Guidelines for the Implementation of Invention Based Enterprise Development (IBED) Assistance Program

October, 2014

DOST-TAPI ADMINISTRATIVE ORDER NO. 172-14

 

1.0 Background

The Department of Science and Technology through the Technology Application and Promotion Institute (TAPI) was tasked to implement Republic Act No. 7459 otherwise known as "Inventors and Invention Incentives Act of the Philippines" which provides assistance to Filipino inventors. In recognition of the indispensability of the Filipino inventors in the development of technological capabilities, and in the landscape of national economic development, TAPI implements a comprehensive program of assistance for invention development and commercialization through pilot production prior to full commercialization of the inventions.

2.0 Program Description

The Invention-based Enterprise Development (IBED) Program shall support an inventor in developing the invention into a business enterprise by making it available to the consumers. Funds will be provided for the pilot production of the invention including raw materials, labor and overhead costs directly related to the production and the purchase of the equipment needed to manufacture the new inventions.

The Program shall provide financial support to Filipino inventors to start a business enterprise from the invention. The Program beneficiary must be able to develop as an invention-based enterprise to satisfy basic social needs and a result of a responsive research and development (R&D) to provide for a solution of a problem.

Commercialization of a successful invention into a marketable product is a major milestone in the life of any inventor. However, long term success requires multiple marketable offerings. It is an established fact that hardly will a business take off upon its birth. If or this reason alone that additional support is given for start-up, the more that this is necessary for inventors for inventions have greater barriers to hurdle. Inventors have the ability to churn many inventions that appears to have strong commercialization potential. However, because of previous assistance that has not been closed, the opportunity may be lost if they are not given extra consideration.

3.0 Program Objectives

The Program shall:

3.1 Support the establishment of an enterprise through commercialization of technically and economically viable inventions; SDAaTC

3.2 Assist in the development of sustainable enterprises out of inventions;

3.3 Assist the inventors develop into successful entrepreneurs;

3.4 Support the early stages of commercial development and reduce risks in marketing and commercialization; and

3.5 Address gaps that inhibit the translation of invention into economic and social benefits.

4.0 Definition of Terms

The terms used in this Guidelines can be referred to the DOST-Grant-in-Aids Guidelines per DOST Administrative Order No. 006 Series of 2004 and 2005 Implementing Rules and Regulations of RA 7459 and Annex D of this Guidelines for other operative definition of terms.

5.0 Program Coverage

The Program shall provide funding to develop and commercialize the inventions in a pilot production scale and assist the inventors address their needs as they grow as emerging inventor-entrepreneur.

Following are the two (2) forms of IBED assistance:

5.1 Pilot Production cum Market Testing of the Invention

 The assistance shall cover the start-up capital and pilot production costs for the production of the invention in quantity sufficient to test market the product. The Program shall provide a grant financial assistance amounting to 50% of the production costs or a maximum of P100,000 whichever is lower to cover only the cost of raw materials for the production of sufficient number of units enough for market testing the invention product. Other production costs such as labor and overhead expenses will be the counterpart of the requesting inventor.

5.2 Commercialization of Invention

 The assistance shall cover the production costs of the additional requirement of the market to satisfy the unmet demand.

 The inventor must have completed the previous TAPI assistance for pilot production and must be able to grow as an enterprise. The previous project must be already completed and terminated prior to availment of succeeding assistance. The inventor must be able to register his business as an enterprise and he/she needs additional funds to produce his invention product in commercial scale in order to meet the current demand or fulfill the market needs or customer orders and sustain the existing market for its invention commercialization.

 The financial assistance shall be returned to TAPI in three (3) years with enough grace period following the repayment schedule agreed upon by TAPI and the inventor.

