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NEW TECHNOLOGY?
INTELLECTUAL PROPERTY?
WHAT'S THE LINK?
by
Dr. Derrick C R Hurlin Pr. Eng.
Consultant - New Technology Management
New technology is being developed across Africa and
as scientists we are often unaware of the value of our intellectual property.
Derrick Hurlin provides an informative overview of how to go about
identifying patentable knowledge and technology, how to patent it, copyright it
and how to get down to business. Take the time to read this article. It is a
must for any scientist wishing to get wise about their inventions
INTRODUCTION
It's technology - not love - that makes the world go round.
It's innovative people who make the technology go round.
… And it's intellectual property that oils the wheels!
Good technology can be lost if "intellectual property" is poorly understood. So - read on!
The article is in three parts:
· TECHNOLOGY
· INTELLECTUAL PROPERTY
· COMMERCIALISING
(* = Discussed later)
TECHNOLOGY:
What is "technology"?
Technology is a way of doing things. A stone-age axe; travelling to the moon; heart transplants; toothpaste; microchips.
What is new technology?
A way of doing things better.
There are a few things we need to ask about 'new' technology: Is it "good"? … i.e. …
1. Does it "fit the world"?
2. Does it work?
Does it "fit the world"?
· What problem does it solve?
· How is the problem solved now?
· How does the new technology solve it?
· Is the new solution better? - cheaper? - both?
· Is there a market?
Does it work?
Does it do what it should? - Repeatedly?
· What is the stage of development? What remains to be done?
· What resources will be needed to complete it?
· Are there any potential advantages/snags regarding:
- scale-up
- raw materials
- effluents
- environment
- specialised equipment
- specialised skills
- job creation
· Is the technology "protectable"? *
WHAT SHOULD YOU DO WITH NEW TECHNOLOGY?
1. Keep it secret:
Are you on to something? If you are, MAKE SURE THAT IT IS KEPT SECRET. *
2. Evaluate it:
By the tests given earlier, does it "fit the world"? Does it work?
3. Protect it: *
If the technology is valuable, "protect" it so that no one can take it away from you.
How? You'll first need to know what "Intellectual Property" (IP) is. *
Why? Because the way to protect technology is by protecting the IP.
I'll deal with this in the next section.
4. Commercialise it: *
You have three choices:
· You can use it yourself
· You can sell it.
· You can license it
Either way, you should be making money.
Now that I think about it … there is a fourth choice:· You can put it on a shelf, and admire it once a year. You won't make money!
INTELLECTUAL PROPERTY
What is "Intellectual Property"?
Let's first define "Immaterial Property".
"Immaterial Property" is something you own, which you can't see or feel. Examples are:
· your name;
· the right to occupy your house;
· the right to vote;
· an insurance policy;
· a debt.
These may have a tangible expression, like a contract or a certificate, but the functions themselves are intangible.
Intellectual Property is the Immaterial Property of technology. It comprises:
1. Patents
2. Trade Marks
3. Copyright
4. Registered Design
5. Plant Breeders' Rights
6. Secret Know-how
7. Protection from unlawful competition
Each has a tangible expression - a certificate, an Act of Parliament - but the rights they confer - called Intellectual Property Rights - are intangible.
I shall describe each briefly.
1. Patent:
A patent is a monopoly granted by a Government - on successful application - to the owner of an invention. For the invention to be patentable
and for the application to succeed an invention must:
· be new;
· have an inventive step - i.e. be "not obvious to someone skilled in the art";
· have a practical use.
"New" means that the technology is not publicly known anywhere in the world. If you disclose the new technology before you apply for a patent, it is no longer "new" and therefore no longer patentable. That's why it's so important to keep promising technology secret until you secure your patent position. This is often a problem for academics, who must "publish or perish". So remember, if you want to publish, file a Provisional Patent Application* first. Then you can have both - protection and publication.
To apply for a patent in South Africa, you first file a Provisional Patent Application. The date of filing is called the "Priority Date". If, within one year, you file the same application in virtually any country in the world, the foreign application is backdated to the Priority Date. Within the same year, you have to file a second application in South Africa, called the Complete Application.
2. Trade Mark:
A Trade Mark is a distinctive name or symbol, or any sign that can be represented graphically. It distinguishes a product or service from another of the same kind. Examples are the name and logo 'Coca-Cola', the name and star-symbol for Mercedes-Benz.
