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Intellectual Property Agreement

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Intellectual Property Agreement Powered By Docstoc
					Starting an Intellectual
Property Licensing Practice


Presented by:
Andrea M. Jacobson

Minnesota Chapter - Licensing Executive Society (LES)
January 10, 2006
           Overview

              Definitions
              Types of Intellectual Property
               Transactions
              Business Models and Strategy
              Marketing & The Approach
              License Agreement Factors
              IP License Case Study


2/2/2011                Minnesota Chapter - LES   2
           Intellectual Property License
              Permission for an entity to take some
               action with respect to software, movies,
               inventions, or whatever it is being
               licensed.
              The type of action — to make, to use, to
               sell, to modify, to copy, etc. — and the
               degree of permission — for how long, how
               exclusive, etc. — are up to the parties to
               negotiate as part of the license
               agreement.
              Source: http://www.darwinmag.com/read/040104/legal.html




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           Basic Types of IP Licensing
           Transactions:

              Inbound IP Licensing

              Outbound IP Licensing




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           Basic Types of IP Licensing
           Transactions:

              Inbound IP Licensing
                  Licensing IP (purchasing) into your
                   organization from others
                  Buyer/Licensee
                  Work with R&D and product
                   development
                     Make/Workarounds or Buy
                     Identify and avoid potential infringement

                     IP review prior to shipment




2/2/2011                    Minnesota Chapter - LES               5
           Basic Types of IP Licensing
           Transactions:

              Outbound IP Licensing
                  Licensing IP (selling) to others for profit
                  Seller/Licensor
                  May interact with business
                   developments/sales
                  Identify IP inventory for licensing




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           Business Models and Strategy
              Two Types of Business Models:

                  Internal IP Licensing Process

                  Individual IP Licensing Strategy per Project




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           Business Models and Strategy

              Internal IP Licensing Process
                  Internal business model
                       Factors influencing this process:
                            Organizational Design
                            Industry Compliance/Regulations
                            Politics / Relationships
                            History
                            Culture and Belief Systems




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           Business Models and Strategy

              What is the IP culture?
                  Old thinking
                       ―Sell our leftovers to others at a high-
                        price, then throw it over the fence…‖
                  Progressive
                       Open to offering some new technologies
                        to others
              What are the IP intentions?


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           Business Models and Strategy
              Components of an Internal IP
               Licensing Process
                  Need generation (inbound)
                  Inventory generation (outbound)
                  Approvals, Contacts / Routing
                  Resources: talent, valuation, etc.
                  Compliance
              Spin/PR: ―…And here is our
               process…‖

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           Business Models and Strategy

              Individual Business Models per IP
               Project (inbound)
                  Have you done your homework?
                    Understand the product development
                     timeline, shipping dates, etc.
                    Interrogate!?!

                    Work with IP team to identify potential
                     options
                          Make / Workarounds
                          Buy


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           Business Models and Strategy

              Individual Business Models per IP
               Project (outbound)
                  Have you done your homework?
                    Understand the industry
                    Be aware of trends

                    Avoid thinking like everyone else in the
                     industry




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           Business Models and Strategy

              What is in the IP portfolio and/or
               available for licensing?
                  Partner with a subject matter experts
                       Are there adjacent market segment
                        opportunities?
                  Is the portfolio up to date?




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           Business Models and Strategy
           Inventory / Portfolio Team

              Patent Analyst
                  Identify patents in portfolio for defensive purpose
                   and strategic value. Understand patents both
                   inside and outside of the corporation.
              Patent Engineer
                  Look for new tech transfer opportunities. Liaise
                   with IP team and inventors.
              Patent Agent/Patent Attorney/IP Attorney
                  Advises internally to reduce risk, draft patent
                   disclosures manages relationship with outside
                   counsel, assist with litigation.
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           Business Models and Strategy
           Inventory / Portfolio Team

              IP Licensing
                  Manage IP inventory/portfolio, identity license
                   opportunities, package/market, close deals.
                  Inbound vs. Outbound
              Financial Analyst
                  Assisting with IP Valuations, tracking royalties,
                   milestone payments, etc.
              Patent Paralegal
                  Maintains patent docket, alerts patent
                   committee/IP members regarding critical due
                   dates, etc.



2/2/2011                      Minnesota Chapter - LES                  15
           Prospects

              Generated from market research,
               networking, and referrals

              Everywhere and anywhere…




2/2/2011               Minnesota Chapter - LES   16
           Don‘t Assume The World Is
           Simple…

              Check for potential taint and conflicts of
               interest
                  What is our history?
                  Conflicts check?
                  Are there any prior agreements that can be
                   cloned or leveraged?
              Network internally to see if a prior
               business relationship exists and if so,
                  Learn about prior dynamics
                  Attempt to gain access to it


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           Marketing
              Approach IP as if it were a product
               or service to be marketed
              The 4 Ps of Marketing
                  Product - IP
                  Place- Where is it in terms of the
                   ―Window of Opportunity‖?
                  Price – Valuation
                  Promotion – Your job
              Answer: What‘s in it for them?

