Introducing Innovation into 

the Home Building Industry 

advice for innovators and inventors 

U.S. Department of Housing and Urban Development 

Office of Policy Development and Research 
Visit PD&R’s website 

www.huduser.org 

to find this report and others sponsored by HUD’s Office of Policy Development and Research (PD&R). Other services of 

HUD USER, PD&R’s research information service, include listservs, special interest reports, bimonthly publications (best 

practices, significant studies from other sources), access to public use databases, and a hotline (800-245-2691) for help 

accessing the information you need. 
 

 

 

Introducing Innovation into
�

the Home Building Industry
�

Advice for innovators and inventors 

Prepared for 

U.S. Department of Housing and Urban Development 

Office of Policy Development and Research 

Prepared by 

Mike Moore 

Steve Shrader 

Sam Bowles 

Newport Partners LLC 

Davidsonville, MD 

January 2010 
ABOUT THE AUTHORS 

This pamphlet was prepared by Newport Partners LLC. The following staff contributed to the 

report: Mike Moore, Steve Shrader, and Sam Bowles. Newport Partners provides analytical, 

technical, regulatory, and market research services to clients in the building industry. 

DISCLAIMER 

This pamphlet was produced by Newport Partners under contract to the U.S. Department of 

Housing and Urban Development (HUD) Office of Policy Development and Research (PD&R) 

and the Partnership for Advancing Technology in Housing (PATH). The contents of this report 

are the views of the authors and do not necessarily reflect the views or policies of the U.S. 

Department of Housing and Urban Development or the U.S. Government. 
 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS 

An Industry Overview.................................................................................................................1
�

Assessing the Market................................................................................................................2

 Identifying and Assessing Market Drivers: Codes, Productivity, Functionality.................................2

 Look for Market Opportunities.........................................................................................................3

 Communicating Your Innovation’s Advantage.................................................................................4
�

The Commercialization Timeline...............................................................................................4
�

Protecting Your Innovation...............................................................................................................5
�

Developing Partnerships or Venturing: It’s Your Decision........................................................6

 Commercializing Your Invention through Venturing.........................................................................6
�

Licensing Partnerships....................................................................................................................7
�

Typical Contracts......................................................................................................................8
�

Resources...............................................................................................................................11
�

Financial Resources.......................................................................................................................11
�

Other Resources.............................................................................................................................13
�

Conclusion: Six Steps to Increase Your Chances of Success..................................................14
�

LIST OF EXHIBITS 

Tables

 Table 1. Housing Components in GDP – 2006.................................................................................1
�

Table 2. Helpful Resources for Inventors........................................................................................13
�

Figures

 Figure 1. Staged-Gate System of New Product Development............................................................11
�

Case Study

 Purfect Glaze: Hurricane Resistant Sealing for Glazing...................................................................9
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1 

Overview 

The residential home building industry is an important 

sector of the U.S. economy. Unfortunately, it has not shared 

the productivity gains experienced by other industries, 

in part due to a lack of innovation. Government studies 

and university research indicate that the structure of the 

housing industry is an impediment to the adoption of 

innovation. 

To help counter this trend, the Partnership for Advancing 

Technology in Housing (PATH) has sponsored several 

studies to better understand the process of innovation in 

housing. PATH recognizes that innovation is important to 

the housing industry in making homes more affordable, 

durable, and energy efficient. 

This guide is the result of a Technology Transfer study 

of selected innovations and partnerships between 

inventors, innovators, and manufacturers. It contains 

information gathered through interviews, focus groups, 

case studies, and independent research, and provides 

insights for readers who have an invention or innovation to 

commercialize in the housing industry. 

An Industry Overview 

The home building industry represents a unique market 

opportunity for innovators, as the housing market is one 

of the largest market segments of the economy. In 2006, 

the combination of private investment and consumption 

spending on housing constituted 16% of GDP (see Table 

1). Despite the presence of several large national players, 

the industry is still dominated by small- and medium-sized 

builders and typified by an industry association that retains 

a 1,000+ member board. Materials, labor, and building 

practices differ according to geography; multifamily or 

single-family; new and remodel; factory-built, modular, or 

site-built; production, semi-custom, or custom; and builder 

size. 

In such a multifaceted market, assessing an innovation’s 

chance of success can be challenging. Even identifying 

the customer can be challenging! Potential customers 

include manufacturers, homeowners, contractors, builders, 

or architects – any one of whom may specify construction 

Table 1 

2006 – Housing Components in GDP (Billions of Dollars) 

Gross Domestic Product $13,194.70

Gross Private Domestic Investment 2,209.20 

Fixed Investment 2,162.50 

Nonres Fixed Investment 1,397.70 

Nonres Structures 405.10 

Nonres Equipment & Software 992.60 

Residential Investment 764.80 

Share of GDP 5.80% 

Share of Gross Private Domestic Investment 34.62% 

Residential Structures 755.20 

New 657.00 

New Housing Units 476.40 

Permanent Site 469.00 

 Single-family Structures 416.00 

 Multifamily Structures 53.00 

 Manufactured Homes 7.40 

Improvements 178.50 

Other 2.10 

Broker’s Commissions on Sale of Structures 101.50 

 Net Purchases of Used Structures -3.40 

Residential Equipment 9.60 

Personal Consumption Expenditures 9,224.50 

Durable Goods 1,048.90 

Nondurable Goods 2,688.00 

Services 5,487.60 

Housing Services 1,381.30 

Share of GDP 10.47% 

Share of Personal Consumption Expenditures 14.97% 

Owner-occupied Nonfarm – Imputed Space Rent 1,014.50 

Tenant-occupied Nonfarm – Rent 277.00 

Rental Value of Farm Dwellings 14.80 

Other Housing Services 75.10 

Residential Investment + Housing Services 2,146.10 

Share of GDP 16.26% 

Source: U.S. Dept. of Commerce, Bureau of Economic Analysis. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 

