SIS Session “Protecting KnowHow and Trade Secrets in
Collaborative R&D
Relationships”
Dr. Gene Slowinski (Rutgers University Business School)
Dr. Ed Hummel (Lucent Technologies Bell Labs)
Dr. Bob Kumpf (Bayer MaterialScience)
Summary of Project
Intellectual property is the currency of the millennium
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
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Collaborative R&D is increasingly common for reducing costs
while enlarging the space of accessible innovations and
reducing time to market.
A round table with over twenty firms was conducted to
understand how firms successfully share proprietary
information in collaborative relationships.
The results of this study fall into three general areas:

(1) Issues in Non - Disclosure Agreements
 (2) Issues in Joint Development agreements and
 (3) Organizational issues that effect intellectual asset protection.
, Slide 2
Process for the SIS
We will pose a series of questions from
the study that we found interesting
 We’ll ask for your comments and “stories”
 We’ll facilitate a real time brainstorming
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 Mindmapping
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If interested you’ll receive a copy of the
summarized results of today’s SIS (drop
off business cards)
, Slide 3
Questions for SIS
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What specific steps do you take to protect knowhow in collaborative R&D relationships?
What specific steps do you take to protect knowhow in international R&D relationships?
Is exclusivity worth it?
Do you have examples of successful (or
unsuccessful) practices in sharing know-how in
collaborative R&D relationships?
, Slide 4
Results of SIS Session - Overview
Issue: International
collaborative agreements as
such are of "?" legal value
Test the partners
Look to build trust
How many NDA's are actually
litigated?
Impression: Not many are
actually litigated
Multi-nationals are best
The "company" is
also a variable
Few examples of this being
done well
Issue: Be aware of high risk
countries but also high risk
companies
Renewal dates
Who keeps tracks of agreements?
Software exists: Nextance,
etc
"Reputation" of the
specific company
The HQ company may not
agree to sign along with the
local legal entity
Not a practical approach to avoid certain
countries
Still a risk / benefit analysis
Best practice: one person
per legal entity
All about who and not where
Companies that have long term goals are
more reliable
Actually separate sections of buildings
Concept of "phased" legal
agreements
Have a specific area for collaborators
Process
Discipline
Examples: Switzerland; UK; Japan
Have escorts that are assigned to visitors
Arbitration: Swiss Courts
(50% have this as policy
Best practice: Language in agreements in
but is it really done?)
Must TRUST the partner or
walk away
Best practice: Assigned
responsibilities (IP lead per
project). Defined contact point.
Choose a coutry where both partners
are comfortable with the law
Strategy: Physical Engagement
De-brief people that are
physically "with" the visitors
General Best Practices
'Badge" people based on needed access
Find a balance
EU often easier than US
Best practice: Use geographic
regions and international law
Agreement on this
Camera phones are an issue to be
watched
Quote: "Customers and suppliers
are a problem otherwise
everything is fine"
Do we overestimate what is
truly confidential?
Cytec has a person with just this
responsibility to coordinate betweenn
these groups
Suppliers and customers have
specific issues because of
different agendas
What is the relationship between
technology, legal, and business
organizations in your company and
how could it be better in the
context of collaborative R&D
How do we deal with subsid.
Training!!!!
De-brief people and emphasize
the need to reduce to writing
What specific steps do you take to protect know-how in collaborative R&D relationships?
Remind each person using the 1)
must tell, 2) may tell, and 3 ) must
never tell
"Need-to-know" mapping of the
know-how and trade secrets
Have a continuous discussion as
you and your partner "evolve" in
their expertise
Training: Need to educate
people involved in a
joint development relationship
5/18/2005 - v26
Strategy: Have a clear
understanding of what are truly
the secrets and know-how that
need to be protected and how
they will be protected
Best practice: Identify what are the
business goals and then attorneys define
the risk for each scenario. At the end of the
day it is a business decision based on risk
and benefit
5/18/2005 - v14
India: Binding arbitration in the UK
What is really confidential
It is more the company than the country
What specific steps do you take to protect know-how in international R&D relationships?
Add NDA's and JDA's to in-house IP
training
Co-location an issue
(Author: Tom Allen
(sic?))
