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Economic Moats - For Early Stage Startups and Early Stage Investors12,322 viewsShareLikeDownloadBrian Laung Aoaeh, CFA, Seed-Stage VC @KECVentures | Internet Infrastructure, Supply Chain, Transportation Services | Organizer: #TNYSCMFollowPublished onJul 28, 2016In order to grow into a company that endures, an early stage startup must...Published in: Technology1 Comment32 LikesStatisticsNotesPostAmy Wilson , Project Manager at Angel Vision Investors-= BTW Thanks for the info!.... Also you can send your pitchdeck to thousands of VC's and Angel's with just 1 click. Visit: Angelvisioninvestors.com4 weeks agoEconomic Moats - For Early Stage Startups and Early Stage Investors1. Notes on ECONOMIC MOATSfor early stage technology startups BRIAN LAUNG AOAEH2. 2  BA - Mathematics, Physics - Connecticut College  MBA – Specialization; Financial Instruments and Markets – NYU Leonard N. Stern School of Business Former employee; Watson Wyatt, UBS AG and Lehman Brothers Currently; Investment analyst, Partner - KEC Ventures, New York City WHAT DO I DO? I assess early stage technology startups for seed stage and series A venture capital investments BRIAN LAUNG AOAEH Let’s talk: @brianlaungaoaeh3. Questions I ask myself daily when assessing startups Focus on early stage technology startups A summary of the economic moats those startups might build around themselves to sustainably fend off competition and mature into successful companies The observations of this document take into account my experience as of 2015/2016 3 SCOPE OF THIS DOCUMENT 20164. 4 DEFINITIONS1 3 SWITCHING COSTS 2 NETWORK EFFECTS 4 INTANGIBLES 7 CONNECTING THE DOTS 5 COST ADVANTAGES 6 EFFICIENT SCALE SUMMARY5. 5 1 DEFINITIONS6. WHAT IS A STARTUP? A temporary organization built to search for the solution to a problem, and in the process to find a repeatable, scalable and profitable business model that is designed for incredibly fast growth #Experimentation #SteveBlank #PaulGraham 6 WHAT IS AN ECONOMIC MOAT? When specifically thinking of early stage technology startups: A structural feature of a startup’s business model that protects it from competition in the present but enhances its competitive position in the future WHAT ARE THE SOURCES OF ECONOMIC MOAT? NETWORK EFFECT SWITCHING COSTS INTANGIBLE ASSETS EFFICIENT SCALECOST ADVANTAGE7. 7 2 NETWORK EFFECTS8. WHAT IS A NETWORK EFFECT (also known as Direct-benefit effect)? A network effect occurs when the value of a good or service increases for both new and existing users as more customers use that good or service. The network effect is a virtuous cycle that allows strong companies to become even stronger. 8  Need for some form of interaction or compatibility with others: the number of other people using the technology has a direct impact on how valuable that technology is to each individual user.  For Network effects to evolve positively for a startup, the users of the network need to derive both inherent value and network value from their use of the product.  Inherent value is value that an individual user derives because of that individual user’s consumption of the product or service.  Network value is value that an individual user derives because other people use the product or service. HOW DO THEY DEVELOP?9. LOCAL NETWORK EFFECTS DIRECT NETWORK EFFECTS or one-sided network effects TWO-SIDED NETWORK EFFECTS INDIRECT NETWORK EFFECTS 9 4 TYPES OF DIRECT-BENEFIT EFFECTS When increased usage leads explicitly to increased welfare for the members of the network Fax machines, telephones, messaging apps When the proliferation of network members leads to the proliferation of complementary goods and services such that the welfare of the network’s members increases significantly iOS, Android, smartphones and apps When an increase in usage of the product by one group of network members increases the welfare of a separate and distinct group of other members of the same network. Marketplaces, platforms that combine hardware and software, and software pairings in which there’s a reader and writer When an individual network member’s welfare increases not because of an increase in the overall network user base, but as a result of growth in the users within a localized subset of the network’s membership. Whatsapp: welfare increases when people in your contacts’ list join, no matter the number of Whatsapp users10. The Power of Network Effects (Image Credit: Ray Stern, former CMO of Intuit) 10 THE POWER OF NETWORK EFFECTS11. 11 HOW MIGHT A STARTUP START TO EXPERIENCE NEGATIVE NETWORK EFFECTS? LOCK-IN OR SWITCHING COSTS  When a member of one network cannot switch from that network to another without suffering substantial costs.  The switching costs could be monetary and non-monetary. Often, the non-monetary switching costs far outweigh the monetary costs. Non-monetary costs might include the loss of massive amounts of information and data, business process disruptions, and so on and so forth.  Switching costs are not an issue as long as users perceive that they derive more value from being within the network than the inconvenience they suffer as a result of lock-in or switching costs. NETWORK CONGESTION CONFLICTS OF INTEREST12. 12 HOW MIGHT A STARTUP START TO EXPERIENCE NEGATIVE NETWORK EFFECTS? LOCK-IN OR SWITCHING COSTS NETWORK CONGESTION CONFLICTS OF INTEREST  When the experience of each member of the network deteriorates as the network’s membership grows. In other words the network becomes less efficient from the users’ perspective.  As a result of this each member of the network derives decreasing inherent and network value from the network. Ex: A website, web or mobile app that is consistently unavailable because too many people are trying to access it simultaneously13.  When a network operator behaves in ways that limit or restrict the ability of network members to freely form sub-networks.  Networks that support the construction of communicating groups create value that scales exponentially with network size, i.e. much more rapidly than Metcalfe’s square law.  When the operator of a network platform starts to compete with its platform partners it is engaging in behavior that will lead to the destruction of the network. Ex: I prefer to buy used books on Amazon if possible. This is possible because Amazon has allowed independent merchants to market such goods in its marketplace. If Amazon compelled me to purchase its own offering, or pay a penalty otherwise, what effect would that have on my behavior? On the behavior of the independent sellers? What if an Amazon competitor did not impose that penalty? How might that shift the competitive landscape? 13 HOW MIGHT A STARTUP START TO EXPERIENCE NEGATIVE NETWORK EFFECTS? LOCK-IN OR SWITCHING COSTS NETWORK CONGESTION CONFLICTS OF INTEREST14. First mover adoption matters It can pay to subsidize adoption – by providing an in-network benefit of some sort Viral marketing matters Redefine the market Form alliances and partnerships Leverage distribution channels Seed the market Encourage the development of complementary goods Leverage backward compatibility Build-in compatibility with the market leader Close-off access to new entrants and existing rivals and innovate constantly Pre-announcements 14 WHAT STRATEGIES SHOULD A STARTUP THAT’S COMPETING IN A MARKET IN WHICH NETWORK EFFECTS MATTER EMPLOY IN ORDER TO WIN?15.  Understanding networks effects and how they unfold for an early stage startup is critical  Markets with network effects are fiercely competitive  A bandwagon effect tends to take hold thanks to positive-feedback loops  A winner can emerge in remarkably short order and that winner typically garners a commanding market share lead over its competitors  Once a winner has been established it is extremely difficult for competitors to win users away from it 15 CONCLUSION ON NETWORK EFFECTS16. 16 3 SWITCHING COSTS17.  Switching costs refer to the expense in cash, time, convenience, risk, and process disruption that a customer of one product or service must incur if they change from one product from an incumbent Producer A to another product from Producer B.  Switching costs can be explicit or implicit.  It can confer the benefit of customer lock-in to incumbent suppliers if the customer perceives the cost of switching as outweighing the benefits that would be obtained by making the switch. 17 WHAT ARE SWITCHING COSTS?18. 18 HOW DO SWITCHING COSTS DEVELOP?  When an incumbent product becomes “mission-critical” for the purpose for which the customer acquired the product in the first place.  An incumbent that combines network effects with high switching costs in the same product line is well positioned to build a durable moat around its business.  3 main assumptions about switching costs: They can be exogenous Switching costs are symmetricalThey can be endogenous When they evolve without any intentional influence from the incumbent producer Ex: From customers that adapt the product When they evolve through deliberate actions by the incumbent Ex: volume discounts , long-lived license agreements, incompatibility with competing products between all the producers competing within a given market19. COMPATIBILITY REQUIREMENTS TRANSACTION COSTS COGNITIVE COSTS UNCERTAINTY LEARNING COSTS LOST-BENEFIT COSTS 19 WHAT ARE THE TYPES OF SWITHCHING COSTS THAT LEAD TO BUYER LOCK-IN? One might consider switching costs to exist along a continuum that is characterized most distinctly by how intertwined each of the categories identified by economists is tightly intertwined with nearly every other category below:  They make it difficult and expensive to switch between products.  