as Canberra Innovation Network, attend local and national networking events, and read up on the topic.

Where can creators find out more about start-ups at ANU?

Information regarding start-up companies established from University IP is being developed into a separate Handbook. While this is being developed, contact Innovation ANU with any questions regarding start-ups at ANU.

» Go to next section: Section 6: Support structures