3. Copyright:
Copyright prevents anyone from copying anything that you have written or drawn, a film you have made, or music that you have composed - in fact any literary, musical or artistic work. Under some circumstances, computer programs are protected by copyright. Unlike Patents, Trade Marks and Designs, Copyright does not have to be registered (except for films). It is an automatic right that extends to virtually all countries.
4. Registered Design:
A Registered Design can cover two aspects.
· aesthetic design - the shape or appearance of a product.
· functional designs - those dictated solely by the function of the article. For example an anti-skid tyre tread.
5. Plant Breeders' Rights:
A monopoly on a new variety of plant can be secured by registration.
6. Secret Know-how:
If you know something the other guy doesn't know - and he needs it - that's "Secret Know-How" - and you can sell it!.
True technological know-how:
· is intangible
· is separate from human agency - i.e. it can be set out in some material form. It is this feature that distinguishes "know-how" from "skill" (sometimes called "show-how")
· is technical
· has substance and usefulness
· is capable of being kept secret
7. Protection from Unlawful Competition:
There are many forms of commercial competition that are unlawful. These include:
· "passing off" - i.e. trying to fool buyers that the product is someone else's
· illegal trading - e.g. trading without a licence
· spreading malicious rumours about a rival product
PROTECTING YOUR I.P.
Protecting your I.P. makes sure that no one can take it away from you.
Five things to think about:
· Who owns the I.P.?
· Why should you protect IP?
· How should you protect it?
· Where should you protect it?
· What does it cost?
1. Who Owns the I.P.?
Surprisingly, its not always the inventor who owns the invention. For example, if you make an invention as part of your work, the invention belongs to your employer. South African law is not very clear on this, so it is imperative that Conditions of Staff Service make it clear. Also, you can of course give your invention away. But don't! … Sell it instead!
2. Why should you Protect the Technology?
There are two reasons - "defensive protection" and "active protection".
Defensive protection ensures that others can't stop you from using your own work. Active protection gives you a tool to commercialise the technology.
3. How Should You Protect I.P.?
This depends on three things:
· The nature of the technology
· The value of the technology
· What you intend to do with it
These factors also determine which of the seven protection techniques you use. The important deciding factor is what you intend to do with the new technology.
Are you going to use it yourself, or license it to someone else? Or perhaps both? *
4. Where Should You Protect it?
International patenting is very costly. So - protect the technology only in countries where:
· you intend to exploit it;
· exploitation by someone else will be a threat to you.
There is no such thing as a "World Patent". You have to apply for a patent in each country in which you want protection.
This is not strictly true. For multiple European countries, you can make a single application to the European Patent Office. You can also make what is called a "PCT" (Patent Co-operation Treaty) application to cover as many of the hundred or so member countries as you wish. PCT applications are very expensive, but give you more time. Use them only if you want cover in many countries, and if you need the time.
5. What does it cost?
Ask your patent attorney or IP practitioner for a quote. This can be from R4000 to R8000 for a South African application, up to R25 000 for a foreign application, and up to R50 000 for a PCT. Subsequent processing costs about the same.
Please note that this is only an outline. Patent law is very complex, so get detailed advice from a patent attorney or I.P. Practitioner.
COMMERCIALISING YOUR I.P.
How do you go about it? There are two basic ways:
· You can sell it
· You can license it.
Selling outright:
This has one advantage.
· You get your money up front.
It has two disadvantages.
· You may miss out on bigger, continuing income.
· You lose control of quality.
Licensing:
This has two advantages.
· continuing income
· quality control.
It has two disadvantages.
· it must be done under a licence agreement, which must be serviced.
· the technology must be continually updated.
How to license?
It is not sufficient to simply publicise the technology and hope that potential licensees will "beat a path to your door". They won't.
You have to work at it.
And have patience!
Where to find a licensee? Know your market, and you'll know where to look.
But there are …
SEVEN WAYS TO GET IT RIGHT:
Here are the seven "BAS" Rules - Before Actually Starting
BAS-Rule 1: Protect your technology.
BAS-Rule 2: Know the market.
BAS-Rule 3: The technology must fill (or create) a need.
