This paper will review my personal experience in licensing in emerging countries. I will discuss problems that I have encountered and those that are likely to be encountered in the future. I will then suggest how the problems can be overcome and how the opportunities can be realized. I shall end this paper with a suggestion of how we, as members of LES International, can meet the challenges and take advantage of the opportunities represented.

There still exist remarkable differences between Europe and the United States in terms of university/industry relationships and technology transfer of university-based technologies. The reasons for such differences lie mainly in cultural and historical factors.

The amendment to section 42 of the German law on em- ployeesʼ inventions, which has applied to “new contracts” since 7 February, 2002, and which, since 7 February, 2003, has in some cases also made it necessary to adapt “old contracts” concluded before 18 July, 2001, has led to an intensive search on the part of universities, and also on the part of industry, for model contractual solutions for standard situations.

Several valuation models have been proposed for setting a value on an R&D project (Khoury, Daniele and Germeraad, 2001): a cost-based approach, an income approach (net present value: NPV) and a market approach (real option valuation). In this article we focus on valuing specific projects, disregarding methods that value complete portfolios. We focus our attention on valuing an R&D project for the purpose of setting a future royalty rate, for deciding on whether to go ahead with a project or not and/or for the purpose of selling the project outright at a certain stage of development. In particular we pay attention to the possibility that this decision may be re-evaluated at several milestone decision points. Whatever the valuation model, it should be able to reflect this process.

Parallel imports of genuine goods are generally free from infringement of relevant intellectual property rights in Japan. Case law and legislation have already paved the way for genuine goods to be legitimately imported into Japan by parallel importers. For example, parallel imports of “patented goods” do not infringe relevant domestic patents under the 1997 Supreme Courtʼs decision in the BBS case. In the BBS case the Court agreed with the lower courtʼs ruling of legality of parallel importation and upheld the application of the exhaustion doctrine to the patent at issue

Unfortunately for all of us, patents are not really options. Recently some scholars and practitioners have been promoting the idea that patents can be valued as real options.1 While it is appealing to think of patents as options, they are options only in the vernacular sense that the patent holder isnʼt obligated to take any action. Patents are not options in the financial sense required to make use of financial option-valuation tools. Valuing a patent using a tool such as Black-Scholes will result in a meaningless value.

With the advent of easy and ever-less-expensive computer access throughout the industrialized world, we live more and more in an economy based not on agrarian activities or industrial strength but on knowledge and the management of knowledge. Managing this new economy requires different tools than did agrarian or industrial economies. The agrarian economy demanded farming skill from the workers, and transportation and storage for crops. The industrial economy demanded manufacturing skills from the workers, transportation and a consumer market for manufactured items. Our new knowledge economy demands that organizations have in place the tools to manage the knowledge contained within them: some examples are contracts with employees, contractors, strategic partners, and consumers to protect the organizationʼs knowledge base, patents to protect inventions, trademarks and service marks to protect organizational goodwill, copyright to protect publications, and a well-designed licensing program to allow the organization to commercialize and capitalize on its intellectual property.

Pharmaceutical and biotechnological technologies have consistently been areas in which large licensing fees have been negotiated. However, there is no information in the open literature on how pharmaceutical up-front licensing fees are determined. A number of papers discuss valuation methods, but these are general discussions and no specific models or valuation methods are provided.1,2,3 Thus, the licensing executive is not only left to “guess” at a value, but also lacks a consistent, repeatable, logical method for determining an appropriate up-front or milestone payment. It is noted by Degnan and Horton4 from a survey that only 60% of licensors ask for an up-front fee. One may wonder why, but could it be because there are no well documented or referenced methods for determining up-front fees? Because a pharmaceutical has to pass through several Food and Drug Administration (FDA) approvals, milestone payments are often associated with FDA approval for a particular phase. In this paper, milestone payments are discussed and are assumed to be part of the up-front fee valuation, where one may think of the initial up-front fee as being split into several installment (milestone) payments.

Business seems good, so good itʼs hard to imagine otherwise. Optimistic business plans are materializing, the company has excellent creditor relations and capital is available at low rates. Venture capital is plentiful for technology funding and investors are focused more on growth than profits. Then over a few years, or perhaps even a few months, things change.

“Valuation” is Razgaitisʼ second edition of his Valuation book but it is substantially revised. “Dealmaking” is a new standalone book that develops Real Options and Monte Carlo analysis beyond the more fundamental coverage in “Valuation.” It is designed for the more serious student of the topics.

