1. Understanding product development
CHAPTER 4
Understanding product development

2. 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. 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. 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. The Consequences of Resource Shortfalls for New Product Development
Figure 6.1
The Consequences of Resource Shortfalls for New Product Development

6. 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:
Design products right the first time
Shorten the time-to-market
Outsource some product developments tasks to create a lean structure

7. The New Product Development Success Curve
Figure 6.2
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 Reprinted with permission.

8. 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. Figure 6.3
From Idea to Market

10. 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. 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. 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. Is the Invention Patentable?
The invention must fit into one of the five classes established by Congress:
Machine or something with moving parts or circuitry
Process or method for producing a useful and tangible result
Article of manufacture
Composition of matter
A new use or improvement for one of the above that does not infringe on the patents associated with them

14. 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. 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. 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. Provisional or Non-provisional Patents
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. 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. 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. 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. 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. 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. 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. 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.