It is an implicit cost that is borne by the customer. Ex: An individual or organization running MS Windows contemplating a decision to switch to Linux.20. COMPATIBILITY REQUIREMENTS TRANSACTION COSTS COGNITIVE COSTS UNCERTAINTY LEARNING COSTS LOST-BENEFIT COSTS 20 WHAT ARE THE TYPES OF SWITHCHING COSTS THAT LEAD TO BUYER LOCK-IN? One might consider switching costs to exist along a continuum that is characterized most distinctly by how intertwined each of the categories identified by economists is tightly intertwined with nearly every other category below: They impose an explicit cost on customers who decide to switch from one product to another Ex: Cable-TV subscription agreements typically impose a high penalty on subscribers who decide to terminate their agreement before it has run its full course21. COMPATIBILITY REQUIREMENTS TRANSACTION COSTS COGNITIVE COSTS UNCERTAINTY LEARNING COSTS LOST-BENEFIT COSTS 21 WHAT ARE THE TYPES OF SWITHCHING COSTS THAT LEAD TO BUYER LOCK-IN? One might consider switching costs to exist along a continuum that is characterized most distinctly by how intertwined each of the categories identified by economists is tightly intertwined with nearly every other category below: They are the perceived hurdles customers feel they will have to overcome when they switch from one product to another. Ex: The dichotomy between Mac and Windows lovers. Beyond the practical reasons for preferring one system over the other, discussions often turn to name-calling. That suggests there are significant psychological issues at play that have nothing to do with the reality one might face if one tried to switch products22. COMPATIBILITY REQUIREMENTS TRANSACTION COSTS COGNITIVE COSTS UNCERTAINTY LEARNING COSTS LOST-BENEFIT COSTS 22 WHAT ARE THE TYPES OF SWITHCHING COSTS THAT LEAD TO BUYER LOCK-IN? One might consider switching costs to exist along a continuum that is characterized most distinctly by how intertwined each of the categories identified by economists is tightly intertwined with nearly every other category below:  The apprehension regarding the quality of the new product – it works for the incumbent when customers have very little information about the relative performance characteristics of the new product  Uncertainty is minimized only if the customer believes that, at a minimum, the new product will match the old product in quality. Ex: A small business considering migrating from MS Exchange Server to Google Apps for Business at a time when its license for the former is up for renewal.23. COMPATIBILITY REQUIREMENTS TRANSACTION COSTS COGNITIVE COSTS UNCERTAINTY LEARNING COSTS LOST-BENEFIT COSTS 23 WHAT ARE THE TYPES OF SWITHCHING COSTS THAT LEAD TO BUYER LOCK-IN? One might consider switching costs to exist along a continuum that is characterized most distinctly by how intertwined each of the categories identified by economists is tightly intertwined with nearly every other category below:  They are the hurdles to overcome to attain a mastery of the new product that is at par with mastery of the incumbent product.  Learning costs need to be considered on their own, independent of other categories of switching costs.  High learning costs increase switching costs in favor of the incumbent and vice- versa.  The decision to switch products often depends on the consequences when things go wrong, whether it’s an inconvenience or a potential significant loss of revenue.24. COMPATIBILITY REQUIREMENTS TRANSACTION COSTS COGNITIVE COSTS UNCERTAINTY LEARNING COSTS LOST-BENEFIT COSTS 24 WHAT ARE THE TYPES OF SWITHCHING COSTS THAT LEAD TO BUYER LOCK-IN? One might consider switching costs to exist along a continuum that is characterized most distinctly by how intertwined each of the categories identified by economists is tightly intertwined with nearly every other category below:  They are costs suffered by the customer because of certain non-transferable benefits that have been earned but not yet consumed as a result of its historical relationship with the incumbent.  The customer who decides to make a switch suffers a significant loss and must start to earn such benefits from scratch with the new provider. Ex: Loyalty programs such as airline travel points, or roll-over minutes for mobile phone subscriptions.25. Maintaining high switching costs leads to sustaining innovation for the incumbent  Switching costs lock in high-margin customers (with high needs) for the incumbent. To keep meeting their requirements, the incumbent needs to sustain innovation. While it improves on already existing products, it focuses on squeezing more out of a large base of existing and a comparatively small base of new customers. Disruptive innovation by competitors is aimed first at new customers in the market  However, disruptive innovation seeks to satisfy non-consumption by developing products with features so simple and inexpensive in comparison to the status quo that a disproportionately large number of new customers enter the market. The key is that the customers that flock to the disruptive product are very unattractive to established incumbents. With time, the disruptive product becomes a substitute for the incumbent product  With time, the disruptive innovation matures to the extent that it becomes a viable substitute first for the incumbent’s low-margin customers (with “only moderate” needs), and then for its most profitable customers - at a price point that is extremely hard for them to resist.  It is at this tipping point that the incumbent’s fight for its survival begins. 25 HOW MIGHT SWITCHING COSTS BECOME A DISADVANTAGE?26. It is important for early stage technology startups, and investors, to understand the dynamic that might evolve as they seek entry into a market characterized by an incumbent who benefits from customer lock-in. The incumbent sells to existing customers, rival new-entrant serves new buyers The incumbent excludes the new entrant New customers are won with bargains, then they are “ripped off” Customers are paid to switch A portfolio of products is bundled together in order to increase total switching costs 26 WHAT ARE THE COMPETITIVE STRATEGIES AT PLAY IN MARKETS IN WHICH SWITCHING COSTS MATTER? 1 2 3 4 527.  This happens in markets that are relatively mature.  The incumbent focuses its efforts on its existing customer base, with growth in revenues arising from endogenous growth within that customer base.  New entrants meanwhile utilize new technology to serve new customers, initially ignoring the incumbents existing customer base.  This is especially true in markets in which the incumbent producer has a high level of power relative to customers in that market – typified by dominant market share, giving it pricing power over its existing customer base. 27 WHAT ARE THE COMPETITIVE STRATEGIES AT PLAY IN MARKETS IN WHICH SWITCHING COSTS MATTER? The incumbent sells to existing customers, rival new-entrant serves new buyers128. 28 WHAT ARE THE COMPETITIVE STRATEGIES AT PLAY IN MARKETS IN WHICH SWITCHING COSTS MATTER? The incumbent excludes the new entrant2  This happens in markets when the incumbent’s fixed costs per customer are greater than the switching costs per customer.  The strategy works if the incumbent is in a position to set a price that makes it unattractive for any new entrant to enter the market.  Where this is not possible, the incumbent will choose to set a price that allows the market to be shared between the incumbent and the new entrant.  This is why freemium business models are so powerful, especially when a freemium business model is coupled with a product that embodies network effects and switching costs. Ex: Facebook – A cost-leadership strategy to compete with Facebook is ineffective, so competitors must seek an alternate path.29. 29 WHAT ARE THE COMPETITIVE STRATEGIES AT PLAY IN MARKETS IN WHICH SWITCHING COSTS MATTER? New customers are won with bargains, then they are “ripped off”3  This happens when customers are offered low “introductory offers” in order to entice them to adopt a product. Prices increase once lock-in has been established.  A common example are products that are free up to a certain usage threshold but for which continued use beyond the set threshold requires customers to pay. Various mechanisms might be used to ensure the onset of customer lock-in, and improvements in the product’s features and capabilities are designed to nudge users over the threshold beyond which they have to become paying customers.  This tactic is common among cable TV and satellite TV providers, and also among internet service providers.30. 30 WHAT ARE THE COMPETITIVE STRATEGIES AT PLAY IN MARKETS IN WHICH SWITCHING COSTS MATTER? Customers are paid to switch4  Consider three segments of an incumbent producer’s customers:  Existing locked-in customers,  Unattached or new customers,  Customers locked into a rival.  In this situation, rival producers will implement price discrimination:  Existing locked-in customers get one set of prices,  New or unattached customers get another set of prices,  Customers locked into rivals are paid to switch.  This tactic is common with cellular phone service providers and credit card issuers.31. 31 WHAT ARE THE COMPETITIVE STRATEGIES AT PLAY IN MARKETS IN WHICH SWITCHING COSTS MATTER? A portfolio of products is bundled together in order to increase total switching costs5  In order to make a switch, the customer must deal with nearly all the switching costs we have previously considered at the same time.  It works especially when the incumbent producer offers a product line that is so broad that most customers simply deal with the incumbent as their single supplier for the entire line of products that they use. Ex: Microsoft’s strategy of giving away Internet Explorer in a bundle with Microsoft Windows reportedly led to the demise of Netscape Navigator. I would guess that beyond merely bundling Explorer with Windows, Microsoft built-in a number of features that made Navigator less compatible with the Windows operating system than Explorer.32.  Switching costs play an important role in retaining customers, and motivating repeat purchases in the future.  Early stage startups must spend some time understanding the features that create value for the customer while building customer lock-in early in their product design process.  The existence, or lack thereof, of switching costs amongst the incumbent’s customers will play an important role in determining its competitive response:  In a market with low switching costs, one might expect vicious price wars to ensue. Generally, such price wars will always favor the presumably better capitalized incumbent. Moreover, price wars are a bad idea for the incumbent as well as the new entrants.  In a market where the incumbent enjoys significant customer lock-in with ensuing monopoly profits, one generally expects new entrants to find a foothold from which they can eventually migrate up-market 32 CONCLUSION ON SWITCHING COSTS33. 33 4 INTANGIBLE ASSETS34.  An asset is a resource that is owned by a startup with the expectation that it will provide an economic benefit to the startup in the future.  Intangible Assets are assets that are not physical in nature. 