Audits help
Best Practice: Need a mix of
patent and general contract law
Daily contact
Brainstorm around IP strategy
Careful to overly trust the legal
agreements
Universities
Seek balance between legal, business,
technology
Write a policy as a way to flesh out concepts
Not legally binding but does help describe
the value propositions
"Educate" grad students
Put in effort up-front to ensure
that people can exchange the
information needed to make the
project a success
Special cases
IP with Universities
should not be
"strategic"
Time-limits seem to be OK
Story: Product on
shelves before
agreement was signed!
What happens when the partner
learns from a" failed"project
Not good at discussing bad things
Non-US universities are easier
Can also have a "standard"JDA
US law makes this more difficult
Best practice: Limit to market or field
Best practice: time-bounded
First right of refusal
Good: Collaborative agreements
with Universities. They want
money and then sell back IP
Universities: Specific letter
describing three types of
know-how with a focus on
information that we don't want
shared with a competitor
(university didn't agree)
Avoiding a
premium for
exclusivity
"Heads of Agreement" as soon
as possible but
Universities
Examples of successful (or unsuccessful) practices
5/18/2005 - v8
Is it "overemphasized"
Usually a way to get around
exclusivity
Here we do see lawsuits
, Slide 5
Depends on where you are in
supply chain or your industry
General Issues
Opinions
NO it is not worth it (buyer
viewpoint)
Where buyer has large market
share: likely to get
exclusivity
Good: Milestones in JDA that
trigger exclusivity
Not a substitute for a
JDA. It helps to prepare ground
for the JDA
5/18/2005 - v15
Good: Find multiple businesses that can
fund work
Foreign collaborations
Is exclusivity "worth it" in agreements?
Good: Joint IP negotiated at end
Bad: NDA in place but really
needed a JDA. Get the JDA!!
Best Practice: keep supply issues
for later in cooperation: (NDA JDA - Supply Agreement)
Options
How do you keep track
of who has what
exclusivity?
Patent lead is part of
business team
Licensing attorney as speciality
The govt agencies
have specific rules
Very speculative
because outcome is
not known
Reputation of manager or
technologist
Training is ia challenge ineffective because
of "culture" of scientists wanting to share
information
Put in writing
everything
Background and foreground IP
are VERY important
Issue: Most partners will
need exclusivity so as to
capture value
Faster (see Cytec example)
Learning: Program started, result reported,
business manager funds, sends team to
partner: ratio of managers to scientists hurt
scale-up, project collapsed. Learning:
re-confirm results that come from partner
Bad: Silent agreements: Equal
rights to all IP
Question 1: What specific steps
do you take to protect know-how
in collaborative R&D
relationships?
What specific steps do you take to protect
know-how in collaborative R&D relationships?
Overview
, Slide 7
Strategy: Physical Engagement
, Slide 8
Training: Need to educate people involved
in a joint development relationship
, Slide 9
Special cases
, Slide 10
Strategy: Have a clear understanding of what are truly
the secrets and know-how that need to be protected and
how they will be protected
, Slide 11
General Best Practices
, Slide 12
Find a balance
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
Process
Discipline
, Slide 13
Question 2: What specific steps do you
take to protect know-how in
international R&D relationships?
What specific steps do you take to protect know-how in
international R&D relationships?
Overview
, Slide 15
Issue: International collaborative agreements as such are
of "?" legal value
, Slide 16
How many NDA's are actually litigated?
, Slide 17
Issue: Be aware of high risk countries but also high risk
companies
, Slide 18
The "company" is also a variable



Multi-nationals are best
"Reputation" of the specific company
The HQ company may not agree to sign along with the
local legal entity
, Slide 19
What is the relationship between technology, legal, and
business organizations in your company and how could it
be better in the context of collaborative R&D
, Slide 20
Suppliers and customers have specific issues because of
different agendas
, Slide 21
Best practice: Use geographic regions and international
law
, Slide 22
Who keeps tracks of agreements?
, Slide 23
Question 3: Is exclusivity
"worth it" in agreements?
Is exclusivity "worth it" in agreements?
Overview
, Slide 25
Opinions
, Slide 26
General Issues
, Slide 27
Avoiding a premium for exclusivity
, Slide 28
Question 4: Examples
of successful (or
unsuccessful) practices
Examples of successful (or unsuccessful) practices
Overview
, Slide 30
"Heads of Agreement" as soon as possible but
, Slide 31
Foreign collaborations
, Slide 32
Universities
, Slide 33