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IP Issues in Licensing: The Challenges

IP Issues in Licensing: The Challenges. Casey K. Chan National University of Singapore IP Academy of Singapore. Licensing, RCA, MOU’s. Commercial Perspective University’s Perspective Individual’s Perspective. Practical Aspect of Licensing. Company Product Champion

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IP Issues in Licensing: The Challenges

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  1. IP Issues in Licensing: The Challenges Casey K. Chan National University of Singapore IP Academy of Singapore

  2. Licensing, RCA, MOU’s Commercial Perspective University’s Perspective Individual’s Perspective

  3. Practical Aspect of Licensing • Company Product Champion • University Product Champion • Individual Product Champion

  4. Lonnie Johnson - 49 patents “I pumped it up and fired it across the conference room,” he recalled. “Wow,” was the reaction from the suited executives. “From that point it was a done deal.” MSNBC Jan 26 ,1999

  5. Selling your ideas • Who to disclose to ? • VP, Director, Product Manager, Sales Rep • How does the company view you ? • Opinion leader, volume user, inventor, expert, unknown • What kind of disclosures ? • Napkin, Drawing, Prototype, Pre-production Prototype, Patent Filed

  6. Disclosure agreement • (a) is in the possession or control of DISCLOSEE prior to the time of disclosure hereunder; or • (b) is at the time of disclosure or thereafter becomes public knowledge through no fault or omission of DISCLOSEE; or • (c) is lawfully obtained by DISCLOSEE from a third party under no obligation of confidentiality to DISCLOSER; or • (d) is developed by DISCLOSEE independently of the CONFIDENTIAL INFORMATION.

  7. Disclosure Agreement • Time limit of 2 months for a decision • No limitation on disclosures to others • Time to keep in confidence - 3 years • Arbitration in a neutral state

  8. Definition of Scope of Licensing • What is being license • Patents - claims • Know how • Field of Use • Geographical • Right to sublicense • Exclusive versus Non Exclusive

  9. The most famous Non Exclusive License to IBM

  10. Agreement • Assignment / Licensing / Consultation • Financial Terms • Warranty and Representation • Indemnification against product liability and infringement lawsuits • Minimum performance clause • Right of first refusal on new invention

  11. Licensing TermsFinancial Terms • Upfront Fees • Milestone Payments • Royalty - Based on gross or net sales • Equity

  12. Royalty • Medical Device • Napkin 1-2%, Drawing 2-4%, Prototype 4-6%, Patent 6-8% • Pharmaceutical • Pre-Clinical - 2% • Phase I - 5% • Phase II - 15% • Phase III - 40%

  13. Licensing TermsPerformance • Minimum performance • Due diligence obligation • Quality of Product

  14. Licensing TermsWarranty and Indemnification • Warranty from Licensor • No warranty of fitness of use • No warranty of non-infringement • May warrant best knowledge of not infringing subject to limitation • Indemnification from Licensee • Insurance for third party liability

  15. As a general policy University Do not assign IP • Lost of control to defend e.g. reputation • If company insolvent, IP is lost. • No control on the field of use. • Future improvement by other University scientist may not receive the benefit of Section 103(c)

  16. Future improvements • Commercial research is project driven • University research is investigator driven • Avoid carving out of research areas • Such “reach through” clause is unacceptable

  17. Pointers On Negotiation

  18. Quid pro quo Something for something

  19. Build up personal relationship • Make licensee feel welcome • Having meals with licensee • Body language and manner of speech • Listen carefully to the optimistic speech • Margin • How soon to market • Market

  20. Be Prepared • Know your stand • Know your background • Technology • Market size • Region

  21. Be Prepared • Product • Field of use • Royalty rate

  22. Be Prepared • To close the deal at the table • To walk away

  23. MOUs • Expression of intent • Other terms to be negotiated • Binding and non-binding

  24. RCA, Sponsored Research, Grant • Partial payment • Full payment • Grant

  25. Poor posture • We are hungry for your money • We need to get the agreement done quick • Company collaborator make offer, you being the nice guy agree to the term • IP not important “Never mind, let them have the IP”

  26. Many posture is possible • Weak posture • Elite posture • Good deal posture

  27. Elite Posture • We are the 3rd ranking university in Asia • We are not a commercial company • We have expertise not available in the industry • We are selective in choosing collaborators

  28. Good deal posture • We are a growing department • We are industry friendly • We have expertise you need • We provide research capability at reasonable rate

  29. Agreement Finger Print

  30. Publication Right • Unrestricted right • Review delay of up to 30 days • No more then 60 days to allow for patent filing

  31. IP ownership • University owns all IP • Allows for sponsor non-exclusive in-house use for research • May give first right of refusal for exclusive royalty bearing license

  32. Joint owner to be avoided • Very difficult to manage • Contribution of background information does not confer automatic joint ownership • Financial contribution not sufficient ground to demand joint ownership

  33. Thank you

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