IP Issues in Licensing: The Challenges Casey K. Chan National University of Singapore IP Academy of Singapore.
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Transcript IP Issues in Licensing: The Challenges Casey K. Chan National University of Singapore IP Academy of Singapore.
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
University Product Champion
Individual Product Champion
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
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, Preproduction Prototype, Patent Filed
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.
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
Definition of Scope of Licensing
What is being license
Patents - claims
Know how
Field of Use
Geographical
Right to sublicense
Exclusive versus Non Exclusive
The most famous Non Exclusive
License to IBM
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
Licensing Terms
Financial Terms
Upfront Fees
Milestone Payments
Royalty - Based on gross or net sales
Equity
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%
Licensing Terms
Performance
Minimum performance
Due diligence obligation
Quality of Product
Licensing Terms
Warranty 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
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)
Future improvements
Commercial research is project driven
University research is investigator
driven
Avoid carving out of research areas
Such “reach through” clause is
unacceptable
Pointers On Negotiation
Quid pro quo
Something for something
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
Be Prepared
Know your stand
Know your background
- Technology
- Market size
- Region
Be Prepared
Product
Field of use
Royalty rate
Be Prepared
To close the deal at the table
To walk away
MOUs
Expression of intent
Other terms to be negotiated
Binding and non-binding
RCA, Sponsored Research,
Grant
Partial payment
Full payment
Grant
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”
Many posture is possible
Weak posture
Elite posture
Good deal posture
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
Good deal posture
We are a growing department
We are industry friendly
We have expertise you need
We provide research capability at
reasonable rate
Agreement Finger Print
50
45
40
35
30
25
20
15
10
5
0
IP Ownership
Improvement
Warranty
Indemnification
Start
Negotiated
Publication Right
Unrestricted right
Review delay of up to 30 days
No more then 60 days to allow for
patent filing
IP ownership
University owns all IP
Allows for sponsor non-exclusive inhouse use for research
May give first right of refusal for
exclusive royalty bearing license
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
Thank you