products depending on the individual application. Most 

innovations will enter the market through a specific sector 

within the home building industry, commonly referred 

to as a market niche. Identifying the specific target for 

your innovation’s market entry is the key to success. Case 

studies of industry innovations have demonstrated that 

understanding and addressing the demands and concerns 

of the target customer early in the design phase are critical 

to timely and successful product design and development. 

For the inventor who is new to the home building 

industry, a wealth of resources are available to assist with 

understanding industry regulations, opportunities, and 

challenges. Sources of information include industry-wide 

associations that are dedicated to specific building systems, 

products, or the industry as a whole; government research 

and demonstration programs; and trade journals. Table 2 

provides useful resources at the end of this report. 

Assessing the Market 

Once you have gained a basic understanding for how 

the industry functions, you should identify your target 

market. The first step is determining how your innovation 

compares to alternatives in meeting market needs. Once 

you have gone through this exercise yourself, you might 

consider arranging market studies or focus groups of 

individuals who would interact with your innovation. Such 

industry participants can provide invaluable feedback on its 

marketability. Key topics to consider include: 

•	�Ease of Use and Adaptability: installation tools, time, 

and learning curve; maintenance; coordination with 

trades and other critical players (e.g., a wall system 

must accommodate the activities of electricians, 

plumbers, siding installers, insulators, and framers); 

disposal. 

•	�Start-Up and Lifecycle cost: shelf price, cost of 

installation, maintenance costs.
�

•	�Performance and Maintenance: durability (shipping, 

construction, and lifetime performance phases); 

impact on resources (e.g., energy and water 

efficiency). 

• Safety and Security: building code and regulatory 

compliance, and perceptions of relevant parties. 

•	�Environmental Impact: current and anticipated 

regulatory compliance, lifecycle analysis of 

environmental impacts from material sourcing 

through product disposal (“cradle to grave” 

analysis).
�

•	�Overall Perceptions: regulatory/code officials, home 

owners, trades, home builders. 

It is important to recognize that the home building 

industry is slow to adopt new technologies and that the 

initial costs of these innovations can be substantial. The 

further a technology departs from market familiarity or 

lowest first costs, the more challenging market adoption 

will be. A thorough market analysis can help you avoid 

costly mistakes and common pitfalls that result from a 

lack of understanding of how the innovation will affect all 

stakeholders involved in the commercialization process. 

The value of obtaining and responding to feedback of 

potential customers early in the design phase cannot be 

overemphasized. Note that it is a good idea to protect your 

innovation by obtaining a provisional application for patent 

and non-disclosure agreements before revealing too much 

through focus groups or other market research. The bottom 

line is that a number of disparate groups must agree that 

the innovation adds value to the home building process. 

IdentIfyIng and assessIng 

Market drIvers: Codes, 

ProduCtIvIty, funCtIonalIty 

Building codes and regulation play a major role in the home 

building industry. Many innovations come to market or 

gain market share because of building code requirements. 

Examples include: 

•	�Hurricane Resistant Glazing – Adopted by the 

codes for defined areas of the United States in the 

aftermath of Hurricanes Andrew and Hugo 

•	�House Wraps – Tyvek® and other house wraps 

existed before being mandated by the codes, but 

gained substantial market share through code 

requirements on infiltration 
 

 

 

3 

•	�Ground Fault Circuit Interrupters – Adopted to 

prevent accidental electrocution 

The International Code Council (ICC) family of codes 

(I-Codes) contains over a dozen codes that may be 

applicable to particular jurisdictions depending on local 

adoption. The International Residential Code (IRC), 

applicable to detached one- and two-family dwellings 

and town homes up to three stories in height, and the 

International Building Code (IBC), which applies to all other 

new construction, are the general codes that pertain to the 

residential building industry. The grant of a code approval 

is the first step toward market acceptance of an innovation, 

but the battle for regulatory approval does not always end 

there. For example, air admittance valves (AAV), innovative 

plumbing system components that eliminate the need for 

a vent pipe and roof penetration, are approved within the 

2003 IRC. However, some local code officials have opposed 

these valves due to lack of product familiarity, causing their 

jurisdictions to prohibit them. 

If your innovation does not satisfy code requirements in 

its current state, consider design refinements that will 

result in compliance. Alternative options involve seeking 

code approval of an individual product through the ICC 

Evaluation Service or proposing a code change to the 

I-Codes themselves. Potential business partners will want 

to know how your innovation relates to the code. It can be 

prudent to design an innovation from the beginning so 

that it complies with codes, as innovations that fall outside 

of the code may require additional time and financial 

resources. As dull as they may be to read, codes are living 

documents, under constant revision and maintenance, and 

inventors need to be aware of their influence on innovation. 

