Transcript SHARING IP ASSETS Franchising – Licensing Technology Transfer PRESENTATION for WIPO July 2005 Suriname & St.

SHARING IP ASSETS
Franchising – Licensing
Technology Transfer
PRESENTATION for WIPO
July 2005
Suriname & St. Lucia
by
WILLY MANFROY
President
Licensing Executives Society International
and Bornivall LLC
Jamaica & Dominican Republic
by
LAWRENCE J. UDELL
Executive Director
Intellectual Property International, Ltd.
DEFINING THE DIFFERENCE
• FRANCHISING –
Is a huge business worldwide.
However, to be in a position to franchise your
business, product or service, you must be
successful.
You cannot convince anyone to buy a franchise
unless you can show and prove that your business
is providing sales and profits and greater potential
growth in the future.
Without a track record, how do you even decide what
to charge for a franchise?
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DEFINING THE DIFFERENCE
• LICENSING –
Is over $150 billion a year worldwide
Successful licensing requires very secure IP
from issued and pending patents to trademarks, copyrights and proprietary info
It can be an extremely profitable opportunity
for an SME with the right IP portfolio,
especially with proven products or marks
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DEFINING THE DIFFERENCE
• TECHNOLOGY TRANSFER –
Is the process that moves a technology or
IP from one entity to another
This can be from company to company or
from university to company or from a
national lab to a company
In so doing, there has to be a perceived value
that is agreed upon by both parties
In almost every case, it includes royalties
based upon successful commercialization
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Types of Franchising
• Franchising is a highly regulated industry
• Rules and regulations are important in
order to protect both parties
• There exist franchise associations aimed
at protecting the interests of their
constituencies
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Types of Franchising
Franchising
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IP Issues in Franchising
• Clarity on IP issues is paramount
- Identify IP rights involved
– Check national IP laws
– How secure are the IP rights
(no infringement case)
– What is the value of IP assets &
is it worth the investment?
– Contact existing and past
franchisees and ask them about
IP related costs
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IP Issues in Franchising-cont.
– Check the duration of protection of
involved IP assets (don’t want to be
tied by the agreement while IP
protection has expired)
– Are there any competing IP protected
comparable products in the market
(are they also franchised)
– Study the effect of the arrangement
to your future growth? Do you intend
to develop your own IP assets?
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IP Issues in Franchising cont.
• Check whether previous
•
•
business relationships
have IP related
obligations/constraints
Check on methodology of
certifying products,
involves additional costs
Are you ready to take IP
responsibilities?
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Role of Technology Transfer in
Economic Development
 Increase in physical stock of productive and
innovative resources
 Further exploitation of economical resources
- natural resources
- manpower
- innovation
- physical resources
 Productivity increase
- labour
- capital
- natural resources
- innovation capacity
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Continuum from purely internal to
purely external …
 Seizing tacit knowledge
 Internal R&D
 Internal R&D with networking
 Reverse engineering
 Technology transfer and absorption
 Contract R&D
 R&D strategic partnership
 Licensing
 Purchasing
 Joint venture
 Acquisition of company with technology
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Choosing the best source option
for your company …
Assess the advantages and disadvantages
 Company technological growth
 Exclusivity/competitive advantage
 Company capability
 Time to market
 Risk of failure
 Costs/affordability
Consider all and choose the
best overall option
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Stage-gate Process
PROJECT GRAVEYARD
IDEA
GENERATION
NO GO
Initial Screening
GO
Preliminary Market
Assessment
NO GO
Concept Identification
Market study
Preliminary Technical
Assessment
Preliminary
Evaluation
GO
Concept Generation
(technical)
Concept Test
Market study
NO GO
Concept Evaluation
GO
Development of
Marketing plan
Product Development
(engineering design
And prototypes)
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Stage-gate Process (continued)
NO GO
PROJECT GRAVEYARD
Evaluation
GO
Prototype Test
With Customers
NO GO
Prototype Testing
In-House
Evaluation
GO
Finalization of
Marketing Plan
Finalization
Of Design
Test Market
Trial Production
Pre-Commercial
Business Analysis
NO GO
GO
Full
Production
Market
Launch
Post-Launch Evaluation
and Control
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Problems in the implementation of
technology development projects
 Understanding costs, risks, benefits
 Protect the trade secrets
 Understanding the application
 Lack of appropriate measures
 GO/NO-GO decision making
 Communications
 Management commitment
 Slipping schedule
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Tech Transfer Concepts

Technology implementation is a PROJECT with a
beginning and an end

Effective, cross-functional CORE TEAMS are needed
to direct and empower teams

Action-oriented PHASE REVIEWS are needed to
direct and empower teams

Concisely documented STRUCTURED DEVELOPMENT
PROCESS is needed to provide teams with a
common road map

Integrated set of DEVELOPMENT TOOLS and
TECHNIQUES improve project speed and efficiency
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Why are you Licensing?








