Professional Documents
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Wipo Smes Sha 04 7
Wipo Smes Sha 04 7
Outline:
Looking closer at an IP Asset’s owner right to exclude others
Looking at ways for sharing IP Assets and how taking an inclusive approach
can improve profitability
Emphasis on Case Studies: some of the imaginative ways that IP Assets have
been leveraged to create new business relationships and increased
profitability 2
Patent:
right to exclude
Patent confers upon its owner the right to exclude others from exploiting
the invention the subject of the patent
Licensing IP is a tool
An owner of an IP asset may grant to another person rights to use the
owner’s IP
An owner of IP may do so consistently with retaining their own
exploitation rights
How?
By the use of tools that permit concurrent exercise of IP rights
Sole Licenses – a shade of exclusivity
Field of Application restrictions
Territory restrictions
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Exclusivity: Sole License
Exclusivity:
Why would a patent owner with the right to exclude others grant a license
to a person that would be its competitor ?
Surely that will decrease profitability, not increase it !
Doesn’t that defeat the purpose of having the right to exclude others
granted by a patent ?
Yes, but not necessarily always
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Exclusivity: Case study in increasing
profitability by granting a sole license
Technology developed by testing laboratory – Company A in Australia
Company A had clients globally
But its global clients amounted to less than 1% of the global market place
Did not have a global marketing network – and did not want to – preferring to
remain “boutique”
Company B in Europe
A competitor to Company A
But a significantly larger company, with a significantly larger share of the
global market place
Had the resources to market widely, globally, and maximise the use of the
technology
Choices:
Exclude all others from the technology – and make minimal financial returns
License a competitor with greater capability and maximise financial returns
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Fields of Application
Would you exclude others from exploiting your patent in all fields, even those
fields, applications, industries outside your own capability to service ?
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Fields of Application
New formulation for scratch Would you keep all fields to
resistant plastic yourself and exclude others,
Possible fields: even if you had no capability
Exterior pipes – plumbing other than in one field only ?
industry
Spectacles – optics industry No, you would license out
Furniture – moulding remaining fields
industry
Bottles for consumer Would you license optics
products – injection industry applications to a
moulding industry plumbing manufacturer ?
Car parts and trim – motor Would you license motor
vehicle industry vehicle applications to an optics
Boat trim – boating industry manufacturer ?
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Fields of Application
Could be
country by country
states or other geographically distinct areas within a country
But they combine their efforts or their resources for their mutual
benefit
They may even make their IP Assets available to each other
Usually more than just a license – a closer more intimate relationship
than just a license
They leverage their own IP Assets to form a partnership with another
person that contributes its IP Assets, with a common objective of both
benefiting from each other’s IP 13
Strategic Alliances
Combining IP Assets to create new IP
Company A is conducting R&D on a new formulation for a scratch
resistant plastic for making plastic furniture
Company B is be conducting R&D on a new formulation for a scratch
resistant plastic for making motor vehicle trim
Both
have valuable IP in the area
have patents
They decide that
collaborating together
combining their resources
combining the inventiveness of their staff
may lead to developing a formulation that would suit them both
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Strategic Alliances
Combining IP Assets to create new IP
They enter into a Collaboration and license agreement
To collaborate and create New IP hat will be jointly owned
Company A grants to Company B a license
Of Company A’s patents
Of Company A’s interest in the New joint IP
In the field of motor vehicle trim and accessories
Company B grants to Company A a license
Of Company B’s patents
Of Company B’s interest in the New joint IP
In the field of furniture
Both have leveraged their own IP assets
To create New IP
To obtain access to the IP of the other, and the new IP, in their own field of
interest 15
Strategic Business relationships that can be
formed by leveraging
Licenses are at the heart of almost all strategic relationships where this
leveraging of an IP Asset occurs
License of
a patent
a trade mark
A registered design
Licensing
Designs
Characters (movies, cartoons)
Copyright works (art, photograph etc)
And allowing licensee to reproduce onto products, from clothes to
children’s lunch boxes, back packs, and food containers
Another form of leveraging an IP Asset by extracting maximum value
by sharing its use with others
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Case Study:
ITL Corporation Pty Limited
An Australian Company
Commenced operations in 1994
Seen it grow
from the two founders with no other staff, to over 170 staff in four
countries
from no IP assets to
12 patent families
Over 100 granted patents worldwide
11 Trademarks registered in over 25 countries
From a company with no capital, to a company listed on a stock
exchange in late 2003
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Company’s name and business
ITL’s name itself indicates that IP Assets are a major focus of its
attention
Its name suggests that licensing was its intended business model
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Company beginnings
In 1994 ITL applied for a utility patent or petty patent (in Australia
now called an innovation patent) over their first product, the
DonorCare
Later converted to a standard patent
Has a unique design
Needle retracts into the vessel, protecting
health care staff from the risk
of needle stick injury
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First trade mark
DonorCare
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Licensing option
ITL considered for some years that its strategy would be to license out
the patent
Licensing held many attractions
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License manufacturing
and sell products