Building codes define minimum standards for building 

practices and systems. Some products and systems 

installed in homes meet only these minimum standards. If 

your product exceeds code requirements, it must provide 

enhanced value, such as productivity improvements or 

added functionality. Productivity improvements are those 

that decrease input costs or increase cost effectiveness by 

saving labor, time, or materials. Functionality improvements 

generally are those that increase livability, comfort, health, 

usability, or durability. Recognizing where your product fits 

is key to market positioning. Some products may improve 

both productivity and functionality. 

UNDERSTANDING BUILDING CODES 

International Residential Code (IRC) 

• Applicable to detached one- and two-familydwellings and town homes to three stories 

in height. 

• Functions as a single source for all building 

and systems within its scope. 

International Building Code (IBC) 

• Applies to all commercial and residential 

buildings not covered by the IRC or 

International Existing Building Code. 

• Commonly references other regulatory codes, 

such as the International Plumbing Code, 

the International Mechanical Code, and the 

International Energy Conservation Code. 

Also, be aware that individual states may adopt 

and amend the I-Codes to satisfy state-specific 

standards for building that can arise from 

durability initiatives or energy efficiency goals. 

See www.iccsafe.org for more information. 

look for Market oPPortunItIes 

Understanding what is happening in the housing market 

can help you identify and focus on key opportunities. For 

example, many industry experts believe that the slower 

part of a housing market cycle is actually the best time to 

introduce an innovation. 

If your innovation includes environmental features, 

consider “code-plus” programs as an approach to 

marketing your innovation. These programs often focus on 

energy efficiency, durability, indoor air quality, or “green 

building” – the practice of environmentally responsible 

and sustainable building, design, and construction. Most 

current green building programs, such as LEED for Homes 

and NAHB’s Green Home Building Guidelines, award points 

to different products and systems based on their perceived 

environmental impact. At the heart of most green building 

programs is the EPA’s Energy Star qualification. The Energy 

Star is the most recognized label in the consumer market. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 

Affordable innovations that assist builders in meeting these 

programs’ objectives stand to capitalize on one of today’s 

fastest growing segments of home building – the green 

building market. A recent survey has found that the primary 

reason home buyers would be motivated to purchase 

a green home is the knowledge of the health benefits 

associated with these homes, pointing to market demand 

for greener, healthier products.1 

The best time to advance innovation is during a housing 

recession when builders are looking for something to make 

their product distinctive. When the housing market is booming, 

builders are likely to be resistant to innovations that might 

slow down their standardized processes. To be successful, 

innovations must be sensitive to market timing.

 —PATH Study, Overcoming Barriers to Innovation in the 

Home Building Industry, 2005 

Market Timing: 

Sometimes you just need to wait!
�

A small company out of Kennewick, Washington, Infinia developed 

a long life Stirling engine for applications in the space industry. 

In a textbook case of technology transfer, Infinia partnered with 

a Japanese firm to integrate their engine into a residential micro 

combined heat and power unit (mCHP) that can function as a 

mini-power plant for the home – providing space heating, water 

heating, and electricity. The unit possesses the advantages of 

being energy efficient and very quiet to operate while having the 

potential to act as a backup power source during grid failures. 

Micro CHP (mCHP) units are finding great success in Japan and 

Europe where regulatory incentives and a favorable natural gas 

to electricity price ratio are driving the market. Unfortunately, the 

U.S. market for mCHP is likely to remain constricted unless market 

incentives are established. 

CoMMunICatIng your 

InnovatIon’s advantage 

The results of your market assessment should guide the way 

you communicate the advantages of your innovation. Give 

thought to how to quantify and communicate the lifecycle 

costs and benefits of your innovation. Communicating cost 

comparisons between highly innovative systems and their 

market alternatives can be very challenging. For example, 

it may be difficult for a builder to conceptualize how cost 

effective it is to specify a wall system that incorporates 

insulation, framing, and electrical wiring versus a traditional 

wall system where these costs are spread over various 

trades. Realize that products with higher or unknown 

first costs will be a harder sell, but that productivity or 

functionality improvements may be sufficient to make your 

product marketable and could yield long-run cost-saving 

benefits. Regardless of your product, understanding and 

communicating its benefits in a way that is relevant to the 

market are critical to selling it. 

The Commercialization 

Timeline 

Inventors frequently make the mistake of underestimating 

the time required to commercialize a new product. At 

a roundtable discussion held with manufacturers and 

innovators at the 2007 International Builders Show, 

participants agreed that inventors can expect that 

commercializing a new technology will take 5-6 years 

when everything goes as planned. Further, participants 

agreed that the minimum time required to introduce a new 

technology to market is 3 years. Although these guidelines 

have been found to be fairly consistent and repeatable 

rules of thumb, individual experiences can vary significantly. 

Factors that can lengthen or shorten the commercialization 

time include the degree of complexity of the product, the 

source or ownership of the innovation, the qualifications 

and testing required, and the market’s readiness to accept 

the new product. 

