IP%20Issues%20in%20Licensing:%20The%20Challenges

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IP Issues in Licensing The Challenges

• Casey K. Chan
• National University of Singapore
• IP Academy of Singapore

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Licensing, RCA, MOUs

• Commercial Perspective
• Universitys Perspective
• Individuals Perspective

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Practical Aspect of Licensing

• Company Product Champion
• University Product Champion
• Individual Product Champion

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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
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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, Pre-production
  Prototype, Patent Filed

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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.

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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

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Definition of Scope of Licensing

• What is being license
• Patents - claims
• Know how
• Field of Use
• Geographical
• Right to sublicense
• Exclusive versus Non Exclusive

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The most famous Non Exclusive License to IBM
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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 TermsFinancial Terms

• Upfront Fees
• Milestone Payments
• Royalty - Based on gross or net sales
• Equity

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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

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Licensing TermsPerformance

• Minimum performance
• Due diligence obligation
• Quality of Product

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Licensing TermsWarranty 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

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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)

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Future improvements

• Commercial research is project driven
• University research is investigator driven
• Avoid carving out of research areas
• Such reach through clause is unacceptable

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Pointers On Negotiation
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• Quid pro quo
• Something for something

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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

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Be Prepared

• Know your stand
• Know your background
• Technology
• Market size
• Region

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Be Prepared

• Product
• Field of use
• Royalty rate

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Be Prepared

• To close the deal at the table
• To walk away

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MOUs

• Expression of intent
• Other terms to be negotiated
• Binding and non-binding

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RCA, Sponsored Research, Grant

• Partial payment
• Full payment
• Grant

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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

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Many posture is possible

• Weak posture
• Elite posture
• Good deal posture

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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

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Good deal posture

• We are a growing department
• We are industry friendly
• We have expertise you need
• We provide research capability at reasonable rate

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Agreement Finger Print
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Publication Right

• Unrestricted right
• Review delay of up to 30 days
• No more then 60 days to allow for patent filing

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IP ownership

• University owns all IP
• Allows for sponsor non-exclusive in-house use for
  research
• May give first right of refusal for exclusive
  royalty bearing license

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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

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Thank you