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Navigating Licensing Challenges: Perspectives and Negotiation Strategies

Explore the complexities of licensing agreements from commercial, university, and individual viewpoints. Learn about disclosure agreements, licensing terms, performance expectations, and more to guide successful negotiations. Understand IP ownership, financial terms, and the importance of maintaining a strong posture during discussions.

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Navigating Licensing Challenges: Perspectives and Negotiation Strategies

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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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