1. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ANALYZING PRODUCT/SERVICE DESIGN AND PROTECTION 6

2. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

3. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

4. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

5. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Consequences of Resource Shortfalls for New Product Development Figure 6.1

6. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 time 2.Shorten the time-to-market 3.Outsource some product developments tasks to create a lean structure

7. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

8. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

9. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. From Idea to Market Figure 6.3

10. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

11. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

12. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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?

13. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 circuitry 2.Process or method for producing a useful and tangible result 3.Article of manufacture 4.Composition of matter 5.A new use or improvement for one of the above that does not infringe on the patents associated with them

14. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

15. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

16. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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!

17. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

18. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

19. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

20. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

21. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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

22. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

23. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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).

24. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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.

25. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. New Venture Action Plan Find ways to incorporate customer input into the design of your products, processes, and services. Locate independent contractors who can help in the construction of a prototype. Identify intellectual-property rights appropriate to the business concept.