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Module 4: Intellectual property and commercialisation

2.1: The commercialisation process – an overview

There are no set rules for commercialising university research – only guidelines, as each project will have unique characteristics. This could be as a result of the research itself, the market it addresses, the institution, the researcher, the funders of the research, the investors or funders of further research, or a range of other factors. However, there are a number of common themes, and most university commercialisation offices will follow a process such as the one outlined in Table 4.1. While represented as a linear process, few commercial ventures proceed from stage 1 all the way to stage 8, and even fewer will do so in a linear manner. For example, unexpected research outcomes may send a venture back to an earlier research stage, or a change in market conditions may force a re-evaluation of the potential venture.

Table 4.1: The Commercialisation Process

  Commercialisation stage Research stage What is involved
1 Research and discovery Fundamental Research
2 Disclosure Fundamental Innovation disclosed to university commercialisation office
3 Evaluation Fundamental Evaluation of the research for commercial potential;
Development of a commercialisation plan.
Key questions addressed include:

  • What is the product and what benefit does it offer?
  • Can the IP be protected?
  • Who is the competition? What is the competitive advantage?
  • Who are the customers?
  • What is the size of the market and what are the market dynamics?
  • What is the time to market?
  • How much funding is required to take the product to market?
4 Intellectual property (IP) protection and packaging Fundamental Protection and packaging of IP for commercial opportunities
5 Proof-of-concept Prototyping/ Pre-clinical Demonstration that the innovation 'works' by measures that external partners deem appropriate.
6 Commercial Development   This may involve the formation of a start-up company or licensing the IP to an existing business. Further collaboration may occur with the original research provider.
7 Value adding R&D/clinical Continued research and development to refine the product for the market and potentially develop additional products. This stage may involve testing and refining the product for market readiness; may develop the business further.
8 Returns   Realisation of capital value of the company for the inventor and investors. This may be a public offering, sale of a start-up company, or the payment of royalties or other consideration from the licensing of the IP.

The commercialisation process is a difficult one, involving long time-lines, and very few innovations go on to become major international successes. Some innovations have enormous intellectual value as pure research but for a range of reasons are unable to be commercialised. These are not necessarily related to the innovation itself, but may result from many factors, such as changes in the market, changes in the commercial focus of the commercialisation (licensing) partner, technical failure, regulatory change or failure, inability to raise necessary finance, and many other reasons.
It is important to note that if research cannot be commercialised, this is not a reflection on the quality of the research itself. It has been estimated that for every 3000 raw ideas generated about 300 are disclosed to a commercialisation office. From these, about 125 or less are taken forward to be commercialised and result in 9 early-stage developments which in turn lead to 4 major developments, about 2 product launches, and ultimately just 1 successful business (Stevens, G. A. and Burley, J. (1997). 3000 raw ideas = 1 commercial success!, Research Technology Management: 40(3): 16–27.)

Commercialising research is not a process that can be undertaken by the individual researcher in isolation. Due to the complexity of the process and the costs involved in protecting and developing a product for the market, it is necessary to take on intellectual and financial partners at various stages. These partners include the university commercialisation office; patent attorneys and consultants; solicitors and accountants; research partners and managerial staff; entrepreneurs; and potential sources of funding such as venture capitalists or angel investors or perhaps even shareholders and company directors.

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