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
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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
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Licensing Terms
Financial Terms
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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
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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
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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
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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