BAS-Rule 4: The technology must have economic benefit
BAS-Rule 5: Finish the Development
BAS-Rule 6: Get someone else - a recognised authority - to test it if you can.
BAS-Rule 7: Have something to show.
And …
SEVEN WAYS TO GET IT WRONG:
FLOP-Way 1: The technology is not sufficiently developed
FLOP-Way 2: The technology is a "solution in search of a problem"
FLOP-Way 3: The technology is not better and/or cheaper than current technology
FLOP-Way 4: Lack of continuity
FLOP-Way 5: The technology is not protected
FLOP-Way 6: Lack of technology management skills
FLOP-Way 7: Underestimating resources required for development
The last one is the most common "Flop". Perhaps you should apply "Hurlin's ep Rule"!
Ca
= Ce x e
Ta = Te
x p
Pa
= Pe ÷ ep
Where:
Ca = Actual cost of project
Ce = Estimated cost Ta = Actual time required for project
Te = Estimated time Pa = Actual profit from project Pe
= Estimated profit p
= pi (not in the sky!) =
say, 3.14 e
= base of natural log. = 2.7 (close
enough!) So, e p
= 22.6
Tongue-in-cheek, perhaps. What it means is - multiply your time and cost estimates by 3, and divide your expected profit by 30! You won't be far out.
WHAT CONTRACTS DO YOU NEED?
Service Contract
Be sure that your staff service contract defines ownership of IP.
Disclosure Undertaking - When you need only to show something.
A Disclosure Undertaking says in effect
· We have some new technology that you want to see.
· You may have a look, but first sign here.
· You may not tell anyone about it.
· This doesn't count for things you already know.
· You may not use the technology commercially without our consent.
· All documents and samples to be returned after evaluation, including copies.
· There is a time limit.
Evaluation Agreement - When the partner wants to test the technology.
Same as Disclosure Undertaking, with the following provisions added:
· You may carry out tests on the technology.
· You must give us a full report on the tests.
Evaluation and Option Agreement - When the partner wants an option to take a
licence. This is the same as Evaluation Agreement, with the following provisions added:
· If you want a licence, we'll give it to you.
· Territory defined.
· Outline of licence agreement ("Heads of Agreement")
Licence Agreement - When a partner agrees to take a licence, the Licence Agreement says in effect:
· You want to use our technology.
· You may use it if you pay us money (royalties).
· There is a territory limit.
· There is a time limit.
There are three kinds of licence:
· Sole licence: No-one else gets a licence - not even the owner.
· Exclusive licence: No-one else gets a licence - but the owner may .
· Non-exclusive licence: The owner may give a licence to anyone.
Joint Venture Agreement -
When the owner and partner form a joint company - or co-operate in some way to commercialise the technology.
This Agreement answers the questions:
· What are you bringing to the partnership?
· What am I bringing to the partnership?
· What are we bringing to the partnership?
· How shall the partners share the work?
· How shall the partners share the spoils?
Co-operation Agreement -
Essential for co-operative development with an outside organisation - before the work starts.
The questions are similar to a Joint Venture Agreement:
· What are we trying to achieve?
· What are you bringing to the partnership?
· What am I bringing to the partnership?
· What are we bringing to the partnership?
· How shall the partners share the work?
· Who shall own the resulting technology?
· How shall the partners share the spoils?
Ownership is the most important thing to decide. Try to avoid "joint ownership". It causes unnecessary complications in administering the I.P. and in negotiating agreements. It's better to register the I.P. in the name of one of the partners, and define the sharing of the spoils in the agreement. Make provision for the other partner to take ownership of the I.P. if the other
doesn't want it, or fails to maintain it.
This outline of Agreements is a very bare skeleton only. Once you have negotiated the fundamentals, then an I.P. practitioner will draft the complex legal agreement. In fact it is advisable to have the I.P. practitioner present from the beginning of a project!
Derrick Hurlin has been involved with new technology and intellectual property for twenty-eight years. His skills include patenting and protection strategies, commercialising new technology, and negotiating and writing relevant agreements.
He has a Doctorate from the University of Pretoria in New Technology Management.
Contact details:
Dr D.C.R. Hurlin Pr.Eng.
P.O. Box 346, La Montagne, 0184
Tel./Fax: (012) 803-5579
Cell: 082 577 9817
e-mail: hurlin@icon.co.za
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