The Commission has published an invitation to comment on a draft Regulation and six draft notices which make up its modernisation package pursuant to the new Regulation 1/2003. This Regulation deals with on proceedings under Article 81 and 82 of the Treaty, which concern anti-competitive agreements, such as cartels and abuse by a company in a dominant position in its particular market.

The law concerning personal jurisdiction of a court over a party prevents a party from being sued and dragged into court in unfavorable or inconvenient locations when the partyʼs activities have little or no relation to the court where it is sued. In Electronics for Imaging, Inc. v. Coyle, No. 02-1536 (Fed. Cir. Aug. 18, 2003), the Federal Circuit held that repeated communications directed at a California-based company (EFI) by a Nevada patent holder (Coyle) were activities sufficient to allow a California court to have personal jurisdiction over Coyle when EFI brought a declaratory judgment action against Coyle in a California court.

In this overview of licensing negotiations we will address three areas: In Part One of the article, our focus is on the art and artistry, the issues and interests, the options and opportunities, and the alternatives and end-games that occur in a complex licensing negotiation. In Part Two, we briefly review opportunities to extend a licensing program during the renegotiation process. Part Three is a case history of a complex negotiation.

Intellectual property rights (IP rights) are typically the central element of prosperous multinational enterprises (MNEs). The existence of IP rights possessing advantageous elements (in the form of patents, proprietary technology, brand name, distribution system or otherwise) provide competitive advantage. Successful exploitation of such advantages on a global basis provides opportunity for significant economic growth by the MNE.

Intellectual asset management is now a common term. It has come to embody not only the tactics to obtain and to protect intellectual assets and the company’ s freedom to practice such, but also alternative strategies to extract value from existing intellectual property and know-how assets. However the real question is, “how are companies actually realizing this ‘untapped’ value?” An Add-on session at the September 2002 LES (U.S.A. and Canada) Annual Meeting, sponsored by the Intellectual Capital Management Committee (E-109), was designed to uncover the answer to just this question. This paper highlights two common IAM processes, IP Strategy and Competitive Assessment, that companies are using to realize their untapped value, followed by three specific diverse case studies of how companies have implemented Intellectual Asset Management (IAM) systems to obtain value based on the different strategic

On October 26, 2002, President Bush signed into law the Medical Device User Fee and Modernization Act (the “Act”). Many of its parameters have been discussed and debated in the industry for years, such as the user fee. This article explores licensing issues, particularly those related to single use medical device refurbishing, in light of intellectual property and provisions of the Act. Initially, it can be pointed out that the Food and Drug Administration (“FDA”) has published a very good summary of the Act on its web site.1

The Bayh-Dole Act of 1980 allowed US Universities to own inventions made with federal funding—previously, the government had usually held title and was responsible for licensing the resultant patents. After the Act, academic licensing became an important component of the licensing profession. In the US and Canada, almost 1,500 professionals were employed in academic licensing in 2001 and the AUTM Annual Meeting now rivals the LES Annual Meeting in attendance. Academic inventions have impacted all aspects of industry but have made particularly important contributions to, first, the biotechnology industry and, a decade later, the Internet.

Every company produces intellectual property as an intangible asset. These are work outcomes which are sometimes of great economic significance.

Achieving and sustaining a competitive business advantage is both a major need and opportunity for companies and organizations around the world. As we exited the 20th century, it became ever clearer to many business executives that KNOWLEDGE is “king.” The challenge is to identify an organization’ s areas of core competencies and Intellectual Capital that allows the company to differentiate itself in an intensely competitive market worldwide.

A new Technology Transfer Block Exemption Regulation is likely to enter into force on 1 May 2004. If it enters into force as drafted, it will be much more restrictive than the current Regulation.

The recent difficulties in raising funds in the capital markets and via the venture capital route have renewed interest in securitizing cash flows from intellectual property assets, perhaps thereby presaging a revival of this form of financing for companies pos- sessing the appropriate intellectual property assets and seeking a lower cost of capital.

The Enterprise Act received Royal Assent on November 7, 2002 and came into force on June 20, 2003. The key competition aspects of the Act are set out below.

This is a resource that will be useful to the Intellectual Capital (IC) student, whether a formal student at a university or a practitioner who enjoys well crafted discussions.

