Successful IP Licensing in U.S. 

KOREA U.S.

라이센싱 =    Licensing  (?)

Licensing in U.S.

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1. Language 2. Culture 3. Law

• Illustration source: BrandMagazine.com

Leading Brands have the Most Valuable IP

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Value of IP

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Success Story – PDL BioPharma

• Source: http://pdl.com

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• PDL BioPharma:  Pioneer of humanized monoclonal antibodies

Humanized Antibody

• Source: http://pdl.com

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Success Story – PDL BioPharma

• PDL Queen Patent License– Licensees:  Genentech, Roche, Novartis, Biogen, etc.  – Sales of licensed products:  >$20 billions– Paying royalty v. patent invalidation 

• PDL Success Formula – Strong patent portfolio – Successful patent litigation defense

Enablement

Demonstration

Development

Prob

ability of Success

Effort/Time

Idea Invention Patent License

Invention Disclosure

Commercialization Stage

Commercialization Steps

Source: Michigan Technological University (http://www.mtu.edu/research/references/training/docs-new/Intellectual%20Issues%20in%20Research%20Presentation.ppt.)

Technology Commercialization Process

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• Internal review process• Review by in‐house counsels• Making a patent filing decision based on prior art, scientific maturity, commercial value, market conditions, etc.

• Patent v. Trade Secret

Invention Evaluation

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Three Stages of Patent Acquisition: A. Invention and Prior Art SearchB. Patent PreparationC. Patent Prosecution

Acquisition of Strong Patent

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• Two possible approaches: 

vs.

Source: MIDAS©, 2005–2012, IMS Health Incorporated or its affiliates.

Where to File & License?

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• Drug Sales 

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Licensing Timeline

• Typical licensing procedure

Non‐Confidential Presentation

Confidential Disclosure Agreement 

(CDA)

Due Diligence

Term Sheets

Final Agreement

• Assessment of intellectual property assets owned by (or licensed to) a company

• Critical part of licensing• Complex legal review process

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Odds are…?

• Only a few licensing candidates survive at the end

Source: http://www.sharevault.com, Building a better partnering presentation 

• Due Diligence = checking various (critical) points• No high price for a product having defects 

Licensing = Used Car ?

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1. Freedom To Operate (FTO)– Any potential infringement?– Any risks to be sued? 

2. Ownership & Transferability– Owner of your IP? 

3. Validity & Enforceability– Protect target product?– Strong patents? 

IP Due Diligence – Main Points

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• Investigation to determine if you infringe patents of others 

• Expensive process but necessary for commercialization 

1. Freedom To Operate (FTO)

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• Patent procurement v. Patent infringement 

• Samsung:  Top 2 patent filer in U.S. 

1. Freedom To Operate (FTO)

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vs. 

• Source: Lex Machina ‐ Patent Litigation Year in Review (2013).

1. FTO - Patent Damages in U.S.

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Source:  http://ptopatenttrials.com/2012/05/20/uspto‐post‐grant‐opposition‐costs‐a‐forum‐conveniens‐for‐invalidity‐disputes/

1. FTO - U.S. Litigation Costs

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• Assess potential litigation risks in U.S. 

• Conduct FTO Search  – Conduct patent searches regularly 

– Search competitors’ patents

• Monitor screened patents/applications

• Keep search/review record 

– Patent search/review assessment

• Consult patent counsel 

1. FTO - ID Infringement Risks

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• Wrong Inventorship  Unenforceable patent.  See Stark v. Advanced Magnetics, 119 F.3d 1551 (Fed. Cir. 1997) 

• Wrong inventorship 

a) Nonjoinder:  Non‐inclusion of a true inventor

b) Misjoinder:  Inclusion of a non‐inventor 

• Record keeping 

– Invention disclosure 

2. Inventorship

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Invention Disclosure • Develop invention disclosure form

• Information to be included:– Title of invention

– Identification of prior art (patents and publications) 

