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Module 4: Intellectual property and commercialisation

Dictionary of terms (IP and commercialisation jargon)

*Definition or part thereof derived from the Concise Oxford Dictionary

Term Definition
Angel investor An individual who invests his/her own private money into a start-up company or technology at a very early stage. They take a large risk with their investment and often take a management role. Angels may be wealthy entrepreneurs or family or friends of the inventor.
Background IP Refers to the intellectual property (IP) including know how that exists prior to entering into discussions with a third party.
Business plan Written to define your business, identify your goals, allocate resources, focus on key points, and prepare for problems and opportunities. When embarking on a new venture, a business plan is frequently written to help those involved, including potential investors, decide if the venture is worth pursuing. Business plans generally include descriptions or analyses of the company, the product or service, market, forecasts, management team and the finances (balance sheet, income statement and cash flow analysis).
Circuit layout rights Form of intellectual property protection which automatically protects original layout designs for integrated circuits and computer chips. While these rights are based on copyright law principles they are a separate, unique form of protection.
Commercialisation The pathway to deriving a financial return from Intellectual Property (IP). The IP should be protected before commercialisation begins. When commercialising a technology, the university's commercialisation office/company will generally either licence the technology to an established company with a strong market presence or form a start-up company. It should be noted that not all innovations can be commercialised. Some innovations have enormous intellectual or social value as research but no marketable value.
Confidentiality agreement Form of intellectual property protection. Also known as CDA, or Non Disclosure Agreement. Putting a confidentiality agreement in place with a prospective collaborating organisation and is intended to protect the confidentiality of the technology and allows for a detailed discussion in a sound commercial framework.
Copyright Form of intellectual property protection (for more information, refer to the definition for Intellectual Property).
Disclosure Revelation of intellectual property. Disclosures should be made in confidence only to select individuals involved in the commercialisation process. Disclosures can be made in the final stages of research and development or when they are still a concept or idea.
Discovery Refers to a breakthrough in research or disclosure of something previously unknown. It is also the process by which a disclosure is revealed.
Due diligence The complete analysis of a business or technology opportunity, including risks, value and the accuracy of information supplied before recommending it for investment. This process ensures that all relevant information has been disclosed to prospective investors. It is often undertaken by the investing company's underwriter and accounting firm. As well as reviewing all documentation and financial records, they will speak with management about the company's (or technology's) prospects, strategy, products, competitors and financial statements.
Equity* Stocks and shares owned in a company which don't bear fixed interest.
Evaluation Assessment of an intellectual property disclosure, based on the strength and level of advancement of the research, its uniqueness, competitive advantage and marketability. Also, the ease with which the innovation can be developed into a saleable product and how large a market it could capture may be examined.
Exit Point of leaving an investment, generally the selling of shares in a company.
Foreground IP Also referred to as Project IP, this is intellectual property (IP) developed during a project (as opposed to Background IP).
Goodwill An intangible asset that is valued according to the advantage or reputation a business has acquired (over and above its tangible assets). It represents the value of factors that are anticipated to translate into higher earning power.
High Net Worth investor Similar to an angel investor, except that they do not tend to take a major role in the management of the venture.
Infringement When someone uses (i.e., makes, uses, sells) a property right owned by another without their permission.
Initial Public Offering (IPO) This refers to the floating of a company on the stock exchange – their first sale of stock to the public.
Innovation* To make changes or make novel. Innovation and technology are used interchangeably to describe an invention or research result that has commercial application.
Intellectual property (IP) The term for the property rights covering innovations, discoveries, creations or any other original products of a human's intellect. Intellectual property can be protected by:

i. Copyright – for literary works, art, music and software

ii. Trademarks – for company and product names and logos

iii. Patents – for inventions and processes

iv. Trade secrets/Confidentiality agreement – for recipes, code, and processes. They are used when the innovation's nature would make a patent difficult to obtain or it would be almost impossible to duplicate