With the growing importance of Intellectual Property Rights (IPRs), evidenced by damage awards for infringement and annual royalty income reaching 10-digit figures, “leveraging” and “monetizing” IPRs have become buzzwords. A veritable cottage industry of webbased third-party service providers has sprung up in short order to “extract value” from IPRs. The big five accounting firms, and Arthur Andersen, in particular, seem to have initiated and spearheaded the “new wave” or, I would say, “new craze.” To name but a few: Aurigin, Ascent Financial, Delphion, Epache, INTX, ipCapital Group, IP.com, IPNetwork.com, IP Vision, IP Value Management, Invention Machine, Licent Capital, M-Cann, PatEX, Pl-xTRRU, ThinkFire, Value Extraction, Yet2.com, etc.

Spiderman, Minority Report and Fellowship of the Ring were recent blockbusters, but pirated versions are available on the Internet, and in some cases were there before the movies even opened in theaters.

The economic consequences of counterfeiting and piracy are an increasing concern to governments within the European Union (EU). Recent industry estimates have suggested that counterfeiting accounts for a reduction of m8 billion (around US $9 billion) annually in EU GDP, with both businesses and their employees feeling the negative effects. The counterfeitersʼ lack of respect for national borders has meant that the problems have now been raised to a regional level within the EU, with interest being expressed by the European Commission in tackling the issues. In fact, the European Commission has recently launched proposals for two new pieces of legislation aimed at giving greater powers to rightsholders and national authorities to combat the flow of infringing goods. This legislation will be of particular interest to rightsholders in industry sectors such as the software, food and pharmaceutical product sectors (which are among those that suffer the most from counterfeiting). It may be of greatest relevance for rightsholders who actively license the use of their rights, and who will want to protect those rights, but also to be seen (by their licensees) to be doing so.

Dreadful Drafter having suffered from the publicity of his legal writing skills in “The LESI Guide to Licensing Best Practices” is pleased to have an opportunity to redeem himself. He is now with Interco and has been given another assignment by his President who likes succinct letters of intent. He is to create the first draft of the warranty section of the agreement between DevCo and InterCo.

The industrial world is facing a liquidity crisis. Gone are the heady cash flows that financed R&D to fill product pipelines. Gone are the conventional capital sources of equity and debt to generously finance start-ups, growth, and acquisitions. And long gone are the excess tangible assets to liquidate in a time of need. In search of ways to manage this crisis, companies are examining under deployed assets comprising a significant fraction of their book or enterprise value and asking, “how do we monetize our intellectual property rights?” The answer to this question lies in an entirely new family of financial tools and services designed to unlock and exploit the value of IPR that is now an asset class unto itself.

On its face, the many attractive features of open source licensing are readily apparent when juxtaposed against the traditional proprietary software model. For many technology companies, the adoption or rejection of the open source model may have potentially far-reaching and irreversible consequences. For both licensors and licensees, open source licensing presents numerous business and legal maelstroms requiring careful consideration and navigation. Following a discussion of the salient characteristics of open source licensing, we elucidate key factors which should figure prom- inently in a strategic approach to open source licensing.

This paper describes the in- creasing importance of economic and financial analysis in determining the value of intellectual property—and of patents in particular—in the U.S. courts. We observe that patent damage awards by the courts are now commonly based on careful economic and financial analysis. As a result, patent owners today are better able to satisfy the courtsʼ requirements for demonstrating damages in a non-speculative manner than in the past. Patent owners have been able, either by winning in court or more commonly through favorable settlement of litigation, to obtain compensation from infringers and protect the value of their patents. This contrasts with previous eras when patent owners were often limited in claiming damages to testimony based on anecdotal evidence or questionable rules of thumb. We discuss implications of this trend, both in the courtroom and in general perceptions of the value of intellectual property.

The value of intellectual property to those who exploit it effectively increased significantly in the last decade. For many businesses, “The intellectual property capacity of a company is now more valuable than its buildings, machinery, and fixed assets.”1 The increased value of intellectual property has led to increased competition for such property and increased litigation, resulting in increased risks for intellectual property owners, users, and insurers. Those risks may be grouped into five categories: (1) infringement risks—risks that a business will be compelled to pay money, halt activities, or incur substantial legal expense as a result of infringing, or being accused of infringing, the intellectual property of others; (2) enforcement risks—risks that a business will incur substantial legal expense or suffer a reduction in the value of its own intellectual property as a result of infringement by others; (3) what one might call title risks—risks that the business will not be able to maximize the value of its intellectual property as a result of its inability to convince government officials such as patent and trademark examiners, or potential licensees or purchasers, that it owns the intellectual property it claims; (4) investment risks—risks that efforts and expenditures invested in intellectual property will not yield the expected results, or will not yield results in a way that is useful to the business; and (5) storage, maintenance, and dissemination risks—risks that a business will suffer damage to its digitally stored intellectual property.

