from a university or derived from the founder’s idea, says Guterman:

"That in itself can create wealth." A company she co-founded

put most of its early capital into pioneering patents, and now that

portfolio has been licensed to 40 companies with revenues of up to

$2 million annually.

of PhDs, young high-tech companies can take advantage of ambitious

young scientists and engineers ensconced at what are sometimes low-paying

university jobs. They want to generate some extra income and have

ideas but don’t have factories or lab programs. The university’s transfer

and licensing office will patent the ideas and license them to the

technology companies.

"You want to start up a company, you have some money — not

much but some — a good place to look is at universities,"

says Guterman. "If you have an idea of where you want to start,

collect names of leading scientists and talk to them. Universities

love start-ups. Instead of paying you up front, they may take five

percent of the company, usually a smaller percentage than would a

venture capitalist. Universities also usually want royalties on future

products."

Because acquiring venture capital and filing applications is like

the chicken and egg problem, you can’t do one without the other, Guterman

suggests filing what is called a provisional patent application, appropriate

even for those who have no laboratory or new data. This kind of patent

helps level the playing field for biotech companies, which are by

nature more expensive to establish than software development or Internet-based

firms.

"The beauty of the provisional patent application is that it is

not examined," says Guterman. "It gives you a clear year to

collect data, get venture capital support, hire people, and set up

a lab. A year later, when you have these ideas in place, you can file

the nonprovisional patent application."

some technologies big companies might classify some of the discoveries

as trade secrets rather than patents. Trade secrets are acquired over

time and involve fine points of a particular process; Coca Cola’s

formula is a famous one. They are kept very clearly marked, with locked

files and limited access.

Depending on the technology these large firms could consider rewarding

their scientists with bonuses for trade secrets or other ideas not

patented. Patents are not cheap; they cost $15,000 to $20,000 in the

United States and $50,000 to $100,000 worldwide. Meanwhile the large

company may have thousands of scientists wanting recognition, bonuses,

and advancement — all linked to devising patents.

"Trade secrets should be rewarded by management to the same extent

that patents are, just the way that sales people get bonuses. Then

there wouldn’t be so much pressure on patent departments," says

Guterman.

in a large firm is enthusiastic about an idea, but management is not,

the company could file a provisional application. It is cheaper to

file, and it does not require a patent law expert to draft the claims.

The inventor can go a long way to creating the final product."

The company then allows the inventor to put together the "disclosure,"

words describing the invention, and to do the business plan and calculations

predicting the revenue stream and time table.

"You are much more likely to get value out of that scientist,"

she says. Either the idea comes through so the company can file a

nonprovisional application, or — if it turns out to be a flash

in the pan — the employee learns a lesson.

— Barbara Fox

Corrections or additions?

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.