For example, Leviton, a leading North American innovator 

and producer of electronic products, often succeeds 

in bringing products from concept to production in 

6 months. At the opposite end of the spectrum, the 

Lawrence Berkeley National Laboratory’s Environmental 

Tech Division (LBL) has been working on research, 

development, and commercialization of its innovative 

product, the Integrated Window and Wall System (IWWS), 

for over 14 years. In this instance, the disparity in the 

length of the commercialization process can be attributed 

to two factors: the Leviton innovations often are line 

extensions of previously commercialized products within 

previously commercialized systems, while the LBL IWWS 

is an innovative new concept (sometimes referred to as 

Robert Charles Lesser & Co. (July 17, 2007). “Building Green TV and RCLCO Reveal that Health is the Most Powerful Motivator for Consumers to Build or Buy a Green Home,” 

http://www.rclco.com/pdf/Jul172007521_Press_Release_RCLCO_and_Building_Green_TV.pdf. 

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5 

a disruptive innovation) that requires modifications to 

building processes. Additionally, manufacturer innovations 

are motivated by a return on investment whereas a 

government laboratory research innovation serves a public 

purpose or research purpose and may not be driven by 

profit or schedule. In this way, government laboratory 

innovations and university innovations are similar. 

ProteCtIng your InnovatIon 

The introduction of an innovation requires intellectual 

property protection to prevent an infringement and to 

allow manufacturers the appropriate ability to control the 

technology. Patents are an integral part of preparing for 

partnering with manufacturers, as they grant the patentee 

the right to prohibit others from manufacturing or selling 

their patented innovation. Patents are granted only to 

innovations that can be shown to be novel, useful, and nonobvious. 

Before applying for the right to protect your innovation, 

initiate a patent search to determine if your innovation is 

eligible. The University of Texas provides an excellent online tutorial for this process (see Table 2), or you can always 

hire a professional patent agent or attorney. 

Once you have determined that your innovation is eligible 

to be patented, consider submitting a “provisional 

application for patent,” which is affordable and requires 

minimal filing procedures. In order to pursue intellectual 

property (IP) protection rights, filing a design or utility 

patent must occur within one year of filing of the provisional 

application. It’s a good idea to enlist a patent agent or 

attorney registered to practice before the U. S. Patent 

and Trademark Office (PTO) to review or produce this 

application for you. It also is important to note that to 

a patent agent or patent attorney, “innovation” implies 

patentability, so “patentable innovation” is somewhat 

redundant. Cursory options for IP protection rights are 

given below. For detailed information on any of the 

following, refer to the U.S. PTO website (www.uspto.gov). 

•	�Provisional Application for Patent: For many 

inventors, the first step in the patenting process is 

filing a provisional application for patent. Filing a 

provisional application for patent provides a quick, 

inexpensive way to share your idea with potential 

partners without fear of others stealing your idea 

and leaving you without legal recourse. Upon filing 

a provisional application for patent, you have 12 

months to apply for a utility patent. A provisional 

application provides some IP protection, but is not 

enforceable. The words “patent pending” can be 

used to provide notice to competitors that a patent 

application has been filed but provides no legal 

rights. 

•	�Utility Patent: Obtaining and maintaining a utility 

patent is more expensive than filing a provisional 

application for a patent, but a utility patent 

protects the rights to the product’s specific physical 

characteristics and its applications for a period of 20 

years from the filing of the provisional application, or 

from filing of the utility application if no provisional 

application was filed. 

•	�Design Patent: Design patents address the 

appearance of a product. If the product’s appearance 

is original and is a significant component of its 

marketability, consider filing for a design patent. If 

acquired for your innovation, a design patent provides 

the right to protect the physical appearance of an 

innovation for up to 14 years. 

•	�Patent Cooperation Treaty International Application: 

The Patent Cooperation Treaty (PCT) application 

process was established to simplify the process 

of obtaining international patents in participating 

countries. If your market assessment concludes 

that opportunities for commercialization exist in 

international markets, the U.S. PTO and World 

Intellectual Property Organization (www.wipo.int) 

provide resources to help you pursue international 

protection. International patents can be very expensive 

to pursue but could also produce valuable returns. 

Other tools that support IP protection include trademarks 

to prohibit the use of an innovation’s name or symbol by 

others; copyrights to protect software or multimedia works; 

and trade secrets to protect an innovation’s formula or 

composition. If your innovation will achieve a large market 

share, these tools could be as important as obtaining a 

patent. 
 

 

 

 

 

 

 

 

 

 

6 

Developing Partnerships or 

Venturing: It’s Your Decision
� Once you have conducted the necessary market research, 

developed an understanding of the pressures of the 

regulatory environment, evaluated the expectations of 

your potential consumer base, and done your homework 

on the competition, you have set the stage for the 

commercialization of your innovation. 

A key decision is whether to license your product to an 

established manufacturer or to establish a start-up business 

to commercialize and manufacture your innovation yourself. 

The choice could have significant impact on the success 

of your product in terms of both market penetration and 

realized financial rewards. In this section, you will find 

guidelines for selecting the best approach and information 

about what to expect on each path. 

CoMMerCIalIzIng your InventIon 

through venturIng 

Many inventors choose to form start-up companies to 

commercialize their product when they feel they have 

sufficient funding and are well prepared for the task at 

hand. This is sometimes referred to as “venturing.” Venture 

capital can come from private or public sources. Some of 

the benefits of venturing include: 

•	�It is often a more exciting and challenging approach 

than forming a licensing partnership; 

•	�You have greater control over how the technology is 

commercialized and eventually managed; and 

•	�There is far greater potential for rewards, both 

financially and in a sense of achievement.
�

The challenges are significant, but with the right approach 

– which involves thorough research and planning and being 

open to learning from the experience of others – success is 

definitely achievable. 