For examining the latest developments in the field of patents of invention in the region, it is necessary to bear in mind that Decision 486 of 2000 or Industrial Property Common Regime is the legislation that governs this matter.

"In little more than a generation, our definition of life and the meaning of existence is likely to be radically altered,” writes Jeremy Rifkin, Esq. in his new book, The Biotech Century: Harnessing the Gene and Remaking the World. By the time you get done with his book, you will feel as if he has understated the fact.

Merchandising generally, and character and personality merchandising in particular, has become a huge part of the entertainment and sporting world. An exclusive licence to sell a variety of clothing, toys and other merchandise bearing a famous name or image is often now the subject of intense bidding wars.

These issues will be discussed serially, in regard to each of the United States, the European Union, South Africa and Australia. Due to similarities between the judge-made law of Australia and Britain, comments on the non-statutory aspects of Australian law will apply to Britain and may apply to other countries with a British-based common law heritage.

Service companies don’t normally need patents. Table 11 illustrates several major service industries, major companies within those industries and the total number of new patents these companies obtained in 2002. With the exception of Citigroup, none of these companies obtained any patents. This is to be expected. Service companies sell the services of their employees. They do not sell products that are subject to reverse engineering and copying. Copying is what patents primarily protect against. The inventions of a service company are related to improving the efficiency of their operations. This often involves the customization of off-of-the-shelf technology, such as software and computer systems, for their particular needs. Customization acts as an effective barrier to copying. The direct copying of a competitor’s customized in-house solution would be difficult due to its secrecy. It would be of little value because it would have to be recustomized to the copier’s needs. Hence patents offer little additional value in protection against copying of service industry inventions.

Collaborations and joint developments offer many benefits to their participants, in particular, the ability to access technology and IP developed by the other participants. However, it is important to consider how any resulting inventions or improvements to technology will be owned. Too often, parties wishing to achieve a fair and equal outcome simply provide for joint ownership without considering how this will affect future dealings with that property. In this article, we look at some crucial issues with which collaborations and joint ventures should expressly deal when agreeing to joint ownership in relation to inventions.

An effective IAM program includes identification of and information about the organization’s Intellectual Property (IP), analysis of this data, and specific actions to create value based upon the analysis. Figure 1 illustrates this process.

What gives your business its competitive advantage? Is it the technical superiority or innovativeness of your products or services, the efficient manufacturing or operational business processes you have developed and use, or simply your marketing or brand? Are the things that make your business successful and profitable protected?

The deployment of brands is no longer limited to technology driven product markets. Today, valuable brands exploit their value in very different market segments, using different product technologies, competing against multiple competitors, being distributed in various retail channels, but still delivering the same brand promise and brand values. This umbrella brand strategy has become obvious in fashion, personal outfit, sports and lifestyle markets. In many cases, it is realised through license partnerships or similar alliance networks.

The Japanese government ap- proved amendments of the Pharmaceutical Affairs Law (PAL) of Japan last year. The amendments are the most extensive revision of the pharmaceutical regulations in Japan since the enforcement of the current PAL in 1961. The new regulations will become effective in a phased manner from 2003 to 2005. They will significantly affect business activities of drug companies and promote diversification of their business operations in the industry in Japan. To take advantages of such changes, it is worth thinking ahead over the mid- and long-term strate- gies of drug licensing in and for the Japanese market. This paper takes up important amendments among others that may alter the current licensing practices in the industry. The paper also views licensing opportunities in the pharmaceutical marketplace and addresses necessity of transforming conventional licensing policies into a new form of strategic co-operation in line with the changing business environment.

When the history of competition policy is written, the closing months of 2002 will stand out as a remarkable period of activity.

Working with Technology is a comprehensive treatment of the funding of the development of new technology and the subsequent management and commercialisation of the arising Intellectual Property in the United Kingdom. It is essential reading for all IP practitioners and will prove to be a valuable work of reference.