The treatment of innovation is a national disgrace (why I took my...

The treatment of innovation is a national disgrace (why I took my invention overseas)

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Every now and then we receive an unsolicited plea by a concerned reader with a passionate view to share. Today, Don E. Morgan, the inventor of the cone-head™ liner for helmets shares his experiences and views on innovation in Australia.

The appalling treatment of inventors and innovation by governments and politicians in this country is a national disgrace.

The federal government can spend something like 2.6 billion dollars on a disastrous program putting Pink Batts insulation in Australian homes but fail to help Australian inventors and innovation.

As the inventor of the cone-head™ liner for helmets, which won the 2007 Invention of the Year award on the ABC’s New Inventors program and in 2009 was voted top 10 in Australian Anthill’s Smart 100 innovations, I have been a little more fortunate in my endeavours than other inventors and innovators.

That’s not to say that things have been easy.

I did receive a small grant in 2000 from the Australian Transport Safety Bureau (ATSB). Yet, that has been the only financial support that I have received from Australian government programs or Australian companies.

Instead, I was forced to take my innovation offshore.

When funding is hard to find

As it was, the small grant money that I gratefully received was not enough to cover the basic research costs.

I put in nearly twice as much money of my own to scientifically prove that the new shock absorbing cone-head™ foam liner was superior in absorbing an impact force when compared with current hard foam liners found in motorcycle and bicycle helmets.

You’d think, once you had proven something scientifically worthy and superior it would be all downhill from that point – but that wasn’t the case.

I spent another three to four years desperately trying to obtain funding from governments and get a manufacturer interested. On three occasions, I applied for the Queensland Government Innovation Start-Up Scheme (ISUS) and each time I was unsuccessful.

The third rejection was the lowest point in my journey as an inventor. This was the time when Peter Beattie was the premier of Queensland and had the view of making Queensland the ‘smart state’ of Australia. However, while happy to pour billions of dollars into biotechnology, the State Government’s interest did not seem to extend to clever inventions/innovations.

So, in desperation, I took my invention overseas and licensed it to a major helmet manufacturer based in Hong Kong.

The process of scientifically proving my invention and my struggle to find a suitable overseas manufacturer cost me and my family hundreds of thousands of dollars.

The actual development and manufacturing of a cone-head™ helmet would have cost me millions of dollars, which was beyond my means. The fact I couldn’t receive government support or industry support in Australia left me no choice but to license the cone-head™ design to a major overseas helmet manufacturer.

We must stop the innovation drain

Ideally, if I had been given support by the government or industry to start up a company, then the development, manufacturing and marketing of the helmet would have been controlled here in Australia, instead of all being lost to an overseas manufacturer.

The first helmet manufactured with the cone-head™ design is already selling overseas in Europe, USA and Canada (under the brand name Kali Protectives) and within weeks it will be imported into Australia. The helmet using the cone-head™ design has already won two major prizes in Germany and the United States.

Recently, other desperate inventors have been approaching me, asking for my advice about how to take their inventions overseas to be developed and manufactured. All the inventors have the same complaint: the lack of support from Government and big business.

Australia is currently in the grips of an innovation drain.

Both the federal and state governments are guilty of this deplorable treatment of inventors. In simple terms, they don’t seem to care two hoots about innovation if it is not related to big business.

In the meantime, Australian jobs, wealth and intellectual property are being forced overseas by inept, shallow and short-sighted governments and politicians who don’t deserve to be there representing Australians who want to make a difference.

The senseless wastage of Australian smart inventions and innovation to overseas must stop now.

Don E. Morgan is a physicist, inventor, educator and motivational speaker. He is a consultant in crash investigation, product development and manufacturing in China and Taiwan, as well as a member of the Australian Institute of Physics (M.A.I.P.).

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  • http://twitter.com/WorthZero Worth Zero

    What a great story for Australian innovation. Ask Bishop Engineering whether licensing is a good strategy! The Australian Government DID fund the early work at the time when it was at the highest risk of failure. Well done to them! Don is also to be applauded for putting lots of his own money in to maximise the prospect of him getting rich from the process.

    The fact that the AU government did not give millions of dollars to complete design for manufacture and setup manufacturing plant is honestly not that amazing. If they funded every inventor that wanted to do this, using the exact same logic as above, we (as the Government = taxpayers) would all be broke.

