Volume XL No. 4

Initial Results of a Survey Conducted in Janaury/February 2005 by the Licensing Foundation of LES (USA & Canada), on behalf of The Licensing Foundation.

Biotechnology is one of the most influential enabling technologies for the pharmaceutical industry. Investments in research are growing very rapidly along with control of innovations and new entry barriers. In these conditions, participation of medium-sized firms from emerging economies in the biotechnology revolution requires a very careful process to identify opportunities. Our group has been active in assisting Mexican firms to develop competitive intelligence capacities to properly assess technology trends in selected markets in order to create a solid base for technology development and transfer strategies. Our experience shows that adequate management of information and the use of advanced techniques to analyze scientific and technical literature allows firms to respond to opportunities optimizing the use of internal capabilities and external technology inputs. Our paper reports a case of a mexican company dealing with three different cases in which we analyze the logical framework for conducting competitive intelligence, the main sources of information, the review process, the analytical tools and the means to selectively disseminate results. Based on this analysis, we draw recommendations for the development of technological services to support “me too” strategies of firms in developing countries.

Investors who finance the commercialisation of high technology research and development projects know that the risks of failure are high, and the probability of a good reward rather low. Before committing they will require proof of strengths such as a realistic and documented strategy, clear intellectual property ownership, vision, problem solving ability, strong balanced teams, and clearly stated concrete benefits for specific paying customers. Convincing investors to put ʻtheir money where your mouth isʼ requires showing a clear path to value creation, pre-empting their unexpressed concerns and regularly communicating why your project still promises a good return on their investment.

Russia is one of the few countries with a rapidly developing market. The markets of the developed countries have already shaped themselves, so Russia, along with China, India and Brazil remain today the only large countries where substantial market development is possible.

University Licensing Offices Need to Clarify that the Role of Licensing in Economic Development isnʼt Transferring Technology, itʼs Catalyzing Commercialization: This will improve the perception and operation of these offices.

Profit margins are increasingly under pressure in todayʼs global economy. It is therefore important for shareholders and top management to realise that patent assets can bring additional revenues to companies. They will increasingly expect intellectual property rights, in particular patent rights, to be managed as a business, turning, where possible, a traditionally expensive patent operation into a source of profits. Questions frequently asked include: What do patent assets add to the companyʼs bottom line? What is their return on investment?

This paper aims to synthesize the results of an investigation into technology licensing practices carried out by LESI members. We developed a questionnaire in collaboration with members of LES (USA & Canada) and LES France. It was sent in the Spring 2001 to 2685 firms, mainly in Europe (35.5 percent), Japan (13.0 percent) and North America (48.5 percent).

In 2000, the market for M&A transactions reached an unexpected peak of approximately US$ 3,500 billion, which was followed by a plunge of approximately 40 percent within a few months (cf. Fig. 1). In the meantime, transaction volume has been increasing again, yet a level similar to the one before the world economic crisis is still in the distant future. Mergers and acquisitions are being carried out with more caution, the number of stock market flotations has been declining, and postponements or even cancellations are not uncommon because of missing interest. All of this indicates that both institutional and strategic investors have become more cautious, and that they are examining their investments for chances and particularly for risks more carefully than in the past.

A patent can be rendered unenforceable if the patent owner misuses the power of the patent to obtain a benefit that impermissibly expands the scope of the patent. Examples of patent misuse include requiring a licensee to pay a royalty on products that are not covered by the patent, requiring a licensee to pay royalties after the patent expires, or requiring a licensee to purchase a separate staple product as a condition for the patent license when the patent owner has market power.

As the information technology (IT) marketplace becomes more competitive and heterogeneous in nature, the need for interoperability among diverse systems and components increases dramatically.1 Whereas 20 years ago, individuals and corporations customarily bought all of their IT equipment and services from one of the major vendors such as Digital, HP, IBM, or NCR, today they purchase and deploy multi-vendor networks of interoperable hardware and software.

Patent license restrictions can be used to control profits from the aftermarket for refi llable or reusable products such as printers or medical devices to substantially increase the value of those products. These license restrictions can also spur the publicʼs adoption of a product by permitting the introductory price to be minimal, with the profi t coming from sales of the consumable portion of the product. However, placing enforceable license restrictions on patented goods can raise challenging issues. Poorly crafted license restraints can violate antitrust laws or constitute patent misuse. Nevertheless, recent decisions by the U.S. Court of Appeals for the Federal Circuit provide road maps that help show companies how to increase the likelihood that the restrictions will be enforceable and not violate the antitrust laws.

According to a commentator, the judgement given by the European Court of Justice in IMS Health1 last year was one of the most awaited competition judgements in the history of that court.2 Since it is at the centre of your business, my contribution will focus on this case and put it into perspective.

A recurring feature highlighting recent decisions in the United States.

