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6 November 2002 Areas of Potential Disputes: the Venture Capital Perspective Francesco De Rubertis, PhD General Partner, Index Ventures WIPO Conference on Dispute Resolution in International Science and Technology Collaboration, Geneva April 25-26, 2005
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6 November 2002 Index Ventures Among European largest Venture Capital firms (ca. 1bUSD under-management) Geneva and London location Only Institutional Money
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6 November 2002 Framing the Start Up scene Actors within start up companies Founding scientists (publications) Concerned Universities (IP-income) Entrepreneur (glory and money) Venture backers (money and glory)
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6 November 2002 Unique situation of start up companies At very early stage, for the first years of life of the Company, the Venture Capitalists exerts a control position in the Company, both because of contractual agreements and because of the dependence of the Company’s survival on their investments
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6 November 2002 Assets of start up companies IP-related transactions and agreements Licenses Employment contracts IP positions Patent applications Trademarks
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6 November 2002 Due Diligence ahead of investment Total cost ca. 75-100k EUR 60-70% of total cost is legal bill (ca. 40-70k EUR) IP deals, transfers Assignment of IP rights and co-ownership issues Enforceability of IP, novelty Freedom to Operate Applicable law (R&D or HQ location, IP depot…)
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6 November 2002 Risk-mitigating approaches Move Top-COs to other countries Ownership vs licensing IPR, when possible Integrated IP and product analysis Relevance of third party claims IP interference on likely future product Business-driven focus on key claims Due diligence with lawyers from multiple jurisdictions
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6 November 2002 Standard Terms (general) Veto power on major decisions Joint decision power with the other major stakeholders Representation and Warranties Indemnification clauses
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6 November 2002 The role of arbitration and mediation Start up environment killed by uncertainty More than direct financial cost is “opportunity cost” on the upside that can impair Start up growth Speed of decision correlates with survival
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