While in many respects, producing a prototype isn't compulsory, it's generally regarded as a key part of the commercialisation process. One significant advantage of a prototype is that it helps you demonstrate that your idea can really work.

There are a number of different levels of prototypes ranging from virtual prototyping comprising animated 3D CAD drawings, right through to production stage products. A well produced prototype will allow you to:

• Conduct any necessary testing to ensure the product will work as claimed.
• Identify and protect any subsequent improvements prior to patenting.
• Estimate the cost to manufacture
• Provide a visual representation of your idea when you're giving presentations to potential investors, licensees etc.
• Research potential customers prior to entering the market.

Whether or not you choose to produce a prototype, may vary depending on the type of invention, available resources and your commercialisation strategy.

There are a number of services that can assist you in this area such as industrial designers, which you can find in the Yellow Pages. Additionally, many innovation centres also provide government subsidised technical assessments that provide a written report on your current designs and drawings.

In terms of patenting your idea, again you don't necessarily require a prototype, but you will need to convince the patent examiner that the device works as outlined and is useful. You could achieve this with comprehensive drawings and descriptions.

Contact the NSW Innovation Advisory Service to arrange a Preliminary Patent Search to ensure your idea has not already been patented.

Franchising is not a business itself, but a way of doing business. It is essentially a marketing concept – an innovative method of distributing goods and services. It is also an extremely successful and rapidly growing aspect of Australia’s small business sector.

Franchising is a business relationship in which the franchisor (the owner of the business providing the product or service) assigns to independent people (the franchisees) the right to market and distribute the franchisor’s goods or service, and to use the business name for a fixed period of time. The International Franchise Association defines franchising as a continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organising training, merchandising and management in return for a consideration from the franchisee.

Franchising is used to describe a number of business models, the most commonly identified of which is business-format franchising. But there are other models which are also dependent on franchise relationships. These include:

1. Manufacturer-Retailer – Where the retailer as franchisee sells the franchisor’s product directly to the public. (eg. New motor vehicle dealerships).
2. Manufacturer-Wholesaler – Where the franchisee under license manufactures and distributes the franchisor’s product (eg. Soft drink bottling arrangements).
3. Wholesaler-Retailer – Where the retailer as franchisee purchases products for retail sale from a franchisor wholesaler (frequently a cooperative of the franchisee retailers who have formed a wholesaling company through which they are contractually obliged to purchase. (eg. Hardware and automotive product stores).
4. Retailer-Retailer – Where the franchisor markets a service, or a product, under a common name and standardised system, through a network of franchisees. This is the classic business format franchise.

The first two categories above are often referred to as product and trade-name franchises. These include arrangements in which franchisees are granted the right to distribute a manufacturer’s product within a specified territory or at a specific location, generally with the use of the manufacturer’s identifying name or trademark, in exchange for fees or royalties.

The business format franchise, however, differs from product and trade-name franchises through the use of a format, or a comprehensive system for the conduct of the business, including such elements as business planning, management system, location, appearance and image, and quality of goods.

Standardization, consistency and uniformity across all aspects are hallmarks of the business format franchise.

Business format franchising is today the fastest-growing segment of franchising and has spread to virtually every sector of the economy in Australia. It has significantly more franchise systems, more outlets, more employees and more opportunities than product and trade-name franchises. Business format franchising requires a unique relationship between the franchisor (the owner of the system) and the franchisee (the owner of the individual outlet), which is commonly referred to as a “commercial marriage”.

Content supplied by Franchise Council of Australia.

In 2008/09, IP Australia estimates that it has received 25,800 patent applications, 99,573 trade mark applications, 6,513 design applications and 324 plant breeder’s rights applications. For a Preliminary Patent Search contact your NSW Innovation Advisory Service officer.

There are very few standard licensing transactions. A lot will depend on the commercial context and the agreement used to transfer the rights should be tailored to accomplish the commercial objectives. Relevant issues will include:

• The bundle of intellectual property rights being licensed.
• What type of activities are permitted?
• Whether the grant is exclusive or non-exclusive.
• Whether sub-licensing rights are appropriate.
• Whether there should be field of use or territorial limits.
• What approach should be taken to improvements and infringement issues?
• What obligations should be placed on the licensee?
• What is the reward for the licensor?
• What obligations of confidentiality should be imposed?
• If disputes arise, how should they be resolved?
• What is the duration of the licence, and what termination rights should be imposed?
• What are the obligations post-termination?

This information regarding licensing was kindly provided by Rodney De Boos (Partner) and Sally Wilson (Lawyer) of Davis Collison Cave Solicitors.

Good "housekeeping" and finding the right partner are both important in the licensing process. As a first step, the licensor needs to ensure they own the necessary bundle of rights to enable the transfer. Secondly, the desirable attributes of potential licensees should be determined. The important attributes may include whether the licensee is competent in relation to the invention or product, its prominence in the market place, its business reputation, and whether it deals in competitive technology or products.

