Maximising the Commercialisation Window


What is the Commercialisation window?

For universities and research organisations, the Commercialisation Window is the finite window of opportunity to find a commercial partner for a technology. The commercial partner might be a licensee, or an investor. 

For different technologies, the Commercialisation Window is influenced by different factors. The comments here relate to the Commercialisation Window for patentable technologies.


When does the Commercialisation Window open?

The Commercialisation Window opens when the technology transfer office (“TTO”) first becomes aware of the IP. This will often be upon an Invention Disclosure being lodged with the TTO. But, it can be sooner, when the TTO actually becomes aware of the project with which the IP is concerned.


When does the Commercialisation Window close?

For most patentable inventions, the Commercialisation Window closes firmly 6 months before national phase patenting is due to commence.

Why is that so? 

There is a “cast in stone” rule amongst universities and research organisations: the university will not pay national phase patent costs with its own funds, but looks to a commercial partner to fund national phase patent expenses. This “cast in stone” rule is best practice amongst North American, European, and Australian universities and research organisations.

The reason for this “cast in stone” rule is that universities cannot spend the substantial monies involved in taking IP through the national phase of patenting. 

To patent in every country that the IP should be prudently patented will cost, depending upon the number of countries where patent protection should be sought, USD$30,000 to $300,000, or more. 

A university cannot incur that level of expenditure for every parcel of IP that it would like to commercialise. To do so would be diverting monies from research, and other purposes, and this would not be acceptable.

A university therefore needs to find a commercial partner to fund taking a patent through national phase. If a commercial partner has been found at least 6 months before national phase, there is sufficient time to negotiate the commercialisation transaction under which funding for national phase patenting will be secured.

But, if no commercial partner has been found at least 6 months before national phase, there is insufficient time for a potential commercial partner to be found, for it to assess the technology, make a decision, to negotiate the terms of the transaction, as well as negotiate the contract recording the transaction. Accomplishing all these tasks in just 6 moths being impossible, any further efforts to find a commercial partner would be wasted. The TTO is better off dedicating its resources, particularly the time of its staff, into finding commercial partners for projects that are further away from the Commercialisation Window shutting. To continue commercialisation efforts upon a project where its Commercialisation Window has shut is to neglect the projects whose Commercialisation Window is still open.


How long is the Commercialisation Window open?

The duration that the Commercialisation Window is open is not long. 

If a provisional patent application is filed, followed by a PCT application 12 months later, there is then 18 months to national phase. 12 and 18 months is 30 months. Subtracting the last 6 months, the Commercialisation Window has a duration of 24 months. To this is added the time between the Invention Disclosure (or when the TTO first became aware of the invention), and the filing of the provisional application. 

When the Commercialisation Window is open for this 24 month period, there is a reasonable timeframe within which to find a commercial partner.

If no provisional patent application is filed, and only a PCT application is filed, the duration that the Commercialisation Window is open is still 24 months, since national phase commences 30 months later (30-6 = 24 months).


Best practice: filing both a provisional and a PCT application

If the duration that the Commercialisation Window is open is the same - 24 months – whether only a PCT application is filed, or a provisional application followed by a PCT application is filed, is there any advantage in filing two applications instead of one?

For most technologies, the filing of two patent applications, the provisional application, and the PCT application, is international best practice, and prudent. The cost of the two applications is comparatively modest, so both applications can be made without a commercial partner. A provisional application is an inexpensive application, which can be filed to set the priority date, and allow more research to be done. In the period that follows the filing of the provisional application the university or research organisation can continue to conduct further research and collect data, enabling the patent claims that will be made in due course to be as robust as possible.


Maximising the value proposition for a prospective licensee - and the value to the licensor

If a TTO proceeded itself to national phase, without yet having a commercial partner, the usual result will be choosing only a few countries in which to pursue patent protection. A TTO being unable to afford the significant patent prosecution costs of national phase, it would in this case typically choose just a few countries to prosecute the patent in, such as its own country, and the United States. Or, perhaps just its own country. The result is that what the TTO offers to a commercial partner is limited to just one or a few patents, in just one or a few countries. This will only have a modest value to the licensee, and will be reflected in the modest financial terms of any license.

But, by negotiating with a licensee while a patent application is still in the PCT stage there is the prospect of the maximum value accruing to both the licensor and the licensee. The licensee, which will fund the patent prosecution, will in its own interests seek national phase to proceed in all the countries where patent protection should be prudently pursued. 

The result is that patent protection is maximised. In turn the value of the IP the subject of the license is maximised. And in turn, the financial terms under the license will be maximised. A license of just a few patents will earn royalties in just a few countries. A license of a pending PCT application with the prospect of patents in many countries will earn significantly more royalties.


Commercialisation Window is a decision making tool

It is very important that a TTO is always mindful of the Commercialisation Window for each commercialisation project, and at which point in the windows’ opening each project lies.

In this way the Commercialisation Window becomes a decision making tool, helping the TTO make well informed decisions about a project. 

Realising the point at which a project lies in its Commercialisation Window might suggest that more resources should be devoted to the project to accelerate finding a commercial partner. Or, it might suggest that no further resources should be applied, and that the resources available to the TTO should be directed to other more worthwhile projects instead.