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Commercialising Government Intellectual Property

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Prepared for the 2010 Australian Innovation Festival, this presentation provides some unique insight into the challenges of commercialising government intellectual property in the Australian context.

Prepared for the 2010 Australian Innovation Festival, this presentation provides some unique insight into the challenges of commercialising government intellectual property in the Australian context.

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Commercialising Government Intellectual Property Commercialising Government Intellectual Property Presentation Transcript

  • Commercialising Government IP
    An Innovation Catalyst™ Seminar
    Prepared and Presented by
    Marcus Tarrant
    Managing Director
    Mission HQ Pty. Ltd. ATF the Innovate Trust
  • Contact Details
    Marcus Tarrant
    Managing Director
    Mission HQ Pty. Ltd. ATF the Innovate Trust
    Marcus.tarrant@missionhq.com.au
    +61 3 9005 9710
    www.missionhq.com.au
    © Mission HQ Pty. Ltd. All Rights Reserved
    2
  • Copyright ©2010 Mission HQ.
    The content, format, structure and communication technique utilised in this document are the intellectual property of Mission HQ Pty. Ltd.
    This document is strictly classified as “Commercial in Confidence” and intended only for recipients expressly authorised by Mission HQ. Any modification or distribution under altered expression, by any means, in its entirety or in parts, to any person without written approval from Mission HQ is expressly prohibited.
    Natural Persons or bodies corporate may not copy, retransmit, distribute, publish or otherwise transfer any copyrighted material to third parties or contractors without the express permission of Mission HQ.
    This document is intended to reflect MISSION HQ’s high-level overview of Innovation Commercialisation. It does not constitute formal professional advice or a recommendation to potential licensors, tax advisors, inventors or other third parties as to a course of action in respect of the processes addressed, and should not be relied on as such. All care is taken in the preparation of this document but MISSION HQ bears no responsibility as to the contents of this document and disclaims any liability with respect to its use or misuse.
    Intellectual Property & Disclaimer
  • Seminar Agenda
    © Mission HQ Pty. Ltd. All Rights Reserved
    4
  • Some inspiration
    Innovation is ugly, awkward, clunky, difficult and unknown. It lurks in garages, labs, fields, offices , cafes, pubs, the back of envelopes and around kitchen tables. Innovation is not about answers, but about finding the right problem. An innovation journey will take you through many loops, dead ends, and stale mates. It will force decisions you would rather not make. Innovation is a journey that changes both the destination and the traveller. Where will your journey begin?
    By Marcus Tarrant
    © Mission HQ Pty. Ltd. All Rights Reserved
    5
  • About Mission HQ Pty. Ltd.
    © Mission HQ Pty. Ltd. All Rights Reserved
    6
    Some recent past clients of Mission HQ and the team:
  • Mission HQ Overview
    The team have undertaken the following projects
    Federal and State Government
    Department of Defence (DSTO) – Technology Transfer Advisory Group
    Department of Industry and Resources (WA) – Investor Ready Programme Design and Opportunity Evaluation Framework
    Department of Land ‘Landgate’ (WA) – Innovation programme design, and commercial engagement programme (Business Associations), technology commercialisation programme
    CSIRO – IP management process
    NICTA – Audinate Capital Raising 4.2m
    CRC’s
    CRC-ACS, CRC for Polymers, Dairy CRC
    VC’s
    Innovation Capital, Starfish Ventures – Austhink, Audinate, Ceram Polymerik etc.
  • Why do we want to commercialise?
    Commercialise Vs Impact
    Mini-Whiteboard session
    © Mission HQ Pty. Ltd. All Rights Reserved
    8
  • Queensland government rationale for commercialisation
    Under commercialisation there is considerable scope to reduce the overall cost, or increase productivity in the delivery of Government services, thereby freeing up funding for other purposes — for example, to provide improved social programs, to invest in economic projects, to reduce and/or limit increases in taxes, reduce debt and so on.
    © Mission HQ Pty. Ltd. All Rights Reserved
    9
  • Commercialisation foundations
    © Mission HQ Pty. Ltd. All Rights Reserved
    10
  • what are intangible assets?
    intellectual assets (IA)
    intellectual
    property (IP)
    intellectual capital (IC)
    patented technologies
    trade marks
    designs
    copyright
    databases
    trade secrets
    key skills
    know-how
    processes
    market data
    information
    un-recorded inventions
    data
    business relationships
    licenses
    branding
    reputation
    human resources
    Do I have something to commercialise?
  • Characteristics of Intellectual Property Assets
    IP assets are divisible through shared ownership, licensing and royalty arrangements.
    IP tends to be cumulative in nature.
    It is also difficult to have an exclusive ownership of IP – information and ideas, once exchanged, are difficult to take back
    Unlike physical assets, the value of IP is not necessarily diminished over time or through use.
    IP can emerge from a variety of sources. Within government agencies, employees, contractors and funded bodies commonly create IP.
