1 marketing of licensing-out opportunities fptt conference halifax, june 2004 dave tyrrell, vertex...
TRANSCRIPT
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Marketing of Licensing-Out Opportunities
FPTT Conference Halifax, June 2004
Dave Tyrrell, Vertex Intellectual Property Strategies Inc.
Vertex Intellectual Property Strategies Inc. ©20042
This presentation provides guidance for the execution of a licensing-out business strategy
Tactics and processes that can be employed in the marketing and sale of technology licenses will be discussed, and pointers for negotiating teams will be provided
Practical, easy to apply licensing tips will be offered
Overview
Vertex Intellectual Property Strategies Inc. ©20043
Topics
Introduction – Why choose the licensing option?
Implementation steps for a Licensing-Out Strategy
Licensing Negotiation Tactics Five Licensing Tips Questions
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Introduction
Why Licensing?
Vertex Intellectual Property Strategies Inc. ©20045
Licensing is one Commercialization Option for New Technologies
Options for Businesses– Use in existing business– Spin-off business– Joint Venture– License
Options for Government Organizations– Licensing is preferred
Could be a license to a spin-off start-up business
Vertex Intellectual Property Strategies Inc. ©20046
Comparing Licensing with Other Business Options
Technology Applications
Options
New Capital Required
Personnel Requirements
Time Needed to Access Market
Accessibility to Worldwide
Markets and Broadly-Based Applications
Liability and Exposure to
Risk
Comparison Factor
Highest – 10 Lowest – 1
Most – 10 Least – 1
Longest- 10 Shortest – 1
Best – 10 Poorest – 1
Highest – 10 Lowest – 1
1. Include in Current Business 9 9 10 1 10
2. Spin-off 10 10 10 1 8
3. Joint Venture 3 4 7 6 6
4. License Technology 1 1 1 10 1
Vertex Intellectual Property Strategies Inc. ©20047
Some of the Business Conditions that Favour a Licensing-Out Strategy
Provide a source of revenue and earnings in markets that are otherwise non-accessible, such as:
• Distant or international markets without a potentially risky capital investment.
• New or different applications for technology Utilize “orphaned” technologies – technologies that have either
a poor fit or no fit with the business’ current portfolio and its business or research plans
Can provide an opportunity for growth and the development of a high margin business without investment in a market where demand exceeds supply
To obtain benefits from technology grantbacks or improvements
Vertex Intellectual Property Strategies Inc. ©20048
Some of the Business Conditions Not Favouring a Licensing-Out Strategy
If the technology is truly a leading technology and greater value can be derived from it by protecting it and retaining confidentially through:
• Controlling a market niche with a highly profitable specialty product• Retaining price premiums• Maintaining a currently held major worldwide market share• Maintaining barriers to entry
The potential for high liability exists, such as with hazardous products
Difficulty in providing an effective delivery and ongoing support due to such factors as:
• Safety• Working conditions• Distance• Availability of appropriate personnel
Vertex Intellectual Property Strategies Inc. ©20049
When Licensing is Determined to be the Preferred Option
The challenge becomes:– Who to approach– Setting the royalty rate– Negotiating the deal– Managing the deal
So what do you do next?