34 WHAT ARE INTANGIBLE ASSETS? Intangible assets—a skilled workforce, patents and know-how, software, strong customer relationships, brands, unique organizational designs and processes, and the like—generate most of corporate growth and shareholder value. They account for well over half the market capitalization of public companies. They absorb a trillion dollars of corporate investment funds every year. In fact, these “soft” assets are what give today’s companies their hard competitive edge. Baruch Lev, Sharpening The Intangibles Edge, Harvard Business Review June 2004 Issue “35. INTELLECTUAL PROPERTY BRAND R&D REGULATORY ENVIRONMENT CULTURE & MANAGEMENT 35 THE DIFFERENT TYPES OF INTANGIBLE ASSETS36. As far as early stage technology startups are concerned I am mostly interested in: “ Copyrights Trademarks Patents Trade secrets 36 INTELLECTUAL PROPERTY - overview Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. World Intellectual Property Organization37. A copyright protects the original author’s work - that can be stored in some form of fixed media - from indiscriminate copying by other people.  Original author’s work: computer software, computer programs, blog posts, advertisements, marketing materials, videos, pictures, etc.  Some form of fixed media: Creating the work in my mind is not enough, but the moment I commit it to software or document it some other tangible way (even a notebook), the copyright comes into existence.  Protects: - Copyright registration: not necessary but in the US, a copyright holder can not file a lawsuit for infringement if the copyright is not registered with the United States Copyright Office. - For an individual, for the life of the original author + 70 years beyond his death - For a startup, for 120 years from the date of creation or 95 years from the date of publication. 37 INTELLECTUAL PROPERTY Copyrights 1/238. Note on copyrights for early stage startup: “WORK FOR HIRE DOCTRINE” “ 38 INTELLECTUAL PROPERTY Copyrights 2/2 In early stage startups, the parameters for determining who is an employee is not very straightforward. Thus, I believe founders should make it a practice to protect some of the work done by contractors and vendors with work for hire agreements, that will state unambiguously that the work product covered by the agreement between the startup and the contractor is a work for hire to the benefit of the startup. If a work is made for hire, an employer is considered the author even if an employee actually created the work. The employer can be a firm, an organization, or an individual United States Copyright Office39. A trademark is a brand name. A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services. US Patent and Trademark Office “ 39 INTELLECTUAL PROPERTY Trademarks 1/2 Similar to copyright protection, merely using the mark in the course of doing business establishes the trademark right for the startup that owns the mark. A startup founder seeking trademark protection should seek the advice of an IP attorney since this is a more complicated topic than copyright protection.40. According to the International Trademark Association trademarks are:  Fanciful Marks – coined (made-up) words that have no relation to the goods being described (e.g., EXXON for petroleum products).  Arbitrary Marks – existing words that contribute no meaning to the goods being described (e.g., APPLE for computers).  Suggestive Marks – words that suggest meaning or relation but that do not describe the goods themselves (e.g., COPPERTONE for suntan lotion).  Descriptive Marks – marks that describe either the goods or a characteristic of the goods. Often it is very difficult to enforce trademark rights in a descriptive mark unless the mark has acquired a secondary meaning (e.g., SHOELAND for a shoe store).  Generic Terms – words that are the accepted and recognized description of a class of goods or services (e.g., computer software, facial tissue). A fanciful mark has the strongest trademark protection. A generic mark has the weakest protection. Over time, the protection afforded a fanciful mark can wane if that term becomes a generic term that is used to describe a category. 40 INTELLECTUAL PROPERTY Trademarks 2/241. WHAT IS A PATENT?  A patent is an exclusive right granted for an invention; a product or a process that generally provides a new way of doing something, or offers a new technical solution to a problem.  Patent protection means that the invention cannot be commercially made, used, distributed, imported, or sold by others without the patent owner’s consent.  During the period in which the invention is protected, the patent owner can:  give permission to (license) other parties to use the invention on mutually agreed terms  sell the right to the invention to someone else, who will then become the new owner of the patent.  Once a patent expires, the protection ends, and an invention enters the public domain: anyone can commercially exploit the invention without infringing the patent. 41 INTELLECTUAL PROPERTY Patents 1/742. 42 INTELLECTUAL PROPERTY Patents 2/7 TYPES OF PATENTS  There are design patents and utility patents.  Design patents are used to protect the appearance of an invention.  Utility patents comprise most of the patent applications made to the US Patent and Trademark Office and are used to protect the functional features of an invention. They generally provide broader protection than design patents, also it is easier to avoid infringing on a design patent. They are also more expensive and take longer to obtain.43. CONTENT OF PATENT APPLICATIONS To get a patent, technical information about the invention must be disclosed to the public in a patent application, that must be:  Patentable  New, or novel  Useful: a theory will not receive patent protection, in and of itself if it is not useful in a practical application.  Non-obvious: “someone of ordinary skill in the arts” would not necessarily have reached the deductions made by the inventor on the basis of prior art in that technical field  Adequately described: “someone of ordinary skill in the arts” should be able to replicate the invention using nothing but prior background in that technical field along with the inventor’s description in the patent application Software and business process patent applications will also likely be subjected to a “machine or transformation test.”  The machine test means that software or business processes can not be patented unless they are combined with a machine of some sort – a computer.  The transformation test means that software or business processes cannot be patented unless they transform one thing into another, different thing, or into a different state. 43 INTELLECTUAL PROPERTY Patents 3/744. FILING A PATENT APPLICATION There are two main patent award systems:  first to invent jurisdictions (like the US)  first to file jurisdictions Public disclosure causes the invention to become part of the “prior art” in the field of the invention. In the US: From the first disclosure to the public, the inventor has 1 year within which to file a patent application. If he doesn’t, he either forfeits patent protection for that embodiment of the invention or he can file for a provisional patent application with the USPTO to preserve a filing date. A final, or utility application has to be filed within 12 months, and will be examined by the USPTO to determine the merit of the inventors appeal for patent protection. Outside the US: Inventors do not have the benefit of a grace period. As a result any international patent applications must be made as soon as possible, in order to preclude public disclosure by the inventor. 44 INTELLECTUAL PROPERTY Patents 4/745. WORKING WITH PATENT ATTORNEYS OR PATENT AGENTS  They are unlikely to be experts in the technical field of an invention even if they specialize in the legalities of obtaining a patent in that field.  It is the inventor’s responsibility to transfer as much background knowledge as possible about the technical field of the invention and specific nuances of the invention itself to the patent agent/attorney.  This will help the attorney perform a more complete and comprehensive patentability search.  It will ensure that the patent application is drafted correctly from the outset. That has the benefit of minimizing rework.  It will also help the attorney answer questions and respond to objections during the period when the patent is being examined by patent examiners 45 INTELLECTUAL PROPERTY Patents 5/746. ADDITIONAL SUGGESTIONS – Part 1  Maintain “excruciatingly detailed” notes about the invention. You should describe the invention such that someone of considerably less expertise than you can understand the description. Keep pictures, drawings, figures, and any data that you create as you go through the invention process. You can maintain a “lab-book” with numbered pages, dates, and handwritten notes about how you have tested your invention using theory, as well as the steps you have taken to test the output of what you have created. These can be supplemented by electronic notes created with MS Word, and also saved as PDF files as well as spreadsheets you have developed to test the idea further.  Describe prior attempts to do what your invention does, and keep notes about why those prior attempts did not work.  Keep notes about the alternatives to your invention, and descriptions about how your invention is unique. You should describe the advantages of your invention over the prior art and alternative approaches.  Keep records about any discussions you have had about the invention with people outside of the immediate team working on your startup’s product. 46 INTELLECTUAL PROPERTY Patents 6/747. ADDITIONAL SUGGESTIONS – Part 2  Discuss the possibility of obtaining international patent protection with your IP attorney.  In certain instances it is possible to speed up a patent application in the founders’ home jurisdiction by first obtaining a patent abroad.  The Patent Cooperation Treaty (PCT) between different jurisdictions states that patent offices can fast track the examination of an applicant that has received a final ruling from a first patent office (which allowed at least one claim), through the Patent Prosecution Highway (PPH).  This is particularly useful when foreign patent offices can grant patents in a much shorter time than the USPTO does. Ex: a startup applying for a patent (examination times can of course vary)  In the US, it will take 5 years or more  In the UK, it will take 18 months + 6 months fast track examination in the US through the PPH = 24 months to get the patent granted 47 INTELLECTUAL PROPERTY Patents 7/748.  