Optimize Intellectual Assets return
Optimize R&D resources
Strategic decision
Establish standards
Entering or exiting a business
Freedom of action
Compulsory license
Protect a business position
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Licensing Process Steps
Input
Output
 Need identification
Invention
 Sourcing
Secrecy agreement
 Assessment
Option agreement
 Negotiation
Agreement
 Financing
Management approval
 Transfer of
Technology
Review of documents,
Intellectual Property
 Implementation
 Termination
Amendment - Royalty
reports
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Types of Agreements involved in
Licensing
 Preliminary agreements
 IP rights agreements
 Developments and collaboration
agreements
 Implementation agreements
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General Principles of Agreements
 Take the business perspective
 Define the issues
 Prepare before you negotiate
 Communications internal & external
 Negotiate before you draft
 Use a mirror
 Plan before you sign
 Use appropriate resources when needed
 Be flexible and fair
 Take your time
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The WIN-WIN Approach
(Principled negotiation)
 Contract should be correct, fair and balanced
 Play role reversal
 What could reasonably go wrong
 Minimize litigation potential
 Establish close post agreement cooperation
Contract is only as good as the parties
are willing to implement it
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Licensing Steps
 Identify and define technology
 Evaluate potential
 Identify targets ( in or out )
 Plan and prepare approach to targets
 Negotiate the agreement
 Transfer the technology
 Monitor the license
 Terminate the deal
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Grant and Exclusivity
Scope and Field of use
Exclusivity
Exclusive
Non exclusive
Rights of licensor
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Commercial Considerations
 Terms
- Running royalties ( fixed,sliding,capped)
- Minimums
- Down-payments/milestones/installments/
options (creditable or not)
- Basis of computation of payment calculations
( net sales , volume)
- Penalties and effects for late or insufficient payment
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General Commercial Terms
 Duration
- Limited
- Life of patent(s)
- Multiple countries
- Know-how
- Restrictions by European Union
 Scope
- Territory
- Quantity
- Make, have made, use, sell
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Valuing The Technology
 Costs
- Avoidance
- Development
 Market
- Comparables
 Benefit
- Share of future benefits
- Avoidance of payments
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Valuation by Technology type
Market
Cost
25%Rule
NPV
X
Early stage
X
Process
X
X
X
Product
X
X
X
Cost
savings
X
X
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Valuation of Intellectual Property
Objectives
Internal
Valuation
Licensing
(voluntary)
Market
Cost
X
X
X
25%Rule
X
X
Licensing
(coercive)
X
Alliances
X
X
Cost
savings
X
X
NPV
X
X
X
X
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Technical and Engineering
Assistance
 Scope
 Cost
 Duration
 Training issues
 Liabilities and performance guarantees
 Personnel
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Improvements
 Grant back
 Grant forward
 Cost/Reward
 Impact of future IP
 Ownership of future IP
 Limitations by governments
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Opportunity
Criteria
Strategic Fit
Initial Review
Internal Opportunity
Assessment
Corporate Development
R & D Marketing
Approval to Proceed
Competitive
Intelligence (Gap
Analysis)
External Fact Finding
External Partner
Confidentiality Agreement
Assessment
Due Diligence
Business Development
Management Approval
Letter of Interest
Negotiations
Contract
Business, Corporate, Legal
Stakeholder Review & Approval
Tech Transfer Team
Final Due Diligence
Contract Signing
Tech Transfer
Integration
Monitoring
Implementation Team
Corporate Development
Objectives
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ADVANTAGES
• FRANCHISING:
Can be extremely profitable if you have all
the right ingredients to start
• LICENSING:
Greater opportunity for sales and profits with
the right licensees
• TECHNOLOGY TRANSFER:
If the IP has good success potential, then
this is a profitable way to go
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DISADVANTAGES
• FRANCHISING:
Without the proper preparation and accurate
records, you have no reason to attempt it
• LICENSING:
If the IP portfolio is significant and free of any
potential litigation, the SME could make a lot more
money over a long period of time with far less risk
• TECHNOLOGY TRANSFER:
Without the right research, you may be giving away
the future and profits
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