wipo_ip_dam_07_2

Kari Sipilä, Future Innovations 2007

Kari SipiläDirector, D.Sc.(Tech.)h.c. FUTURE INNOVATIONS

Past President of LES ScandinaviaFormer Director of the Foundation for Finnish

InventionsEspoo, Finland

TECHNOLOGY TRANSFER AND LICENSING

Damascus 15-17.5.2007

Kari SipiläDirector, D.Sc.(Tech.)h.c. FUTURE INNOVATIONS

Past President of LES ScandinaviaFormer Director of the Foundation for Finnish

InventionsEspoo, Finland

TECHNOLOGY TRANSFER AND LICENSING

Damascus 15-17.5.2007


CONTENTSCONTENTS

• Intellectual assets, commercialization and competition

• Alternatives to get revenues • Commercialization of research results• Licensing and technology transfer in practise• Summary


KNOWLEDGE AND MONEYKNOWLEDGE AND MONEY

IN EDUCATION :

- MONEY IS TRANSFERRED TO KNOWLEDGE

IN COMMERCIALIZATION :

- KNOWLEDGE IS TRANSFERRED TO

MONEY ( AND WELFARE )

IN EDUCATION :

- MONEY IS TRANSFERRED TO KNOWLEDGE

IN COMMERCIALIZATION :

- KNOWLEDGE IS TRANSFERRED TO

MONEY ( AND WELFARE )


PRINCIPLES FOR SUCCESS

Focus the business

Identify other winners

Identify market requirements

Identify internal performance

Benchmark best competitors


COMPARISON – HOW DO WE PERFORM?

Price

Quality

Fast delivery

Reliable delivery

Small lots/ customization

Design

Frequentproduct change

What the market wants Source LESI

“Not important” - - - - - - - - - - - - - - - - - - -“Very important”

How we actually perform

How well our best competitor performs


WHAT INTELLECTUAL ASSETS SHOULD YOU WHAT INTELLECTUAL ASSETS SHOULD YOU CONSIDER?CONSIDER?

Marketing

Trademarks

Trade Names

Brand Names

Logos

TechnicalPatentsPatent applicationsTechnical DocumentsKnow HowTrade dress docsTrade secrets

CustomerListsContractsRelationshipsOpen purchase orders

ArtisticLiterary worksCopyrightsMusical compositionMapsEngravings

Data ProcessingProprietary SoftwareSoftware copyrightsAutomated data- basesIntegrated circuits

EngineeringIndustrial designProduct patentsTrade secretsEngineering drawingsSchematicsBlueprints

ContractFavorable supply

contactsLicensingFranchisingNon-compete agents

HumanTrained andAssembled work forceEmployment agentsUnion contracts

LocationLeasehold interestsMineral exploitation rightsEasementsAir rightsWater rights

GoodwillInstitutionalProfessional practicePersonal goodwill of a professionalCelebrityGoing concern value


THE VALUE CHAIN IN THE USE OF INTELLECTUAL THE VALUE CHAIN IN THE USE OF INTELLECTUAL PROPERTYPROPERTY

Know HowIdea

Patent

Publish

Trade Secret

Utility Model & Design

Trade Mark

Copyright


ALTERNATIVES TO MAKE BUSINESS ALTERNATIVES TO MAKE BUSINESS AND TO GET REVENUESAND TO GET REVENUES


POSSIBILITIES TO GET REVENUESPOSSIBILITIES TO GET REVENUES FROM AN INVENTION FROM AN INVENTION

Start-up company

Production in a current company

Selling / purchasing

Licensing ( in or out )

Technology transfer

Franchising

Partnership arrangements

Collateral

Start-up company

Production in a current company

Selling / purchasing

Licensing ( in or out )

Technology transfer

Franchising

Partnership arrangements

Collateral


HOW TO START AND CONTINUE?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


BUSINESS VIEWPOINTS OF AN INVENTIVE BUSINESS VIEWPOINTS OF AN INVENTIVE PRODUCTPRODUCT

• 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?