When establishing a start-up company, it is necessary to 

establish an appropriate team. The team must be able to 

SCORE. (2008). Small Biz Stats & Trends. (www.score.org/small_biz_stats.html) 

both innovate and transfer technology. An effective team 

should include professionals with technical, financial, legal, 

and market research expertise. 

Having a team with one or more professionals with strong 

financial backgrounds is critical to the success of your 

venture. Your needs will vary based on your business plans 

and your product, but it is important to have expert legal 

resources for ongoing patent and contractual issues. The 

scope and strength of the required marketing team will 

vary based upon the business plan and level of innovation. 

As a manufacturing business, your start-up company will 

need to retain marketing functions or partner with others to 

continue market research and monitoring. The marketing 

team must be able to clearly identify a market need, 

effectively communicate the value of the innovation, and 

establish distribution channels or partners. 

You may form your team using existing employees, hiring 

new staff, or through a subcontracting agreement. Your 

team will need to further establish relationships and partner 

with third-party subcontractors to provide raw materials as 

well as to distribute final products. For further guidance on 

the manufacturers’ side of the commercialization process, 

refer to the HUD Publication, New Product Adoption in 

Housing: Guidance for Manufacturers. 

Assuming that you already have protected your 

intellectual property rights by patenting your innovation, 

the next step is to develop a baseline understanding 

of the commercialization process. You will need both a 

commercialization and a business plan. 

By one estimate, only 31 percent of new small businesses 

survive more than 7 years.2

 By numbers alone, the 

disadvantages of venturing tend to outweigh the 

advantages. However, venturing is not about the number 

of hurdles you’ll have to overcome. Instead, it is about 

your desire – and more importantly, your commitment and 

resources – to successfully build a business around your 

innovation. 

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7 

lICensIng PartnershIPs 

A licensing partnerships is a relatively simple, low-risk 

linkage with a manufacturer that allows the inventor to 

“enter” new markets. The licensee (the manufacturer) is 

given the right to use a process, trademark, patent, or other 

proprietary item for a fee or royalty. Inventors may have a 

number of reasons for licensing their technology to others 

rather than pursuing a venture. These include: 

•	�Low level of success for new business start-ups 

(although proper preparation and planning can 

increase your likelihood of success); 

•	�Reduced need for appropriate equipment and 

facilities;
�

•	�Reduced need for capital; 

•	�The investment of time and effort required to start 

and operate the business, secure, and manage 

needed resources, etc.; 

•	�The challenge of overcoming barriers to market 

entry in industries that do not welcome new entrants 

(see “Overcoming Barriers to Innovation in the 

Homebuilding Industry,” http://www.huduser.org/ 

publications/destech/OverBarriers.html); and, 

•	�Likelihood that you, the technology innovator, 

will have little time for additional research and 

development if you devote most of your time to 

marketing and commercialization. 

•	�Improved efficiency, if the licensee is an established 

manufacturer; 

•	�Brand/name recognition, if the partner is well known 

to the industry; 

•	�Product similarities and synergies, if the innovation 

extends the partner’s product lines; and 

•	�Resource pooling, if the partner brings additional 

resources to the partnership. 

The experience that manufacturers bring to the business 

of commercializing can offer significant advantages to 

inventors new to commercialization and mass production. 

In effect, this path takes advantage of specialization 

and economies of scale, as inventors can concentrate 

on innovating and manufacturers can concentrate on 

commercializing. The brand or company name recognition 

of established manufacturers helps to ease the market’s 

natural resistance to new products. For example, a new 

home heating technology carried under a brand name such 

as Carrier or Lennox would have a much higher chance 

of market acceptance than the same technology under 

a new and unproven corporate identity. In some cases, 

partnership with a manufacturer will be suggested by 

the innovation’s similarity to other products and the fact 

that many innovations are sold as components of larger 

subsystems. 

An example is Purfect Glaze, a hurricane resistant sealing 

for window glazing developed by the National Starch and 

Chemical Company. Once the sealant was developed, 

the National Starch and Chemical Company decided 

to contract with TruSeal Technologies Inc., a supplier 

of various glazes and sealants, for the marketing and 

distribution of their product. This alliance has proven very 

beneficial because TruSeal is the leading supplier of glazes 

and sealants for 7 of the 10 largest window manufacturers 

in the nation. With an established distribution system for 

products similar to Purfect Glaze, TruSeal has been able to 

help Purfect Glaze achieve a larger market share at a faster 

rate than otherwise possible. 

It is possible that a partner may engage in a partnership to 

“freeze” a potential innovation. This could allow the larger 

manufacturer to field a competing product without the 

threat of competition. 

Resource pooling offers a particularly beneficial 

opportunity to partner with manufacturers, as most 

inventors have limited financial and labor resources at 

their disposal. Manufacturers that have a vested interest in 

the success of your product, such as a manufacturer that 

supplies components for your innovation, will have strong 

motivation to promote the success of your product. The 

pooling of financial and labor resources is likely to lead to 

greater success than either partner would have individually. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8 

Typical Contracts 

When negotiating a contract with a potential partner 

it is important to pay close attention to the structure 

of the licensing agreement, which will vary depending 

upon the innovation’s stage of development as well as its 

marketability. You likely will need to enlist the help of a 

licensing expert and legal counsel due to the complexity of 

license contracts. Nevertheless, your initial considerations 

for the license structure should address the following: 

•	�Exclusivity: Consider licensing by region, end-use, 

or market to allow for optimum market penetration. 