A trade secret is any confidential and non-public information that confers a competitive advantage to the owner of that information because it is not known to the public, and especially because it is not known to competitors in that market.  The owner of the information must make demonstrable effort to keep the information secret.  Trade secrecy can be lost by legitimate means, such as reverse-engineering by a competitor. It lasts for as long as the information remains confidential and undisclosed to the public. Any kind of information can be designated as a trade secret by its owner.  The key to maintaining trade secrecy is the creation of internal practices and procedures that are designed to protect the information designated as “trade secrets” from being divulged to the public. Ex: The mystique behind the formula for Coca Cola is one famous example of a trade secret. 48 INTELLECTUAL PROPERTY Trade secrets 1/249. ADVANTAGES  It is cheaper than going through the process of obtaining a patent.  It can cover subject matter that would not qualify for patent protection.  It comes into effect almost instantaneously, and that protection can last indefinitely if appropriate processes, procedures and practices are put in place. DISADVANTAGES  Once trade secrecy is lost, it is lost forever.  They can be reverse engineered by others.  Information protected by one party (A) could legitimately be “independently invented” by another party (B), who would patent it, resulting in a violation of B’s patent by the first inventor A  speak with an attorney for more details  It provides a significantly lower degree of protection than protection obtained from holding a patent. 49 INTELLECTUAL PROPERTY Trade secrets 2/250. INTELLECTUAL PROPERTY BRAND R&D REGULATORY ENVIRONMENT CULTURE & MANAGEMENT 50 THE DIFFERENT TYPES OF INTANGIBLE ASSETS51. WHAT IS A BRAND? Austin McGhie emphasizes throughout his book Brand is A Four Letter Word that a company’s brand embodies the market’s response to:  The company’s product,  The customer/user’s experience when they use the product, and  The company’s marketing strategy, which should lead to a differentiated and valuable positioning of the company and its products relative to its competitors.  It is an “emotional shorthand for a wealth of accumulated or assumed information”, which can be positive or negative.  It develops over time, as users and customers build an accumulation of experiences with the product or service.  Positive feelings should be reinforced continually and consistently by the company through its PR and marketing. 51 BRAND 1/352. “ “ 52 BRAND 2/3 HOW A STRONG BRAND CAN BE AN ECONOMIC MOAT A brand creates an economic moat around a company’s profits if it increases the customer’s willingness to pay or increases customer captivity. A moat worthy brand manifests itself as pricing power or repeat business that translates into sustainable economic profits. Why Moats Matter A brand is present when the value of what a product, service, or personality means to its audience is greater than the value of what it does for that audience. Brand is a Four Letter Word53. 53 BRAND 3/3 EARLY STAGE TECHNOLOGY STARTUPS TOO OFTEN NEGLECT THEIR BRAND  A common reasoning is that there is no capital to devote to marketing.  However, the first step has already been done by the company when building its product: getting an intimate knowledge of its customers/users. Marketing is multifaceted and doesn’t have to be expensive: use social media to build the hype, have the founders embody the brand, etc. Trademarks, copyrights, design, iconography, and trade secrets (as a source of implicit brand affinity and loyalty) should also all reinforce the positive emotions that the startup has already been accumulating. In a few words, implement a simple strategy to communicate on 3 levels to customers:  WHAT – What problem does the startup’s product solve for them?  HOW – How is this better than the current alternative?  WHY – Why should they accept the risk that comes with trying a product from an early-stage startup? Why will they gain more than they stand to lose?54. INTELLECTUAL PROPERTY BRAND R&D REGULATORY ENVIRONMENT CULTURE & MANAGEMENT 54 THE DIFFERENT TYPES OF INTANGIBLE ASSETS55. 55 RESEARCH AND DEVELOPMENT 1/2 WHAT IS R&D? R&D is the set of systematic, investigative, and exploratory activities that a business chooses to conduct with the intention of making a discovery that can either lead to the development of new products or procedures, or that can lead to an improvement of existing products or procedures, and in the process develop better ways of solving customers’ problems, creating new profit opportunities for the business.  It is systematic, investigative, and exploratory – it seeks to expand the boundaries of organizational knowhow and organizational capacity.  It seeks to solve customers’ problems in a better way than the status quo.  It seeks to create new opportunities for the startup to make profits. For those reasons, ongoing R&D is one important means by which any organization that operates in a competitive market can create an enduring competitive advantage for itself.56. 56 RESEARCH AND DEVELOPMENT 2/2 R&D IS A GOOD INDICATOR OF FUTURE PROFITABILITY  Studies have shown that R&D intensive firms have sustained future profitability.  So what does this mean for early stage investors? All else equal, invest in startup founders who show indications of being capable of building organizations that will become R&D leaders in the markets in which they have to compete.  How might one go about assessing this? How often in the past have the founders’ started with the same information as everyone one else, but examined it in a way that led to unexpected results that proved to be correct and so enabled them to exploit an opportunity others ignored or did not know existed? For early stage technology startups, R&D should purposely seek to strengthen both the startup’s ability to win and retain customers, and increase profitability.57. INTELLECTUAL PROPERTY BRAND R&D REGULATORY ENVIRONMENT CULTURE & MANAGEMENT 57 THE DIFFERENT TYPES OF INTANGIBLE ASSETS58. 58 CULTURE & MANAGEMENT 1/5 INVESTING IS MAKING A BET ON THE FOUNDERS’ DECISION-MAKING ABILITIES  Seed-stage investors are really taking a bet on the founders’ decision-making skill as managers of entrepreneurial risk, and the assumptions that drive those decisions.  It is very hard to differentiate between skill and luck at that stage because the financial ratios and metrics that one could use to make that determination do not yet exist. Managerial decision making skill only reveals itself over time.  What kinds of decisions will founders make, and make correctly on a consistent enough basis to yield a return on the investors’ capital?  The qualities of a good entrepreneur are multifaceted and not so easily visible in early stage technology startups.59. THE ENTREPRENEURIAL STATE OF MIND In some cases, including the entrepreneurial context, uncertainty includes not only uncertainty about others’ actions, but also uncertainty regarding the courage and willingness of others to act. Ross B. Emmet, Frank H. Knight on the “Entrepreneur Function” in Modern Enterprise (PDF)  Jean-Baptiste Say – 1800 // An entrepreneur shifts resources out of an area of lower productivity and into another area of higher productivity and return.  Frank H. Knight – 1921 // An entrepreneur is someone who confronts a business challenge and is confident enough to risk financial loss in order to overcome that challenge.  Joseph Schumpeter – 1965 // An entrepreneur is someone who exploits market opportunities through technical and organizational innovation.  Peter Drucker – 1970 // An entrepreneur is someone who always searches for change, responds to it and exploits it as a business opportunity.  Robert Hisrich – 1990 // An entrepreneur is someone who takes the initiative to organize social and economic factors of production in order to create something unique that is of value to society, and accepts financial and social risk in the process. 59 CULTURE & MANAGEMENT 2/560. 60 CULTURE & MANAGEMENT 3/5 HOW TO DISCERN POTENTIALLY GREAT MANAGERS  Study the founders’ past accomplishments and try to determine which aspects of that track record result from decision-making skill and which ones result from luck. Weigh those two things during the assessment of what that means for the startup.  Take sufficient time to observe founders’ decision-making skills and abilities – individual skill matters just as much as collective skill.  Look at the role each co-founder plays in the final outcome.  The early stage startup founders who excite me the most have convinced me that they know how to build an organization that will become exceedingly more valuable than the sum of its parts. They must inspire excellence from their co-founders, from other early team members they recruit to join the startup, and they must inspire devotion from their early customers.61. DECISION-MAKING PITFALLS  Insufficient focus on the customer, too much focus on the technological innovation.  Sub-par outcomes regarding recruiting great people, and empowering them to bring the founders’ vision into reality.  Inability to think creatively about new organizational designs and structures that will yield better insights about shifts in the expectations of existing customers, the hidden pockets of potential new customers, and opportunities that might be going unrecognized by competitors.  Incongruities between what the startup needs to accomplish in order to satisfy its customers and achieve product-market fit, and the choices that the founders make. There are many others. 61 CULTURE & MANAGEMENT 4/562. CULTURE EMERGES FROM THE START The culture of a startup is determined predominantly by the attitude, behavior, and personality of the founders. Look out for these elements:  Founders are self-aware, and understand how their behavior affects the startup through the response it elicits from members of their team, from their early customers/users, and from their early investors.  The way the founders talk about themselves and the organization they are building is distinctive, it illuminates the founders’ beliefs about the world, and about the reality they will create as a result of those beliefs.  They understand what they need to do to build a winning team. They also know why they need to do those things if they want their team to succeed.  They understand that culture is not something they can ignore until things are falling apart, rather it has to be tended continually. Culture matters just as much as other organizational functions that are much easier to measure and manage. 