Another year has passed, and you are sitting in the main lecture hall at the AAO Annual Meeting. A surgeon you know by reputation is introducing her overview of emerging medical technologies for 2011. As her presentation continues, you set down your coffee and grab the hotel notepad, intent on taking notes. You scribble down the names of companies and products that you promise yourself to look up in the exhibition hall during your next break. You are momentarily distracted by a text message regarding your lunch plans for the afternoon when the lecture suddenly grabs your attention. Although you shrug it off as pure coincidence, in the back of your mind, you are thinking, “Wait a minute. That was my product idea!”
When a definable market need exists, many individuals and/or companies are likely to consider a solution. As a surgeon, you have learned to innovate: your training forces you to formulate a solution when faced with a complex surgical procedure. I am willing to bet that you have driven home on many days thinking of technologies that would have (a) improved the clinical outcome, (b) made your complex case much more predictable, and (c) enabled you to sneak in a workout at the end of your day because of time saved. This article presents simplified rules of the commercialization game to help you capture the value you deserve before it is too late.
KNOW WHEN TO PUNT VERSUS RUN FOR IT
A necessary first step is to determine how much you can be involved and what the reward is for assuming such high risk. First-time entrepreneurs have only an 18% chance of succeeding (with success defined as an initial public offering or acquisition).1 Therefore, be honest with yourself regarding how much time you can truly devote to this endeavor.
High risk offers the possibility of great reward, but what exactly? Let's say you work at a university that is world renowned for innovation and that you have decided to let your university pursue a patent on your behalf. A common revenue share is a three-way split: the university gets 1/3, the medical school gets 1/3, and you get 1/3. The bad news is that the average royalty on an issued patent is 3.5% of revenue,2 if you are lucky enough to get both an issued patent and a royalty offer. Therefore, your share would be 1.2%.
Let's make another assumption that you want to take your idea further and try to outdo 1.2%. You say to yourself, “I am done with surgery and would like to start a medical device company.” You probably have the means to fund most of the early financing to create a prototype, but you need outside financing to properly comply with the legal, regulatory, engineering, commercialization, and launch processes. It may surprise you to learn that a founding CEO is lucky to own 8.2% of the company (Table).2 Keep in mind that the CEO is working 80 or more hours a week, picking up pizza dinners for his or her staff, maintaining open communication with investors, and bearing full responsibility for the company's profits and losses. Obviously, the further you personally take your idea, the better it is. As perspective, however, if you quit practicing, focus 100% on your idea, and raise financing through venture capital or angel investors, by the time you have a commercial product, you will be lucky to own 5% of the company. Take the time to fully understand the money at stake and weigh that against your professional and financial goals.
STUDY THE GAME PLAN
Protect your idea from migrating out of your control by filing a provisional patent application (PPA) before you speak with anyone. The PPA was introduced in 1994 with an amendment of the Patent Act of 1952. A provisional application differs from a standard or nonprovisional application in that it does not establish official claims. You can read a full explanation at the patent office's Web site (http://1.usa.gov/mTUfZ1), but what does it mean to you as an inventor? The PPA will give you an efficient and inexpensive time stamp for your idea so that you can confidently research and/or shop your idea to other people or companies. Once the application is filed, an inventor has 12 months to conduct appropriate research and assess his or her next step. I acknowledge that conducting “market research” is a gross simplification of all of the business factors you should evaluate, but be sure you can immediately describe the competitive landscape and market opportunity.
In business, time is critical, and I have seen too many inventors get delayed in their research. Instead, in that time, take the offensive. File new add-on PPAs based on your expanding insight and discoveries and build a protective legal “fence” around your idea (Figure 1). Intellectual property is a land grab—to put it in Monopoly terms (Hasbro, Inc. Providence, RI), you can out earn Boardwalk with a nicely developed Mediterranean Avenue.
DO NOT FEAR COMPETITION
know first hand the anticipation you feel before you conduct the first Google search of your idea. In that fraction of a second, you are hoping your online search does not reveal any hint that your idea may already have been thought of. Do not lose faith if your search reveals that someone else had a similar idea. That discovery provides validation of a significant business opportunity.
Competition can make your idea stronger. For example, your original idea may be too broad, which means the patent office will have a field day throwing years of prior art at your application, should you choose to convert your PPA to a nonprovisional patent application. Save yourself the anxiety and assume you have competition. With that in mind, think of what true value your solution would offer, assuming multiple medical companies are in the game. Is there something unique about your surgical approach, handling of the product, or even its shape? An attorney friend mentioned to me that one of the Polycom teleconference phone's (Polycom, Inc., Pleasanton, CA) most commercially powerful patents was its shape. Every triangular, starfish-shaped teleconference phone you see is none other than a Polycom (Figure 2). Challenge yourself to go beyond just the core idea.
CONCLUSION
If the thoughts in your mind during your next jog or commute are dominated by a great idea, take action. Be truthful with yourself regarding how much time you can commit to pursuing it and weigh that against your professional and financial goals. Keep control of your idea by completing a PPA before you speak with anyone. Remember that competition is not a bad thing and strengthen your idea with a fence of additional intellectual property. In this way, I hope you will become one of the surgeons presenting his or her innovations in the main hall during the next ophthalmic meeting.
Timothy Buckley, MBA, BSME, is cofounder of Ocunetics, Inc., in Alamo, California. He acknowledged no financial interest in the products or companies mentioned herein. Mr. Buckley may be reached at www.timothybuckley. com; (650) 766-5341; timbuckley@calalum.org.
