First Publication Date: 6th December 2010
Licensing is one of the important ways by which companies generate revenue from their patents. Assignment or licensing is the only way by which many dedicated research firms, that develop a portfolio of patents through focussed research make money. For many knowledge driven companies patents add value by providing competitive advantage or business advantage through exclusivity. Decision with respect to investments in R and D are made by most companies based on possibilities of patent acquisition. On the other hand, Universities and Government Institutes generally protect some of the inventions created from research and their primary research focus is not on patent protection.
Patent licensing is a well developed field in USA, Europe and other developed countries. Though Companies and Universities in India are today keen on licensing their patents, the infrastructure and resources to enable the same are lacking. Business development amd marketing personnel, R and D personnel and patent agents are today trying to play the role of licensing specialists. As licensing patents requires a blend of technology, management and legal expertise, most licensing efforts either take too long or fail. One of the reasons for the failure is incapability to sense licensing opportunities.
Popular belief among many companies and universities in India that a granted patent means everything for acquiring a license misleads their decision making. It must be noted that patent grant or application is just the beginning of a licensing effort. Licensing a patent often requires more time, effort and money than what is required for getting a patent grant.
A typical licensing transaction includes the following steps:
a. Identifying patents that are capable of being licensed;
b. Validating the patents for strength;
c. Forming a portfolio of patents, if possible;
d. Carrying out a patent valuation;
e. Identifying and contacting potential licensees;
f. Negotiating a deal with interested licensees; and
g. Drafting and executing a license agreement.
In order to sense licensing opportunities, an organisation must take the first five steps. After identifying patents to be licensed based on an internal business decision, the organisation must ascertain if the patent(s) sought to be licensed are strong in the light of existing patents in the field. This is generally done by carrying out a patent mapping or landscaping exercise. A group of patents are easily licensable than a single patent unless it is a base patent that has opened the roads for a new technology. Patents belonging to the same area may be grouped from among the organisation’s patents or by collaborating with or acquiring patent from other patent owners. Thereafter, it is important to carry out valuation in order to understand the monetary value of the patent(s). This will set the basis for financial expectations from the patent)s). The final step then would be to identify potential licensees and contact them.
The licensability of a patent may fall at any of the steps. Lack of patent strength, Low monetary or lack of interest in licensees may foil the licensing efforts. In addition to sensing licensing opportunities, the afore-mentioned steps will play an important role if the patent is licensable during the process of negotiation.
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Sensing Licensing Opportunities
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