Technology TransferTechnology TransferPracticePractice

Ken Porter Steamboat Mountain Solutions

copyright 2011all rights reserved

Overview

Invention Management Process• Idea Submission• Evaluation• Patent Prosecution• Marketing• Negotiation and Licensing

Resources and SupportStart-up Companies

New IDF

Evaluation

Hold or release

Go/No GoNPV > 0

Patent Filing and

ProsecutionMarketing

Market Interest

Valuation and

Negotiation

Manage License

Agreement Executed

Process from Invention Disclosure to License

Patent Milestone

Go

No-go

Hold or release

No

Yes

Yes

No

InvestNPV > 0

No

Yes

Invention Management Process Overview

Invention Timeline: Conception to Patent Protection pat app is a resource allocation tool

Priority 12 30 Date months months

ProvisionalPatent

File US PatentFile PCT

PCT NationalPhase

Invention Disclosure Form (IDF)

ProvisionalPatent

Marketing and Patenting Licensing

$10 3 $10 5

Observation Hypothesis Prediction Experimentation

Research

TTO

PTO

INVENTION

$10 4

EPO & US Patent Timeline

Key Process Steps

1

4

2

5

3

Idea Submission

Evaluation

Patent Prosecution

Marketing

Negotiation and Licensing

Inventor Idea SubmissionRoutinely discuss questions informally by phone or in

person prior to a first time submission – encourage early dialog

Inventors describe invention on a standard invention disclosure form (IDF)When should inventors disclose an invention?

An idea has been reduced to practice that has an industrial application

Form is available on the Protto website

1

Evaluation

An invention’s value includes 3 components:

Scientific value and/or technical merit Elucidation of concepts not previously recognized

Patent value The likelihood of securing valuable and defensible claims

Commercial value The feasibility/likelihood that a technology can be turned

into a differentiable, marketable product and a licensee secured

2

EvaluationKeys to evaluation1. Invention assessment

What is it? Describe the invention How is it better compared to what is available today or

anticipated by prior art? How can application of this technology result in a

differentiable product offering for a potential licensee?

2. Market assessment Who is the target market How large is the market

Is it an incremental improvement or disruptive technology?

Industry interest – phone and personal interviews with knowledgeable industry representatives

2

3. Patent assessment Novelty Non-obviousness Usefulness Predict key claims

Determine support for the claims enabled, i.e., experimental evidence

Evaluate the patent landscape and freedom to operate Based on the anticipated claims

Anticipate obviousness challenges An unexpected result? Success where others have failed?

2

EvaluationPatent Assessment Tools

Google Scholar Scientific literature

USPTO Issued patents Published Patent Applications PAIR

European Patent Office WIPO

Automated patent classification tool

2

Invention requires:• Conception – formulation in the mind of the

inventor• Reduction to practice

– Creation of the invention (demonstrate how to make it)– Testing or validation (explain how it works)

Patentable invention must be, under title 35 US Code:

Useful §101 Novel §102 Non-obvious §103

In view of Prior ArtPrior art is anything published or publicly disclosed before the

date of invention, including combinationsRecently in KSR v. Teleflex the Supreme Court raised the bar for

nonobviousness, i.e., chapter 35 section 103 no longer relies on TSM (teaching-suggestion-motivation), which increases the likelihood that hindsight may creep into decisions

EvaluationGo/No Go decision made by positive patent and

economic analyses (net present value, NPV)If a Go, most often the next step is filing a US

provisional patent applicationIP can also be protected by copyright, trade secrets

or trademarks For a positive NPV Go decision, a partnership with a

patent attorney can lower costs, and therefore lower the financial hurdle

2

Go or no-go

Patent Prosecution

Hire a patent attorney Sign engagement letter or contract

Provide key background information (enhances quality and reduces legal fees)Invention Disclosure FormInventor technical descriptionInvention analysis form and checklist Patent search results form

3

Patent ProsecutionPatent application draft is prepared for review by

manager and inventors Comments, corrections and revisions are relayed to the

patent attorney, often via conference callFinal application draft is prepared based on the agreed

revisionsFinal application is reviewedPatent application is filed

Key to minimizing expenses is to provide a thorough review of the initial draft and avoid multiple revision-review cycles

3

Marketing Success depends on a deep understanding of the context of the technology

Identify marketing targets (right companies)Prepare key marketing and technology facts (right

message)Inventor(s) participate as technology expertsRight tools and methods

Non-confidential marketing brochurePersonal contact (calls and e-mails)Meeting postersWebsite

4

Strategic Growth InitiativesStrategic Growth Initiatives

5 = Most attractive growth segment, 1 = least attractive growth segment

Market D. Market C.

Market A. Market B.

Product Extensions

OtherAncillaryProducts

NextGeneration Of Market A.

Advanced Technology for Market A.

New & Line Extensions

MinimalNew Products

CostReductions

CostControl

New Products

OtherAncillaryProducts

*****

***

**

*

4

Companies will tend to pursue new products in segments where there is significant growth potential and strategic interest

Marketing

Sources of marketing leads Inventor contacts Industry analysis Professional organizations Personal contacts Current clients Industry studies Industry databases Google and Industry Websites

4

Negotiation and Licensing

Preparation before contact Research companies in detailUnderstand overall market and competitive technology

optionsSurvey comparable deals (SEC EDGAR database)Understand technology value

published deals industry norms 25% rule

5

Negotiation and Licensing

Initial contact and discussionCDA executed, if necessaryThree levels of commitment:

Letter of Intent Option Agreement Patent License Agreement (PLA)

5

5Negotiation and LicensingDue diligence requests

What do you intend to do with the technology? Product development plan (PDP)

What is a fair royalty? – or – What is the deal worth? Pro-forma product level income statement

Draft Term Sheet: Royalty rate Quarterly maintenance fee Milestones and due dates Minimum royalty Sales milestones Others as appropriate

5Negotiation and Licensing

Memorialize financial terms and due diligence obligations in a Term Sheet

Once Term Sheet is agreed upon, then negotiate other legal issues, responsibilities and restrictions

The Term Sheet can become the 1st part a two-part Patent License AgreementThe contract comprises the Term Sheet, a preamble and

a signature page at the end, to which is attachedThe Terms and Conditions, which specify the definitions,

License Grant, confidentiality and publication rights, etc.

Resources and Support

Proof of Concept Funding OverviewShort research projects to confirm proof-of-concept Purpose is to accelerate commercialization efforts and

execute a license agreement Effective projects can accomplished on very small

budgets, but should be completed in 6 months or less Proposals must include concrete objectives and

milestones

Start-upsPursue when start-up is the best option for

commercialization, which is often the case for disruptive technology

Link inventors to a network of entrepreneurs, financiers, and experienced managers

Key Requirements to be in place prior to licenseBusiness planCOI management plan, for facultyFinance plan, access to capitalManagement team