As the Singapore tech ecosystem advances in scientific innovations (or “deep technologies” in tech speak), it becomes more imperative for entrepreneurs to discover the value of integrating science-based intellectual property (IP) into their business models.
But where does an entrepreneur start in considering science IPs, especially when a founder has no scientific background? For starters, there are readily available IPs from institutions in Singapore that are awaiting entrepreneurial collaborations that can bring them to market.
To help kick start this process, I spoke with Dr. Sze Tiam Lin, senior director of Intellectual Property Intermediary (IPI) Singapore, a government unit that facilitates the commercialization of science-based IP, to understand the key considerations that an entrepreneur needs to think about when commercializing an IP from a Singapore institution.
Benefits of taking IPs from institutions
According to Dr. Sze, institutions create scientific IPs mainly for “scientific discovery and novel technology development in pursuit of knowledge creation for academic recognition, economic or societal impact.”
For IPs that show commercial potential, IP protection is sought through patent application, copyright, and know-how protection. This allows the IP to be licensed out to the industry, while allowing the creators to continue researching on the area.
In Dr. Sze’s opinion, taking an IP from an institution have many benefits and is applicable to any business, be it a startup or a multinational company.
First, it supports the company’s strategy to create a defensible product. Having a technology that is not easily replicable and protected by patents gives more value.
A proof of concept reduces the risk of a failed product and curtailed development time. To him, it is not necessary to reinvent the wheel, but efforts should be focused on cultivating what has already been developed and accelerating the product to commercialization.
Getting support from the institution has shown intangible benefits as well. “Having an institution’s name adds prestige and credibility, and also lends weight to startups to raise money,” Dr. Sze said. Furthermore, accessing a network of researchers is a boon to help a startup develop their IP.
How to take an IP to the market
To easily navigate the many IPs available, startups can turn to a directory of institutions and their IPs.
Once an IP has been identified, entrepreneurs should familiarize themselves on the Technology Readiness Level (TRL) scale. Dr. Sze explains that most IPs are between TRL 3 (i.e. proven proof of concept) and TRL 9 (market-ready).
As for popular IPs, he notes a high demand for IPs in electronics and ICT, energy and environment, materials and chemicals, health and personal care, manufacturing, and food and nutrition.
Startups will also be happy to know that there are government grants available for support.
Preparing to meet the owners of the IP
Before engaging the institution to discuss IP licensing, entrepreneurs should not come unprepared.
Dr. Sze suggests:
“Research about the technology, its state of the current technology available in the market (e.g. specifications, protocols, public information, product sheets, and patent abstracts and texts, and all other information are relevant to the technology).
Following that, have a business plan and objectives in mind. Do identify, protect, and manage your IP. Know [your] strengths and limits, both financially and operationally (manpower and capabilities). Lastly, be clear of the industry/market needs and how the IP fits in.”
Discussing the components of the licensing agreement
I asked Dr. Sze what clauses are included in the licensing agreement that an entrepreneur should expect. He recommends seeking an IP legal firm’s advice but highlighted some common clauses that an entrepreneur should take note.
For example, there are different types of license:
- Exclusive: Licensor will not be able to grant licenses to other parties
- Non-exclusive: Licensor is not restricted from granting similar licenses to other parties
- Sub-licensed: Licenses are granted to other parties by head licensee, where the rights are no broader than the head licensee’s own and expires along with the head license
- End user: For licensee’s use, not for further development and incorporation into products for sale
- Evaluation/option: Short-term license for licensee to evaluate IP for suitability of use with no rights to commercialize
He also recommended clearly defining rights and grants to avoid ambiguity. “Rights is about what IP is being licensed and grants is about what can be used with the licensed IP. Grants may cover the scope of the license grant, purpose, territory (worldwide, certain geographic regions, or specific countries), field of use (all or specific fields), and valid claims,” Dr. Sze explained.
He also shared a good practice: specifying in the agreement who owns what IP and/or technologies in a situation where the licensor and licensee are in a joint venture to develop a product together.
Other things that will be discussed are payments (upfront fees, royalties, milestone payments, etc.), performance milestones (proof of concept or commercial prototype), term (allowable lifespan of the patent), and termination clauses written by both parties.
Convincing the IP creators to hop onboard
In my interviews with startups that deal with IP commercialization, I found literally all had the IP creator as part of their respective teams. So, is it vital for startups to have the IP creator as a co-founder?
Dr. Sze agrees that having the IP creator as part of the team boosts the company’s credibility and ability to develop the IP further. “The decision is up to the IP creator [to join the company]. Factors that may potentially convince the IP creator would be financial opportunity, alignment with one’s long-term career goals and plans, a promising and compelling business plan, and chemistry with the startup founder.”
Advice to startups on managing licensed IP
Dr. Sze suggests startups to periodically review how their own patented assets align with their business strategy. “If they are not aligned, take steps to see whether internal R&D or in-licensing is able to strengthen [the case].”
He also recommends innovative alternatives to keep developing. “License IP or spin off a company if the startup has the core competency to further develop the technology on their own and bring it to commercialization. Or consider a JV with the inventor if they do not have the core competency to further develop the IP, thereby locking in the brain of the technology to the company.”
He does not recommend taking an IP that proves no competitive edge.
Regarding the IP creator, one has to be aware of the risk of unavailability and low commitment level. At the same time, he encourages a startup to build a good relationship with the IP creator, as some may be willing to continue helping even after they have left the organization.
This is the second article of the Science and Technology Development Singapore series, where the author delves into the development of science and technology in the country.
This article first appeared on Tech in Asia.