    If all the revenue was being recognised in Australia, it would be irrelevant whether we were importing the helmets or not. Bishop Engineering has contributed huge amounts of money to the Australian economy and employed lots of people in Australia in high paying jobs. Engineers, patent lawyers, etc not to mention the more mundane tasks.

    I think there is more to this story than stated. Licensing a manufacturer does not in itself force a company to setup off-shore. The fact that Don has setup his trading company outside Australia and chooses to be taxed in another country (it appears) is a separate issue. I would like to know why.

    Cheers.

    • Anonymous

      I think some of your comments are WORTH ZERO.

      For your information, I’m not driven by money. My first and foremost goal was to invent a safer shock absorbing liner for helmets. I am a scientist not a businessman. I didn’t put money into the 2000 Australian Transport Safety Bureau (ATSB) project thinking I’d get rich in the process as you suggest in your WORTH ZERO article.

      It’s been eighteen years since I invented the cone-head liner and twenty five years since I was a member of a research team investigating the effectiveness of motorcycle and bicycle helmets. The research project was conducted at the Queensland Institute of Technology (now known as the Queensland University of Technology) and was funded by the Federal Office of Road Safety.

      Eighteen years is a long time and what drives or motivates me are the images of the horrific motorcycle and bicycle accidents that I attended with the Brisbane Traffic Accident Investigation Squad (during the 1980’s) and the hundreds of gory helmets, which I had to pull apart to examine for damage. Many of the helmets that I examined had blood and spinal fluid splattered throughout the interior of the helmet and bone fragments grinded into the comfort liner. The majority of the helmets that I examined showed the hard expanded polystyrene foam (EPS) liner had sustained little or no evidence of damage despite the fact the rider’s brain was seriously injured (bruised, battered, bloodied, torn, squashed, pulverised). It was obvious to me and my fellow researchers that the hard foam liner had failed to absorb the impact force and the brain absorbed most of it instead. The images I’ve described are permanently etched in my mind and it is these images that have driven me over the past eighteen years – not the thought of becoming rich in the process.

      You maybe surprised to learn that all the inventors that I’ve met over the last few years are also not driven by money. They all have their own reasons to keep on going and not to give up.

      You obviously did not read my article properly.

      I did not write in the article that I wanted the Australian Government or the Queensland State Government (at the tax payers expense) to give me a million dollars to develop and manufacture the helmet.

      I wanted SUPPORT in the form of a start-up grant and how to go about bringing my invention to market. The start-up grant would not have involved the government putting in a million dollars. The Queensland Government ISUS funding involved providing a grant of eighty thousand dollars and the successful recipient was required to put in at least one hundred thousand dollars of their own money.

      As stated I was not successful in obtaining the ISUS funding on three occasions. Nor was I able to gain support in the form of advice, for example, where do I go from here.

      The ISUS representative advice was: WE DON’T THINK THIS IS WORTHY OF FUNDING. WE DONT RECOMMEND YOU SHOULD APPLY AGAIN.

      I’ll say it again, the typical complaints I receive from inventors are the lack of SUPPORT from Government and big Business. There are too many of these inventors who desperately want SUPPORT. Do we keep on ignoring them – just because they want a small start-up grant and some simple advice?

      I find it absolutely crazy that I’m giving advice to desperate inventors on how to take their invention into China and linking them up with potential manufacturers when there should be someone from government providing them with advice on how to keep their innovation in Australia.

      There should be a government policy on helping smart innovation.

      We don’t ignore our elite sportsmen and sportswomen of Australia. They’re given proper support so why do we keep on ignoring inventors and innovators of Australia who want to make a difference.

      Finally, I have not set up a trading company off-shore and once again you’re fabricating false stories. I have licensed the cone-head design to a large reputable OE helmet manufacturer based in Hong Kong with two large factories in China and they’re responsible in selling the helmet with the cone-head design to different buyers around the World. Like every other decent and responsible Australian I pay tax here in Australia.

      Don E Morgan M.A.I.P.

      • http://twitter.com/WorthZero Worth Zero

        Don,

        I actually did read it and was not ‘fabricating’ anything. I was asking the question because you stated you were “forced to take my innovation off-shore”. This was in fact is not the case. You licensed it to a overseas manufacturer. Your innovation is now global and your company is Australian.