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Steps in the Marketing and Sale of a License Agreement
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Steps in the Marketing and Sale of a License Agreement (1of 8)
Define scope of technology to be licensed Assure technology ownership and understand the
potential for patent infringement (of a third party’s patent)
Consider strengths of the technology versus other technologies available in the field
Develop a market segmentation strategy:– End use application, – Market segment, – Geographic territory
Vertex Intellectual Property Strategies Inc. ©200412
Steps in the Marketing and Sale of a License Agreement (2 of 8)
Create a licensing team – Requires members with a variety of different skills and
capabilities – expertise in the following areas will be required either on an ongoing basis or from time to time:
Business / Technology Manager (Team leader) Technology Guru Patent Agent Lawyer Specific situations may require specialty services:
– International business relationships– Translation service– Engineering services
Vertex Intellectual Property Strategies Inc. ©200413
Steps in the Marketing and Sale of a License Agreement (3 of 8)
Add to the team the expertise of a licensing consultant – if not available in-house
The consultant can be utilized for:• Reviewing strategic direction• Enhancing networks of contacts• Advising on patent work• Contributing to the technology evaluation process• Setting of fee schedules• Serving on the negotiation team
Vertex Intellectual Property Strategies Inc. ©200414
Steps in the Marketing and Sale of a License Agreement (4 of 8)
Determine the profile of the desired licensee:– Marketing force, – Manufacturing capability,– Personnel,– Business fit
Identify, locate and qualify list of potential licensees – existing contacts, networks and specialized computer searches can be utilized in this process
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Consider why businesses licensing-in technology – In order to supplement research programs and unblock
development projects by providing that missing link– Secure a technology where the required capabilities don’t
exist or are not available in-house– Expediency – It can be quicker to license-in than to develop
a specific technology oneself – Cost effectiveness– To understand the state of competitive technologies– To gain exclusivity for an attractive emerging or growth
market
Steps in the Marketing and Sale of a License Agreement (5 of 8)
Vertex Intellectual Property Strategies Inc. ©200416
Steps in the Marketing and Sale of a License Agreement (6 of 8)
Investigate company culture and ethics of potential licensees
Develop a proposed license package geared to meet the potential licensee’s needs and that can be delivered
Establish a sales and marketing plan Establish a proposed fee schedule
Vertex Intellectual Property Strategies Inc. ©200417
Steps in the Marketing and Sale of a License Agreement (7 of 8)
Prepare a draft agreement Setup product demonstration if appropriate Have a licensing negotiation team and strategy
prepared Have a technology transfer delivery plan ready
to go
Vertex Intellectual Property Strategies Inc. ©200418
Steps in the Marketing and Sale of a License Agreement (8 of 8)
Prepare to deal with confidentiality / secrecy requirements:
• No nondisclosure agreement ─ Limit discussions to publicly available or non-
confidential information• Licensing negotiation stage
─ Additional information can be provided under terms of a non-disclosure agreement
• Upon the conclusion of a license agreement─ All proprietary information made available to
the licensee with a comprehensive secrecy provision included in the final agreement
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Licensing Negotiation Tactics
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Some Important Points in the Negotiation Process
Team member participation will depend on the business situation
Licensing negotiations should not be done on a solo basis Meeting responsibilities should be clearly understood. Leader
should be designated. Also need to assign someone with the responsibility for taking detailed notes
The team needs to have planned meeting strategies The team should caucus privately from negotiation discussions
if necessary and not hesitate to excuse themselves for confidential discussions
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Five Licensing Tips
Vertex Intellectual Property Strategies Inc. ©200422
Licensing Tip # 1
Consider technology licensing as a strategic option – it can be a valuable and powerful business tool and can help access global and or new application opportunities
Vertex Intellectual Property Strategies Inc. ©200423
Licensing Tip # 2
Effectively manage intellectual assets, so they can become the cornerstone of a licensing venture – areas to address include:
• Employment & Consulting Contracts and Agreements• Identification / Cataloguing / Inventorying of IP• Patent Strategy• Invention Policy• Non-Disclosure Agreements• Proprietary Information Protection • Licensing-Out & Licensing-In Opportunity Identification • Other Organizational Specific Issues
Vertex Intellectual Property Strategies Inc. ©200424
Licensing Tip # 3
Clarify IP ownership issues up-front in all technology development activities including those that involve:
– Employees– Contractors– Universities– Other businesses – Customers – Etc.
Vertex Intellectual Property Strategies Inc. ©200425
Licensing Tip # 4
Don’t loose sight that the essence of a licensing relationship is one that:
Is a business partnership rather than the traditional supplier / customer relationship
Focuses on WIN -WIN results and is not for those who operate with a ‘loophole’ mentality
Is similar to a Strategic Alliance and exhibits the following characteristics:• Two separate independent entities• Working together to tackle specific objectives• Sharing the risk and rewards• Supplying resources on a continuous basis
Vertex Intellectual Property Strategies Inc. ©200426
Licensing Tip # 5
Identifying, selecting and working with the right licensee is probably the single most important ingredient to a successful licensing venture
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Questions