For example, Infinia licenses their Stirling engine to 

multiple markets. This has enabled them to partner 

with manufacturing leaders in Asia and Europe to 

increase commercialization overseas, while their 

North American license remains available as the 

market matures. 

•	�Payments: Estimate upfront fees, maintenance fees, 

and continuing revenues or royalties. 

•	�Flexibility: How will the license address industry, 

corporate, and product changes? 

•	�Liability: Determine liable parties, extent of liability, 

etc. 

•	�Protection: Safeguard trade secrets and patent 

enforcement rights. 

•	�Incentives for Development: Your payments are 

going to be tied to the innovation’s successful 

commercialization, so ensure that the contract is 

structured to encourage this. Options include annual 

licensing fees and establishing and requiring that 

milestones be met to retain a license. 

•	�Expectations: Manufacturer licensees typically 

receive the lion’s share of sales profits due to the 

risk they assume. As an inventor who is licensing 

an innovation, expect the licensee to pay out 

royalties of 0.5% 25% of net sales, depending on the 

innovation’s stage of development and its ability 

to stand alone. (e.g., Is it a small component of a 

larger system or a full system unto itself?) Upfront 

and annual payments vary widely according to the 

innovation and the size of the licensee and may take 

the form of equity ownership in a small or start-up 

company. 

•	�Termination: Clearly define conditions of termination 

that will both protect your interest and encourage 

commercialization. 
 

 

9 

Case Study: Purfect Glaze – Hurricane Resistant Sealing for Glazing
�

Technology Summary 

This product class is relatively new and was created to limit 

the damage to buildings caused by hurricane force winds and 

impacts. Building codes, such as the International Residential 

Code and the Florida Building Code, now require window 

systems to meet rigorous standards for design pressure and 

impact resistance. 

By using Purfect Glaze to bond glass to framing, window 

manufacturers have been able to meet the impact resistance 

requirements of code-referenced standards. Besides 

improving product performance by using Purfect Glaze, 

manufacturers also can benefit from reduced production time, 

improved production efficiencies, and total cost reduction. 

Technology Source 

The National Starch and Chemical Company developed 

Purfect Glaze. The company is based out of Bridgewater, New 

Jersey. National Starch manufactures three types of warmapplied sealants for windows and doors. The Purfect Glaze 

sealant is available for general application and high-strength 

use.3 National Starch, with sales of over $3.5 billion, is part of 

a larger group, Imperial Chemicals Industries (ICI), and has 

substantial resources for technology development. 

currenT STage of DevelopmenT 

Despite its significant size and influence, the National Starch 

and Chemical Company is not well known in the window 

industry. Recognizing this, they have strategically partnered 

with TruSeal Technologies, Inc; which is a leading supplier 

of warm-edge, insulating glass sealant spacers for windows 

and doors for the world market. TruSeal will market, sell, and 

distribute the sealant to window manufacturers in the United 

States. 

Based in Beachwood, Ohio, TruSeal has been in the insulating 

business since the late 1960s and offers a wide variety of 

insulating glass spacer technologies and accessories that 

meet the demands of insulating glass fabricators. TruSeal is 

the preferred supplier for 7 out of 10 of the largest window 

productions in North America.4 

Purfect Glaze has been successfully assimilated with TruSeal’s 

product line. TruSeal now offers three types of Purfect Glaze 

(G, H, and SA): Purfect Glaze G is a high-green strength 

sealant specifically formulated for back-bedding IG units; 

Purfect Glaze H is a high-ultimate strength back-bedding 

sealant specifically formulated to pass impact resistance 

standards; and Purfect Glaze SA is formulated for high-green 

strength in glazing applications of larger IG units, such as 

patio doors and large picture windows. 

leSSonS learneD 

Commercialization can happen smoothly when a new product 

meets a clear need. With the changes in building codes for 

wind events and hurricanes, glazing came under increased 

pressure to improve. Safety issues are also a huge benefit 

of these adhesives and sealants. When incorporated with 

glazing, the adhesives are a good product for impact and 

hurricane resistance because they absorb shock and are more 

flexible than mechanical attachments. Furthermore, Purfect 

Glaze promises improved production efficiency and reduced 

costs for the manufacturer. Thus, Purfect Glaze addresses 

the needs of multiple stakeholders, from manufacturers to 

homebuilders to homeowners. 

TruSeal was a good choice for the manufacturing of Purfect 

Glaze’s hurricane resistant seal because the product 

incorporated well with TruSeal’s product line. The partnership 

allowed Purfect Glaze to reduce resources devoted to 

market development and overcome the barriers to market 

penetration through its advancement of effective partnerships 

with a well-recognized and regarded distributor within its 

market niche. 

3 National Glass Association: Window and Door (www.windowanddoor.net) 4 To learn more about the Purfect Glaze system, visit TruSeal Technologies (www.truseal.com) 
10 

ManufaCturers’ exPeCtatIons 

Before contacting manufacturers, it is essential that you 

understand what manufacturers expect of innovators. Since 

there usually are several inventors in the market striving for 

commercialization of their product, it is important that you 

be fully prepared to comply with the expressed needs of 

the manufacturer. Most manufacturers will request specific 

information from inventors prior to an initial meeting. 