v. Circuit layout rights

vi. Plant breeder's rights/Plant variety protection certificates

Inventor Person or persons who thinks of, finds, discovers, or creates a product, device or process (for legal purposes this will include anyone whose intellectual contribution was essential to the development of the invention).
License A contract in which an IP owner grants a company permission to make, use, or sell the IP. This is not an assignment of ownership and does not give the licensee legal title to the IP. Licenses may be exclusive or non-exclusive (if multiple groups are licensed to use it). Licenses may be bound by a range of parameters, including set time periods (which may include the length of the patent), by territory (such as Australia only or USA only), or by field of use (such as research or a given market segment). Generally there is a licensing fee charged by the owner of the IP and/or a right to a percentage of the profits (royalty stream).
Materials Transfer Agreement Form of intellectual property agreement. This governs the transfer of biological or other material between two parties. Generally the intellectual property owner retains ownership rights to the material, and restricts the other party's use to research, or in the case of a company, evaluation prior to entering into commercialisation arrangements.

i. Location where goods are bought and sold

ii. The total demand for a commodity

iii. The customers (actual and potential) for a good or service

iv. The process by which buyers and sellers interact to determine prices and quantities

v. Marketing: selling of a product

Milestone Markers of achievements within a project. Milestones are established to help progress a project on budget, on schedule, and to achieve specific goals. Milestones are identified at the commencement of a project, agreed to by contract, and are frequently tied to injections of further capital or performance payments.
Monetise Used in connection with a royalty income stream from a licence, where the future income from that license is sold (wholly or part) to a third party for a payment, usually of cash.
Moral rights Moral rights are the rights individual creators have in relation to copyright works or films they have created. Moral rights are separate from the 'economic rights' of the copyright owner, such as the right to reproduce the work or communicate it to the public. The creator of a work, who holds moral rights, is not necessarily the owner of copyright in the work. Creators have the right:
  • To be attributed (or credited) for their work
  • Not to have their work falsely attributed
  • Not to have their work treated in a derogatory way
National phase The stage of an international patent application where copies of the application are forwarded to the patent offices of designated countries for examination.
Patent* A government granted right for the exclusive privilege to make or sell an invention for a limited period (it also prevents anyone else from doing so). When a patent is granted, the applicant becomes its owner and can sell, licence or mortgage the patent. For a patent to be granted, the applicant must disclose how the invention works. Patents are territorial rights only.
Patent attorney Specialises in providing advice on establishing, maintaining and enforcing intellectual property rights.
Patent Cooperation Treaty (PCT) This treaty allows for a unified procedure for filing patent applications. In a single filing, countries can be selected in which to pursue patent examination. The examination and grant procedures are then handled by the relevant national or regional authorities. The PCT does not lead to the grant of an "international patent", which does not exist. There are 128 contract states to the PCT.
Patent search Search of existing patents to assess the competitive position and patentability of an unpatented innovation.
Pre-Seed funding Investment in an early stage venture or project, which is usually targeted at demonstrating a specific technical proof-of-concept.
Prior Art An existing technology (previously published or publicly known information) related to an invention. Such technology may limit the scope of a patent application.
Proof-of-Concept Evidence that an idea or an invention actually works. This may refer to demonstrating that an idea or innovation is feasible when scaled up.
Royalty A payment for the right to use IP. This is generally a negotiated percentage share of a revenue stream.
Seed funding Investment in an early stage start-up company. The funding is typically used to develop business, proof of concept, plan and employ key executive staff.
Securitise Similar to Monetise and used in connection with a royalty income stream from a licence, where the future income from that licence is provided as security (wholly or part) against a financing facility provided by a third party.
Spin-off company A company formed by a parent company to give it an independent status and as a vehicle to take a technology to the market. The term can be used interchangeably with 'start-up company' to describe the formation of a new company.
Start-up An early-stage company.
Technology* An application of science. This term is used interchangeably with innovation to describe an invention or research result that has commercial application.
Trade mark Form of intellectual property protection (for more information, refer to the definition for Intellectual Property).
Trade sale The sale of a technology or company.
Trade secret Intellectual property protected by secrecy or a confidentiality agreement. The IP is not published or promoted as is patented IP.
Venture capital High-risk private equity funding. Typically these companies do not have access to capital but are perceived by the investor(s) as having the promise of high return. As such, the investor usually demands a percentage of the company's equity in return for the investment.
Venture capitalist Venture capitalists raise money for investment from sources such as institutional investors, superannuation funds and high net worth individuals, usually in the form of partnerships.
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