    Different professions think about IP differently, for example, lawyers refer to IP as having a property right in law; accountants refer to it as identifiable intangible assets; and managers think of it as an investment which has no physical existence.
    © Mission HQ Pty. Ltd. All Rights Reserved
    12
  • Why is IP Important?
    IP is a resource that can be used, managed and commercialised to provide economic, social and environmental benefits for government, the community and business.
    If managed correctly, some of the benefits that can spring from IP resources include:
    revenue or royalties from commercialisation
    expansion of business opportunities
    improved competitiveness
    economic growth and job creation in the jurisdiction, if IP is commercialised
    social and environmental benefits from the broader take-up of IP.
    © Mission HQ Pty. Ltd. All Rights Reserved
    13
  • State of Patent activity in the State of Victoria
    Patents at PCT or later filed in the name “State of Victoria”
    (WO 2002/075618) DATA STORAGE SYSTEM 26.09.2002 G06Q 10/00 PCT/AU2002/000320 THE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENT FOR AND ON BEHALF OF THE CROWN IN RIGHT OF THE STATE OF VICTORIA  
    (WO 2002/075616) IDENTIFICATION AND AUTHENTICATION DEVICE 26.09.2002 G06F 21/00 PCT/AU2002/000317 THE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENT FOR AND ON BEHALF OF THE CROWN IN RIGHT OF THE STATE OF VICTORIA  
    (WO 2002/075615) ELECTRONIC FINANCIAL INSTRUMENT 26.09.2002 G06Q 40/00 PCT/AU2002/000316 THE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENT FOR AND ON BEHALF OF THE CROWN IN RIGHT OF THE STATE OF VICTORIA  
    (WO 2002/075575) SECURE DATA LOADING METHOD 26.09.2002 G06F 21/00 PCT/AU2002/000318 THE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENT FOR AND ON BEHALF OF THE CROWN IN RIGHT OF THE STATE OF VICTORIA  
    (WO 1988/000056) COMPOSITION AND METHOD FOR IMMUNOLOGICAL CASTRATION AND SPAYING 14.01.1988 A61K 39/00 PCT/AU1987/000199 THE STATE OF VICTORIA TILBROOK, Alan, John FAIRCLOUGH, Robert, John  
    (WO 1987/006828) BIOCOMPATIBLE IMPLANTS 19.11.1987 A61K 9/00 PCT/AU1987/000139 THE STATE OF VICTORIA MONASH MEDICAL CENTRE VICTORIAN COLLEGE OF PHARMACY LIMITED
    (WO 1986/007236) SNARES 18.12.1986 A01M 23/34 PCT/AU1986/000157 THE STATE OF VICTORIA STEVENS, Peter, Lindsay ROBINSON, John, L.  
    (WO 1986/006382) AVIAN ENCEPHALOMYELITIS ANTIBODY DETECTION 06.11.1986 G01N 33/569 PCT/AU1986/000114 THE STATE OF VICTORIA SMART, Ian, James  
    (WO 1985/001657) TREATMENT OF ANIMAL DIARRHOEA 25.04.1985 A61K 33/14 PCT/AU1984/000188 THE STATE OF VICTORIA JERRETT, Ian, Vincent  
    © Mission HQ Pty. Ltd. All Rights Reserved
    14
  • A framework for assessing opportunities
    © Mission HQ Pty. Ltd. All Rights Reserved
    15
  • Detailed Opportunity Assessment Framework
    A detailed framework has been developed to assist in the assessment of potential opportunities.
    Further details on the assessment framework have been removed from this presentation. Contact the Author for further details
    © Mission HQ Pty. Ltd. All Rights Reserved
    16
  • Commercialisation Considerations
    © Mission HQ Pty. Ltd. All Rights Reserved
    17
  • -18-
    Tax
    What is the best structure for tax?
    What is the best way to minimize tax at exit? (all parties, ourselves)
    How to work with tax-exempt partners?
    How to minimise tax on IP transfer?
    What tax incentives are available to leverage? What structures do we need to put in place to ensure we are tax effective?
  • -19-
    Capital Rasing
    Do we have the money?
    What is our/their valuation?
    What VC funds have capital?
    Can we support a cash crisis?
    Can we support/maintain our equity moving forward?
    Can the opportunity support the time to injection?
    Where is the best place to get cash from?
  • -20-
    Experience
    Has any one harvested commercialisation activities before?
    Has anyone managed high growth before?
    Do we understand our IP and value in the deal?
    Are our cultures complimentary?
  • -21-
    Network
    Does our network have the pieces of the pie?
    Capital
    Management
    Start-up
    Experience
    Sales channels
    I.e: can we acquire resources via the network?
  • -22-
    Excludability
    What is the IP landscape, can we register patents?
    Can we create an industry standard? (individually, with market leaders)
    Will this have conflicts with the Trade Practices Act, National Competition Policy etc?