62 CULTURE & MANAGEMENT 5/563. INTELLECTUAL PROPERTY BRAND R&D REGULATORY ENVIRONMENT CULTURE & MANAGEMENT 63 THE DIFFERENT TYPES OF INTANGIBLE ASSETS64. WHAT IS IT AND HOW DOES IT WORK?  The regulatory environment is the framework of rules, laws, and regulations that the startup and its competitors have to adhere to as they go about their operations.  The benefits of this asset accrue to every entity that decides to enter that market after rules have been established by regulatory bodies:  First-movers usually bear all the social, political, and financial risks of putting the regulatory environment in place.  Fast-followers get a free-ride after a regulatory framework has been established  In the United States there are many examples of regulators requesting comment from participants in an industry during the period when rules, laws, regulations are being crafted to govern the activities of organizations within a given market. 64 REGULATORY ENVIRONMENT 1/265. WHAT ABOUT ASSESSING EARLY STAGE STARTUPS?  Startup founders who can play a role in shaping the regulatory environment that is developed to govern their activities have a better chance of influencing events in their favor than founders who demonstrate an inability to influence legislation.  If it is appropriate I want to see some evidence that founders have an understanding of the role that regulations might play; will they be a catalyst or an impediment? What can the startup do to make regulations work in favor of the business model that the startup has set out to create?  This is one of the most difficult intangibles for me discuss:  I have relatively less experience on this subject than on the preceding ones.  It is so specialized, it will largely be outsourced to a lobbyist, at least in the US.  This is unlikely to be something a startup needs to worry about until it has grown considerably, which is likely to happen well beyond the seed stage. 65 REGULATORY ENVIRONMENT 2/266.  Assessing intangibles and their potential impact on the future of an early stage startup is hard work that can seem to rely on information that is even more qualitative and less data driven than other aspects of early-stage startup investment analysis.  Nonetheless, it is important to think through the issues carefully since that work can lead to important conclusions that highlight potential risks and uncertainties, point to future areas of possible opportunity, and yield better decisions about when and where the investor should deploy scarce capital.  Collectively, intangibles are important because once a startup establishes them as an asset, it is impossible for that asset to be replicated in exactly the same way by a competitor. 66 CONCLUSION ON INTANGIBLE ASSETS67. 67 5 COST ADVANTAGES68.  A cost advantage arises when a company can sustainably lower its costs of doing business relative to its competitors.  Such a reduction in costs can be due to process advantages, superior location, economies of scale, or access to a unique asset. In other words: Definition: A cost advantage is a structural feature of a startup’s business model that enables it to maintain sustainably lower overall costs of doing business than its competitors while earning equal or higher margins over time. 68 WHAT IS A COST ADVANTAGE?69. For early stage technology startups, these are the most important sources from which a cost advantage may be derived. 69 SOURCES OF COST ADVANTAGE PEOPLE & CULTURE SYSTEMS & PROCESSES FACILITIES CAPITAL  When a startup develops a unique organizational culture, it creates management processes, and organizational structures that enable and empower members of the team to consistently generate significantly better results than the results of its direct competitors and that beat the adjusted-performance of more well-established incumbents in that market.  This source of cost advantage is intimately connected to the intangibles of Management and Culture, and Research and Development.70. For early stage technology startups, these are the most important sources from which a cost advantage may be derived. 70 SOURCES OF COST ADVANTAGE PEOPLE & CULTURE SYSTEMS & PROCESSES FACILITIES CAPITAL  When a startup develops unique organizational processes that enable it to consistently generate comparatively superior results. Key categories are:  Marketing and Sales Processes: how to create demand and satisfy it through delivery.  Operational Processes: how tangible and intangible inputs are turned into something the market is willing to pay for.  Distribution Processes: channels of delivery. A choice must be made between direct distribution and indirect distribution channels, and how it will affect the ability to maintain an overall cost advantage.  Support Processes: activities that make everything else that the startup does possible – ex: HR.  Systems & Processes are intimately tied to People & Culture to create an environment in which unique tangible and intangible assets are developed consistently over time to increase the competitive advantage over competitors.71. For early stage technology startups, these are the most important sources from which a cost advantage may be derived. 71 SOURCES OF COST ADVANTAGE PEOPLE & CULTURE SYSTEMS & PROCESSES FACILITIES CAPITAL  This cost advantage is derived from the physical infrastructure that a startup needs in order to operate.  For early stage tech startups, hard decisions begin to be necessary when the startup has scaled to a point at which off-the-shelf hardware products are no longer good enough for what the startup seeks to accomplish.  This is often the point at which startups must consider the advantages or disadvantages they may derive from building custom hardware instead of relying on what’s available from outside vendors or partners.  It can also be tied to a geographic location which gives the startup unfair access to an input that is critical for what it does.72. For early stage technology startups, these are the most important sources from which a cost advantage may be derived. 72 SOURCES OF COST ADVANTAGE PEOPLE & CULTURE SYSTEMS & PROCESSES FACILITIES CAPITAL  This cost advantage is determined by the startup management team’s ability to allocate capital in such a way that the startup successfully navigates the path it must travel between being a startup and becoming a company.  Cost advantages due to capital are determined by:  External sources of capital – potential outside investors and sources of trade credit,  Internal sources of capital – existing capital raised from investors, financial management of money the startup expects from its users or customers and money it owes to the vendors and business partners with whom it has a working relationship.73. 73 6 EFFICIENT SCALE74. “ Efficient scale describes a dynamic in which a market of limited size is effectively served by one company or a small handful of companies. The incumbents generate economic profits, but a potential competitor is discouraged from entering because doing so would cause returns in the market to fall well below the cost of capital. Why Moats Matter 74 WHAT IS EFFICIENT SCALE? In other words, from my perspective as an early stage investor: A startup can scale efficiently if doing so does not drive its customer or user acquisition costs to unsustainable levels over time, and if the startup’s decision to enter that market does not drive returns in the market to levels that are below the cost of capital for incumbent companies in that market over the short term.75. Product-market fit milestone: when demand for a product at a price that is profitable for the startup’s business model begins to outstrip the demand that could have been explained by its marketing, sales, advertising, and PR efforts. Before Product-Market Fit (BPMF) Everything takes a lot of effort. Every sale is tough, everything that can go wrong will go wrong, and most of the sales deals will fall apart. After Product-Market Fit (APMF)  Demand for the startup’s product threatens to outstrip the startup’s ability to meet that demand. This is when a startup must scale, and scale fast and efficiently. 75 BEFORE AND AFTER THE PRODUCT-MARKET FIT  There are two reasons to scale at this point:  There is demand for the startup’s product from its users or customers that should be met  APMF is the point at which copy-cat competition starts to materialize from new entrants, and possibly from incumbents too.76.  Efficient scale means different things at different points in the startup’s lifecycle: A team of 2 co-founders scales differently than when the team has grown to 20 people. In other words the way to pursue scale BPMF differs markedly from the way to pursue scale APMF.  Premature scaling seems great initially, until it leads to startup failure and death  The cadence of hiring is important:  BPMF hiring should be slow, deliberate and methodical  APMF the challenge is to hire the right people for the startup as quickly as is necessary to keep up with demand, and cope with competition. For this reason building sound and cost-advantageous systems & processes, and modifying them as the startup grows is important.  Technology-enabled scaling wins:  Tools to promote communication and collaboration once the teams grow  Tools to make salespeople as effective as they can be  Operations should seamlessly transition from one order of magnitude of scale to another without a deterioration in customer or user satisfaction  Customer or user acquisition should not be slowed unnecessarily by a failure to account for what customers are willing to do in order to get the product.  Culture makes a difference: Startups with a strong culture will scale more successfully than startups with a weak culture.  Eventually, most founders must also become managers and coaches: Not every founder is cut out for this and some may want to remain as close to building the product as possible – they need to be self-aware about this. 76 KEY CONSIDERATIONS FOR EFFICIENT SCALE77. 77 7 CONNECTING THE DOTS78. Founders’ willingness to conceptualize and build such moats should be self-evident. It should not be a secret that is hidden from investors. An economic moat is not the same thing as a competitive advantage. A competitive advantage is temporary. A durable economic moat is unique, and typically can not be duplicated. Startups need an economic moat that is derived from more than one source. In relation to Internet and other software technology business models, indirect network effects can prove to be as important as direct network effects. Intangibles often offer some of the strongest foundations on which to build an economic moat. Management & Culture, and R&D stand out to me because everything else emanates from those two. Cognitive costs are a real barrier to entry - especially for startups building products for sale to other businesses - and are nearly impossible to articulate or measure. A seed stage startup must find that niche of potential customers for whom the sum of cognitive costs and uncertainty is a minimum. To last, a cost advantage should yield increased value for users and customers. Finding product market fit does not automatically lead to conditions that favor efficient scale. Extended unprofitable growth is one sign that a market might not have the characteristics to support efficient scale, or that the startup has not thought its business model through enough. 78 SOME FINAL OBSERVATIONS when assessing early stage technology startups and their potential economic moats79. CONTACT ME 79 Twitter: @brianlaungaoaeh Blog: Brian Laung Aoaeh's Blog | Innovation Footprints THANK YOU! For more detailed discussion, the content of this presentation is available on my blog Design credits: Chloe Lolicart – [email protected] // Send Chloe a request for your next presentation!i hope that could be more help