        Your development and licensing is actually a great story for AU and a fantastic outcome for you personally. This result might not have been what you had in mind initially, but you got your product to market and most people don’t.

        I don’t doubt the amount of effort, and am not surprised by the amount of time. Nor am I saying that you weren’t genuinely motivated (and qualified) to solve a significant problem. You did it, and most people fail. They don’t fail because they don’t have a great idea, they fail because they don’t execute for whatever reason; lack of skill, lack of resources, no real market at the right price, lack of persistence, no luck … lots of reasons.

        Motivations differ, and there are many with genuine intentions however unless the invention is public domain / open source, then there is a profit motive. Nothing wrong with this. You can make a great contribution, and make a profit. They are not mutually exclusive.

        I can understand why you are annoyed about your treatment in the grant process and think it’s pretty poor that there was not ‘what to do now’ advice available afterwards. I also agree with the comments about AU’s spend on sport. Each Olympic gold medal costs us $40-50m. Gold medals are nice for the athlete, but I have to say that I don’t care $50m about it. Spending money creating more money by funding innovation makes sense, but it’s very tough for governments to execute.

        Every single inventor thinks that their invention is the one. There’s no simple solution because everyone that misses out on a grant feels like you. Everyone can’t get one and decisions will sometimes be proven wrong as is the case with your innovation.

        Glad it worked out for you.

        Peace :-)

        • cone_head

          I appreciate your comments.

          I don’t think there’re much difference between our views.

          I agree with your comment: they fail because they don’t execute for whatever reason; lack of skill, lack of resources, no real market at the right price, lack of persistence, no luck … lots of reasons.

          Thanks

        • Tam

          Don,

          What a shame you were not aware of the different grants and people in industry that might have been able to help you as an inventor “take your product to market”.
          Scattered through-out Australia there are various incubator labs and earlier stage programmes that are there to help guide you through the exact type of problems you mention.
          Based on your comment regarding Premier Beattie, i will assume you are in Queensland. If you are in Brisbane then some one should have pointed you to i.lab Toowong http://www.ilab.com.au
          Would you believe i.lab was started in 2000 and was funded at the time by the Queensland Government. You would have been a classic company that i.lab was looking for in 2001 to 2005, i would have thought. Your business and other similiar “innovative start-ups” are exactly who i.lab keep an eye out for. I am sure i.lab would love to have you visit their facility, to show you what it is they do, so that the next inventor you come across can be pointed in the right direction.

          In regard to Grants:
          R& D Tax – I would contemplate firing your accounting firm! If you are in the development space and they were not aware you could claim R&D Tax during 2001 to 2005, they are not fit to be your accountants. http://www.smarttax.com.au
          ISUS & Commercialisation Australia – In addition to ISUS, if you had already proven the technology was real then Commercial Ready may have also been an appropriate Grant for you at the time. It has now been replaced with Commercialisation Australia. http://www.innovation.gov.au/section/innovation/pages/commercialisationaustralia.aspx
          EMDG – During your activity in selling/licensing your technology in China, did you also look at the EMDG (Export Market Development Grants Scheme). http://www.austrade.gov.au/default.aspx

          And of course apart from grants and guidance from the likes of i.lab, the other big problem for start-ups is money, that brings us to the topic of Angel or VC investment, was investment ever an option for you? It sounds like it was not all about getting money, but about assistance to commercialising your product?

          It is tough being a technology company in Australia, half of our problem is size of market. I believe if you are in the business of technology or innovation in Australia, then you better get ready to export.
          Well done on licensing your innovation overseas, that is actually a good outcome, your product has made it to market and is sure to save many lives. It is a shame though that you did not get the chance to manufacture locally, but long term that may not have ended up a viable option for you anyway.

          Tammy

          • Anonymous

            Thanks Tammy for your comments.

            Yes, I live in Brisbane.

            Unfortunately, I was never aware of iLab when seeking Start-up Support.

            I did have several meetings with the Queensland Manufacturing Institute (QMI) but nothing substantial came out of the meetings.