– Detailed description of invention: 

• Differences, improvements, and advantages of the invention

• Specific experimental examples 

– Date of invention, inventor names 

2. Inventorship

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Source: http://www.uclb.com, Invention Disclosure Form

• Common Ownership Issues

1. The target does not hold the IP rights

2. Prior agreements limiting the target’s IP rights

3. IP rights encumbered by liens

2. Ownership

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• Ownership Transfer ‐ Assignment

– Check chain of title

– Review assignment recordation

– Tip:  Obtain signatures as quickly as possible

• Potential ownership leaks  

– Collaboration, Government support, etc.

• Review agreements with third parties

2. Ownership

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1. Patent Exploitation in U.S. 

a) Each joint owner can exploit without permission of others

b) No duty to share royalties

2. Patent Enforcement in U.S.

a) All joint owners must join suit

b) Other owners can grant license (circumvention)

2. Avoid Joint Ownership!

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• Anticipation and Obviousness– Collect prior art info– Cross‐check references – Competitor’s patents and publications

• Section 101 Patent Eligibility – Mayo & Myriad cases

• Inequitable Conduct (Duty of Candor)– Cross‐check related applications– Review inventor publication files

• Enablement and Written Description

3. Patent Validity

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• Obtain description of target product – Specifications/product literature– Manufacturing documents– Product inserts

• Identify critical terms in claims– Specification, file history, normal usage– Review file histories

• Categorize claims– Covers target product?  How? – Covers competitor’s products?

3. Claim Scope

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• Expiration date: Determine the expiration of patents

• Patent Term Adjustment/Extension: PTA v. PTE

4. Other Issues - Patent Term

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Patent Term Adjustment (PTA) under 35 USC §154

Patent Term Extension (PTE) under 35 USC §156

Eligibility Any Issued Patents  Drug & Device Patents

Delay Patent Office Examination FDA Regulatory Review

Calculation 14 + 4 + 4 + 4 Rule ½ Clinical Trial + FDA Review  Terminal Disclaimer Reduces PTA No Reduction

Maximum Term PTO Delay (A+B+C periods) Five Years

• Provide NCE/NBE info and related documents• IND and NDA filing dates and estimated NDA approval 

date

4. Other Issues – FDA Exclusivity

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NBE

Reference Product Approval

Biosimilar Application

Biosimilar Approval

0 12 Years4 Years

NCE Expiration

5 Years

30‐month stay

NCE0

• Possible Targets:  – New use/indication, new target patient strata, new administration 

route, new formulation

• Adjunct Benefit for Existing Drug:  – Reduced side‐effect, improved therapeutic index, diagnostic 

application

• New “Article‐type” invention:  – Racemate‐to‐chiral switch– New salt, ester, amide, hydrolysate– New crystal form or polymorph, Metabolite or pro‐drug – Combination therapy – Formulation with improved bioavailability

4. Other issues - Life Cycle Management

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Prepare IP status reports

Check assignments/invention disclosures 

Perform prior art/patent searching

Review file histories

Prepare strategy for patents having potential issues

Preparation of IP Diligence

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IP Diligence Checklist

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Source: http://media.lockelord.com/files/uploads/Documents/Folios/US‐IP‐DueDiligenceChecklist.pdf

• Due diligence check list

Virtual Data Room

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• Virtual data room:  for exchanging secret information• Transparency is the key to success. • Be prepared for data/document disclosure!

Source:  http://www.ethosdata.com/advanced_functionality/

Set up good IP policy

Build strong IP portfolio

Evaluate IP portfolio regularly 

Look for licensing opportunities

Prepare for due diligence 

Take Home Message

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Questions?

Kisuk Lee이기석

Patent Attorney (U.S./KR), PartnerHarness, Dickey & Pierce+1‐314‐446‐7670 – work+1‐324‐775‐8771 – cell

klee@hdp.comwww.facebook.com/ksluspat – IP blog

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