ip4inno Module 4C
IP Licensing
Name of Speaker
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Venue & Date
ip4inno is brought to you by:
• The European Commission, DG Enterprise & Industry
• The European Patent Office
• 19 consortium partners in the first ip4inno project
This particular module was written by:
Theo Stamatiadis - Theia
www.theia.eu
with funding from the EC and EPO
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The Disclaimer!
This training material concerns intellectual property
and business strategies only in general terms.
This training material should not be relied upon
when taking specific business or legal decisions.
Rather, professional advice should be obtained
which suits the circumstances in question.
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Overview of the module
• Slides 5 – 11: What is a license and why licensing
• Slides 12 – 16: Before negotiating a license, due diligence
• Slides 17 – 49: Core content of licensing agreements
• Slides 50 – 57: The negotiation of a licensing agreement
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Which IP rights can be licensed?
Registered IP
Unregistered IP
Patents
Utility models
Registered trade marks
Registered designs
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Copyright
Database right
Unregistered trade marks
Unregistered designs
Soft IP
Know-how
Trade secrets
Confidential information
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An IP License
• Intellectual property can be exploited
directly and/or indirectly
• Licensing agreement: the owner of IP (Licensor)
grants to the Licensee the right to use the IP
• The Licensor maintains the ownership of the IP
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Some good reasons for licensing
• Generate profit
• Accessing technology
• Enter into an R&D collaboration
• Settle an infringement claim
• Cross licensing
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Some good reasons for licensing
• Generate profit
• Accessing technology
• Enter into an R&D collaboration
• Settle an infringement claim
• Cross licensing
www.ip4inno.eu
Some good reasons for licensing
• Generate profit
• Accessing technology
• Enter into an R&D collaboration
• Settle an infringement claim
• Cross licensing
www.ip4inno.eu
Some good reasons for licensing
• Generate profit
• Accessing technology
• Enter into an R&D collaboration
• Settle an infringement claim
• Cross licensing
www.ip4inno.eu
Some good reasons for licensing
• Generate profit
• Accessing technology
• Enter into an R&D collaboration
• Settle an infringement claim
• Cross licensing
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Before the negotiation
• Information regarding the licensor/licensee
• Information regarding the technology and its context
• Information regarding the legal status of rights
• Information regarding the business environment
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An example of due diligence
• A new industrial process for leather dyeing
• Protected by patent
• Supported by secret know-how
What due diligence for the patent and know-how?
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Due diligence in patents
• Ownership, legal status, geographical scope
• Patented technology and its context
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The Espacenet database has over 70 million documents!
http://www.epo.org/searching/free/espacenet.html
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Due diligence in trade secrets
• Licensor trade secret policy
• Confidentiality agreements with employees
• Other licensees in possession of the secret
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Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
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Defining the subject matter
• Identify all necessary rights
• Define the subject matter correctly
• Pay particular attention to soft IP
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Defining the subject matter
• Identify all necessary rights
• Define the subject matter correctly
• Pay particular attention to soft IP
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Defining the subject matter
• Identify all necessary rights
• Define the subject matter correctly
• Pay particular attention to soft IP
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Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
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The rights granted
• Considering the purpose
• Considering the subject matter
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Exclusive/sole or non-exclusive
• Exclusive license
• Sole license
• Non-exclusive license
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Exclusive/sole or non-exclusive
• Exclusive license
• Sole license
• Non-exclusive license
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Milestones
Minimum royalties
Exclusivity term
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Exclusive/sole or non-exclusive
• Exclusive license
• Sole license
• Non-exclusive license
Most favoured license
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Territory and/or field
• Territorial restrictions
• Restrictions in fields of application
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Sublicensing rights
• Following licensor’s approval
• Specific number of sublicenses
• To specific entities
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Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
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Royalties and lump sums
• Lump sum at the signature of the agreement
• Lump sums for milestone achievements
• Running royalties
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Royalties and lump sums
• Lump sum at the signature of the agreement
• Lump sums for milestone achievements
• Running royalties
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Royalties and lump sums
• Lump sum at the signature of the agreement
• Lump sums for milestone achievements
• Running royalties
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Royalty variables
• Royalty rates may change
• Minimum/maximum royalties
can be established
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Royalty variables
• Royalty rates may change
• Minimum/maximum royalties
can be established
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Technology valuation
• Cost method
• Income method
• Market method
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Technology valuation
• Cost method
• Income method
• Market method
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Technology valuation
• Cost method
• Income method
• Market method
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Technology valuation
• Cost method
• Income method
• Market method
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Information on royalty rates
• Press, technology reports, surveys
• Royalty rate databases
(royaltysource.com, royaltystat.com,
royaltyconnection.com, ktmine.com)
• Bibliography
(lesi.org, ipresearch.com, technologytransfertactics.com)
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Source: Pricing the Intellectual Property of Early-Stage Technologies: A Primer of Basic
Valuation Tools and Considerations RICHARD RAZGAITIS,
IP Management in Health and Agricultural Innovation - A handbook of best practices (p.876)
Additional considerations
• How important is the technology to the final product?
• What is the cost of commercialisation?
• What is the state of development of the technology?
• How important is the technology to the licensor?
• How big is the market?
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Adjustments, reports and audits
• Inflation, currency, other adjustments
• Technology and business reports by the licensee
• Right of the licensor to carry out audits
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Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
www.ip4inno.eu
Licensing agreements
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The parties (licensor and licensee)
Purpose
Definitions and subject matter
Rights granted and restrictions
Improvements
Confidentiality
Royalties, reports and audits
Representations and warranties
Infringement
Term and termination
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Licensing agreement negotiation
• A strategic choice
• A long standing relationship
• Legal, technical and financial aspects
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Licensing agreement negotiation
• A strategic choice
• A long standing relationship
• Legal, technical and financial aspects
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Licensing agreement negotiation
• A strategic choice
• A long standing relationship
• Legal, technical and financial aspects
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Negotiating licensing agreements
Be sufficiently prepared to negotiate
• Examine the licensed technology in detail
• Make business plans and acquire data
• Respect the time constrains of the other party
and of the technology
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Negotiating licensing agreements
Search for a win-win agreement
• Take into account the other party’s interests
• Make sure that calculations are accurate
• Provide evidence and try to foresee adjustments
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Negotiating licensing agreements
Discuss the agreement as a whole
• Search for an overall agreement and avoid deadlocks
• Discuss conditions together with price
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Additional information and resources
• Exchanging Value - Negotiating Technology
Licensing Agreements - A Training Manual
http://www.wipo.int/sme/en/documents/guides/technology_licensing.html
http://www.wipo.int/patent-law/en/developments/licensing.html
• IP handbook of best practices
http://www.iphandbook.org/
• Intellectual property and technology transfer –
European Commission
http://ec.europa.eu/invest-in-research/policy/ipr_en.htm
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Thank you for your attention!
<insert presenter's name & contact details>
Over 50 teaching hours of material, case studies,
exercises, links and more can be found on
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