Volume XLIV No. 4

Increasingly, before taking on new inward licensing opportunities, pharmaceutical companies are seeking to identify and include back-up compounds, so as to reduce he risk if the lead compound fails in development.

Earlier in March, the author completed a study examining the methods used to value drug development projects. The study was conducted by interviewing individuals over a period of four months1 in the UK from a representative sample of twelve leading industry participants, including small biotech business development ("biotech"), large pharma and large biotech business development ("pharma"), financial analysts ("analysts") and venture capitalists ("VCs").

Avoiding jurisdictional and cost problems associated with the court system, the Uniform Domain Name Dispute Resolution Policy (UDRP), adopted by ICANN at the initiative and with the assistance of the World Intellectual Property Organization (WIPO), has proven to be an effective administrative mechanism against cybersquatting, the abusive registration of domain names that copy or play off trademarks. WIPO's Arbitration and Mediation Center has administered close to 16,000 cases covering some 27,000 domain names, mostly in the .com domain and frequently involving trademarks in biotechnology and pharmaceuticals, banking and finance, the Internet and IT, retail, and entertainment. The two-month UDRP procedure, conducted largely online, results in easily implemented decisions by WIPO-appointed panelists.

Despite their best of intentions, parties draft license agreements which purport to have the patentee grant sufficient rights for a licensee to assert a patent against third parties, but fail to grant all substantial rights to sue. The surprising number of cases decided against the intended transfer of all substantial rights to empower a licensee to sue on a patentee is a testimony to the complexity of the jurisprudence in this area. This article attempts to cut the "Gordian knot" regarding all substantial rights in patent licenses.1 First, the United States law defining the four key categories regarding the parties in a licensing transaction is reviewed. Next, thirteen key cases from the United States Court of Appeals for the Federal Circuit ("CAFC")2 are summarized as to which cases directly address the question of all substantial rights in patent licenses.3 Last, the article suggests fifteen practice pointers from the various decisions to assist practitioners in drafting exclusive licenses with all substantial rights which licenses will be upheld as originally intended.

The views expressed by the author, are the author's individual views and not those of LES International or CSIRO.

The Aerospace and Transportation Committee of LES (USA & Canada) was founded in 1998 to provide member companies an opportunity to network and exchange best practices for those involved heavily in manufacturing goods and products. As such, members have found their Committee to be valuable in enhancing their own licensing and technology commercialization efforts. To that end, the Committee has been conducting monthly teleconferences to provide a forum for discussing current opportunities and challenges outside of scheduled LES meetings.

The financial crisis that triggered in the United States on September 15, 2008 has spread and intensified globally with the force of a billow, drawing the automobile industry into the vortex of a radically changing economic environment. The current crisis is said to be a type that occurs only once in a hundred years. Looking back, there have been similar cases of radical change in the economic environment that have also been called crises. The first and second oil crises of 1973 and 1978 originated a change in the way Middle Eastern crude oil is provided. These events caused radical changes in the economic environment, just like the current crisis.

Schneider Electric, a provider of power and control solutions headquartered in France, recently announced it had settled a three-year-old patent litigation with Chint, one of the largest manufacturers of low-voltage devices in China. The settlement amount of CNY 157.5 million (about USD 23 million) paid by Schneider is believed to be the largest for a patent litigation settlement in China. The decisive victory for Chint puts a fresh spotlight on the fastchanging patent litigation landscape in China.

Experimental use is a judicial doctrine that may be invoked to delay the start of the one-year clock1 for filing U.S. patent applications. A recent court ruling suggests that inventors tread cautiously in relying on the doctrine. Ordinarily, a public use or sale of an invention made more than one year before a patent application is filed bars the inventor from obtaining a patent. "Experimental use" allows an inventor to engage in activities that would otherwise bar him from obtaining a patent under the public use bar, as long as the use is necessary for experimentation. If the activity qualifies as experimental, the inventor can refute a charge that the activity rendered the invention unpatentable.

This is the third in Razgaitis' series of books on Valuation. The first book was written in 1999, the second in the series (two volumes) was written in 2003 and this one, consolidating the topics of the two 2003 volumes, was written in 2009.

