Q: What makes an idea a commercial success?
A: An idea can become a commercial success if consumers believe there is value in that idea. The first step on the path to commercial success is a thorough evaluation of the idea itself: defining the novel aspects of the invention. Next, the invention has to be compared to what already exists in the market. If the idea is too similar to what already exists, it will be difficult to convince investors or consumers that the idea is worthy of investment or purchase. On the other side of the spectrum, sometimes the market is not ready for a truly novel and disruptive idea. There were some wonderful tailored medicine patent applications in the early 1990s that came 30 to 50 years too early to be commercial successes.
There are several different paths to commercial success, and they don’t always involve a patent application and the subsequent license of the patent to a commercial entity. IURTC has had success licensing technologies that are not patentable subject matter. For example, naturally occurring phenomena such as DNA or genetic material are not patentable, and the same is true for many software applications. In those cases, the strategy might involve licensing a trade secret or copyrighting the software, respectively.
Q: Where do most ideas fall short in the commercialization process?
A: Ideas fall short in the commercialization process when they have not been fully realized into a form where a consumer or licensee believes there is value. For example, licensees evaluating an innovation in the field of engineering want to see a basic prototype demonstrating the innovation in a way that the licensee can see a clear path to the final product and a market. Licensees evaluating a novel drug often want to see promising efficacy in animal models rather than preliminary in vitro results.
Sometimes a great idea from an inventor falls short because it already exists in written form and is hidden in the patent system, awaiting evaluation by a patent examiner.
Sometimes a good, novel idea falls short because the market won’t accept it for economic reasons. The science and innovation might be solid, but the economics might not be attractive. For example, say an inventor creates a widget that lasts for 15 years, and the one currently on the market lasts only 10 years. Assume the market is $5 million in sales per year. A licensee could show that it would cost $200,000 to change the manufacturing and supply-chain process, but the resulting profit would not cover those costs to switch to the new widget. Alternatively, the licensee could refuse the new invention because it could make more money selling the inferior widget every 10 years as opposed to selling the improved technology every 15 years. Planned obsolescence is a driving factor is some markets. As consumers, we don’t like to hear that term, but it is a reality.
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John Montgomery is a technology manager for the Indiana University Research and Technology Corp. The IURTC helps researchers across all campuses in the IU system bring promising research and innovations to market. Montgomery specializes in inventions within the engineering and life sciences industries. You can contact John at jsmontgo@iu.edu, 317-278-1958.
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