You can do both. Get a STEM degree first, then law school and an LLM. “Nearly every examiner in the biotechnology group at the United States Patent and Trademark Office (USPTO) has a Ph.D. and has conducted scientific research. Indeed, most attorneys working in biotechnology patent law have science Ph.D.s, and many have impressive postdoctoral experience.”Biotechnology Law is a rapidly growing, highly specialized field of law, closely associated with pharmaceutical law and stemming from the field of science and technology. Despite its specialized nature, this area of law does overlap with a few other main practice areas: intellectual property law; patent law (and specifically, patent prosecution); licensing law; litigation; business law; and venture capital law.Biotechnology is generally defined as the manipulation of microorganisms to perform certain processes and is largely identified with genetic engineering. The procedure usually involves the transfer of genes from one living entity into another, or into a synthetic compound, using advanced recombinant DNA technology. It covers any technological application that uses biological systems, living organisms, or their derivatives, to create, manufacture, modify or adapt plants, products, goods, animals or processes for specific use.Its applications are useful in the medical field (red biotechnology), the aquatic field (blue biotechnology), the agricultural field (green biotechnology), and the industrial field (white biotechnology). It is involved in the development of new medicines and therapies; new research tools; increasing crop yields; creating hardier crops and plants; increasing the taste, texture and nutritional value of food; decontamination; removal of manmade pollutants and waste; and much more.With biotechnology, the development time between working theory and a tangible product is far longer than that of other companies, generally seven to ten years. And these are very costly endeavors, ranging from $250 million to $300 million to create, develop, test and prepare a drug/product for market. The nature of these types of innovations and the rapidly evolving laws and regulations regarding biotechnology make this legal practice area both difficult and challenging. Lawyers, companies and scientists must struggle with complex issues involving necessary and applicable financial backing and how best to develop and create business agreements; intellectual property rights; convoluted, drawn-out regulatory proceedings; and many other challenges and obstacles spread over a lengthy time period.The Coordinated Framework for Regulation of Biotechnology is the U.S. government’s formal policy for dealing with biotechnology and its applications. It was enacted by the Office of Science and Technology Policy (OSTP) Agency and is implemented by the Department of Agriculture (DOA), the Food and Drug Administration (FDA), and the Environmental Protection Agency (EPA). The federal Biotechnology Patent Protection Act allows the patenting of biotechnological processes and/or the resulting products or materials, provided they are novel and non obvious. The FDA largely regulates how drugs and other pharmaceutical products may be brought to market.Copyright http://HG.orgBiotechnology Law - USABA - Biotechnology Law Commitee The Biotechnology Law Committee, part of the ABA Section of Science & Technology Law, keeps abreast of various topics relating to biotechnology including research, commercial, regulatory and patent issues. The committee also covers biotechnology issues relating to clinical medicine, such as gene therapy, forensic medicine, such as DNA fingerprinting, and other areas of biotechnology raising ethical and/or evidentiary issues. The committee follows pending legislation designed not only to control the availability of products of biotechnology, but also to protect the proprietary rights of biotechnology developments in the U.S.Animal and Plant Health Inspection Service (APHIS)APHIS uses the term biotechnology to mean the use of recombinant DNA technology, or genetic engineering (GE) to modify living organisms. APHIS regulates certain GE organisms that may pose a risk to plant or animal health. In addition, APHIS participates in programs that use biotechnology to identify and control plant and animal pests. Below is a list of the regulatory requirements for genetically engineered organisms and facilities.Biological Product Deviations On November 7, 2000, the Food and Drug Administration published a final rule to amend the requirements of reporting errors and accidents in manufacturing of products. The rule amended the regulation at 21 CFR 600.14 for licensed biological products, and added a requirement at 21 CFR 606.171 applicable to all manufacturers of blood and blood components.FDA's Biotechnology Policy In the Federal Register of May 29, 1992 (57 FR 22984), FDA published its "Statement of Policy: Foods Derived from New Plant Varieties" (the 1992 policy). The 1992 policy clarified the agency's interpretation of the application of the Federal Food, Drug, and Cosmetic Act with respect to human foods and animal feeds derived from new plant varieties and provided guidance to industry on scientific and regulatory issues related to these foods.Federal Food, Drug, and Cosmetic Act The FDA's online reference edition of the Federal Food, Drug and Cosmetic Act is based on the publication Compilation of Selected Acts Within the Jurisdiction of the Committee on Energy and Commerce; Food, Drug, and Related Law, As Amended Through December 31, 2004, prepared for the use of the Committee on Energy and Commerce, U.S. House of Representatives, March 2005. Updates have been made in the online edition as the act was amended since that time. Notes in the text indicate when the online version was updated, rather than the date the change was enacted.Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) EPA and the states (usually that state's agriculture office) register or license pesticides for use in the United States. EPA receives its authority to register pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Exit EPA disclaimer States are authorized to regulate pesticides under FIFRA and under state pesticide laws. States may place more restrictive requirements on pesticides than EPA. Pesticides must be registered both by EPA and the state before distribution.Federal Issuance of Experimental Use Permits An experimental use permit (EUP) is generally required for testing of any unregistered pesticide or any registered pesticide being tested for an unregistered use. However, as described in paragraph (b) of this section, certain of such tests are presumed not to involve unreasonable adverse effects and, therefore, do not require an EUP.Food Biotechnology in the United States - Science, Regulation, and Issues This report provides basic information on the science of food biotechnology. It discusses regulatory policies and issues of concern about the use of biotechnology to modify foods through genetic engineering. It describes the scientific processes used and current products available. It explains how all three major federal agencies - the Food and Drug Administration, the U.S. Department of Agriculture, and the Environmental Protection Agency - regulate these foods.Microbial Products of Biotechnology: Final Rule (62 FR 17910)The regulation under which the TSCA Biotechnology Program functions is titled "Microbial Products of Biotechnology; Final Regulation Under the Toxic Substances Control Act", promulgated in the Federal Register on April 11, 1997. This rule was developed under TSCA Section 5, which authorizes the Agency to, among other things, review new chemicals before they are introduced into commerce. Under a 1986 intergovernmental policy statement, intergeneric microorganisms (microorganisms created to contain genetic material from organisms in more than one taxonomic genera) are considered new chemicals under TSCA Section 5. The Biotechnology rule sets forth the manner in which the Agency will review and regulate the use of intergeneric microorganisms in commerce, or commercial research.Microbial Products of Biotechnology; Final Regulation Under the Toxic Substances Control Act EPA is promulgating this final rule under section 5 of the Toxic Substances Control Act (TSCA), 15 U.S.C 2604, to establish notification procedures for review of certain new microorganisms before they are introduced into commerce. &&New'' microorganisms are those formed by deliberate combinations of genetic material from organisms classified in different taxonomic genera. This review process is designed to prevent unreasonable risk of injury to human health and the environment without imposing unnecessary regulatory burdens on the biotechnology industry. This final rule describes notification procedures and the microorganisms that would be exempt from notification.Office of Science and Technology Policy The mission of the Office of Science and Technology Policy is threefold; first, to provide the President and his senior staff with accurate, relevant, and timely scientific and technical advice on all matters of consequence; second, to ensure