San Diego, CA (PRWEB) July 29, 2010
The international law firm of Fish & Richardson recently sponsored a presentation, as part of Connect’s FrameWorks Workshops series, on public research institution to private venture technology transfer issues. According to Fish Principal Sean Grygiel, a speaker at the presentation, a major factor in a successful technology transfer is, at the start of the process, the inclusion of key elements and an understanding of the common pitfalls that make or break a licensing deal
Technology transfers - the process of sharing of skills, knowledge and technology findings with others for the purpose of further development and commercialization of technology – are often used by start-up and early stage commercial endeavors to gain technology that has already been extensively researched and tested.
For young commercial endeavors, tech transfers have a tremendous influence on the ability to further develop and refine the technology, establish strategic partnerships, obtain financing at various levels, retain control of the technology and derivative products and establish exit points.
“The structure of the initial license can be built on as a foundation for success in the venture” according to Grygiel.
Understanding what each party in the transfer is looking for sets the stage for successful negotiations, according to Grygiel. Public research organizations want the ability to continue basic research, collaborate with others on the research, publish their knowledge, control and benefit from follow up technology, generate royalties and control enforcement of the license.
Start-up and early stage ventures want the freedom to commercially develop the technology, establish partnering and strategic alliances, control the dissemination of technology, develop derivative and related products and/or technology and control enforcement of the license.
While some of the parties’ interests are compatible, others do not align. “Each tech transfer should be unique, taking into account each party’s common and divergent interests,” stated Grygiel.
As the Association of American Universities has stated, “Licensing approaches, even for comparable technologies, can vary considerably from case to case…based on circumstances particular to each specific invention, business opportunity, licensee and university.”
Grygiel stressed that entrepreneurs and early stage companies looking to license technology from a research institution should insist on “very clear language to fully understand what conditions and restraints are attached to the technology and that these be carefully evaluated against the overall business objectives and realistic market opportunities.”
Common pitfalls that companies / licensees should beware of include lack of resources to adequately negotiate and execute the initial technology transaction; using language of intent as a short cut because certain technical and/or business points are not yet developed or defined; undefined royalty payments and payment structures; and failure to provide for ‘outs’ or terminating of the license.
Grygiel also notes failure to clearly define technology and IP ownership – including improvements by either the licensee or licensor and derivative and related technology- and failure to clearly define who controls IP prosecution and enforcement are also common pitfalls that can cause headaches down the line.
He also warned of the tendency to default to ‘joint ownership’ of the technology, even when not appropriate. Patent law calls for “in the absence of an agreement to the contrary, each of the joint owners may make, use, offer to sell or sell the patented invention…without the consent of and without the accounting to the other owners.” Grygiel noted he “sees conflict too often arise from joint ownership not fully being considered prior to the completion of a license.”
Grygiel closed the presentation with basic tech transfers tips to remember when negotiating a deal:
· Terms should be clear and concise.
· Draft definitive language.
· Where business terms are not finalized, add a procedure that ensures finalization or spells out what happens if finalization never occurs.
· Consider all issues regarding joint ownership before using it as a default.
· Be open to and plan for renegotiation.
About Fish & Richardson:
Fish & Richardson is a leading global law firm with 400 attorneys and technology specialists practicing intellectual property strategy and counseling, intellectual property litigation and business litigation. Fish does cutting-edge legal work for innovative clients who value their intellectual property. The firm was recently named top patent prosecution firm (Managing Intellectual Property, February 2010), was honored as an IP Firm of the Year (Law360, January 2010) and named a finalist for top IP litigation department of the year (American Lawyer, January 2010). Fish handles more patent litigation than any other law firm (IP Law & Business, September 2009), is the number one IP firm for America’s biggest companies (Corporate Counsel, September 2009) and was named the number one firm in the world for PCT filings (Managing Intellectual Property, October 2009). The firm also handled two of the top ten most important IP cases of 2009 (Managing Intellectual Property, January 2010). For more information, visit http://www.fr.com.