Volume XLIV No. 3

In view of the increasing significance of open source licences in the law of software licences and first decisions concerning the most important licences by German courts, a short summary of the enforceability of open sources licences in Germany is given.

Not all hope is lost. Biotechs that adapt to the current market and capital realities and focus on the most value creation activities will be able to survive and excel once market conditions improve

Although this article will compare recent developments in both the U.S. and the European Union with respect to the application of the exhaustion of intellectual property rights, the focus of this overview will be laid on the application of the exhaustion theory in the European Union, using U.S. case law as a source of inspiration.

The explosion of open source software and its associated licenses has dramatically increased the complexity of deciding how to create, manage and enforce a uniform open source policy for "closed-source" commercial enterprises.1 Because of the complexity and risks associated with open source—where source code is made freely available for all to review, edit, and use—many closed-source commercial enterprises discourage or prohibit use of open source; a common and short-sighted practice. Open source can be an invaluable tool, and its risks can be understood, managed and controlled. This article aims to assist engineers, developers, managers, licensing professionals, in-house counsel and other open source practitioners in developing a consistent and effective open source policy to enable a peaceful coexistence between open source and closed-source in the competitive global marketplace.

The traditional valuation metrics that apply to physical technology governed by patents do not adequately work for the valuation of software not protected by patents but rather governed by privacy, trade secrecy, and copyright. Only a small portion of commercially available software is covered by patents. Copyright for commercialized software offers weak valuation principles. A recent article in les Nouvelles, discussed that the accounting rules required by FASB do not accurately apply to software valuation.1 This article will review other traditional valuation methods used to value technology and show that these valuation methods are also inadequate for the business valuation of software. Since the value generating principles such as identification, possession, ownership, and trade secrecy for software can be lost easily by failure to take the appropriate due-diligence measures, some best software valuation practices will be highlighted such as the need for an IP audit to give assurance that the value principles of ownership, possession, trade secrecy and privacy are being maintained.

Earlier in March, 2009, the author completed a study examining the methods used to value drug development programmes. The study was conducted by interviewing individuals over a period of four months1 in the UK from a representative sample of twelve leading industry participants, including small biotech business development ("biotech"), large pharma and large biotech business development ("pharma"), financial analysts ("analysts") and venture capitalists ("VCs").

This article represents a synthetic work meant to help readers understand the main problems concerning the protection of intellectual works over the Internet. Far be it from exhausting all the aspects of this matter, nevertheless it aims to establish some "landmarks" that may possibly show some ways of achieving a better balance among all the interests at stake, so that the sacrifice of one or more relevant juridical values may be avoided.

The paper will explore the legal relationship between industry, academia and government in research collaboration and technology transfer in Germany in comparison to the UK and will raise the questions, to which extent the recent legal changes in Germany have actually improved the academy-industry collaboration and if the current practice would not have been simpler if Germany was not bound to its legal tradition.

Start your engines and look for the checkered flag! Lets's face it, product and technology licensing negotiations between pharmaceutical and biotechnology companies are challenging, difficult and protracted. From initiating a transaction to ultimate contract, it can take more than a year, numerous term sheets and many contract drafts! The process is wearing. Negotiations involve a myriad of financial, regulatory, supply, development and operating hurdles which have to be addressed and not to speak of the personal egos involved. Further, this does not address the internal approval process which adds anxiety to the negotiations. The Business Development Officer engages in a diplomatic joust between these internal and external pressures.

To avoid an unfair result or undue burden on defendants, the law requires a sufficient connection between a defendant and the location of a court before it will require a defendant to defend against a lawsuit in that court. In particular, courts must have either "general jurisdiction" or "specific jurisdiction" over a defendant to hear a case involving that defendant. "General jurisdiction" exists when the defendant maintains "systematic and continuous" activities in the state where the court sits, like maintaining a personal residence or operating a business. Defendants subject to general jurisdiction may be sued for any activity in that state, regardless of whether the activity giving rise to the lawsuit occurred in that particular court's state or not. "Specific jurisdiction" exists when the activity giving rise to the lawsuit occurred in the state where the court sits.