  • -23-
    Complimentary Assets
    Does the suitor have what we don’t?
    Cash?
    Sales Channel?
    Experience?
    IP?
    Culture?
    International access?
    History of success?
  • -24-
    Risk
    Do we have a large appetite for risk?
    Can we have a large appetite? What are the implications of a high risk deal going sour?
    Do we have the time and resources?
    What is the opportunity cost?
    How to we get cash out? Dividends/Liquidity event.
  • -25-
    Politics
    Personal agendas
    Emotional attachment to opportunities (When to pull the pin)
    Government policy agenda
    I don’t want to work here but I want to keep my benefits?
    Secondment, what are the impacts? Morale, entitlements?
  • -26-
    Market Forces - Porter’s 5 forces
    The threat of new entry
    The power of buyers
    The power of suppliers
    The threat of substitutes
    Competitive Rivalry
    Legislation/policy change
  • All commercial transactions are hard, time consuming and expensive
    There are many facets to any deal, this is further complicated by the checks and balances associated with government.
    Structure
    Ownership
    Valuation
    Due diligence
    Human resources
    Capital
    Politics market forces
    Competition
    Regulation
    etc
    Ministry approval
    Treasury approval
    Imposed restrictions
    Auditing
    Levels of control
    Extra due diligence
    Policy alignment
    -27-
  • Alternative commercialisation models
    © Mission HQ Pty. Ltd. All Rights Reserved
    28
  • IP Ownership Options
    © Mission HQ Pty. Ltd. All Rights Reserved
    29
  • -30-
    Alternate commercialisation modes
  • -31-
    How are commercialisation strategies actually chosen?
    Complementary asset environment
    Others
    Go where the easy money is
    Past Experience
    Internal constraints & politics
    Business network of the entrepreneur
    Internal Innovation (intrepreneurship model)
    Risk adversity
    Market forces
    etc
  • -32-
    Commercialisation Strategy
  • -33-
    Some questions to ask…
    Is the opportunity real??? How big is the gap?
    What is the best options for my IP?
    What are the benefits of licensing as opposed to assigning rights to my IP?
    How do I avoid getting into a situation were I am competing with the parties I have licensed to?
    Does this new IP complement my existing core business?
    Do I have the right business capabilities to commercialise my product to its best advantage?
    Do we wish to commercialise to a world market? (ask all the questions again)
    Can we secure ownership of the IP?
    What is our appetite for risk?
    How much money do we wish to make?
    How much control do we need/want?
  • Guidance from the Queensland Government
    © Mission HQ Pty. Ltd. All Rights Reserved
    34
  • Queensland Commercialisation Guidelines
    Major stand-alone activities will be established as business units and
    operated through separate Trust Funds.
    Arrangements will achieve at least a Budget neutral outcome.
    Policy and regulatory roles will be separated from commercial activities within the Portfolio Department.
    Accrual accounting will be adopted and management information systems will be enhanced to facilitate performance monitoring.
    Commercial disciplines will be applied (e.g., Government Service Obligations (GSOs); dividend policy; commercial pricing arrangements;
    performance monitoring; taxation; capital structure).
    Business units will utilise the enterprise bargaining framework to work towards best practice in industrial relations and human resource management. This may involve separate award or industrial agreement coverage.
    © Mission HQ Pty. Ltd. All Rights Reserved
    35
  • Particular challenges for Government and Statutory Authority Innovation
    Competitive neutrality
    Enabling free choice of supplier by clients;
    Pricing at efficient market rates;
    Setting performance targets in terms of acceptable rates of return;
    The payment of dividends and tax equivalent payments.
    Giving management more autonomy and at the same time making them more accountable for performance.
    © Mission HQ Pty. Ltd. All Rights Reserved
    36
  • Selecting what can be commercialised in the government context
    Consumers of the goods and services can be identified;
    Charging for the goods and services is technically feasible;
    Users are in a position to influence their consumption; and
    There are no public interest or equity reasons why charges should not be attached to the goods or services that are being produced.
    © Mission HQ Pty. Ltd. All Rights Reserved
    37
  • Where to look for commercialisation opportunities
    Software development projects where the agency owns the intellectual property
    Where excess capacity may exist (for example server or back-up services)
    Tools or techniques that have been developed to enable improved performance of day to day functions
    Leverage of skills or capability.
    © Mission HQ Pty. Ltd. All Rights Reserved
    38
  • How can we assist?
    Utilisation of our opportunity assessment framework.
    Structuring commercialisation compliance frameworks for government agencies and statutory authorities.
    Identification of potential intellectual property or intellectual assets for commercialisation.
    Training commercialisation teams.
    Executing on individual opportunities.
    © Mission HQ Pty. Ltd. All Rights Reserved
    39
  • -40-
    Parting thought
    “ I was seldom able to see an opportunity until it had ceased to be one ”.
    Mark Twain