Manufacturers will also require that the product be 

appropriately patented (as described above) and that the 

product be one that fits closely within the manufacturer’s 

segment of the housing market. 

Most manufacturers will expect you to have prepared both 

technical and market research data. Before approaching 

a manufacturer, you should have compiled technical 

performance data as appropriate for your innovation. 

Manufacturers also will want preliminary information 

regarding anticipated costs associated with the 

manufacture, utilization, and maintenance of the product. 

Although not all manufacturers expect market research 

from innovators, most expect a minimum of preliminary 

market research. Market research is valuable for inventors 

to be able to estimate the value of their technology. 

However, many large manufacturers recognize that some 

small inventors cannot obtain this information because of 

their limited resources. Manufacturers may compensate 

for this lack of information by conducting their own market 

research before agreeing to commercialize a product. As 

an inventor, be sure to conduct the appropriate market 

research to ensure that you are contacting the right 

manufacturers and that your product fits well with their 

currently established product line or target market. 

It is common for inventors to be cautious when partnering 

with large manufacturers, but don’t let caution get in the 

way of commercial success. Small innovators often require 

restrictive confidentiality agreements from manufacturers 

that prohibit the manufacturers from sharing the necessary 

information across internal divisions. Be sure to protect 

your intellectual property rights through the appropriate 

utility or provincial patents, but when possible avoid overly 

restrictive confidentiality agreements that hinder the 

process. 

Manufacturers are eager for “home run” ideas that 

promise to yield immediate returns on investments or 

“breakthrough” inventions that are novel and bring 

innovative ideas to the attention of the marketplace. A 

manufacturer will spend considerable resources introducing 

the new idea or invention. Licensing the technology is just 

the first step in the commercialization process. 

It is important to fully evaluate your market research and 

analysis to most accurately predict the length of time 

required for commercialization of your specific product. 

The staged-gate development process is commonly used 

by manufacturers. The chart in the next page presents 

the stages that you should pursue as you proceed with 

the commercialization process. The typical staged-gate 

process tracks decision-making regarding development 

of a particular idea from “initial screen” to “post-launch 

review.” 
 

 

 

 

 

 

 

11 

Figure 1 

Staged-Gate Development Process 

Source: Winning at New Products: Accelerating the Process from Idea to Launch; Cooper; 2001 

High strategic fit 

Clear market potential 

Low risk 

Low investment 

Low market potential 

Low strategic fit 

Stage #1 

Initial 

Screen 

Stage #2 

Build 

Business 

Case 

“No Go” 

Stage #3 

Development 

Stage #4 

Launch 

Plan & 

Launch 

Stage #5 

Post 

Launch 

Review 

Resources 

The commercialization of your innovation is an extensive 

and costly process that can be overwhelming to an 

inexperienced and financially constrained inventor. 

Fortunately, there are several resources available to assist 

with your financial and reference needs. 

fInanCIal resourCes 

Several federal and state programs provide targeted 

funding for the support of innovations in the housing 

industry. Federal programs and processes can be easier 

to navigate and less restrictive than state programs. They 

are known to be more accessible and not as onerous and 

restrictive as the state grant programs, although state 

programs with significant funding are also available if 

you are willing to put in the extra work. Examples of state 

energy programs that offer grants are the New York State 

Energy Research and Development Authority (NYSERDA) 

and the California Energy Commission (CEC). Both can have 

high cost of entry in terms of time and resources, and may 

have restrictions based on business size, ownership, and 

location. Some programs may require royalties to be paid 

as well. National-level funding opportunities are sometimes 

available specifically for housing industry-related 

innovations through the U.S. Department of Housing and 

Urban Development, the National Science Foundation, and 

the Forest Products Laboratory, among other resources. 

Specific to promising energy-saving ideas and innovations, 

the U.S. Department of Energy offers financial and technical 

support to inventors and businesses through its Inventions 

and Innovation (I&I) Program. I&I selects technologies to 

receive grants through a competitive process. The Small 

Business Innovation Research Program and Small Business 

Technology Transfer Program are also sources of funding 

(see sidebar on next page). 
 

 

 

 

 

12 

Although there are significant funds available through 

government entities, inventors often need to seek 

outside sources of funding to complete the R&D 

and marketing necessary that results in effective 

development and ultimate commercialization of 

their technology. Incubator programs through 

universities, government, or private sector non-profits 

offer alternative sources of support that are widely 

accessible. In fact, the National Business Incubation 

Association reports that the United States had 1,115 

incubation programs as of 2006. Most of these 

programs are run by non-profit organizations with 

funding from economic development organizations, 

but may vary substantially in their operation and in the 

types of entrepreneurs that they serve. 

Before you enlist the services of an incubator, 

determine whether there’s a good fit. What is the 

organization’s success rate? How long do innovators 

generally spend in the program (typically 3 years 

or less)?5

 What is the innovator’s experience in the 

particular industry and with products similar to your 

innovation? What level of support will be provided? 