6.0 Program Requirements

6.1. The proponent shall satisfy the following requirements to be eligible for assistance:

a) The inventor must be a Filipino citizen.

b) He/She must be of good moral character or has not been convicted of any case involving moral turpitude.

c) The inventor over 60 years old should assign a co-project implementor with equal responsibility of the project.

d) He/She has no delinquent account with TAPI.

e) The invention is already patented, patent pending or is being assisted for IP protection by TAPI.

f) The invention has already a working model as basis for market testing and commercialization.

g) The invention must have a clear commercial benefit or potential that will enable inventor-entrepreneur to showcase innovative products and services to potential users/market.

h) The invention has received numerous inquiries based on the letter of intent to purchase the invention or rental contract received by the inventor. This serves as a basis for market testing and invention commercialization.

i) For juridical entity, the firm must be Filipino-owned and registered in the Philippines and has secured a deed of assignment of patent/UM registration.

j) For government or private academic and R&D institutions, they must be willing to return TAPI's assistance and has secured deed of assignment of patent/UM registration.

6.2 The proponent shall comply/submit the following requirements:

Pilot production cum Market Testing

a) Application letter addressed to TAPI Director;

b) Endorsement letter from DOST Regional Office include RTEC report, if applicable; acEHCD

c) Project proposal following the format in Annex B;

d) Letters Patent or Pending Patent Application or TAPI's letter re: on-going IPR Assistance;

e) Deed of assignment of patent/UM registration to juridical company or RDIS or academic institutions;

f) Personal bio-data of the proponent or company profile if applicant is a juridical person;

g) Assigned co-implementor for inventors over 60 years old;

h) Medical Certificate (physically fit to undertake the project);

i) Certification of Residency from Barangay Center or Barangay Clearance or NBI Clearance, if applicable;

j) Test results, if any;

k) List of prospective client/customer/user;

l) Co-maker undertaking for the private and sole proprietorship proponent;

m) Additional requirement may be needed depending on the nature of the project and capability of the proponent.

Commercialization of Invention

a) Letter of request addressed to TAPI Director;

b) Letter of intent from the client/customer specifying the 5% commitment fee on the amount of requested orders;

c) Copies of the Business registration papers i.e., mayor's business permits, DTI registration, BIR registration, SEC/CDA registration, etc.; and

d) Additional requirement may be needed depending on the nature of the project and capability of the proponent.

8.0 Program Criteria

The invention shall be evaluated based on the following:

a. Technical Viability shall include production efficiency, appearance, acceptability, potential for development, utilization of resources;

b. Market Viability shall include product acceptability, supply/demand ratio, competitive position (market share), market sustainability; and

c. Financial Viability shall include capacity to pay, and production cost vs. selling cost;

d. Compliance to environmental and/or and applicable laws and standards, if applicable.

e. Social Benefits, if applicable.

9.0 Implementation Procedures

9.1 The Program implementation shall follow the procedures and work instructions (proposal evaluation and approval, release and financial assistance, project monitoring, repayment monitoring, and fund liquidation) stipulated in the TAPI Quality Management System per ISO 9001:2008.

9.2 A memorandum of agreement (MOA) among TAPI, the proponent and the DOST Regional Office, if applicable, shall be executed. The terms and conditions concerning all party's obligations, project monitoring, review, assessment and completion/termination shall be stipulated in the MOA.

9.3 The procedures and work instructions (WI-FAD-05-04 & WI-FAD-05-05) stipulated in the TAPI Quality Management System per ISO 9001:2008 regarding repayment monitoring and preparation/issuance of Statement of Account (SOA) to the assisted projects shall be followed. Any request for deferment or restructuring of repayment schedule should be in accordance with TAPI's policy and guidelines or any applicable laws and rules that govern payment deferment and restructuring.

9.4 A Certificate of Full Refund of financial assistance shall be awarded to the inventor upon project completion.

9.5 The project shall be terminated based on TAPI's approved guidelines for termination and/or any applicable laws and rules for project termination.

10.0 Applicability

Other provisions stated in the DOST-GIA Guidelines that was not included in these guidelines but applicable as the case may be.

11.0 Effectivity

This Order shall take effect immediately.

Taguig City, Philippines, October 2014.