Last year at the 2004 LES (USA & Canada) Spring Meeting in New York the Industry/ University Committee sponsored a workshop on "Partnerships Arising from Donated Patents." There had been a growing trend in the donation of patents by corporations to universities and other not-for-profi t research organizations. With the increased number of patent donations came increased interest and many issues began to surface about the donation process. Such issues included what are the acceptable methods for valuing patents, what is the rationale for corporate patent donations and the amount of allowable tax write-off under Internal Revenue Service guidelines. The workshop examined the benefi ts and responsibilities for both the donor and the recipient organizations in patent donations as well as the issues surrounding donations from the perspectives of the different parties in the process.

In starting out or increasing the effectiveness of a technology transfer office, there are many hurdles to overcome. These include: (1) securing the necessary commitment from top management to proceed, (2) ensuring that you have the necessary resources to achieve offi ce objectives, and (3) having a mechanism to gain necessary technical and business support from other company activities.

It is not unusual for reasons including administrative efficiency, tax planning, or protection against insolvency to establish a company within a group to be the owner of all intellectual property owned by group companies. The consequences of such structuring are not always carefully considered. This article considers some issues relating to: -infringement and like proceedings -licensing; and -operational matters, where all patents, trademarks, copyright and designs of a group are held by a separate company, whose only function is to hold and manage those assets (IP holding company). There are signifi cant other issues that need to be considered but are beyond the scope of this article.

Remarks from LES Annual Conference, June 12-15, 2005, Munich

On the surface, the convergence of the Japanese and U.S. systems of university- industry technology transfer is almost complete. Japanese national universities, which conduct most university research in Japan, have been incorporated as independent administrative since April 2004, although they remain under the purview of the Japanese Ministry of Education, Culture, Sports, Science and Technology (MEXT). This was actually the fourth in a series of legal reforms that began in 1998 with the passage of a law authorizing the establishment of technology licensing organizations (TLOs) that could license some university inventions and channel royalties back to the inventors, their laboratories and their universities. Now as a result of these reforms, the legal framework governing university industry technology transfer in Japan is very similar to that in the U.S. Japanese universities now own nearly all inventions made by their researchers, including inventions by most graduate students and industry employees working in university laboratories.

The appreciation of the impact of Intellectual Property and Technology Transfer on the economy of any given country, is coming under scrutiny from the lesser developed countries. Those who do not understand the reasons for the views being expressed will fi nd it more and more diffi cult over time to open up new markets for their IP-based businesses.

This article is a collection of insights drawn from the presenters of "Value Added Licensing: Know-How and Material Transfers," a mini-plenary sponsored by the Energy, Chemicals & Materials (E-104) Committee for the LES 2004 Annual Meeting in Boston. The E-104 Committee focuses on the chemical and associated industries which historically have created and extracted value through their inventions in new products and commercial processes that are protected by patents and proprietary know-how. These classes of intellectual assets typically defend substantial capital asset investments made in plant and equipment to produce and sell products. Globalization and access to information are transforming the energy/chemical and associated industries which present opportunities and challenges to the process of licensing. The licensing of trade secrets and proprietary know-how including novel research materials are becoming more essential value additions in licensing deals, offering success-critical information to the licensee for implementation and commercialization, and generating higher royalties to the licensor. In this context, the E-104 Committee examined and highlighted the various current licensing perspectives in the transfer of trade secrets, materials and know-how information in licensing deals.

Deals with pharmaceutical companies constitute a major commercialization route for the biotechnology industry. Likewise, many agreements on IP from universities involve technology in the area of the life sciences, with applications that are ultimately aimed at the development of new pharmaceuticals. With potentially large markets and high profi t margins there is much at stake. Consequently, many tech transfer and licensing executives as well as many researchers in the life sciences, will at some point in time get involved in a pharmaceutical licensing deal and need to have a basic understanding of how pharmaceutical royalties can be determined.

In 2000, Indonesia enacted its fi rst sui generis law relating to protection of industrial designs, in line with its obligations under the TRIPs Agreement. The Designs Law was a long time in coming and a positive addition to the intellectual property legislative framework. In this article, we will examine the background leading up to the issuance of the law and review four years of the law in action.

In 2004-2005, the LESI Committee of the Americas and the LES (USA & Canada) International Committee conducted a survey of licensing activity in Latin America. Committee members, with experience in Latin American countries, researched available information to respond to a series of questions. In some countries, not much information was available to answer the questions; in others, information was available. Whenever possible, the Committee members supplemented the research with their personal experience, providing insight into the licensing landscape in the particular country.

Foreign companies face diffi culties in conclusion of the License Contracts in the Republic of Belarus due to the absence of their registered Industrial Property objects on the territory of the Republic of Belarus. It happens so because of the missing of terms of fi ling applications for an invention registration in the Republic of Belarus. Therefore, the foreign companies, that have technologies and have not protected them in the Republic of Belarus, are not able to sell the rights of their use on the territory of the Republic of Belarus in spite of customerʼs presence.