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License manufacturing
and sell products
ITL accordingly decided to leverage its IP Assets by moving away
from licensing, and instead licensing a contract manufacturer, and
selling products
License to manufacture
ITL Manufacturer
Sell products back
Sell products
Buyer 27
License manufacturing
and sell products
By doing so
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Other products
Platypus
Similar to DonorCare, but designed specifically for AV Fistula
Needle sets
Also designed to prevent needle stick injury
Key to its success has also been
Patent protection
(Niche, global, innovative, Protectable)
Trade Mark
Market recognition and loyalty
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Other Products
Blade Guard
Stitch cutter, reducing risk of injury
Flipper Stripper
Strips blood tubing
Samplock
Vacuum tube for blood collection
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Evolution to
Licensing in
Having established own manufacturing facility, it has licensed in other
people’s technology to add to its product range
That is, has licensed in other people’s unique patents or designs to produce
and sell
Leuko Cart
A portable cart for blood bags
Baby Leuko Cart
A smaller version
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One IP Asset leveraging another
You leverage one IP Asset with another, and maximise the financial
return, than if you had not done so
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Patent and Trade Mark same product
If directly exploiting a patent rely on patent to exclude others that may reverse
engineer
But in the meantime promote the trade mark for that product
Generate customer loyalty for the product
The patent may expire, but sales may continue, enjoying the competitive edge
brought about by the continued trade mark and customer loyalty
Leverage the patent to add value to the trade mark and improve profitability
beyond the patent term
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License Patent and Trade Mark
together
The challenge:
To do the same when licensing a patent
Persuade licensee to also take a license of a trade mark, and require
only that trade mark to be employed in the exploitation of the patented
product
Have two royalty rates: one in the patent license, the second royalty
rate in the trade mark license
Collect two royalties for the life of the patent
After the patent expires continue to receive royalties pursuant to the
trade mark license
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License Patent and Trade Mark
together
Most patent licensors do not leverage the value of their Patent IP Asset
in this way
A licensee will seek to persuade the licensor that the goodwill
generated from the sale of the product should belong to the licensee
Often that argument will succeed
But a licensor that succeeds in leveraging one asset against the other in
this way will earn royalties for a period well after the expiration of a
patent
It will be easier for a licensor to do so when licensing on a Territory by
Territory basis. It will be easier in that case to require uniformity in
trade marks across all Territories
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Case study: leveraging one IP Asset with
another: Trade Secret and Trade Mark
Company A had a formulation for an nutrient additive to chicken feed that
resulted in chickens producing eggs enriched with Omega 3
Omega 3
a fatty acid that helps prevent heart disease
found in oily fish such as sardines etc
found in relatively few foods
Ironic that you eat a fatty product like an egg (10g of fat in the yolk) to be
able to more readily access the Omega 3 fatty acid
Challenge:
The formulation was not patented, but was protected only by trade
secrecy. It had been commercially used, so could not be patented
Financial return sought on a long term basis, by reference to the price
premium that would be charged by egg producers for Omega 3 eggs
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Case study: leveraging one IP Asset with
another: Trade Secret and Trade Mark
Challenge:
If a know how license was entered into, requiring royalty payments, its
term would cease, and royalties would cease, as soon as the
formulation entered the public domain
As there were to be number of licensees of a know how license, by
Territory, there was an increased possibility of the formulation entering
the public domain, and even an incentive for the formulation to leak
It was sought to get a reach through royalty based not on the quantity
of nutrient added to feed, but based instead on the premium price for
sales of Omega 3 enriched eggs
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Case study: leveraging one IP Asset with
another: Trade Secret and Trade Mark
Strategy
Grant a license to a feed producer to make nutrient and sell it to egg
farmers – but only those egg farmers that had entered into a trade mark
license
Grant trade mark licenses to egg farmers, in that way permitting them to
buy the feed additive
Farmers must use trade mark to promote any Omega 3 eggs, those eggs
must meet certain specifications, and farmers must pay a royalty on
Omega 3 eggs sold pursuant to the trade mark license for the agreed term,
and its renewal
Discourages possible leakage of the formulation
Ensures royalties are connected to the trade mark license, which is likely to
have a longer life than a know how license of a formulation
Success in leveraging one IP Asset against another
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Leveraging occurs by grant of rights,
not excluding
Leveraging IP assets as described occurs by licensing in all of forms
Using an IP Asset, and instead of excluding others from its use,
proactively going out and finding other users who will want to use that
IP Asset
Product in Market
R&D
Signed
Deal
Term
First
Sale
End
of
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Obligations before the first sale
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Commercialisation Milestones
Examples:
If more research is needed to bring products to a market ready
state, the completion of that research
Produce a prototype
Conduct a trial
Complete construction of Pilot Plant
Complete construction of Production Plant
Obtain any regulatory approval
Employ a person with particular expertise
Grant a sub license to a partner in Key Market
First sale anywhere in the world
Dates by which these must be achieved
Mechanisms for extension of time
Termination if not achieved in any extended time
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Obligations after the first sale
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