Kari Sipilä Director, D.Sc.(Tech.)h.c. FUTURE INNOVATIONS Past President of LES Scandinavia Former Director of the Foundation for Finnish Inventions Espoo, Finland TECHNOLOGY TRANSFER AND LICENSING Damascus 15-17.5.2007 Kari Sipilä,
Download ReportTranscript Kari Sipilä Director, D.Sc.(Tech.)h.c. FUTURE INNOVATIONS Past President of LES Scandinavia Former Director of the Foundation for Finnish Inventions Espoo, Finland TECHNOLOGY TRANSFER AND LICENSING Damascus 15-17.5.2007 Kari Sipilä,
Kari Sipilä Director, D.Sc.(Tech.)h.c. FUTURE INNOVATIONS Past President of LES Scandinavia Former Director of the Foundation for Finnish Inventions Espoo, Finland TECHNOLOGY TRANSFER AND LICENSING Damascus 15-17.5.2007 Kari Sipilä, Future Innovations 2007 CONTENTS • Intellectual assets, commercialization and competition • Alternatives to get revenues • Commercialization of research results • Licensing and technology transfer in practise • Summary Kari Sipilä, Future Innovations 2007 KNOWLEDGE AND MONEY IN EDUCATION : - MONEY IS TRANSFERRED TO KNOWLEDGE IN COMMERCIALIZATION : - KNOWLEDGE IS TRANSFERRED TO MONEY ( AND WELFARE ) Kari Sipilä, Future Innovations 2007 PRINCIPLES FOR SUCCESS Focus the business Identify other winners Identify market requirements Identify internal performance Benchmark best competitors Kari Sipilä, Future Innovations 2007 COMPARISON – HOW DO WE PERFORM? “Not important” - - - - - - - - - - - - - - - - - - -“Very important” Price Quality Fast delivery Reliable delivery Small lots/ customization Design Frequent product change How well our best competitor performs How we actually perform What the market wants Kari Sipilä, Future Innovations 2007 Source LESI WHAT INTELLECTUAL ASSETS SHOULD YOU CONSIDER? Marketing Trademarks Trade Names Brand Names Logos Customer Lists Contracts Relationships Open purchase orders Technical Patents Patent applications Technical Documents Know How Trade dress docs Trade secrets Contract Favorable supply contacts Licensing Franchising Non-compete agents Artistic Literary works Copyrights Musical composition Maps Engravings Human Trained and Assembled work force Employment agents Union contracts Data Processing Engineering Proprietary Software Software copyrights Automated databases Integrated circuits Location Leasehold interests Mineral exploitation rights Easements Air rights Water rights Kari Sipilä, Future Innovations 2007 Industrial design Product patents Trade secrets Engineering drawings Schematics Blueprints Goodwill Institutional Professional practice Personal goodwill of a professional Celebrity Going concern value THE VALUE CHAIN IN THE USE OF INTELLECTUAL PROPERTY Patent Idea Know How Trade Secret Trade Mark Publish Utility Model & Design Kari Sipilä, Future Innovations 2007 Copyright ALTERNATIVES TO MAKE BUSINESS AND TO GET REVENUES Kari Sipilä, Future Innovations 2007 POSSIBILITIES TO GET REVENUES FROM AN INVENTION Start-up company Production in a current company Selling / purchasing Licensing ( in or out ) Technology transfer Franchising Partnership arrangements Collateral Kari Sipilä, Future Innovations 2007 HOW TO START AND CONTINUE? Make an inventory – what do you own or have? Identify the goals and needs for your company Evaluate the resources, environment and competition Determine gaps, threats and opportunities Fill the gaps it needs human resources, funds and hard work it takes time and requires patience Check and evaluate results Kari Sipilä, Future Innovations 2007 BUSINESS VIEWPOINTS OF AN INVENTIVE PRODUCT • Who are your customers and what are your channels of distribution? • Does your profitability analysis look promising? • How important is the product to your business and to your image? • Do you have the requisite intellectual and economic resources for product development? • How will the product impact to your operations and bottom line? Kari Sipilä, Future Innovations 2007 NETWORK FOR COMMERCIALIZATION OF INVENTIONS Inventor Financer Manufacturer Marketing organization Kari Sipilä, Future Innovations 2007 COMMERCIALIZATION METHODS FOR INVENTIONS, NEW PRODUCTS AND SERVICES • • • • • • • • • Direct business contacts Licensing bulletins Prototypes Videos, CDs, DVDs E-mail and Internet Electronic marketplaces Commercialization projects Entrepreneurship education Cooperation contacts • Legal services • Fairs, meetings and exhibitions • Professional publications Kari Sipilä, Future Innovations 2007 INTERNATIONAL NETWORKS ARE USEFUL AS INFORMATION SOURCES, IN EDUCATION AND IN NETWORKING 1. 