In most patent regimes, a patent on an invention is only allowed if the claimed invention is novel and not obvious in view of so called "prior art," namely, evidence of what was in the public domain before the claimed invention. Various forms of prior art may be cited against a patent application claim. Under U.S. Patent Law,1 because the fi rst to invent is entitled to the patent, an earlier invention, even though made and used secretly, could be cited as prior art against a claim directed to a later invention. Oddzon Products, Inc. v. Just Toys, Inc.2 Prior to December 2004, the only way to avoid a rejection based on an earlier invention was to establish both inventions were owned by or assignable to the same entity at the time the later invention was made. The owner of the two inventions could use Section 103(c) of the U.S. Patent Law3 by fi ling a "terminal disclaimer" which made the term of any patent issuing on the later invention the same as the term of any patent on the earlier invention.

On October 22, 2004, President Bush signed into law the "American Jobs Creation Act of 2004" (the "Jobs Act"). This highly publicized legislation includes numerous tax law modifi cations, including signifi cant changes to the rules governing charitable contributions of patents and most other forms of intellectual property. This article discusses some of those changes and the issues they raise for donors and donees.

Economic prosperity is one of the major factors for bringing universities and industry closer together. During the last few decades, in many industrially developed countries, there has been an increase in collaborative research activities. In line with this development, many OECD countries began to reform policies to promote university/industry cooperation to increase their international economic competitiveness. The focus of these reforms has been on key issues related to the exploitation of research results, such as the need for clear intellectual property policies that support the exploitation of publicly funded research. In 2000, Korea (Republic of Korea, hereinafter Korea) introduced a new law entitled "Law on Promoting Technology Transfer" (hereinafter LPTT)1 to promote technology transfer and ultimately commercialisation and to create a better infrastructure that will facilitate these processes. It is not always possible to foresee what the outcomes will be; however, there are initial concerns over several points in the new legislation. Although the new legislation applies to all public research organisations and intellectual property rights, this paper focuses on the initial concerns of the new law on universities and patenting.

A recurring feature highlighting recent decisions in the United States.

A review of Drafting Patent License Agreements, Fifth Edition, by Brian G. Brunsvold and D. Patrick OʼReilley.

I am honored to be invited to address the Licensing Executives Society—an association distinguished by its interdisciplinary approach to the challenging issues presented by modern licensing, issues in which law, economics, finance, business, and technology are inextricably intertwined. My emphasis today will be on the law and economics interface, and specifically on the pressure that the high transaction costs incurred in licensing intellectual property exert on legal principles ranging from fair use in copyright law to tying doctrine in antitrust law.

This paper considers the potential impact of two recent legislative changes—the EU Intellectual Property Enforcement Directive1 and the UK Patents Act 2004—on the way intellectual property rights are litigated in Europe. Its primary focus is on the impact in the UK; particularly as the second of the legislative changes addressed has direct effect only in that country. However it also considers the broader implications of the changes.

Whilst at one level the case of Victoria University of Technology v. Wilson & others (2004) 60 IPR 392, could be dismissed merely as another one of those undesirable by-products of the dot.com era—a case which could not possibly be repeated in more sober economic times—the implications of the case clearly do not just apply to that economic environment. The case should provoke a review of practices of all stakeholders involved in university sourced research—i.e. universities, academic staff, and investors alike—particularly where commercialisation of university sourced research is more likely to be the norm than the exception.

Software, or more generally "computer-implemented inventions" (CII), a term which embraces both programs for computers and business methods, gives rise to peculiar difficulties in the realm of intellectual property. It is expensive to develop but easy to copy. Development and product life-cycles are fast-moving and national court systems have difficulty in keeping up; it straddles different forms of IP but does not sit easily on any of them; and finally all attempts at a special software-only or suigeneris protection have failed. There is considerable hostility in some circles to patent protection, although most of the objections are really aimed at patents in general rather than software patents in particular. There is nevertheless a consensus in European industry that in terms of protecting functionality as opposed to expression patents represent the least worst alternative. Much of the software we use daily is the subject of patent protection.

A review and commentary on recent decisions relating to licensing in the European Union.

The 2004 Annual Meeting of LES (USA & Canada) began Monday morning October 18, 2004 with an opening plenary panel discussion. This panel focused on high profi le licensing deals and the partners involved in those deals. We explored how the deals came about, the challenges faced and the synergies that were created through the partnership. The program was moderated by the President of LES (USA & Canada). Below is an edited transcript of the "Partnering Deals: Solutions Through Synergy" panel discussion in Boston.

Product tying (also called "exclusive dealing") in the context of franchising essentially involves the franchisor granting the franchise on the condition that the franchisee takes other products or services from the franchisor (full line forcing) or from a third-party nominated by the franchisor (third line forcing.) The franchisor "forces" the franchisee to purchase a second product or service from a designated source.

A review of “TECHNOLOGY PATENT LICENSING: An International Reference on 21st Century Patent Licensing, Patent Pools and Patent Platforms" by Larry M. Goldstein and Brian N. Kearsey

A recurring feature highlighting recent decisions in the United States.