• 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?


NETWORK FOR COMMERCIALIZATION OF NETWORK FOR COMMERCIALIZATION OF INVENTIONSINVENTIONS

Inventor

Marketing organization

ManufacturerFinancer


COMMERCIALIZATION METHODS COMMERCIALIZATION METHODS FOR INVENTIONS, NEW PRODUCTS AND SERVICESFOR 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

• 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

• Legal services

• Fairs, meetings and exhibitions

• Professional publications


INTERNATIONAL NETWORKS ARE USEFUL AS INTERNATIONAL NETWORKS ARE USEFUL AS INFORMATION SOURCES, IN EDUCATION INFORMATION SOURCES, IN EDUCATION

AND IN NETWORKINGAND IN NETWORKING

For instance:1. WIPO, EPO and local patent offices offer large sources of

information in addition to their main activities2. 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

3. Universities and domestic and international educational institutes and organizations

4. Internet is a huge library, information and contact source


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


BUSINESS FROM LICENSING AND BUSINESS FROM LICENSING AND TECHNOLOGY TRANSFERTECHNOLOGY TRANSFER


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


LICENSELICENSE

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


LICENSING IS ADVANTAGEOUS FOR COMPANIESLICENSING 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


VALUATION METHODS TO CALCULATE THE VALUE OF IPVALUATION 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.


IMPORTANCE OF THE PATENTS IN A COMPANYIMPORTANCE OF THE PATENTS IN A COMPANY

0% 5% 50%

Val

ue

Portfolio Source Intellectual Ventures

High Value Patents

Defensive PatentsOverhead Patents

Often these patents are bought or sold


MAIN PARTIES OF A LICENSE AGREEMENTMAIN PARTIES OF A LICENSE AGREEMENT

Licensor- inventor- company- other owner of the IPR

Licensee - company (usually in the field of the invention)

A


GOALS OF THE LICENSORGOALS OF THE LICENSOR

• Revenues, income• Larger possibility for marketing• Larger possibility for manufacturing• Larger possibilities for distribution• Internationalization• Collaboration• Specialization• Social values


GOALS OF THE LICENSEEGOALS OF THE LICENSEE

• Revenues• Better or more business• Manufacturing• Technology• Specialization• Rights to use IPR • Collaboration


PARTIES IN LICENSINGPARTIES 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


LARGE POSSIBILITIES FOR LICENSINGLARGE 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


LICENSING AGREEMENT, MAIN CONTENTSLICENSING 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


EXAMPLES OF LICENSE FEESEXAMPLES 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…


EXAMPLES OF THE VALUES OF ENGINEERING PATENTSEXAMPLES OF THE VALUES OF ENGINEERING PATENTS

University

Number of active licenses

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


Success = Product x Passion2

Source: Olavi Linden, Fiskars


SUCCESS IN LICENSINGSUCCESS 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


POSSIBLE PROBLEMS IN LICENSING AND POSSIBLE PROBLEMS IN LICENSING AND TECHNOLOGY TRANSFERTECHNOLOGY 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


RISKS IN LICENSING AND TECHNOLOGY RISKS IN LICENSING AND TECHNOLOGY TRANSFERTRANSFER

• 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


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

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

CHALLENGES FOR THE 21. CENTURY


COMPETE AGAINST TIME:

TODAY´S INVENTIONS HAVE TO BEON THE MARKET

BY TOMORROW MORNING,

OTHERWISE OTHERS WILL CONQUER THE MARKETS FIRST

COMPETE AGAINST TIME:

TODAY´S INVENTIONS HAVE TO BEON THE MARKET

BY TOMORROW MORNING,

OTHERWISE OTHERS WILL CONQUER THE MARKETS FIRST


THANK YOU!

Kari Sipila, Helsinki / Espoo, Finland

[email protected]

www.futureinnovations.fi

www.les-scandinavia.org

wipo_ip_dam_07_2

Documents

Transcript of wipo_ip_dam_07_2