that the policies of the Executive Branch are informed by sound science; and third, to ensure that the scientific and technical work of the Executive Branch is properly coordinated so as to provide the greatest benefit to society.Office of Science Coordination and Policy Biotechnology Team The Biotechnology Team located in EPA's Office of Science Coordination and Policy (OSCP) coordinates scientific, technical, and policy development activities within the Office of Chemical Safety and Pollution Prevention (OCSPP). The OSCP Biotechnology Team is also a focal point for coordination with other Federal agencies on any issues involving biotechnology, including international activities.Regulations of Genetically Engineered Organisms and Products - Biotechnology Information Series The United States Department of Agriculture (USDA), the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), and most state governments closely monitor the development and testing of a genetically engineered product and can provide pages of test results concerning its safety. However, in the end, only consumers themselves can decide if using a product, whether it is developed by genetic engineering or traditional methods, is right for them.Stem Cell Therapeutic and Research Act of 2005 On May 23, 2005, Representative Christopher Smith (R-NJ) introduced H.R. 2574, the Stem Cell Therapeutic and Research Act of 2005. The bill to provide for the collection and maintenance of human cord blood stem cells for the treatment of patients and research, and to amend the Public Health Service Act to authorize the C.W. Bill Young Cell Transplantation Program.The Plant Protection Act (PPA) The Plant Protection Act (PPA) became law in June 2000 as part of the Agricultural Risk Protection Act. The PPA consolidates all or part of 10 existing USDA plant health laws into one comprehensive law, including the authority to regulate plants, plant products, certain biological control organisms, noxious weeds, and plant pests. The Plant Quarantine Act, the Federal Pest Act, and the Federal Noxious Weed Act are among the 10 statutes the new Act replaces.Toxic Substances Control Act The objective of the Toxics Substances Control Act (TSCA) is to allow EPA to regulate new commercial chemicals before they enter the market, to regulate existing chemicals (1976) when they pose an unreasonable risk to health or to the environment, and to regulate their distribution and use.United States Regulatory Oversight in Biotechnology Responsible Agencies - Overview The Agencies primarily responsible for regulating biotechnology in the United States are the US Department of Agriculture (USDA), Environmental Protection Agency (EPA), and the Food and Drug Administration (FDA). Products are regulated according to their intended use, with some products being regulated under more than one agency.US Regulatory Agencies - Unified Biotechnology The Federal Government of the United States of America has a coordinated, risk-based system to ensure new biotechnology products are safe for the environment and human and animal health. Established as a formal policy in 1986, the Coordinated Framework for Regulation of Biotechnology describes the Federal system for evaluating products developed using modern biotechnology. The Coordinated Framework is based upon health and safety laws developed to address specific product classes. The U.S. Government has written new regulations, policies and guidance to implement these laws for biotechnology as products developed. This framework has allowed the United States to build upon agency experience with organisms and products developed using conventional techniques.Biotechnology Law - EuropeEuropean Biosafety Association (EBSA) European Biosafety Association (EBSA) was founded in June 1996. It is a not for profit organisation which aims to provide a forum for its members to discuss and debate issues of concern and to represent those working in the field of biosafety and associated activities. The Association has individual members, representing over 15 countries in Europe, as well as other regions.European Food Information Council (EUFIC) - Modern Biotechnology in Food Modern biotechnology - will touch the lives of most European by the close of the 20th century, whether in food, medicine or environmental protection - is the subject of lively and sometimes controversial debate throughout society. In common with many other major scientific and industrial advances, biotechnology raises a range of issues, such as safety, ethics and possible environmental impact.Food Safety and Biotechnology Policy In order to ensure that the development of modern biotechnology, and more specifically of GMOs, takes place in complete safety, the European Union has established a legal framework regulating genetically modified (GM) food and feed in the EU. This framework pursues the global objective of ensuring a high level of protection of human life and health and welfare, environment and consumer interests, whilst ensuring that the internal market works effectively.Life Sciences and Biotech Strategy The EU's Life Sciences and Biotech Strategy aims to make the European biotech sector more competitive and to foster research in the areas of health care, agriculture, manufacturing and the environment.Task Group on Public Perceptions of Biotechnology The Task Group on Public Perceptions of Biotechnology is one of the six Task Groups of the European Federation of Biotechnology. It was established in 1991, to increase public awareness and understanding of biotechnology and the life sciences throughout Europe. The objectives are to advance the public debate on biotechnology and to facilitate dialogue between interested parties.Biotechnology Law - InternationalConvention on Biological Diversity The Convention on Biological Diversity (CBD) entered into force on 29 December 1993. It has 3 main objectives: 1. To conserve biological diversity 2. The use biological diversity in a sustainable fashion 3. To share the benefits of biological diversity fairly and equitably.UN Department of Economic and Social Affairs - Biotechnology Environmentally-sound management of biotechnology is the subject of Chapter 16 of Agenda 21. Biotechnology is not directly addressed in the Johannesburg Plan of Implementation. Biotechnology is the integration of the new techniques emerging from modern biotechnology with the well-established approaches of traditional biotechnology. It is a set of enabling techniques for bringing about specific human-made changes in DNA, or genetic material, in plants, animals and microbial systems, leading to useful products and technologies.UN Food and Agricultural Organization (FAO) - Biotechnology Biotechnology provides powerful tools for the sustainable development of agriculture, fisheries and forestry, as well as the food industry. When appropriately integrated with other technologies for the production of food, agricultural products and services, biotechnology can be of significant assistance in meeting the needs of an expanding and increasingly urbanized population in the next millennium.United Nations Environment Programme - Environmentally Sound Management of Biotechnology Biotechnology is the integration of the new techniques emerging from modern biotechnology with the well-established approaches of traditional biotechnology. Biotechnology, an emerging knowledge-intensive field, is a set of enabling techniques for bringing about specific man-made changes in deoxyribonucleic acid (DNA), or genetic material, in plants, animals and microbial systems, leading to useful products and technologies.Organizations Related to Biotechnology LawBiotechnology Industry Organization (BIO) BIO is the world's largest biotechnology organization, providing advocacy, business development and communications services for more than 1,200 members worldwide. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products.National Agricultural Law Center The National Agricultural Law Center is the only agricultural law research and information facility that is independent, national in scope, and directly connected to the national agricultural information network. The Center has expanded the scope of its coverage to include food law as it recognizes the expanding scope of agricultural law and its convergence with food law topics. The Center is staffed by a team of law and research professors, lawyers, other specialists, and graduate assistants from the University of Arkansas School of Law Graduate Program in Agricultural Law.World Intellectual Property Organization (WIPO) - IP Services The relationship between intellectual property and life science innovations is a particular issue of immediate interest and significance to WIPO Member States. WIPO contributes to the practical understanding of the appropriate role and impact of intellectual property rights on life science technologies, including their ethical, development and health policy implications. WIPO supports international policy discussions and promotes the capacity of policymakers to explore and assess the full range of policy options.Publications Related to Biotechnology LawAll Biotechnology Law Cases and Briefs In addition to core biotechnology cases on liability and regulation, these pages include cases and regulations related to medical research, academic institutions, and general regulatory law issues that are critical to lawyers and scientists working in research and industry. Cases are added on a regular basis, and new additions can be found in the new cases section.Bioethics Forum Bioethics Forum, hosted by the Hastings Center Report, publishes thoughtful commentary from a range of perspectives on timely issues in bioethics. The opinions expressed in it are those of the authors and not The Hastings Center.de Gruyter Journal of International Biotechnology Law Walter de Gruyter is among the first academic publishers in the world to provide electronic access to its journals, books, and databases on a single platform. From now on, you will find all of our online journals and eBooks on this platform. Stay informed about newly added content via email or RSS feed.Mary Ann Liebert, Inc. - Biotechnology Founded in 1980, Mary Ann Liebert, Inc. is universally acknowledged for publishing authoritative peer-reviewed journals, books, and trade magazines in the most promising areas of biotechnology, biomedical research/life sciences, clinical medicine and surgery, alternative and complementary medicine, law, philanthropy, environmental