Smart Strategies for Startup Entrepreneurs to Acquire Innovation / Intellectual Property

Entrepreneurs in India by & large believe that innovation & new product development is beyond them and requires huge investments. But nothing can be further from the truth if one works smartly through this.India is blessed with a lot of Govt. Research Labs., some are doing stellar work in terms of understanding technology challenges, building know-how to solve a problem & creating new products or technologies.

While one can be skeptical by saying that R&D Labs are not at the “cutting edge of technology” and “market savvy”, there are enough talented & passionate people who want their research to see the light of the day and they are the ones that any kind of entrepreneur should look out for!

So what is a good starting point for an entrepreneur to identify technologies or people who can build meaningful products & solve problems? First is to narrow down the technology area / business segment one is interested in and then search for research labs / institutes which are carrying out research in that area. Alternately browse through the technologies / know how available at premier labs & institutes such as IISc (Bangalore), UICT (Mumbai), NCL (Pune), the IITs or DRDO (Defence Research & Development Organisation).

You will be amazed at the wide range of technologies & products developed at the IITs or labs such as DRDO which develops new products to take care of military requirements but at the same time create products which have mass appeal. Some of the products innovated at DRDO are Multi Purpose Foldable Army Field Cot, Explosive Detection Kit, RO based Water Purification System, Electrochromic Windows (can be darkened or lightened electronically)!

One of the most compelling factors for an entrepreneur to consider is the low cost in acquiring most of these technologies. A technology is typically provided by an Institute on a non exclusive basis with low or zero upfront payment and royalty rates which typically range from 2% to 5% of sales price (typically ex-factory price).

Do bear in mind that in most cases, the research institute will not be keen to sign an exclusive licensing deal since they are concerned about lack of interest by the concerned business in commercialising the technology after signing the deal. So the best thing is to get most out of the deal in terms of Know How transfer along with the technology by getting the concerned Inventor/s to spend time in your set-up to sort out teething problems, train your personnel / key staff and assist in testing the product in their set-up / recognized testing facilities.

While I was involved in a study to analyse technology licensing deals in Agriculture sector in 2010 whereby we analysed deals with 19 Govt. Research Institutes, we found out that there are some Research Institutes which charge zero or very low fixed technology fee such as Rs.20,000 irrespective of the technology involved while there were others which charged high upfront fee going upto to Rs.15 lac for a single technology. But one thing I am certain about, the Research Institutes are more than keen in most cases to find an industry / business partner to “commercialise the technology” that benefits the society and are not bothered about “how much they make” since they are Govt. funded and making money is not their first priority. So is it so rosy out there!

Let me warn you that you have to be realistic in terms of expectations and should have the ability to “separate wheat from chaff” so that you know what exactly what you are getting into.

I have come across a number of large & medium businesses who have shared with me that they are more than willing to partner with Research Institutes but since most of them lack a proper business interface and take too long to sign an agreement for technology transfer / development (which can even take upto a year) it is hard to move forward with these Institutes.

Also one of the other major issue as I see it is the over zealousness to sell technologies by claiming that they are ‘market ready’ but most of them are actually at ‘lab scale’ which means it will need a lot more testing & development before it can be launched in the market.

One irritant to contend with could be the non availability of proper documentation & drawings of the technology development process and lab / field reports with most Institutes.

Also there may be cases where no patent has been filed or may have been abandoned which you have to contend with although that mindset of not protecting Intellectual Property is fast changing.

Here are some handy tips in dealing with Govt. Research Institutes:

1. Insist on meeting the actual Inventor/s (He/She may have retired for all you know) of the product/technology with your technical personnel / Advisor which will provide you the context in which the technology was developed, the problems which it can possibly address and the actual status of technology development
2. Find out whether the technology has been patented and try getting the patent no. / application no. Once you have the application no., you can go to Patent Office website on www.ipindia.nic.in and find out the present status of the patent application i.e. whether it has been published, abandoned, examined or granted with details. You can run into situation where application no. is not provided / available easily so one can also search with the name of Inventor / Institute. You can also find out if the patent has been licensed to someone by visiting the Patent Office and referring to the Patent Register
3. Find out upfront, what will be the support provided for the technology concerned in terms of further development, testing, use of their Lab / Equipments and hand holding and whether the same will be free or at a cost. Do note that Institutes are keen to show results and if you can provide specific feedback they may be willing to consider further investment in development or testing.
4. Also try to build a rapport with the concerned Inventor/s and Technology Transfer / Intellectual Property head (who may be a Scientist in charge in most cases) by following up and providing them with market / customer feedback which is what they will value the most
5. Lastly, if the key terms are agreeable to you and want certain changes / deletion in the Agreement, then raise the same early so that they can be dealt with faster rather than having to wait till the end!!

About the Author

Rajeev Surana ([email protected]) who is the founder & director of Scinnovation Consultants Pvt. Ltd., Mumbai a consulting & professional services firm which works on “idea protection to commercialisation”. Rajeev is a qualified Patent Attorney has a passion for taking innovations to the market and serves on the board of Licensing Executive Society,India chapter & Joint Secretary at Patent Agents Association India.