            I also approached several angel investors but their response was apathetic. I think the main problem with the AI’s were they didn’t fully understand the physics/science involved in the cone-head technology. I remember the great disappointment on several of the AI’s faces when I showed them a sample of the cone-head foam liner. Obviously, it didn’t meet their expectation of something exciting and worthy to invest in. The fact that my invention didn’t move, make a sound or have flashing lights meant that it wasn’t at all exciting to them. It was just a boring piece of foam. The colourful computer graphics didn’t persuade them as well. I also had some media attention but this didn’t help as well. So with no ISUS funding, no interest from large business or investors, no advice on ‘where to go from here’ and lack of general interest – I took my invention overseas. I must admit my journey as an inventor from that point onwards was much EASIER when compared with my Australian experience.

            Yes, I’d certainly like to visit your facilities in Toowong.

            Many thanks.

            Don E Morgan M.A.I.P.

  • Insanity

    I actually got a government grant for commercialization about 10 years ago (I was 22 at the time) and it was $100,000. The idea was a winner, but, strangely enough, most of the funds went in all sorts of “liscencing and legal fees” as dictated by the “independent” individual responsible for commercializing the innovation. Government support for independents in this country is a disgrace, compounded by the number of individuals wanting to profiteer without thought for longer term interests. Please feel free to contact me at [email protected] if you’ve had a similar experience.

  • http://www.coolmobility.com.au Colin Johanson

    I won the “2006 Viewer’s Choice Award” on The New Inventors program with an electric wheelchair design and won a trip to a Hong Kong Trade Show that I only had one days confirmation to fly to Hong Kong the day after the filming of the Final Show – a bit of a waste as I couldn’t physically take the chair with me at such short notice.

    I was lucky enough to obtain a COMET Grant, after I’d had to spend a lot on Patents and had left my full time job to follow the Commercialisation Dream. I was wanting to develop leading edge technology for the motors, driver and battery systems, and this all takes a lot of research, time, testing and money. We are now developing, here in Australia, a new higher voltage 4Quadrature driver for gearless brushless hub motors (that will of course come from China, like most of the world’s motors) after testing some potential controller options from overseas that were not satisfactory.

    We are proud to be Aussies but I can relate to a lot of what has been said previously and can only see a potential in seeking manufacturing overseas (more so after reading articles such as this). Like most inventors, we want our product to become available in the qulity, quality and price to satisfy the many people from around the world wanting our wheelchair and it is disappointing to have to tell them that we have failed to make it commercially available. Each time I answer one of those e-mails saying “love your chair design. Where can I buy one?” I cringe and feel ashamed that we are not further along and can’t offer any timeframe.

    I’m a wheelchair user myself and appreciate that these people, like I would be, are frustrated in not being able to obtain a niche mobility solution they love. It is like going to a Motor Show, seeing the car you really want, only to be told – perhaps it may be available in five years time!

    The only expressions of interest in our design have been from overseas, nothing from any Australian manufacturer or backers. What choice do Australian Innovators have???

  • http://www.coolmobility.com.au Colin Johanson

    Don, I have a question regarding your statement “I did receive a small grant in 2000 from the Australian Transport Safety Bureau (ATSB). Yet, that has been the only financial support that I have received from Australian government programs or Australian companies”. What happened to the supposed $ worth of support from overnment agencies, etc that was part of the first prize for winning The New Inventors (apart from the tacky plastic heads!)?

    Was that bogus or just a waste of time as it was a couple of hundred thousand worth in 2006 when I was an entrant? Can’t remember what the prize was in your year… Curious if the promises were not followed through with.

    • cone_head

      Thanks Colin.

      A prize of a couple hundred thousand in 2006!!!

      Gee, I wish I was the winner in that year. The ABC must have drastically cut the prize money.

      In 2007 when I was the winner of the Invention of the Year, the prize money was twenty five thousand dollars which was generously provided by several government organisations. I used the prize money to pay SOME of the costs incurred taking out patents and trade-marks. I never received cash. I had to submit invoices to the different organisations.

      I greatly appreciated the prize money but by the time I won the prize in 2007, I had already licensed the cone-head design to a leading world helmet manufacturer and in the process leading up to the licensing stage it had already cost me and my family hundreds of thousands of dollars.

      It is important to note that the SUPPORT that I’m referring to in the article is the CRUCIAL START-UP SUPPORT needed by an inventor.

      I remember your electric wheelchair design and I thought it was an excellent invention.

