UNDERSTANDING PRODUCT DEVELOPMENT

CHAPTER 4

Learning Objectives

Discuss the current trends in product/process design and development.

Describe the product development cycle. Compare the advantages and disadvantages of

outsourcing product development. Explain the process of intellectual property

development for patents, trademarks, copyrights, and trade secrets.

Entrepreneurs and New Product Design

Intensely competitive arena for product development. Customers demand products that reflect lifestyles and

value systems. Technology shortens product life cycles. Entrepreneurs must manage innovation pipeline to

remain competitive.

How Entrepreneurs Develop Products and Services

Challenge: Perform R&D that results in high-quality, engineered prototype as quickly and inexpensively as possible.

Impact of insufficient resources: Poor execution Time-to-market increases First-to-market opportunities are missed Projects are made simpler so that more can be done

with less Team morale declines

The Consequences of Resource Shortfalls for New Product Development

Figure 6.1

New Product Failure

New product failure results from: Lack of good market and industry analysis Technical problems

Strategies to consider when competing effectively in product development:1. Design products right the first time2. Shorten the time-to-market3. Outsource some product developments tasks to

create a lean structure

The New Product Development Success Curve

Source: Based on the research of Greg A. Stevens and James Burley in “Piloting the Rocket of Radical Innovation,” Research Technology Management, March/April 2003. Reprinted with permission.

Figure 6.2

Product Development Cycle

The process cycle components: Opportunity identification Technical and market feasibility analysis Intellectual property & regulatory requirements Prototype development Initial market tests Launch strategy Execution plan

From Idea to MarketFigure 6.3

Outsourcing Product Development

Areas suitable for outsourcing that require engineering analysis, design and expertise: Component design Materials specifications Machinery to process Ergonomic design Packaging design Assembly drawings & specifications Parts and material sources (suppliers) Operator’s and owner’s manuals

Intellectual Property Rights

Definition of intellectual property rights: The group of legal rights associated with patents,

trademarks, copyrights, and trade secrets Used to:

Protect entrepreneur’s property Avoid infringing on the rights of others

Patents

Patents are the primary means of protecting an original invention.

Questions to assess whether patent is necessary: Does the invention solve a significant problem and

change the way things are done? Does the invention fall under FDA regulations? Will the invention achieve revenues that exceed the

potential cost of patent enforcement? Is there a plan to license?

Is the Invention Patentable?

The invention must fit into one of the five classes established by Congress:1. Machine or something with moving parts or

circuitry2. Process or method for producing a useful and

tangible result3. Article of manufacture4. Composition of matter5. A new use or improvement for one of the above

that does not infringe on the patents associated with them

Is the Invention Patentable? (cont’d)

USPTO criteria for patentability: The invention must have utility (it must be useful). The invention must not contain prior art; that is, it

must be new or novel in some important way. The invention must not be obvious to someone with

ordinary skills in the field.

Patents Types

Utility: Protects functional part of machines/processes Design: Protects new, original ornamental designs for

manufactured articles Business method: Protects fundamentally different

ways of doing business in which the embedded process must produce a useful, tangible, and concrete result

Foreign Patents

Patent rights granted to an individual extend only to the borders of the United States.

Every country has different laws regarding intellectual property.

Hire a knowledgeable intellectual-property attorney!

Provisional or Non-provisional Patents

Provisional patent: Permits use of the term patent pending On par with international applications Granted for 12 months

Non-provisional patent: Required for all patents Granted for 20 years Must be specific enough to demonstrate

the invention’s uniqueness but broad enough to make it difficult for others to circumvent patent

Patent Infringement

Occurs when someone other than the inventor (patent holder) or licensee makes and sells a product that contains every one of the elements of a claim

If lawsuit is successful, court may issue injunction preventing infringer from making further use of invention and award inventor royalties.

Doctrine of equivalents – U.S. Patent Office protects investors from infringers who would violate a patent from making small, insignificant changes in the claims.

Courts tend to favor the inventor.

Trademarks

Trademark is a symbol, logo, word, sound, color, design, or other device that is used to identify a business or a product in commerce.

It has a longer life than a patent. Grants a business exclusive rights to a trademark for

as long at it is actively using it. ® Registered trademark ™ Intent-to-use application filed for product SM Intent-to-use application filed for services

Trademarks (cont’d)

Marks that cannot be trademarked: Anything immoral or deceptive Anything that uses official symbols of the U.S. or

any state/municipality such as the flag Anything that uses a person’s name or likeness

without permission

Trademark Infringement, Counterfeiting, and Dilution

Infringement: A mark that is likely to cause confusion with a trademark already existing in the marketplace

Counterfeiting: The deliberate copying of a mark Dilution: The value of the mark is substantially reduced

through competition or through the likelihood of confusion from another mark

Copyrights

Protects the form of the original works of authors, composers, screenwriters, and computer programmers

Does not protect the idea itself Lasts for the life of the holder + 70 years Works for hire and works published anonymously

have copyrights of 95 years from date of publication. Doctrine of Fair Use: reproduction of a copyrighted

work is “fair” when it is done for purposes of criticism, comment, news reporting, teaching, scholarship, and research.

Copyrights (cont’d)

The Digital Millennium Copyright Act 1998 Prohibits the falsification, alteration, or removal of

copyright management data on digital copies. It made it a crime to circumvent an encrypted work without authorization.

Obtaining copyright protection Federal protection is available if the work is in a

fixed and tangible form; contains a copyright notice and year, and the full name of the responsible person (i.e. © 2011 Stephen Barry).

Trade Secrets

A trade secret consists of: A formula, device, idea, process, pattern, or

compilation of information that gives the owner a competitive advantage in the marketplace.

A novel idea that is not common knowledge and is kept in a confidential state.

A trade secret is not protected by federal law.