Local incubator programs can provide valuable 

assistance to entrepreneurs in the earliest 

stages of business development and innovation 

commercialization by offering services related to 

securing and managing loans, providing introductions 

to “angel” investors and venture capital investors, and 

developing materials necessary to communicate the 

value of your venture. The level of information required 

by investors will vary according to their familiarity with 

the subject matter and their commitment of capital. 

sMall BusIness InnovatIon 

researCh PrograM (sBIr)/ 

sMall BusIness teChnology 

transfer PrograM (sttr) 

The SBIR and STTR are government-sponsored programs that 

encourage small businesses and researchers to explore their 

technological potential by providing incentives to the research 

and advancement of new technologies. Funding from both the 

SBIR and STTR programs is available through various government 

agencies, including the U.S. Department of Defense, the U.S. 

Department of Energy, and the U.S. Department of Health 

and Human Services. Both the SBIR and the STTR are 3-phase 

programs structured as follows: 

•	�Phase I: The Start-Up Phase. In this phase, small businesses 

are eligible for awards of up to $100,000 for approximately 

6 months to assess the scientific and technical merit or 

feasibility of an idea or technology. 

•	�Phase II: R&D Work: In this phase, small businesses are 

eligible for awards of up to $750,000 for a two-year evaluation 

of the results from Phase I. During this time, the researcher 

performs the R&D work, and he or she evaluates the potential 

opportunities for commercialization of the technology. 

•	�Phase III: Technology to Market: The results generated from 

the Phase II evaluation moves from the laboratory into the 

marketplace. Unfortunately, there are no SBIR or STTR funds 

available to support this phase. The small businesses and 

researchers must find funding in the private sector or other 

non-SBIR/STTR federal agency funding. 

To be eligible for funding under the SBIR program you must be 

an American-owned, independently operated for-profit business 

with less than 500 employees, and your principal researcher must 

be employed by the business. To be eligible for funding under 

the STTR program you must be a small business meeting all 

the requirements of the SBIR program or a qualified non-profit 

research institution. Although there is no size limit for non-profit 

research institutions, in order to be eligible these institutions 

must be located in the United States and be a non-profit college 

or university, a domestic non-profit research organization, or a 

federally funded R&D center. Further information regarding the 

SBIR and STTR programs is available on the U.S. Small Business 

Administration website at www.sba.gov/SBIR. SBIR seems 

particularly appropriate when the federal agency is in a position to 

procure the products that reach the market in Phase III. 

National Business Incubation Association (www.nbia.org) 5 
 

 

13 

other resourCes 

For your other industry-related research or data needs, 

Table 2 identifies some useful resources. 

Table 2 

Helpful Resources for Inventors 

Industry Sector Organization Type of 

Resources Available Website 

Academic Advanced Technology 

Development Center Support for Entrepreneurs www.atdc.org 

Academic Joint Center 

for Housing Studies 

Economics and 

Industry Research www.jchs.harvard.edu 

Academic 

National Collegiate 

Inventors and Innovators 

Alliance 

Business Planning, 

Commercialization Plan www.nciia.org/r_primer.html 

Academic University of Texas Patent Search Tutorial www.lib.utexas.edu/engin/patenttutorial/index.htm 

Building Codes International Code Council Building Codes 

Product Evaluation Service www.iccsafe.org 

Federal 

Government Department of Energy Inventions and Innovation Grants www1.eere.energy.gov/inventions 

Federal 

Government 

Department of Housing and 

Urban Development 

Research on Innovation and 

Technology Transfer,

 Annual Housing Survey 

www.hud.gov 

www.pathnet.org 

Federal 

Government National Science Foundation Venture Capital www.nsf.gov/eng/iip/sbir 

Federal 

Government USDA Forest Products Laboratory Research, Venture Capital www.fpl.fs.fed.us 

Non-Profit SCORE Business Advice and Training www.score.org 

Publisher Nolo Legal Counsel www.nolo.com 

Publisher The Licensing Journal Licensing www.aspenpublishers.com 

State Government California Energy Commission Research, 

Venture Capital www.energy.ca.gov 

State Government New York State Energy Research 

and Development Authority 

Research, 

Venture Capital www.nyserda.org 

Trade Association InventNet Support for Entrepreneurs www.inventnet.com 

Trade Association Licensing Executives Society Licensing www.lesi.org 

Trade Association National Association of Home 

Builders (NAHB) 

Economics Data 

on Housing Market www.nahb.org 

Trade Association National Business Incubation Links to Start-Up Support www.nbia.org 
 

14 

Conclusion: Six Steps to Increase Your Chances of Success
� To summarize, innovators in the housing industry have a substantial market opportunities. They also face challenges that 

most inventors face in commercializing product ideas, as well as challenges unique to the home building market. Innovators 

will do well to take the time to follow the course laid out in this guide: 

Do your homework on the housing market Understand regulatory implications. 

and identify where your product fits. Does it conform to applicable building 1 4 and regulatory codes? Will it need an 

evaluation report or change of codes in 

order to gain acceptance? 

2 Identify the market driver. Does it meet 

a building code requirement? Is it more Be realistic. If you are looking to partner, 

affordable than market alternatives? understand that the manufacturer will be 

Does it increase productivity or add value 5 taking on most of the risk and funding 

through increased functionality?	� needs, and will expect revenue that is 

proportionate to that commitment. If you 

have chosen to commercialize the invention 

3
 

Apply for a patent or otherwise protect the yourself, prepare a detailed business plan 

intellectual property embodied in your and budget.
�

innovation.
�

6 Seek outside support in preparing your 

commercialization plan. There are plenty of 

resources available.