      It seems that you’ll have to take it overseas like other great inventions.

      If you need to talk about it give me a call.

      Don E Morgan. M.A.I.P.

  • R&D SmartTax

    Quick question – what about the support the Aus government provides in the form of the R&D Tax Offset? That’s pure cash for inventors. Did you manage to access this at all or was your accountant unaware of the program?

    • cone_head

      Thanks.

      I don’t think the R&D Tax Offset was available from 2001 to 2005 when I needed start-up support. I’ve only become aware of this Tax offset in the last two years.

      • R&D SmartTax

        I guess you don’t really want to know that the R&D Tax Offset was available between 2001 and 2005. But don’t feel alone, there are plenty of inventors and innovators as we speak that don’t know about the cash funding that the Fed Gov does have for them. It’s a disgrace how the gov does nothing to promote this. But I’m trying to turn this around. My goal is to get as many small businesses to claim as possible. http://www.smarttax.com.au

        • Anonymous

          That’s interesting.

          My former local federal member for parliament didn’t tell me about this tax offset and I hounded him for nearly ten years (1997 – 2007). My present federal member – well – he’s ignored me completely for the past eighteen months on questions relating to the federal government offering SUPPORT to inventors. Likewise, my accountant has never mentioned the Tax Offset.

          • R&D SmartTax

            The pollies probably aren’t aware of it either. Like I said, a disgrace but its secrecy is partly because it is jointly administered by AusIndustry and the ATO. You have one government body that is happy to share this “incentive” with industry and another government body that is hell bent on protecting government revenue. I figure that if the program is there, they should at least make a bit more effort at promoting it though. And don’t get me started on accountants – their lack of knowledge about the program is also hard to believe, but probably a factor of too much to do, too little time, let’s sweep it under the carpet and put it in the too hard basket.

  • Andrew

    You’re not alone on this. I have been trying to get some funding for my project for years with no success. I have a project, funded entirely by me and my partners, that is about to hit the Australian market. My product has been applauded by the HIA and builders/plasterers everywhere we have presented it. I have been told it is a “no brainer” when it comes to using my product as it addresses so many issues in the cornice installation area. My product can be found at http://www.ankapro.com.au and we are about to launch it to the Aussie market within the next 6 months.

    The total lack of government assistance came as no surprise as I have been trying to get this to market since 1996. I have applied for grant after grant and been turned down for criteria such as I need to be an employee working full time on my project, have demonstrated management experience, have dollar for dollar funding to get a grant, etc, etc. When first starting out, I had a mortgage to pay and was funding prototypes from my own pocket to get started and any assistance would have been a godsend, but it wasn’t to be.

    No surprise that so many are going overseas or selling out to those business “angels” at 80% – 90% loss of ownership, when they seemingly have no other options. Again, the short sighted bureaucrats cant see when they have genuine world class innovators with a well stocked supply of really great ideas if it hit them in the nose.

    Cheers,
    Andrew

    • R&D SmartTax

      Andrew, apologies for asking this again, but I am more curious than anything – was the R&D Tax Offset cash completely unhelpful to you? Yes you have to spend to get anything back, but really this is only in the first year. ie spend first, get money back, then use that money to spend again. I know a lot of companies that benefit every year from this, but I would like to know why you were unable to access this or didn’t find it useful?
      Thanks
      Caroline

      • design providence

        If I can interject here, is the R & D Tax concession a capped fund and having spent the R & D dollar it is speculative at best to outlay $100 – $200K on prototype and production. I understand you have a software app out, do you guarantee the outcome?

        • http://www.smarttax.com.au R&D SmartTax

          There are two programs, the R&D Tax Offset for small businesses – there is a spend cap of $2m and a turnover cap of $5m in FY2010; and the R&D Tax Concession for larger businesses – no spend or turnover cap. The one to get is the R&D Tax Offset, this is the one that pays cash and at the rate of 37.5% compared with only a 7.5% reduction in tax for the R&D Tax Concession. The software tool is to self assess eligibility, it is difficult to guarantee you are eligible if I don’t know what you are creating. However what I will say is, if you are eligible, you are guaranteed to get the cheque from the ATO. My sense is, if you mention the word prototype, there is a very high degree of eligibility. $200k spend would generate an R&D Tax Offset cheque of up to $75,000.

