Technology Transfer Practice Ken Porter Steamboat Mountain Solutions copyright 2011 all rights reserved

Overview Invention Management Process Resources and Support Idea Submission Evaluation Patent Prosecution Marketing Negotiation and Licensing Resources and Support Start-up Companies

Patent Filing and Prosecution Process from Invention Disclosure to License Invention Management Process Overview New IDF Hold or release No Marketing Patent Filing and Prosecution Evaluation Go/No Go NPV > 0 Go Market Interest No-go Yes Yes Hold or release Valuation and Negotiation Invest NPV > 0 No Patent Milestone Agreement Executed No Yes Manage License

Invention Disclosure Form (IDF) Invention Timeline: Conception to Patent Protection pat app is a resource allocation tool $10 3 $10 4 $10 5 PTO Provisional Patent File US Patent File PCT PCT National Phase Priority 12 30 Date months months TTO Invention Disclosure Form (IDF) Provisional Patent Marketing and Patenting Licensing Research Observation Hypothesis Prediction Experimentation INVENTION

EPO & US Patent Timeline

Key Process Steps 1 2 3 4 5 Idea Submission Evaluation Patent Prosecution 4 Marketing 5 Negotiation and Licensing

Inventor Idea Submission 1 Inventor Idea Submission Routinely 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

Evaluation 2 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

Evaluation 2 Keys to evaluation 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? 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 9

2 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?

Evaluation 2 Patent Assessment Tools Google Scholar USPTO Scientific literature USPTO Issued patents Published Patent Applications PAIR European Patent Office WIPO Automated patent classification tool

Conception – formulation in the mind of the inventor 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 Art Prior art is anything published or publicly disclosed before the date of invention, including combinations Recently 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

Evaluation 2 Go/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 application IP 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 Go or no-go

Patent Prosecution 3 Hire a patent attorney Sign engagement letter or contract Provide key background information (enhances quality and reduces legal fees) Invention Disclosure Form Inventor technical description Invention analysis form and checklist Patent search results form

Patent Prosecution 3 Patent application draft is prepared for review by manager and inventors Comments, corrections and revisions are relayed to the patent attorney, often via conference call Final application draft is prepared based on the agreed revisions Final application is reviewed Patent application is filed Key to minimizing expenses is to provide a thorough review of the initial draft and avoid multiple revision-review cycles

4 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 experts Right tools and methods Non-confidential marketing brochure Personal contact (calls and e-mails) Meeting posters Website

***** ** *** * 4 Strategic Growth Initiatives Market D. Market C. Market A. Market B. Product Extensions Other Ancillary Products Next Generation Of Market A. Advanced Technology for Market A. New & Line Minimal New Products Cost Reductions Control New ***** *** ** * Companies will tend to pursue new products in segments where there is significant growth potential and strategic interest 5 = Most attractive growth segment, 1 = least attractive growth segment

Marketing 4 Sources of marketing leads Inventor contacts Industry analysis Professional organizations Personal contacts Current clients Industry studies Industry databases Google and Industry Websites

Negotiation and Licensing 5 Preparation before contact Research companies in detail Understand overall market and competitive technology options Survey comparable deals (SEC EDGAR database) Understand technology value published deals industry norms 25% rule

Negotiation and Licensing 5 Initial contact and discussion CDA executed, if necessary Three levels of commitment: Letter of Intent Option Agreement Patent License Agreement (PLA)

Negotiation and Licensing 5 Due 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 21

Negotiation and Licensing 5 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 Agreement The contract comprises the Term Sheet, a preamble and a signature page at the end, to which is attached The Terms and Conditions, which specify the definitions, License Grant, confidentiality and publication rights, etc.

Resources and Support Proof of Concept Funding Overview Short 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-ups Pursue 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 license Business plan COI management plan, for faculty Finance plan, access to capital Management team