Help and advice for businesses

Invention by Graham Barker and Peter Bissell

Business owners will find these issues particularly relevant, but they are also useful for anyone involved in the invention process

When an employee has an idea, who owns it?

Much depends on the terms of the contract of employment. If the idea is directly relevant to the employer's activities or if producing ideas to improve the business is deemed part of the job, then the employer is likely to be able to claim whole or partial ownership of IP even if the invention or design has been developed in the employee's own time. Even if it isn't work related, the employer might argue that the work environment was an essential catalyst and that without it the IP would never have arisen.

When a consultant or subcontractor has an idea, who owns it?

It's common for designers to contribute ideas that dramatically improve the potential of an invention, so it's vital that the contract is very clear on who will own or control what, including additional or unforeseen exploitations of the IP. Generally speaking, if the supplier gets a fair rate for the job, then the purchaser owns it. But a supplier is likely to have a claim if payment doesn't materialise as agreed, or if he or she has agreed to share the risk by working for less than normal fees or for some deferred reward.

More advice  
The DTI's national business advice network: www.businesslink.org
Invention and innovation forum at www.ideas21.co.uk
Expert advice at www.invent.org.uk

When is it safe to publicise an invention?

It's usually best avoided unless done for a strategic purpose, for example to advertise an available product or attract investor interest when all other attempts have failed. Even so, never let anything into the public domain that isn't already covered by a suitable form of IP protection. Bear in mind too that the official publication of patent applications and design registrations counts as 'publicity' and many companies routinely search the patent system for information on competitor activity - often in itself a justifiable reason for patenting later rather than sooner.

Why license?

Consider licensing in (other people's inventions) if you're generating too few prospects through your own R&D resources. Consider licensing out (your own inventions) if you have good ideas but too few resources to exploit them effectively, or if the ideas don't fit your organisation's expertise or strategic plans. Licensing is a way of exploiting opportunities relatively quickly. Always remember that being late to market can have a huge effect on profitability.

What royalty rate can we expect?

There are too many variables to cover here, but it's rare for the rate to go outside 1-10% of net sales price (not retail price). Much higher is very unlikely except for short life, low-volume sales with no effective competition. Any lower may be a bad deal for the licensor unless the product will sell in huge volume and has low added value, in which case it may be quite acceptable. What seems a derisory offer in percentage terms may in reality translate into a very substantial income.

What licensing strategy is best?

Whichever strategy produces good win-win outcomes. There are three basic types of licence: exclusive, sole and non-exclusive. There are many strategies to be considered and the main options are to license by industry or application, by territory or by time lapse or time lapse exclusivity, or by any combination of these. A final - not necessarily last-ditch - option is to assign the IP. The assignees then effectively own the IP and can exploit it as they wish.

More information  
Free UK patent database: http://gb.espacenet.com
UK patent office: www.patent.gov.uk 

I own a design business, how can I exploit invention for business success?

Designers are obviously in a good position to be inventors themselves, but they can also help in the process of identifying potential in other people's often very raw ideas. Designers might consider seeking out early stage inventions to ‘adopt’, for example by joining an inventors’ club or by contacting the patentee of a promising but so far unexploited idea (published patents include applicant names and addresses). Through outstanding design, a designer could help to differentiate and even protect an invention that can’t be strongly protected by patent. Making good design a priority throughout development can greatly improve an invention's chances of attracting serious commercial interest.

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