science and sustainability.Articles on http://HG.org Related to Biotechnology LawHow to Draft Clinical Trial AgreementsClinical Trial Agreements (“CTAs”) can be surprisingly complex documents with numerous legal issues, particularly in the setting of a multi-center trial for a new drug product candidate. This outline highlights the principal issues typically arising in a CTA and some of the considerations for companies sponsoring pharmaceutical trials (“Sponsors”) in addressing these issues.SEC Rules Affecting Shell CompaniesWhat is a Shell Company? Securities Act Rule 405 and Exchange Act Rule 12b-2 define a Shell Company as a company, other than an asset-backed issuer, with no or nominal operations; and either: • no or nominal assets; • assets consisting of cash and cash equivalents; or • assets consisting of any amount of cash and cash equivalents and nominal other assets. By: Brenda Lee Hamilton, Attorney Hamilton & Associates Law GroupCan Law Keep up with Technology?Science and technology is advancing at a breakneck pace. With each passing day, new technologies and advancements make our world easier, safer and point toward a brighter future. But with each advancement and innovation, legal issues arise.The New Country of Origin Labeling Law (COOL) and How it Will be AppliedThis article discusses and explains the new Country of Origin Labeling Law (COOL) and describes the impact COOL will have on shoppers, food producers and retailers. The author also unwraps what foods the law covers and what foods and retailers are not regulated by this new law.An Inside Look At What Biotechnology Can Do For MankindThis article examines what biotechnology is and how it relates to the medical field, agriculture, bio processes, industry and the aquatic field. The author notes that as the planet becomes more polluted and more in need of clean water and food, the field of biotechnology will become even more important.All Science and Technology Law Articles Articles written by attorneys and experts worldwide discussing legal aspects related to Science and Technology including: biotechnology, chemical law, computer and software, data protection, information technology, internet law, research and development, telecommunications law.In Person: A Career in Biotech Patent LawBy William J. SimmonsOct. 14, 2011 , 8:00 AMCredit: Hidde de VriesI began to consider patent law as a career after working closely with a patent attorney to help prepare a patent application based on the research reported in my doctoral dissertation. During this process, I learned that the scientific standards for peer review (on the one hand) and patenting (on the other) were different, and that the two writing tasks -- a scientific paper and a patent application -- required different approaches. I also learned that the analytical skills I gained from my scientific training were directly applicable to assessing whether an invention was patentable.A patent law career offered practical advantages, I realized, over a career in academia. In academic science, funds for conducting research were -- and continue to be -- very limited, and the requirements for obtaining funding are exceptionally high. Capable and qualified scientists were not being funded, and many talented postdoctoral scientists were ahead of me in the long line for an academic position. Meanwhile, there was a shortage of people qualified, in science and in law, to work in patent law, and in the biotech industry the need for new patent expertise was -- and is -- increasing.Patent professionals work in companies, state and federal governments (including USPTO), private institutes, and nongovernmental organizations.Curious about a Career in Patent Law?Then you should read this overview, which covers the ins and outs of patent-related careers in the United States, the United Kingdom, Europe, and Australia.Yet, making a transition into patent law didn't require blazing a new trail, since patent law is a well-established career path for scientists. I was not aware of it at the time, but nearly every examiner in the biotechnology group at the United States Patent and Trademark Office (USPTO) has a Ph.D. and has conducted scientific research. Indeed, most attorneys working in biotechnology patent law have science Ph.D.s, and many have impressive postdoctoral experience.Developments in bioscience occur frequently, making the work dynamic and unpredictable. Patent attorneys are exposed to many new discoveries well before they are available to the public, providing a rare glimpse into our future.The legal aspect, too, is dynamic. Congress and the courts are still sorting out the legal framework for biotech patents. Recently, the courts decided a controversial case that asked a fundamental question: Are isolated genes patentable? The judges relied extensively on scientific findings to reach their much anticipated decision: Isolated genes are indeed patentable, at least for now.That decision -- and its tenuousness -- directly impacts those working in (and depending on) patent law. The future of many biotech companies depends on the gene patents they own and the strength of those patents. The potential for a dramatic revision of patent law makes it essential for biotechnology attorneys to stay abreast of developments in the law so that they may advise their clients appropriately.William Simmons (CREDIT: Courtesy of William Simmons)Another example of the need to keep up with the law is the recent establishment of a new law related to “biosimilars.” The Food and Drug Administration (FDA) has not yet issued guidelines for licensing biosimilar products in the United States; biotechnology patent attorneys must nevertheless be prepared to review information from FDA and USPTO and to advise clients without these guidelines. Skills in the biological sciences and the law help attorneys understand what the new U.S. biosimilar law means and how it is likely to be applied. I recently organized a conference and wrote a treatise on the new biosimilar law, which shows that a career as a patent attorney offers opportunities similar to those offered by a career in academic science.Biotechnology patent law requires the communication of complex scientific ideas, so excellence in writing and speaking is essential. While conducting postdoctoral studies to identify and modulate the activity of the NPM-ALK oncogene, I practiced and developed the skills necessary to explain the relevance of my work to lay people and nonspecialist scientists. Some grant-review panels -- such as those for cancer research grants -- include a layperson whose opinions must be considered when preparing an application.Practicing patent law requires managing a demanding schedule. Fortunately, my postdoc (and my graduate work) helped me learn this skill, too. As a postdoc, I coordinated experiments, taking into account the availability of personnel, machines, viable reagents, and so on. Missing a time point could have set the research back for weeks, or longer. The requirements in patent law are similar: It's necessary to juggle several projects, each with several deadlines and many people involved. Failing to keep to a schedule can have a serious impact on the success of client companies.I have a law degree, but a law degree isn't required to work in patent law. Ph.D. scientists who move directly into patent-related careers may work as technology specialists or as agents. Typically, these jobs require passing an exam. To be eligible to take the exam, you simply must have formal training in a relevant science.But many people who enter this field with Ph.D.s -- including me -- choose to become attorneys: attending law school, passing the patent bar examination, and gaining admission to a state bar association. A formal legal education is expensive and demanding and requires years to compete, but it will make you more marketable. Some firms will pay for law school tuition, but even if you can locate such an arrangement, your employer/sponsor will probably expect you to work as you study, which will delay the completion of your degree.Patent law jobs exist in many settings, not just at law firms. Patent professionals work in companies, state and federal governments (including USPTO), private institutes, and nongovernmental organizations. Each organization has different objectives and functions.Within a company, you're likely to specialize, since most companies are focused on a narrow area of science (i.e., therapeutic human monoclonal antibodies). The objective of patent attorneys working in companies is to protect and expand the intellectual property assets of the company by developing new patents and helping to protect existing ones.Examiners at USPTO, on the other hand, read patent applications, study the technology described in the applications, and assess the state of the art (i.e., the science) to determine whether a proposed invention is new and not obvious. Here, you may be called upon to evaluate a fairly wide range of technology, but you will still have a specialty.Another option is working at an institution, such as a university. Here, you may work with an even wider range of technology, with patentable ideas emerging from disciplines as far apart as, say, physics and microbiology. In my work at New York University in the technology transfer office, I evaluated the potential of university research and attempted to identify companies that might be interested in licensing the technology.If you are considering biotechnology patent law as a career, talk to as many people as you can: to someone at USPTO about taking the patent examination, to admissions counselors about your law school options, and to attorneys about their day-to-day work. Professional associations, including the American Bar Association and the American Intellectual Property Law Association, are outstanding sources of information and are usually happy to connect interested people with practitioners in the field.Making the decision to switch to a career in patent law requires weighing and balancing many factors. But if you have the appropriate skills and enjoy analyzing and communicating about scientific innovations, patent law could be your ideal career.DOI: 10.1126/science.caredit.a1100114William J. SimmonsWilliam Simmons is a patent attorney in Washington, D.C., working in all aspects of patent law, with a focus on biotechnology and biopharmaceuticals. He is currently preparing a legal treatise, Biologic Patenting and Regulation, to be published in 2012 by BNA and AIPLA.Twitter