1 marketing of licensing-out opportunities fptt conference halifax, june 2004 dave tyrrell, vertex...

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Marketing of Licensing-Out Opportunities

FPTT Conference Halifax, June 2004

Dave Tyrrell, Vertex Intellectual Property Strategies Inc.

Vertex Intellectual Property Strategies Inc. ©20042

This presentation provides guidance for the execution of a licensing-out business strategy

Tactics and processes that can be employed in the marketing and sale of technology licenses will be discussed, and pointers for negotiating teams will be provided

Practical, easy to apply licensing tips will be offered

Overview


Topics

Introduction – Why choose the licensing option?

Implementation steps for a Licensing-Out Strategy

Licensing Negotiation Tactics Five Licensing Tips Questions

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Introduction

Why Licensing?


Licensing is one Commercialization Option for New Technologies

Options for Businesses– Use in existing business– Spin-off business– Joint Venture– License

Options for Government Organizations– Licensing is preferred

Could be a license to a spin-off start-up business


Comparing Licensing with Other Business Options

Technology Applications

Options

New Capital Required

Personnel Requirements

Time Needed to Access Market

Accessibility to Worldwide

Markets and Broadly-Based Applications

Liability and Exposure to

Risk

Comparison Factor

Highest – 10 Lowest – 1

Most – 10 Least – 1

Longest- 10 Shortest – 1

Best – 10 Poorest – 1

Highest – 10 Lowest – 1

1. Include in Current Business 9 9 10 1 10

2. Spin-off 10 10 10 1 8

3. Joint Venture 3 4 7 6 6

4. License Technology 1 1 1 10 1


Some of the Business Conditions that Favour a Licensing-Out Strategy

Provide a source of revenue and earnings in markets that are otherwise non-accessible, such as:

• Distant or international markets without a potentially risky capital investment.

• New or different applications for technology Utilize “orphaned” technologies – technologies that have either

a poor fit or no fit with the business’ current portfolio and its business or research plans

Can provide an opportunity for growth and the development of a high margin business without investment in a market where demand exceeds supply

To obtain benefits from technology grantbacks or improvements


Some of the Business Conditions Not Favouring a Licensing-Out Strategy

If the technology is truly a leading technology and greater value can be derived from it by protecting it and retaining confidentially through:

• Controlling a market niche with a highly profitable specialty product• Retaining price premiums• Maintaining a currently held major worldwide market share• Maintaining barriers to entry

The potential for high liability exists, such as with hazardous products

Difficulty in providing an effective delivery and ongoing support due to such factors as:

• Safety• Working conditions• Distance• Availability of appropriate personnel


When Licensing is Determined to be the Preferred Option

The challenge becomes:– Who to approach– Setting the royalty rate– Negotiating the deal– Managing the deal

So what do you do next?

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Steps in the Marketing and Sale of a License Agreement


Steps in the Marketing and Sale of a License Agreement (1of 8)

Define scope of technology to be licensed Assure technology ownership and understand the

potential for patent infringement (of a third party’s patent)

Consider strengths of the technology versus other technologies available in the field

Develop a market segmentation strategy:– End use application, – Market segment, – Geographic territory


Steps in the Marketing and Sale of a License Agreement (2 of 8)

Create a licensing team – Requires members with a variety of different skills and

capabilities – expertise in the following areas will be required either on an ongoing basis or from time to time:

Business / Technology Manager (Team leader) Technology Guru Patent Agent Lawyer Specific situations may require specialty services:

– International business relationships– Translation service– Engineering services



Add to the team the expertise of a licensing consultant – if not available in-house

The consultant can be utilized for:• Reviewing strategic direction• Enhancing networks of contacts• Advising on patent work• Contributing to the technology evaluation process• Setting of fee schedules• Serving on the negotiation team



Determine the profile of the desired licensee:– Marketing force, – Manufacturing capability,– Personnel,– Business fit

Identify, locate and qualify list of potential licensees – existing contacts, networks and specialized computer searches can be utilized in this process


Consider why businesses licensing-in technology – In order to supplement research programs and unblock

development projects by providing that missing link– Secure a technology where the required capabilities don’t

exist or are not available in-house– Expediency – It can be quicker to license-in than to develop

a specific technology oneself – Cost effectiveness– To understand the state of competitive technologies– To gain exclusivity for an attractive emerging or growth

market




Investigate company culture and ethics of potential licensees

Develop a proposed license package geared to meet the potential licensee’s needs and that can be delivered

Establish a sales and marketing plan Establish a proposed fee schedule



Prepare a draft agreement Setup product demonstration if appropriate Have a licensing negotiation team and strategy

prepared Have a technology transfer delivery plan ready

to go



Prepare to deal with confidentiality / secrecy requirements:

• No nondisclosure agreement ─ Limit discussions to publicly available or non-

confidential information• Licensing negotiation stage

─ Additional information can be provided under terms of a non-disclosure agreement

• Upon the conclusion of a license agreement─ All proprietary information made available to

the licensee with a comprehensive secrecy provision included in the final agreement

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Licensing Negotiation Tactics


Some Important Points in the Negotiation Process

Team member participation will depend on the business situation

Licensing negotiations should not be done on a solo basis Meeting responsibilities should be clearly understood. Leader

should be designated. Also need to assign someone with the responsibility for taking detailed notes

The team needs to have planned meeting strategies The team should caucus privately from negotiation discussions

if necessary and not hesitate to excuse themselves for confidential discussions

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Five Licensing Tips


Licensing Tip # 1

Consider technology licensing as a strategic option – it can be a valuable and powerful business tool and can help access global and or new application opportunities


Licensing Tip # 2

Effectively manage intellectual assets, so they can become the cornerstone of a licensing venture – areas to address include:

• Employment & Consulting Contracts and Agreements• Identification / Cataloguing / Inventorying of IP• Patent Strategy• Invention Policy• Non-Disclosure Agreements• Proprietary Information Protection • Licensing-Out & Licensing-In Opportunity Identification • Other Organizational Specific Issues


Licensing Tip # 3

Clarify IP ownership issues up-front in all technology development activities including those that involve:

– Employees– Contractors– Universities– Other businesses – Customers – Etc.


Licensing Tip # 4

Don’t loose sight that the essence of a licensing relationship is one that:

Is a business partnership rather than the traditional supplier / customer relationship

Focuses on WIN -WIN results and is not for those who operate with a ‘loophole’ mentality

Is similar to a Strategic Alliance and exhibits the following characteristics:• Two separate independent entities• Working together to tackle specific objectives• Sharing the risk and rewards• Supplying resources on a continuous basis


Licensing Tip # 5

Identifying, selecting and working with the right licensee is probably the single most important ingredient to a successful licensing venture

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Questions

1 marketing of licensing-out opportunities fptt conference halifax, june 2004 dave tyrrell, vertex...

Documents

marketing of licensing

licensing option

business options slide

comparing licensing

business conditions

overview slide

licensing tips questions

business strategy tactics