Gilbert Nicolaon Kiev June 10, 2008 Patenting…or not ? Gilbert Nicolaon Kiev June 10, 2008

A « recent » issue 1980 :The « Turning Point » : For Universities and not for profit organizations protection of Intellectual Property was not an issue until the late 70s 1980 :The « Turning Point » : The Baye-Dole Act.

The « turning » point The Baye-Dole Act (1980) A Major change in I.P.rights in the U.S. Before : No interest from public institutions (Patenting was even a « bad » point for academic scientists) After : I.P. is a source of revenues

The « turning » point : WHY ? Late 70s in the U.S. : The perception of Science is changing Inflation is very high Unemployment is increasing Competitiveness is decreasing ?

A « Radical » change Before : I.P. is owned by U.S. Gvt. After : Univ. can own I.P. rights (Gvt has some preferential rights to license) I.P. becomes a profit center

To make legislations more flexible A « recent » issue U.S. Baye-Bole Act 1980 Europe More recently (90s) A political issue Over regulation (90s) Recent trend all over the world: To make legislations more flexible

Governments and I.P.R. Legal incentives to patent their inventions Numerous incentives to encourage researchers to protect (and “exploit”) their R&D results Legal incentives to patent their inventions Financial incentives Assistance to patent

Two « Very » basic questions Is it « patentable » ? Is it worth patenting ?

Is it worth patenting ? Who will exploit the patent ? An industrial licensee A start up created to do it The RDI itself …… Will the owner be able to ? : Technically detect counterfeiters Financially sue counterfeiters Two « major » questions?

Patent writing Who should write the patent ? A patent is a legal document A scientist usually does not have the legal expertise. when a scientist writes a patent it is usually : Too « technical » Too detailed Too « narrow » ……A specialist of patent law

The owner is usually a Gvt. Organization Patent ownership Who should own the patent ? Writing, filing, extending abroad, and maintaining a patent is expensive. Few patents generate significant royalties Usually scientists do not have the financial capability to support these costs. The owner is usually a Gvt. Organization BUT….

Many organizations have a : « Royalty sharing policy » Patent ownership ….If a patent generates financial revenues…. The inventor(s) should be financially rewarded (financial reward is a strong incentive) Many organizations have a : « Royalty sharing policy »

Royalties sharing + Subtract Patent cost Subtract administrative cost Beneficiaries : Inventor for personal use Inventor’s laboratory For R&D University or RDI for R&D

Royalties sharing : Stanford U. Inventor for personal use 33.3% Inventor’s dept. For R&D Inventor’s school for R&D

Royalties sharing : Harvard U. Up to $ 50000 Net royalties Over $ 50000 Inventor for personal use 35% 25% To support inventor’s R&D 15% 20% To inventor’s Dept. To Dean for academic R&D To President for acad. R&D

Patenting and licensing Patenting protects an idea having some potential for applications BUT Patenting itself does not generates revenue Few patents from public R&D do reach the market and generate income

Patenting and licensing Having a patent is… …USELESS ! Unless it is successfully licensed AND… it does generate financial revenues

Ex.: The French public labs Year Nb. of Patents 1995 300 1998 400 2001 500 2004 700

Ex.: The French public labs 1997: Strong incentives to patent A large increase in Nb. of Patents It almost doubled within 10 years BUT No increase in royalties revenues Royalties revenues are almost constant Approximately 150M€/year

Patenting and Licensing How to generate revenues from a patent ? To create a start up To license the invention to an industrialist + To sue counterfeiters

Exclusive license ? Or Exclusive Non exclusive An important question (Licensing Know how)

Royalties, Royalties, Royalties….! Learned from experience : During the negotiation of a licensing agreement the most discussed topic is : the level of Royalties. This is only one of the issues…and it may not be the most important one ! Also learned from experience : Making money from licensing takes time Very successful licenses are not very numerous

An example : The French C.N.R.S. The French basic research institute : 25000 employees 12000 Scientists 3000 M€ annual budget More than 1200 patents More than 500 Licenses 47.5 M€ Royalties (2003)

Royalties 2003 C.N.R.S. Royalties Nb. Of licences More than 7.5 M€ 1 750 K€ to 7.5 M€ 150 K€ to 750 K€ 4 75 K€ to 150 K€ 7 7.5 K€ to 75 K€ 62 Less than 7.5 K€ 83

Royalties 2003 C.N.R.S. Nature Amount Royalties 47.5 M€ I.P.R. cost To inventors 12.1 M€ To laboratories 15.5 M€ Approx. no of labs concerned 95

An example : American U. A « slow » learning process 10 years before the first significant revenues were collected Today IPR is a revenue center for many U.

A slow learning process Year Royalties for the Nb. 1 Univ. (Millions U.S. $) 1995 15 1996 38 1997 46 1998 61 1999 89 2000 138 2004 110

Conclusion 1980 the Baye-Dole Act A radical change in IPR policy Spreading all over the world An irreversible trend

Thank you for your attention Gilbert Nicolaon Win.tech@club-internet.fr