Commercialization of Patents in Process Systems

The commercialization of patents provides the opportunity to bring strong competitive economic advantages to companies and individuals. Proper stage gating of ideas ensures that time and financial resources are funneled to the best ideas that can deliver economic prosperity.

This article outlines the typical steps for commercialization of patents and offers stronger understanding of how to successfully monetize great ideas.

Turning an idea into a patented and economically viable commercial process has many stage-gates, which are intended to ensure that only the best ideas receive the limited funding and time resources that companies have in their R&D budgets. 

Utility Patents 

Typically when someone talks about a patent they are referring to a utility patent, which entitles the patent holder a 20-year monopoly for the economic benefits pertaining to the patent.  There are four different types of utility patents:

• Composition of Matter Patents – A novel composition of matter is a substance that comes out an industrial process with substantially different physical properties than the feed agents utilized in its production.
• Machine Patents – Dynamic mechanical/electrical devices that are typically the output of an industrial production process.  They are dynamic because mechanical components move and electrons flow to create economic value adds.
• Article of Manufacture Patents – These items are typically static components, parts or tools such as crowbars, mousepads, wrenches, ceramics, etc.  These articles are static because they do not move by themselves and have no chemical/electrical power source.
• Process/Method Patents -  Process patents are typically the industrial process or recipes to product the end industrials products listed above.  In sanitary and industrial industries, process/method patents include catalyst, reactors and other methods of production.  

Commercial & Technical Stage Gates

Since “bad” ideas and patents should be discarded before they consume time and money, stage gates are generally utilized as a filtering mechanism.  While it is true that some ‘good’ ideas will be thrown out with the ‘bad,’ having a separation mechanism for distinguishing economically valuable ideas from money pits is well worth this cost.

Each stage gate creates a more refined understanding of capital and operating expenses associated with each patent. Fundamentally, each stage gate should refine and develop the follow principle criteria:

1. Net Economic Benefit: Monetized value creation – cost of production activities.
2. Technological Viability: Is the technology incrementally better than the next best alternative?   
3. Schedule:  How long until the cash flows?
4. Scope & Resource Requirements:  Can my company deliver?

Ultimately, prosperous companies only nurture projects that produce beneficial outputs and have positive discounted cash flows.

Stage Gate Zero 

This early stage typically takes place in graduating a promissing idea from the exploritory R&D group to the new products R&D group.  Normally, bench-top chemistry experiments or preliminary prototype inventions can generate enough support data and physical properties to file for a patent.

Sometimes, the discovery of promissing technology is a happy accident of motivated researchers uncovering new territory, but most new discoveries come after the hard work of figuring out where to look and how to actively avoid wasted efforts.    

Stage Gate Front End Loading 1 (FEL-1)

1. Net Economic Benefits: Strategic business assessment includes the analysis of a technology’s Strengths, Weaknesses, Opportunities, and Threats (SWOT)
   • Economics: High level cost estimates (typically +/- 50 percent)
     • Economic outputs
     • Capital and installation requirements
     • Operational costs
2. Technology: The new technology integrates with commercially available technology and support systems that sustain a commercial production or create a marketable product, finalized of physical properties, materials of construction, chemical kinetics and equilibriums and recipe cards.
3. Schedule:  Identification of the critical path
   • Long-lead items
   • Process critical equipment
4. Scope & Resource Requipments:  Budgetary
   • Strategic assessement of key personel
   • Potential production sites with the required infrastructure and resources

Stage Gate Front End Loading 2 (FEL-2)

FEL-2 turns budgetary knowledge into preliminary scope definition.

1. Net Economic Benefit: Project Price (+/- 30 percent) supported by substantial scope and schedule definition and a refined economic analysis.
2. Technological Viability: This is no longer a major concern. Technology system integration questions that cannot be assessed on paper require testing in a pilot plant system.
3. Schedule:  Preliminary
   • Minor production tasks identified
   • Environmental permitting and regulatory requirements identified
4. Scope & Resource Requirements: 
   • Preliminary Basic Engineering and Process Design
   • Overall project execution strategy
   • Value Improving Practices (VIP) / LEAN Manufacturing

Stage Gate Front End Loading 3 (FEL-3)

FEL-3 turns preliminary scope definition into final/executable scope definition.

1. Net Economic Benefit: Fixed bid project price (+/- 0 percent) is supported by a final scope and firm schedule.
2. Technological Viability: The project is past all major or minor technology questions.  All technology questions that cannot be fully mitigated are addressed to the satisfaction of all key stakeholders.
3. Schedule:  Preliminary
   • Minor production tasks identified
   • Environmental permitting and regulatory requirements identified
4. Scope & Resource Requirements:  Finalized
   • Basic Engineering and Process Design
   • Overall project execution strategy
   • Value Improving Practices (VIP)/LEAN Manufacturing

Project Approval & Execution

1. Final Design:
   • 3D Modelings
   • Equipment layout
2. Detail Engineering:
   • Final equipment selection
   • Structural & stress analyses
   • Final electrical and automation engineering
3. Construction & Assembly:
   • Equipment procurement
   • Foundations and welding
   • Quality assurance
   • Factory acceptance testing
4. Commissioning & Start-Up:
   • Final checkout
   • Field walkdowns
   • Operator training

If you have a process you would like to patent, we recommend using the above information and working with a patent lawyer and industry experts to move through each stage gate successfully.

Disclaimer: Although the information and recommendations set forth herein are presented in good faith, EPIC Process Systems and its subsidiaries make no representations or warranties as to the completeness or accuracy thereof. No representations or warranties, either express or implied, or merchantability, fitness for a particular purpose or of any other nature are made hereunder, and nothing herein waives any of the seller’s conditions of sale.