          • http://www.smarttax.com.au R&D SmartTax

            Sorry, I will also add the actual programs have budgets set by Treasury, but no cap. The government is legally required to pay out claims if you meet legislated eligibility requirements. That’s the guarantee and why I personally find the R&D Tax Offset much more lucractive than pot luck grant programs which cost a lot of time and money to apply for with no guarantee of outcome.

  • Mark Watson

    Well said Don

    Australian manufacture appears to be brain dead, where the private sector manufacturer is concerned it is usually a ‘self made’ owner with lots of experience in production but low on innovation and creativity which comes from the ‘R’ in R&D. The publicly listed companies, you would think, would be more attuned to market possibilities but management fear of shareholder backlash seems to kill off any desire for innovation.

    It appears that they are just working for their dollar, across public and private sector, and you get a bit punch-drunk from the ‘catch22’ clauses of compliance. R & D tax concessions are a carrot I have offered to potential investors, but you have to spend it to claim it, and is not an answer to the question you raise.

    I have a collapsible trolley design presently going through patent examination which I have funded.

    It won a design award offshore last year but I have had to look offshore for a manufacturer (Tiawan / India) and I have had the same disappointments with Government assistance after having had some seed funding through private sources, Sustainability Victoria largely used it as publicity for their support of innovation but put nothing in that was genuinely helpful. After 3 unsuccessful grant apps to the Sustainability Fund I have given up on them.

    Agree with your views on Angels or as I call them “White Pointers”.

    Post resources boom, what will we have to export ? Manufacturers must step up to the crease if we want our children to enjoy a first world existence. There is lots of talk about innovation, but it is the same old ‘carpet baggers’ sucking up the cash and burning any good will.

    There is need for an ‘icebreaker’ fund to get some runs on the board but the past has proven politically problematic for really talented inventors to fight through the barrage of carpet clad elbows.

    Good luck with Cone Head.

    • cone_head

      Thanks Mark for your comments.

      Your description for an Angel Investor is perfect. Sadly, I have known a few inventors that have been taken by “White Pointers” and the outcomes were disastrous. I was very lucky not to be a victim.

      You raised an important point regarding post resource boom.

      I think many people in Australia are under a false belief the current resource boom hence Chinese boom will last forever.

      My greatest fear for the next generation Australians is that if we don’t begin to support smart innovation in Australia then come post boom, Australia will slump into an existence of a maintenance society.

      I hope everything goes well with your collapsible trolley.

      Don E Morgan M.A.I.P.

  • http://www.baxterip.com.au Lawrence

    I have to agree that the fact you managed to license your invention to an overseas manufacturer is a fantastic succcess.

    Though I do agree that the Dept of Innovation needs to do more to support inventors in Australia (look at our Innovation ranking decline in the last 3 years!).

  • wild

    Nicholas Wylder I am the inventor of a new device. It is an efficient advancment in water purification. The world will never be the same. I need help… =D

    Nicholas Wylder I am open to offers/suggestions

    Nicholas Wylder grants? patient. (?) what should I do. this is free water for any hot country.!..!!!.

    I want to keep it free, I should patient it and release the information onto the net; so water is free for you. =_

    Nicholas Wylder ♥

    • wild

      because i copied this from a face book page it has my name repeated wich is lame XD

  • Brivers45

    What is it about this that the self publicists, closet public servants and drongos posting here don’t get. He is talking about SUPPORT how hard is that to understand! Instead like all true bureaucrats you seize on petulant irrelevancies and miss the main point. Support does not mean money it means taking the time to understand to provide effective guidance and to provide assistance with networking and introductions to centers of influence and to help influence people in to investing in and adopting a new technology. Australia has no effective schemes to do this and encourage inventors in fact all the schemes that are currently in place do nothing but discourage inventors or worse they steal from them using deceptive well practiced conduct by low life bottom feeding scum. My advice to any inventor looking around is to be very very careful the majority people involved in the entrepreneur industry are self promoters looking to profit from you not help you. They will waste your time and take your money, sounding very impressive with their well rehearsed rhetoric about how you know nothing and don’t understand, all the while knowing they are not going to help because they are not empowered to do so because they either lack the money, the authority, the influence or the technical knowledge to contribute to making you a success.