2/2/2011                    Minnesota Chapter - LES     18
           Marketing

              Market Research
                  The balance between time, money, and
                   accuracy. You can never have all three.
                  Network internally to locate market
                   research, OR
                  Purchase info that may be re-used by
                   other areas of your business




2/2/2011                   Minnesota Chapter - LES       19
           Marketing

              Be Creative
              Take Reasonable Risks
              Make Appropriate Business
               Assumptions
              Get Over Being Perfect
              Show Integrity



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           Making the Approach

              Direct Mail
                  It‘s like soooo 10 minutes ago!?!
              Develop the relationship
                  Network / Call the prospect and give
                   them the elevator pitch such as…
                  Provide pre-read materials
                  Don‘t forget to follow up
                  Pushy = Desperate


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Intellectual Property
License
           Non Disclosure Agreement

              Prepare a ‗clean and safe‘ pitch to
               create an interest in the IP
              Insist on a signed NDA prior to
               disclosure of more detailed
               information
              Do not assume that an NDA
               provides you with appropriate
               protections


2/2/2011                 Minnesota Chapter - LES     23
           Non Disclosure Agreement

              Insure all documents shared include
               ―Proprietary and Confidential‖ noted
               in the footer of each document
              Brief engineers supporting the
               project on appropriate boundaries




2/2/2011                Minnesota Chapter - LES   24
           Exclusive vs. Non-Exclusive
              An exclusive license prevents the party
               granting the rights (the "licensor") from
               granting those rights to others
              Some compromises between the
               extremes of full exclusivity and non-
               exclusivity are:
                  Exclusive only within a specific geographic
                   territory,
                  Exclusive only within a given field of expertise,
                  Exclusive for a specific time less than the
                   entire term of the license agreement.
              Source: http://www.darwinmag.com/read/040104/legal.html



2/2/2011                      Minnesota Chapter - LES                    25
           The Right to Sublicense?
              The licensee‘s right to grant a license to
               the IP to a third-party
              The licensor may want to qualify the right
               to sublicense
                  Limitation on sublicensing within a specific
                   geographic territory or market segment
              Can create ‗wild‘ royalty scenarios
                  Avoid being the intermediary with royalty
                   payments




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           Royalty Scenario

                                    University
                                     Licensor




                  University                          Industry
                   Licensor                           Licensor
                                     Licensee
                                    & “Master”
                                     Licensor




                         Licensee                Licensee




2/2/2011               Minnesota Chapter - LES                   27
           Don‘t Over Estimate Your Market

              Be conservative and avoid over
               estimating market segment size and
               demand for the IP
                  Sets a false expectation for both
                   parties (manufacturing resources,
                   product costs, licensing revenue, etc.)




2/2/2011                    Minnesota Chapter - LES          28
           Work with Their Numbers

              ―Hey, we used your numbers you to
               develop the projections…‖
                  Five years of numbers…
                  Place disclaimers in documents
                   indicating sources for
                   assumptions/data.
                  Document, document, document to
                   generate the appropriate project
                   history


2/2/2011                  Minnesota Chapter - LES     29
           The Right to Make Developments
           Based Upon the Licensed Work
              A licensor negotiating a license contract
               may want to prevent the prospective
               licensee from making developments based
               upon the licensed IP, or

              The licensee's plans may include trying to
               improve upon the IP by making such
               developments.
                 Derivative work – they may keep IP
                  rights

              Know each other's intentions and negotiate
               the terms that easily describe it in the
               licensing agreement.

2/2/2011                  Minnesota Chapter - LES           30
           Term & Termination
              The license agreement will normally contain the
               number of years that is effective, i.e., the term.

              Termination options may include:
                   ―Material breach" of the agreement by one party
                    gives the other party the right to terminate for fact-
                    specific reasons.

                   ―For convenience" includes clauses where the
                    licensee and licensor agree on a "buy-out" by the
                    licensee of its future obligations to pay under the
                    agreement.

              Source: http://www.darwinmag.com/read/040104/legal.html




2/2/2011                         Minnesota Chapter - LES                  31
           Avoid Foggy Royalty Language
              Be very specific writing the contract
               language to define the calculations of a
               royalty
                  If IP is a component or element within a
                   package
                      Spend the time to insure technical specialists
                       on your side approve of the language
                      Discern information regarding royalty
                       calculation

                  Specificity = Cost savings


2/2/2011                      Minnesota Chapter - LES                   32
Inbound IP Licensing
Case Study
           Inbound IP Licensing Case Study

              Small software company starts
               relationship with engineers at a Fortune
               100 technology company
                  Engineers start using the technology after
                   ―consent‖ from the small company
                  No IP license exists between the two parties
              IP Dept is in the dark
              Just prior to shipping new product an IP
               issue surfaces
              What is most important thing to do?

2/2/2011                     Minnesota Chapter - LES              34
           Inbound Licensing Case Study
              #1 – Never stop a shipment!
              Alert IP powers that be accordingly
              Assess the potential financial impact of
               the unlicensed technology
              Work with Finance to determine P&L
               impact
              Budget
              Educate
              Bypass fine?

2/2/2011                  Minnesota Chapter - LES         35
           Closing

              Definitions
              Types of Intellectual Property
               Transactions
              Business Models and Strategy
              Marketing & The Approach
              License Agreement Factors
              IP License Case Study


2/2/2011                Minnesota Chapter - LES   36

				
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