 

 

(SGD.) EDGAR I. GARCIADirector, TAPI

ANNEX A

Definition of Terms

a. Pilot Production refers to the production of invention in a limited or smaller than full-scale production, but are built in a range of sizes, can be anywhere from 10 to 10,000 units, in order to bridge the gap between prototype to full commercialization, to determine the product characteristics in the market before commencing full-scale operations and to check whether new product will be more efficient or not. SDHTEC

b. Commercial Scale refers to the definition by the Bureau of Internal Revenue (BIR) per Revenue Regulations No. 19-93 that is the sale of goods and services pertaining to the invention exceeding P200,000 during any twelve-(12) month period.

c. Financial Grant refers to the non-repayable funds provided to the proponent on a particular project for a specified period.

d. Letter of Intent refers to the document issued by the interested user or customer of the invention confirming the intent to purchase the invention for a number of units at a specified amount.

e. Force Majeure refers to the unexpected or uncontrollable event that shall include but not limited to strikes, lockouts, or other industrial disturbances of the public enemy, wars, blockages, insurrections, riots, epidemics, landslides, explosions, fire and other similar events not within the control of man.

f. Delinquent Account refers to non-compliance of requirements as agreed in the Memorandum of Agreement and unpaid financial obligations on the predetermined due date and is unpaid for around two consecutive period of non-payment.

g. Payment Restructuring refers to the modified plan of payment or schedule of payment on a periodic basis.

h. Project Completion refers to the completion of the production of the invention.

i. Project Termination refers to the completion of the production of the invention, submission of required documents as stipulated in the Memorandum of Agreement and 100% return of the financial assistance.

j. Proponent refers to person, private entity or agency that prepares and submits project proposals for TAPI's assistance. They shall exert all necessary efforts to attain the objectives specified in the approved project proposal.

k. Successful Beneficiary refers to any person or private entity assisted by TAPI in the development and commercialization of the invention that has commercial sale of the invention and has fully refunded the total TAPI's financial assistance.

ANNEX B

Project Proposal Format

1.0 Project Title

2.0 About the Proponent including its address and contact information

3.0 Project Summary (about one paragraph of 1-3 sentences and should include the amount of funding requested and give the most general description of the use that will be made general of the funds)

4.0 About the Invention

• Describes the invention and define the problem or need the invention is addressing;

• Describe the manner of operation and how the invention solves the identified problem;

• Describe the current technical state of the art and why the invention is considered an advancement or improvement;

• Identify the technical advantages of the invention and compare to the similar and currently available or will be available invention in the future;

• Discuss the invention performance or test results;

• Identify the competition even if the competition addresses the problem, in a different way; and

• Include patents, technical drawings, photographs, theoretical analyses, experimental data, computer simulations and calculations, performance and test results and others.

5.0 Project Description

• Detailed description of the project to be funded;

• Include copies of complete Letters Patent or Pending Patent Application or any proof of assistance under TAPI's IPR Assistance Program;

• Define the goals/objectives of the project, how they will be achieved, how success or failure will be measured, and what results you expect to bring about;

• Discuss the uses of the invention, who will use it and where it will be used;

• Discuss the socio-economic benefits to be derived from the invention commercialization as to employment generation and/or environment sustainability and protection; and

• Identify any potential problems or anticipated barriers associated with commercializing this invention;

6.0 Project Implementation

• Provide the project duration; AScHCD

• Describe the manner of production of the invention including the staff/workers who will work on the project;

• Discuss in details the costs associated with production requirements;

• Provide information why the invention is considered commercially viable;

• Provide estimate on the selling price of the eventual product and compare the price with existing competitive products;

• Discuss why the end-user would buy the products;

• Include the proposed repayment/refund of financial assistance;

• Provide financial records on product/s sold (if applicable); and

• Identify and discuss any safety issues and standard requirements, if applicable.

7.0 Project Activities and Timeline

• Provide the schedule of activities using Gantt Chart;

• Include information about how/when funds that are provided will be spent to support each activity.

8.0 Project Budget

• Provide the amount requested for funding and the counterpart funding of the proponent and/or any cooperating institution, if there's any;

• Provide estimated cost of production per unit showing itemized materials to be purchased; and

• Include quotations from three (3) suppliers of materials to be purchased for the cost of materials more than P5,000;

9.0 Commercialization Plans/Strategies

• Summarize what is required to continue the development of the invention so that a commercial product could result from your efforts;

• Describe what needs to be done to continue the development of the proposed product; and

• Indicate needed support to continue the development and pursue commercialization.

Published in the Official Gazette, Vol. 111, No. 8 page 1164 on February 23, 2015.