Embrace Technology and Innovation

Licensing

Inventors who want to make money from their inventions have two choices: either manufacture and market the invention themselves or license it (sell the right to commercially develop or use the invention to someone else). Your decision in this matter is largely determined by the invention itself and your personality. Some innovations, because of their complexity or exorbitant production costs, automatically lend themselves to licensing. However, if your invention is relatively straightforward and you have the motivation to produce and sell it yourself, then becoming an entrepreneur makes sense. There are pros and cons on either side:

Licensing your Invention simply means you have agreed to let someone else commercially use or develop your invention for a period of time; in return, you receive either a one-time payment or royalties. The advantage of licensing is that someone other than you assumes all the business risks, from manufacturing to marketing to preventing patent infringement. The disadvantage is that you lose control and your odds of overwhelming financial success are more limited; royalties typically range from 2% to 10% of net revenues.

Becoming an Inventor-Entrepreneur allows you to completely control the production and marketing of your invention. The financial rewards are potentially greater, but so are the risks. If you thrive on challenges, uncertainty and multi-tasking, then go for it. Just be prepared for many sleepless nights and intrusions into your personal life.

In either case you will need money early on to create a prototype. Beyond that, your personal investment depends on the option you choose and may include budget allocations for soliciting/negotiating with potential licensees, creating tools or molds, marketing your invention, mass-producing your product, investigating distribution channels and advertising.

Technology Transfer

Researchers at universities, hospitals, nonprofit organizations and for-profit companies continually generate groundbreaking technologies that have the potential for improving the way we live, work and play. The organizations or individuals that invent these technologies are free to “commercialize” them by creating their own products that they sell directly to consumers.

Universities, which typically do not have the resources or expertise to produce and market products from their technologies, may hand off their intellectual property rights to the for-profit sector for commercialization in a process known as “technology transfer.” A government mandate requires them to do so if the technology in question was developed using federal funds.

The industrial and business sectors have long practiced technology transfer, but universities are relatively new to this process. Prior to 1980, any invention discovered or created with federal funds belonged solely to the U.S. government. Passage of the Bayh-Dole Act gave nonprofit institutions and small businesses the right to develop and profit from inventions sponsored by federal funds.

Technology transfer is today big business on university campuses, and Florida’s public universities provide some of its most fertile environments. In fact, three of them — University of Florida, University of South Florida and University of Central Florida — were among the world’s top 41 academic patent producers in 2015.

Tags: Florida Small Business, Business Basics