Getting Started Entrepreneurship (MGT-271) Lecture 9-11 This Lecture Intellectual Property Rights Forms of intellectual property Patent, its types and steps to obtaining patent Potential financing sources for a new venture Business Incubators 1
Some Important Assets in an Enterprise Social Capital Financial Capital Human Capital Intellectual Property Intellectual Property (IP) is any product of human intellect that is intangible but has value in the marketplace. It is called intellectual property because it is the product of human imagination, creativity and inventiveness. 2
Determining what IP to legally protect? Main questions to consider: Is the IP in question directly related to the competitive advantage? Is the item product valuable in the marketplace? Is it worth spending money on it?(considering the costs involved and value of the idea) How long will it take the competition to come up with a better version? Important Considerations All IP not properly identified Not using IP as part of overall success plan Common IP mistakes Value of IP not fully recognised IP not legally protected 3
Four Key Forms of Intellectual Property Patents Trademarks Copyrights Trade Secrets Patents Grant from federal government conferring the rights to exclude others from making, selling, or using an invention for the term of a patent. Three types of patents Utility patents (17-20 years) Design patents (14 years) Plant patents (20 years) 4
4 Requirements of Utility Patent Novel Useful Inventive step (non-obvious) Reproducible Combination of multiple forms of IP in a single product Acknowledgement: Dr. John Bates, University of Melbourne 5
Rights of Patent Only inventor of product can apply for patent If joint invention, all parties should apply for patent together Two Exceptions Employer has the right to apply for patent through Assignment of Invention Agreement signed by employee as part of employment agreement Rights to apply for an invention can be sold Assignment of Invention Agreement 6
Important Organisations Intellectual Property Organisation (IPO) Pak. Patent and Trademark Office (PTO) General Agreements on Tariffs and Trade (GATT) (past) World Trade Organisation (WTO) (current) World Intellectual Property Organisation (WIPO) The Patent Cooperation Treaty (PCT) Process of Obtaining a Patent Make sure invention is practical Record Keeping throughout the process Hire a patent attorney Conduct patent search File patent application Obtain a decision from the authority 7
Components of Patent Application Generally two parts to a patent application Specifications Explanation of usefulness of the invention Description of existing similar technologies Emphasis on comparison of invention with existing ones Detailed description of the invention Claims Include feature or combination of features that is protected by patent Define and limit patented invention Other services provided by PTO Disclosure Document Program Establishes date of conception of the invention Supported by clear and concise description with evidence (photos, logbook etc) Defensive Publication Program Protection of any idea for which a patent is not desired Prevents anyone else from patenting this idea 8
FINANCING SOURCES FOR NEW VENTURES Financing sources for businesses Trade credit Commercial banks Finance companies Factors Leasing companies Mutual savings banks and savings and loans associations Insurance companies These sources do not normally favour start-up firms 9
Potential Financing Sources for Start-up Ventures Equity Financing (Equity Capital) No legal obligations to repay the principal amount or pay interest on it Requires sharing ownership and profits with funding source Public Stock Offerings Corporations raising capital by going public Sale of securities in the stock market Private placements Small non-public offerings to a small number of chosen investors Cheaper than public offering The Venture Capital Market Valuable and powerful source of equity funding for new ventures Experienced professionals providing full range of financial services which include Capital for start-ups and expansion Market research and strategy Management consulting functions, audit & evaluation Contacts with prospective customers, suppliers & other links Assistance in negotiating technical agreements Help in employee recruitment, risk management, effective insurance programs Counselling and guidance in complying with government regulations 10
Criteria for Evaluation of New Venture Proposals Entrepreneur s Personality Entrepreneur s Experience Characteristics of the Product or service Characteristics of the market Financial Considerations Nature of the Venture Team Business Angels/Angel Investors Wealthy people looking for investment opportunities Angels are typically entrepreneurs, retired corporate executives, or professionals who have a net worth of more than $1 million and an income of $100,000 a year. They are selfstarters. And they are trying to perpetuate the system that made them successful. (William E. Wetzel, Jr.) 11
Motivations for Angel Investors Reduced amount of investment means reduced amount of risk Creation of jobs in areas of high unemployment Development of technology for social needs Urban revitalization Minority or disadvantaged assistance Personal satisfaction BUSINESS INCUBATORS 12
What is an Business Incubator? a physical location in which a new business can incubate Provide a unique mix of advice services and support to nurture the business Create employment, commercialise new technologies and aid in the development of local economies Operate across the community in general and specific areas including art and craft, business and manufacturing, agriculture, biotech, food production, IT and technology Acknowledgement: Prof. Tony Bacic, Director Bio21 & PCBRC, School of Botany, University of Melbourne Incubators Services Provided Business advice Business services Business support strategic planning, marketing and sales, management, business development secretarial/admin support mentoring, networking, synergies Acknowledgement: Prof. Tony Bacic, Director Bio21 & PCBRC, School of Botany, University of Melbourne 13
Key Features of Biotechnology Incubators Many biotech businesses develop within the setting of universities and research institutes A means of achieving technology transfer from academic and research institutions into commerce and industry Provides access to labs, expertise, infrastructure to support companies in early stages More expensive to establish and operate due to scientific infrastructure Higher barriers to entry due to longer lead times for product development Potential to generate high value products Acknowledgement: Prof. Tony Bacic, Director Bio21 & PCBRC, School of Botany, University of Melbourne Who should join an incubator? Spin-off companies from university communities Local institutions / communities Client service providers eg. patent attorneys, IP lawyers, marketing Local office for out of town business or major corporations Small business Acknowledgement: Prof. Tony Bacic, Director Bio21 & PCBRC, School of Botany, University of Melbourne 14
Benefits of Business Incubators For industry Collaboration and networking opportunities Location Access to well educated workforce Potential to build synergies Access to technology and expertise For students Career and development opportunities Real world examples for case studies Opportunities for broader experience and knowledge Introduction to entrepreneurship and professional careers For University Income Strengthen links with the business community Community / economic contribution Bring technological advances and products to market Breadth of experiences and industry interactions Potential inter programs between science and industry Acknowledgement: Prof. Tony Bacic, Director Bio21 & PCBRC, School of Botany, University of Melbourne Business incubators affiliated with universities 15