2. 3. 4. For instance: WIPO, EPO and local patent offices offer large sources of information in addition to their main activities Associations of technology, IPR, innovation and licensing professionals around the world like - LES (Licensing Executives Society International Inc.) and its regional LES societies - TII (Transfer of Technologies, Innovation and Industrial Information) - AIPPI (The International Association for the Protection of Intellectual Property), etc. - Inventors’ associations Universities and domestic and international educational institutes and organizations Internet is a huge library, information and contact source Kari Sipilä, Future Innovations 2007 SOURCES FOR IP BASED BUSINESS IP and innovation sources for future business: Internal sources - Tacit knowledge - Internal R&D External sources - Purchasing - Licensing Combination of internal and external - Strategic partnership - Cross licensing Kari Sipilä, Future Innovations 2007 BUSINESS FROM LICENSING AND TECHNOLOGY TRANSFER Kari Sipilä, Future Innovations 2007 BUSINESS FROM LICENSING • ADVANTAGES & BENEFITS - Costs and risks less than internal R&D - Less time to market Implementation support available • DISADVANTAGES & RISKS - May not have exclusivity - Implementation risks, costs Do not develop internal capability • COST FACTORS - Up-front and royalty payments - Implementation costs Kari Sipilä, Future Innovations 2007 LICENSE License is an agreement, by which the licensor grants permission to the licensee to use intellectual property rights, owned by the licensee, for whatever mutually agreed purpose, which the licensor normally has the power to prevent or stop the licensee from doing. A licensing contract specifies the terms and scope of the agreement. Source: Fahllund-Wik 200 and, WIPO Kari Sipilä, Future Innovations 2007 LICENSING IS ADVANTAGEOUS FOR COMPANIES • Shortage of research and development activities as well as new products • Fast and easy possibilities to new products • Entrepreneural, manufacturing and logistics skills exist already in SMEs • Own manufacturing and licensed products give more revenues • Goals may be specialization and subcontracting • Steps to internationalization Kari Sipilä, Future Innovations 2007 VALUATION METHODS TO CALCULATE THE VALUE OF IP • Cost Approach - based as realised costs or by comparing costs of a similar patent or product • Market Approach - based on selling or buying of patents, comparing similar technologies or products • Income Approach - based on a licensed IP and estimate of future cash flow over time, including estimates of success and risks. Popular method. • Other methods - Business Results Method is based on calculated or estimated cash flow and revenues of business and estimated role of the patent in it. This value changes according to time and business. It may also include the influence of goodwill or value of other IPR - Monte Carlo is a simulation method. Kari Sipilä, Future Innovations 2007 IMPORTANCE OF THE PATENTS IN A COMPANY High Value Patents Often these patents are bought or sold Defensive Patents Value Overhead Patents 0% 5% 50% Kari Sipilä, Future Innovations 2007 Portfolio Source Intellectual Ventures MAIN PARTIES OF A LICENSE AGREEMENT Licensor Licensee - inventor A - company - other owner of the IPR - company (usually in the field of the invention) Kari Sipilä, Future Innovations 2007 GOALS OF THE LICENSOR • • • • • • • • Revenues, income Larger possibility for marketing Larger possibility for manufacturing Larger possibilities for distribution Internationalization Collaboration Specialization Social values Kari Sipilä, Future Innovations 2007 GOALS OF THE LICENSEE • • • • • • • Revenues Better or more business Manufacturing Technology Specialization Rights to use IPR Collaboration Kari Sipilä, Future Innovations 2007 PARTIES IN LICENSING • The seller ( the licensor ), the owner(s) of the invention (or patent ) • Purchaser ( the licensee ), often a manufacturing and marketing company in the field of the invention or technology • Collaboration partners • Financiers, investors • Technical specialists, subcontractors • Lawyers ( IPR, business, international business) • Marketing and other consultants Kari Sipilä, Future Innovations 2007 LARGE POSSIBILITIES FOR LICENSING A license or technology transfer agreement may be based on: • A patent, an utility model ( like technical solution ) • Trademarks, brands • Copyright ( like software ) • Know-how, business secrets • Business methods ( the whole business or parts of it like processes, research and development, testing. materials, logistics, e-business B2B ja B2C, formats, etc.) • Different combinations Kari Sipilä, Future Innovations 2007 LICENSING AGREEMENT, MAIN CONTENTS • The title • The parties and contact information • What will be licensed and related IPR ( product, for what purpose, copyright, patent, trademark …) • Extent of rights ( exclusive, territory, sublicenses…) • Life of the agreement, date of effectiveness • Commercial considerations ( lump sum, fees, royalties, annual minimum royalties, payment terms…) • General considerations ( applicable law, confidentiality, infringement, failure to perform, disputes, termination…) • Concluding comments, date and place, signatures Kari Sipilä, Future Innovations 2007 EXAMPLES OF LICENSE FEES • Initial fee: at least the amount of sunken costs ( patenting, plans, R&D, prototypes…)( plus profit? ) • Royalty: 0.5…5…10 % ( depending on the product, its quality, life span, mass product or unique…) ( % or amount ) • Minimum royalty: annual amount to protect the licensor if product not manufactured • Other fees: consulting costs of development work, possible additional royalties… Kari Sipilä, Future Innovations 2007 EXAMPLES OF THE VALUES OF ENGINEERING PATENTS Number of active licenses University 2002 license income Number of US patents Mean income per U.S. patent owned MIT 776 $28,706,848 1,475 $19,462 CMU 105 $3,750,000 255 $14,706 CIT 239 $11,218,000 1,112 $10,088 Va Tech 113 $2,348,680 264 $8,897 Rutgers 232 $4,017,620 555 $7,239 Georgia Tech 173 $2,242,319 473 $4,741 UCF 18 $279,028 176 $1,585 NJIT 4 $44,826 64 $700 NMSU 23 $8,938 42 $213 RPI 20 $8,000 139 $58 Mean 273 $5,262,426 456 $6,769 Median 232 $2,295,500 260 $5,990 Standard Deviation 277 $8,905,825 478 $6,631 Source: Intellectual Ventures 2006 Kari Sipilä, Future Innovations 2007 Success = Product x Passion2 Kari Sipilä, Future Innovations 2007 Source: Olavi Linden, Fiskars SUCCESS IN LICENSING • Know your technology transfer environment ( including countries, laws and taxation) • Know your partners and their strengths and weaknesses • Strong IPR usually gives better business • Prefer finished products/processes instead of prototypes • Know your minimum business and price limits • Evaluate risks and avoid or manage them • Use experts in technology and legal matters • Remember the human factors Kari Sipilä, Future Innovations 2007 POSSIBLE PROBLEMS IN LICENSING AND TECHNOLOGY TRANSFER • • • • • • • • • • Not enough resources for commercialization Demand and supply do not meet You do not find the other party Reasons in IPR or in the company management strategy Pricing or value of the invention or patent Technology is still in the development stage The invention is not much better than existing products NIH ( not invented here ) – principle Deatails in the contract Culture, language, human factors Kari Sipilä, Future Innovations 2007 RISKS IN LICENSING AND TECHNOLOGY TRANSFER • • • • • • • • Markets – price, quantity, quality Political risk Technology risk Financing risk Environment Schedule Operational risk Risks in the organization, cooperation and in human factors • Force majeure Kari Sipilä, Future Innovations 2007 CHALLENGES FOR THE 21. CENTURY Innovations have the possibility to become successful around the world, if they: • Are commercially strong • Develop the society • Are good for the environment • Can use advantages of the information technology • Are friendly and easy to the users Kari Sipilä, Future Innovations 2007 COMPETE AGAINST TIME: TODAY´S INVENTIONS HAVE TO BE ON THE MARKET BY TOMORROW MORNING, OTHERWISE OTHERS WILL CONQUER THE MARKETS FIRST Kari Sipilä, Future Innovations 2007 THANK YOU! Kari Sipila, Helsinki / Espoo, Finland [email protected] www.futureinnovations.fi www.les-scandinavia.org Kari Sipilä, Future Innovations 2007