Volume XLIV No. 2

Intellectual property valuation in the healthcare sector is often achieved through a combination of discounted cash flow (DCF) and net present value (NPV) calculations, supported by benchmarking based on publicly available deal information. Published total deal value figures invariably show upfront and various milestone payments. However, it is an unfortunate situation for dealmakers that royalties, potentially the largest financial component of the deals they would most like to benchmark, are the one piece of information that almost all companies will keep closest to their chest. The details of these figures are almost always kept confidential by the companies involved. In the United States, public companies are required to file the contracts of material licensing transactions with the U.S. Security and Exchange Commission (SEC). However, the relevant sections and numbers related to financials, and royalty rates in particular, are generally redacted in these filed contracts and are protected under restrictive confidentiality clauses for five or more years. These SEC filing requirements are only for public companies and material transactions. Thus, deals not subject to this requirement include public company deals that are not material to the overall size of the company (i.e. "large pharma"), deals by private companies such as numerous biotech companies, small pharmaceutical companies, ex-U.S. companies and university deals. The result is that actual or primary data on licensing royalty rates and deal terms is limited for a large portion of the industry.

The utilization of open innovation (Chesbrough, 20041) for two companies will affect the long-term corporate strategies at both companies. Even prior to the term "open innovation," Shionogi & Co., Ltd. licensed MS Contin® & OxyContin®, from Mundipharma K.K., the Japanese affiliate of Purdue Pharma L.P. and developed a cancer pain market which did not exist in the mid-1980's in Japan. Due to the sales growth of MS Contin® & OxyContin®, Shionogi designated "Pain" as one of three R&D core therapeutic areas in their 2nd medium term business management plan in 2005. Shionogi chose an alliance strategy which has a synergistic effect and complementary one, rather than exploring closed innovation, so that the discovery alliance with Purdue was initiated in late 2005. While Shionogi was on the pioneering side of open innovation, Purdue's business conditions in 2004 and 2005 suited seeking a strategic partner to share the risk for their Discovery Research. Alliance health surveys are conducted annually between Purdue and Shionogi. The results reinforce a strong, healthy alliance. There is "synchronicity" and "serendipity" noted retrospectively related to the Discovery alliance between Purdue and Shionogi further reinforcing the benefits of open innovation.

This review of Cooperative Research and Development Agreements (CRADAs) is being published in two parts. Part I, which included an overview of CRADAs, organizational and policy matters, and part of the material on patent licensing; was published in the March 2009 issue. Part II, presented here, completes the patent licensing material and covers financial aspects and confidentiality and trade secrets.

Border detention proceedings are an important tool for safeguarding patent protection: On application of the right-holder customs authorities detain goods which are suspected to infringe intellectual property rights. After a short period of time, customs officials destroy the goods unless the importer objects which triggers court proceedings to verify the alleged intellectual property right infringement. This article will review border detention proceedings in the European Union and will advise as to the dos and don'ts.

In the 1980s, Texas Instruments and, somewhat later, IBM showed that it is possible for a company with a strong patent portfolio to reap large added rents for their sunk R&D costs through patent assertion and licensing. Seeing this opportunity, enterprises and universities throughout the world have tried to emulate those trailblazers and somehow monetize their patent portfolios profitably. In spite of reports of astonishing settlements and awards for patent infringement, however, the great majority of patentees have been disappointed. So-called "patent trolls"—accumulators of large numbers of third party patents—have arisen to attempt to remedy this problem with the business model of monetizing by sale, licensing or litigation patents obtained by others while extracting hopefully substantial transaction fees in the process. An important if less well appreciated licensing opportunity can be found in patents that may read on standards. Following a discussion of where such patents fit into patent portfolio management, we will then review the challenges facing patentees looking for standards based licensing revenue.

