Commercialising Government Intellectual Property
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The document presents an overview of innovation commercialization by Mission HQ, highlighting the process and importance of managing intellectual property (IP) for economic and social benefits. It outlines various commercialisation considerations, including tax strategies, funding options, and the unique challenges faced by government agencies. Additionally, the document provides a framework for assessing opportunities and emphasizes the importance of identifying and leveraging intellectual assets.
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Commercialising Government Intellectual Property
- 1. Commercialising Government IPAn Innovation Catalyst™ SeminarPrepared and Presented by Marcus TarrantManaging DirectorMission HQ Pty. Ltd. ATF the Innovate Trust
- 2. Contact DetailsMarcus TarrantManaging DirectorMission HQ Pty. Ltd. ATF the Innovate [email protected]+61 3 9005 9710www.missionhq.com.au© Mission HQ Pty. Ltd. All Rights Reserved2
- 3. 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
- 4. Seminar Agenda© Mission HQ Pty. Ltd. All Rights Reserved4
- 5. 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 Reserved5
- 6. About Mission HQ Pty. Ltd.© Mission HQ Pty. Ltd. All Rights Reserved6Some recent past clients of Mission HQ and the team:
- 7. Mission HQ OverviewThe team have undertaken the following projectsFederal and State GovernmentDepartment of Defence (DSTO) – Technology Transfer Advisory GroupDepartment of Industry and Resources (WA) – Investor Ready Programme Design and Opportunity Evaluation FrameworkDepartment of Land ‘Landgate’ (WA) – Innovation programme design, and commercial engagement programme (Business Associations), technology commercialisation programmeCSIRO – IP management processNICTA – Audinate Capital Raising 4.2mCRC’sCRC-ACS, CRC for Polymers, Dairy CRCVC’sInnovation Capital, Starfish Ventures – Austhink, Audinate, Ceram Polymerik etc.
- 8. Why do we want to commercialise?Commercialise Vs ImpactMini-Whiteboard session© Mission HQ Pty. Ltd. All Rights Reserved8
- 9. Queensland government rationale for commercialisationUnder 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 Reserved9
- 10. Commercialisation foundations© Mission HQ Pty. Ltd. All Rights Reserved10
- 11. what are intangible assets?intellectual assets (IA)intellectual property (IP)intellectual capital (IC)patented technologiestrade marksdesignscopyright databasestrade secretskey skillsknow-howprocessesmarket datainformation un-recorded inventionsdatabusiness relationshipslicensesbrandingreputationhuman resourcesDo I have something to commercialise?
- 12. Characteristics of Intellectual Property AssetsIP 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 backUnlike 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 Reserved12
- 13. 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 commercialisationexpansion of business opportunitiesimproved competitivenesseconomic growth and job creation in the jurisdiction, if IP is commercialisedsocial and environmental benefits from the broader take-up of IP.© Mission HQ Pty. Ltd. All Rights Reserved13
- 14. State of Patent activity in the State of VictoriaPatents 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 Reserved14
- 15. A framework for assessing opportunities© Mission HQ Pty. Ltd. All Rights Reserved15
- 16. Detailed Opportunity Assessment FrameworkA 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 Reserved16
- 17. Commercialisation Considerations© Mission HQ Pty. Ltd. All Rights Reserved17
- 18. -18-TaxWhat 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. -19-Capital RasingDo 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. -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. -21-NetworkDoes our network have the pieces of the pie? CapitalManagementStart-up ExperienceSales channelsI.e: can we acquire resources via the network?
- 22. -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. -23-Complimentary AssetsDoes the suitor have what we don’t?Cash?Sales Channel?Experience?IP?Culture?International access?History of success?
- 24. -24-RiskDo 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. -25-PoliticsPersonal agendas Emotional attachment to opportunities (When to pull the pin)Government policy agendaI don’t want to work here but I want to keep my benefits?Secondment, what are the impacts? Morale, entitlements?
- 26. -26-Market Forces - Porter’s 5 forcesThe threat of new entry The power of buyersThe power of suppliersThe threat of substitutesCompetitive Rivalry Legislation/policy change
- 27. All commercial transactions are hard, time consuming and expensiveThere are many facets to any deal, this is further complicated by the checks and balances associated with government.StructureOwnership ValuationDue diligenceHuman resourcesCapital Politics market forcesCompetition Regulation etcMinistry approval Treasury approval Imposed restrictionsAuditingLevels of control Extra due diligencePolicy alignment-27-
- 28. Alternative commercialisation models© Mission HQ Pty. Ltd. All Rights Reserved28
- 29. IP Ownership Options© Mission HQ Pty. Ltd. All Rights Reserved29
- 31. -31-How are commercialisation strategies actually chosen?Complementary asset environmentOthersGo where the easy money isPast ExperienceInternal constraints & politicsBusiness network of the entrepreneurInternal Innovation (intrepreneurship model)Risk adversityMarket forcesetc
- 33. -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?
- 34. Guidance from the Queensland Government© Mission HQ Pty. Ltd. All Rights Reserved34
- 35. Queensland Commercialisation GuidelinesMajor stand-alone activities will be established as business units andoperated 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 Reserved35
- 36. Particular challenges for Government and Statutory Authority InnovationCompetitive neutralityEnabling 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 Reserved36
- 37. Selecting what can be commercialised in the government contextConsumers 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; andThere 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 Reserved37
- 38. Where to look for commercialisation opportunitiesSoftware development projects where the agency owns the intellectual propertyWhere 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 functionsLeverage of skills or capability.© Mission HQ Pty. Ltd. All Rights Reserved38
- 39. 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 Reserved39
- 40. -40-Parting thought“ I was seldom able to see an opportunity until it had ceased to be one ”.Mark Twain