The reward licensors will get for licensing their intellectual property rights is also a key question. There are no golden rules for licensing returns, and a lot will depend on the negotiation between the parties. Revenue models include upfront payments, lump sum payments and royalties. Royalties can be assessed on production, gross sales, net sales or some other basis. To some degree, the type of reward model will depend on the stage of development of the technology or rights being transferred and the costs for taking them to market. The team behind the negotiation of the licensing deal is important. Assembling a team that has the necessary commercial, technical and legal expertise can make the process successful.

This information regarding licensing was kindly provided by Rodney De Boos (Partner) and Sally Wilson (Lawyer) of Davis Collison Cave Solicitors.

Licensing involves the giving up of control of intellectual property rights to another party. The extent to which control is relinquished will depend on the licence agreement. In return for giving up control, the benefit can be reduced risk of financial loss for the owner of the intellectual property rights and financial returns. By licensing to a third party there is a possibility that the owner of the intellectual property rights creates a competitor for itself in the marketplace. This is one possible disadvantage of licensing. The licensing process requires disclosures of inventions and commercially sensitive information to "strangers". Dealing with third parties means that it is critical to consider the impact of disclosure or use on the intellectual property rights involved. In some instances involving registered rights, disclosure or use before application may undermine the validity of intellectual property rights. Accordingly, it is very important that confidentiality agreements are considered and entered into before making disclosures where the circumstances demand it.

This information regarding licensing was kindly provided by Rodney De Boos (Partner) and Sally Wilson (Lawyer) of Davis Collison Cave Solicitors.

Licensing is one model for commercialising valuable intellectual property. It may be a suitable approach in some situations, but as with most things there are advantages and disadvantages. Licensing is generally used where the owner of the intellectual property rights does not have the resources to "take the product to market". This could be the case for a small Australian company with a novel invention but without capital resources or distribution channels to bring the invention to the marketplace. Alternatively, the financial risk in obtaining the funds necessary to "take the product to market" may be considered too onerous. Licensing can be a viable option in these situations.

Other options outside of the licensing sphere may be joint venture arrangements, strategic alliances to other commercial relationships with third parties to exploit the invention. The preferred model will depend on the particular commercial circumstances.

This information regarding licensing was kindly provided by Rodney De Boos (Partner) and Sally Wilson (Lawyer) of Davis Collison Cave Solicitors.

Licensing is concerned with granting rights to use commercially valuable intellectual property. The process is sometimes referred to as "technology transfer" but strictly speaking this is too narrow term. The subject matter of a licence can include the full range of intellectual property rights, including patent rights, designs, copyright, trade marks, circuit layouts, plant breeders rights and know-how. Confidential information will also typically play a critical role in the "technology transfer".

Licensing itself is the process where the owner of one or more of these rights gives another person permission to exploit the subject matter of the rights. In other words, the person granting the licence (the "licensor") is giving to the person receiving the licence (the "licensee") a level of authority to carry out activities which would otherwise be an infringement of the licensor's rights.

This information regarding licensing was kindly provided by Rodney De Boos (Partner) and Sally Wilson (Lawyer) of Davis Collison Cave Solicitors.

Intellectual property (IP) represents the property of your mind or intellect. In business terms, this also means your proprietary knowledge.Types of IP:

• patents for new or improved products or processes;
• trademarks for words, symbols, pictures, sounds, smells or a combination of these, to distinguish the goods and services of one trader from those of another;
• designs for the shape or appearance of manufactured goods;
• copyright for original material in literary, artistic, dramatic or musical works, films, broadcasts, multimedia and computer programs;
• circuit layout rights for the 3-dimensional configuration of electronic circuits in integrated circuit products or layout designs;
• plant breeder's rights for new plant varieties; and
• confidentiality/trade secrets including know-how and other confidential or proprietary information.

Download this Checklist for License Agreements in PDF format.

Whether you choose to manufacture in Australia or overseas, there will always be the risk your invention will be copied, particularly if it does prove successful. The best strategy for taking your idea to market is to minimise these risks wherever possible while establishing your business and reputation. [more]

Innovation in Australian Business
An Australian Bureau of Statistics (ABS) publication, '8158.0 - Innovation in Australian Business, 2005' presents statistics on business innovation in Australia and key characteristics of innovating businesses. [more]

A new site auspat is available for researching online. Go to:
http://www.ipaustralia.gov.au/auspat/

See this article on Strategic Trademarking from IP Australia
http://www.ipaustralia.gov.au/smartstart/exporting_tips.htm

IP Australia has an online research tool with costings.  Go to http://www.ipaustralia.gov.au/trademarks/online_index.shtml

An article from the Age outlines research undertaken by the Director of the Intellectual Property Research Institute of Australia:

Company Bright Sparks on Rise as Individuals Fall
Most inventions in Australia sell for $100,000 - $500,000, but don’t reach the stage of mass production or export, according to an industry expert. Beth Webster, director of the Intellectual Property Research Institute of Australia, said about 28 per cent of inventions were sold in the range of $100,000 - $500,000. The next largest was inventions in the $1 million to $5 million range (17 per cent), followed by $500,000 - $1 million (15 per cent). [more]