On June 9, 2008, the U.S. Supreme Court rendered a much awaited decision (the "Quanta decision") which clarified the uncertainty surrounding the application of the doctrine of patent exhaustion in the United States (which essentially provides that "a patented item's initial authorized sale terminates all patent rights to that item"2) by essentially removing the ability of patent owners to limit the authorized sales of products embodying their inventions. In order to reach such a conclusion, the Court reaffirmed the 150 year old longstanding exhaustion doctrine and its essential role in maintaining competition in the market place. Despite the Federal Circuit's recent precedent limiting the scope of the exhaustion doctrine and extending the patent owner's power to control the use of the product after the first sale,3 the Supreme Court—evoking the risk that patent drafters try to evade exhaustion by drafting method claims—also ruled that exhaustion extended to method patents by the sale of an article that embodied the method.

There is something inherently comforting and yet bewildering in the cyclical flux of the seasons.

Sixty+ university spinouts in three years. Ninetyfour percent still alive. Lowest cost per spinout in the U.S. The "book" on successful technology transfer is to find multiple ways to substitute bottom-up entrepreneurial approaches for top-down bureaucratic mechanisms. However, few programs successfully manage the transition to entrepreneurial mode. How did they succeed where so many do not?

Innovations and patents make important contributions towards corporate success. A survey on the top 500 patent applicants of the European Patent Office on behalf of PricewaterhouseCoopers conducted by the Institute of Technology Management at the University of St.Gallen, Switzerland and its innovation and intellectual property management advisory spin off BGW reveals the status quo of valuation procedures and methods.

There have been some significant damage awards in patent and trademark litigations over the last twenty years. The largest patent damage award to this date is the 1990 award in Polariod Corporation v. Eastman Kodak Company, which was for more than $900 million.1 The largest trademark award is the 2005 award in Philip Morris USA, Inc. v. Otamedia, Ltd., which was for more than $170 million. The other significant trademark awards since 1990 include Qwest Communications International, Inc. v. OneQwest, LLC; Adidas America, Inc. v. Payless Shoesource, Inc., and Electro-Biology, Inc. v. Orthofix, Ltd.

Software based intellectual assets are known in the computer industry as the software inventory. This software inventory could be considered to include both Intellectual Property (IP) and Intellectual Assets (IA). Like Vertex of Canada one could consider traditional IP to comprise just patents, trademarks, copyrights and industrial design registrations because these four Intellectual Properties have legislation to protect the legal owners in the disclosure of these assets.1 Non disclosed Intellectual Assets (IA) in the software inventory then could be considered to include trade secrets, unpublished copyrights, and know-how or the codified, tangible descriptions of specific knowledge which a business uses to support commercialization. Although Canada does not have specific laws that apply specifically to trade secrets, U.S. state jurisdictions do.2 Trade secrets, unpublished copyrights, and know-how are those software inventory assets that contain valuable proprietary information that belongs exclusively to the business, and which is used in the business to provide economic or competitive advantage. Many proprietary software vendors consider trade secrets to include unpatented inventions, formulas, processes, devices, patterns, designs, design drawings, source code, customer databases, and internal operations manuals. However, in the open source world, disclosure of the source code is covered by copyright protection.

Although the stated emphasis of this book is trade secret litigation, it is an excellent resource for the non-litigation lawyer, as well as individuals charged with managing their company's trade secrets. It is a very readable book with many checklists and sample forms.

Volume XLIV No. 1

This paper is the fifth report of the Annual Survey conducted by the LES Licensing Foundation. As in prior years, the survey was conducted by an online questionnaire of the membership of LES (USA & Canada). The data were obtained primarily in April/May 2008, and refer to the period 2007. Two related but distinct survey questionnaires were used, one for Technology Creators/Users (i.e. buyers or sellers, licensors or licensees), and one for Professional Service Providers (law firms and consultants).

