Monday, March 19, 2007

Joint LES & Oregon Bioscience Assocation Meeting March 2007

by Doug Pollack

This past week, there was a joint meeting between the Oregon Bioscience Association and the Licensing Executives Society Oregon/SW Washington Chapter. The presentation was structured as a "mock negotation" over a hypothetical negotiation of license terms for a new medical device.

Sandy Shotwell of Alta Biomedical and Keith Jones from the Washington State University Research Foundation represented the licensor's interests, while John Villa from HP and Mike Cohen a lawyer from Schwabe, Williamson & Wyatt represented the interests of the licensee.

The entire video of the presentation/negotiation, which runs around 40 minutes, is available to be viewed by clicking below.

It was most helpful that the participants handed out a draft terms sheet for the license agreement, illustrating the general areas and some example levels for royalties, prepaids, minimums, and the like.

The licensors noted that a key requirement for them in the agreement is some limitation on exclusivity, so that the university does not have its "academic freedom compromised". Notwithstanding this, the university also requires the licensee to assume all liabilities for using the IP. They also indicated that it is typical to provide for some reserved rights -- for instance for federal use (especially if the research was funded with federal dollars), non-profits, or for humanitarian purposes. They noted however, that the licensee will typically be averse to enables the licensor access to improvements that they may make to the technology.

HP indicated that they will typically request a very broad grant (all fields of use, worldwide, for use in all products), and that they will also prefer that their is a low initial entry fee for the license with some sharing of profits on the backend of the agreement once products based on the IP are in the market. They also indicated that they will typically like to negotiate sublicensing rights, since they may not have a good sense of whether a particular technology will be central or tangential to strategic product efforts in the future.

The licensee lastly indicated that they typically would negotiate the agreement term to persist for the life of the patents. This lines up with them paying royalties for the period of time for which value is being provided by the IP. The exception to this is if the licensor is providing "know how" that provides for more longstanding value and benefit to the licensee past the life of the patents.