In financially and economically unstable times, when stock markets become rollercoasters, apparent safe-havens such as mortgage lenders or re-insurance companies tumble and fall like cardboard houses, and economies across the world are on the brink of falling into deep recessions, it is natural for humans to search for comfort and stability in other realms of life. While nature, our bodies and the societies we have created operate in cycles, which occasionally lead to both positive and adverse extremes, there is a component of human evolution that has been remarkably strong and consistent in its upward pursuit: Technology. While due to the daunting demographic developments in many countries there are dark clouds of doubt about personal and national wealth progression, very few people would seriously question whether the world of tomorrow will be more technologically advanced. In this light, it is worth exploring where technological innovations originate from and how companies can develop promising R&D relationships.

The focus of this article is on the compensation terms in technology license agreements. Specially discussed are royalty rates and upfront license fees.

Many readers of les Nouvelles are expert in some aspects of licensing technologies. Patents are the focus for most of these readers, but all are aware that know-how has value too, and is part of the property owned by clients and employers. We propose here a process to address this missing piece in Intellectual Asset management.

After the revised version of the Berlin Contract "Building Blocks" was presented here recently (les Nouvelles 2008, 142 et seqq), a further step can be reported today in Germany which ensures parties to industry/university cooperation agreements (or research facilities) enjoy greater legal certainty. The Council for Innovations, housed within the Federal Chancellery, acting in a sub-working group commissioned a committee of experts to carry out the drafting of complete model contracts for all essential variations of agreement between universities and their industrial partners in the field of research. The results of their work comprise the four model contracts to be discussed here. They are a model contract for a research cooperation agreement, two varieties (one with assignment of intellectual property rights, one with licence of intellectual property rights) for research projects and a so-called contract for work and services.

Legal aspects influence patent valuation. Scrutinizing these legal aspects is generally termed patent due diligence (DD). In case DD is omitted, legal uncertainty remains. Speaking in financial terms, uncertainty leads to discounting. We will derive the mathematical framework and discount values that are to be used in patent valuation under these circumstances. The message is: Use either discount values or DD. Taking this into account yields interesting results also for the planning of DD, where legal certainty to be achieved can be optimized under budgetary restrictions

The Law on Modernization of the Economy (LME) was published on August 4, 2008 under N° 2008-776. This Law comprises four chapters, respectively aimed at promoting the development of small and medium-sized enterprises, enhancing competition, increasing the appeal of the French economy, and improving financing.

From the beginning, the partnership between Los Alamos National Laboratory (LANL) and Chevron Advanced Energy Technology has been unique. Both partners saw numerous ways in which they could work together to help Chevron solve some of the most troublesome and common problems of the oil and gas industry, while addressing U.S. energy security concerns. With an initial project in place in 2003 (LANL's wireless communication technology INFICOMM), the parties agreed to further the relationship with an alliance, the Alliance for Advanced Energy Solutions. Through the Alliance, LANL's Technology Transfer Division found a way to expedite the projects between the parties using an umbrella Cooperative Research and Development Agreement (CRADA). The umbrella CRADA is a particularly effective means to streamline approvals and coordinate large numbers of projects with a single partner. Because the umbrella CRADA sets the overall contractual terms of interaction including protection of proprietary information and rights for licensing of intellectual property, the Alliance is able to focus more effectively on identifying, defining, and executing technical programs. Since the Alliance agreement was signed in 2004, LANL and Chevron have started 15 projects together with more projects in development. For more information on the Alliance see: http://www.techcommjournal.com/ archive.php?articleID=35.

As companies seek new streams of profit from their intellectual property (IP), commercializing and licensing IP assets has become an important global business model. Technology is increasingly protected on an international level, such as through the PCT or the EPO for instance. With the multiplication of international IP transactions, the number of IP-related disputes has likewise grown.

Under the Declaratory Judgment Act, potential infringers can file lawsuits against patent owners to determine whether their present actions constitute infringement. Potential infringers thus have an opportunity to have a court rule on a matter when a patent owner threatens, but does not file, an infringement lawsuit. However, since federal courts may only issue declaratory judgments in cases involving "actual controversies," potential infringers may not bring a declaratory judgment action regarding some speculative future activity. As noted by the Supreme Court in MedImmune Inc. v. Genetech, Inc., the proper question for jurisdiction in declaratory judgment actions is whether the facts, as stated in the plaintiff's complaint, show there is a "substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."