Exploitation strategies of IP Rights deriving from H2020 projects Dr. Eugene Sweeney Oxford 11th/12th September 2014 Get your ticket to innovation. Understand the landscape Strategic Intelligence to develop a strategy and plan WP and Call Challenges, Objectives & Topics Research Competitors Technology Standards Regulations Related Research Industry Competitors Market Factors SOTA IP & Oxford, September 2014 1
Recap Gather data and information, in order to.. Understand the landscape (, technology, market, competitor, commercial, etc.), which we then.. Analyse to obtain strategic intelligence, to allow us to.. Plan to develop new creations/inventions/ideas, and Implement management structures and procedures to capture, protect, manage and exploit the results Capturing the IP is just the start! Exploitation.. Assessing research outputs and opportunities Strategies and business models Case studies Oxford, September 2014 2
Basic Research Basic invention Lab demo/ Proof of Concept Working prototype/ Market acceptance Scale-up validated Market Ready Market Deployment Exploitation Strategies Exploitation Practical issues to address How far down TRL road to go? Is further development needed? Do you need to licence in 3 rd party components, etc? Is more investment needed? what for how much where from? Technology Readiness Level (TRL) 1 2 3 4 5 6 7 8 9 Prepare a draft business plan or investment proposition, if appropriate (with financials) Prepare a marketing (communication/dissemination) campaign to support exploitation Exploitation strategies and plans What and Why? Analysis of the market (market/competition/barriers/key targets, etc) Targeted exploitation opportunities and impacts for the proposed project results - with justification and positioning How? Exploitation Strategy (e.g. further development, open platform, by region, by field of use, standards, regulatory, etc., etc.) Commercialisation vehicle(s) (e.g. licensing, spin-out, JV, etc) Funding/Investment required? When and how? (Proof of concept, preseed, seed, etc..) Draft financial projections Oxford, September 2014 3
Assessing the research results picking the winners! STOP Who should judge? Inventor Licensing Professional Patent Attorney Accountant External Consultant R&D Marketing Consumer Oxford, September 2014 4
Market Assessment The challenge of assessing future markets for new technologies is to:- determine the demand for products that don t yet exist from customers who don t yet know about them Prediction is difficult, especially when it s about the future Niels Bohr (Nobel Prize winner) Everyone makes mistakes... The phonograph.is not of any commercial value Thomas Edison, c1880 Heavier-than-air flying machines are impossible Professor Lord Kelvin, c 1895 I think there is a world market for about five computers Tom Watson, IBM, 1943 There is no reason for any individual to have a computer in their home Ken Olson, DEC, 1977 Oxford, September 2014 5
The Benefits of Hindsight Significant emerging technologies are easily seen after the fact, and companies are then congratulated or castigated for their decisions to pursue them or ignore them. But rarely are the winners clear at the outset Doering and Parayre, 2000 The Sony Experience Akio Morita on market research: Our plan is to lead the public with new products rather than ask them what products they want. The public does not know what is possible, but we do. Oxford, September 2014 6
People do not buy technology They buy goods and services that satisfy their needs and wants Evaluating new technologies and markets will always be difficult! Risk cannot be avoided - but they can be managed A structured approach and due diligence allows risks to be controlled Oxford, September 2014 7
Structured due diligence The systematic assessment of an invention and its commercial potential The strength and scope of the The nature of the technology Technology Transfer issues Support Issues Commercial Issues Market Sector Analysis Assessment To assess the potential strength and scope of IP Protection To assess opportunities to strengthen and broaden the IP Rights To assess potential barriers (freedom to use) To identify potential collaborators Oxford, September 2014 8
Technology Assessment Alternative technologies? New technology area? Completeness/status of the solution (lab, prototype, product)? Amount of development needed to take to market Standards or regulatory issues? Etc. Knowledge Transfer Assessment Support needed to transfer knowledge Support needed after transfer Any licensing or other restrictions How easy to monitor licensee and police infringers Etc. Oxford, September 2014 9
Inventor Support Assessment How cooperative are inventors? Fully cooperative Not at all cooperative Commercial experience of inventors Previous experience of supporting licensees First time Inventor personality Inventor reputation Motivation (to be an entrepreneur?) Commercial Opportunity Assessment Nature of market hot new market and technology area Prior art established, mature market players Locations global or local Can market be segmented geographically Fields of use Total market size Likely market share Royalty percentage estimates for licensing etc Oxford, September 2014 10
Summary Picking winners Evaluating new technologies and markets will always be difficult A structured approach and due diligence allows risks to be controlled Risk cannot be avoided - but they can be managed STOP Exploitation Strategies & Business models Oxford, September 2014 11
Idea to Innovation IP assessment Technical assessment IP Management Strategy Territories to target (and seek IP protection in) defence & enforcement Post-deal management Compliance/Royalty audits Exploitation Business & market assessment Exploitation Strategies Development, Marketing Improvements + Renegotiations Business model (Licensing, Company formation, etc) What s special about research results? Research results are often early stage (NOT market ready) Sometimes curiosity driven, sometimes needs driven Many research groups are working at the leading edge, so often only a partial solution Oxford, September 2014 12
Technology Readiness Levels Where are you starting from and where do you want to go? Invention value Basic Research Basic invention Lab demo/ Proof of Concept Working prototype/ Market acceptance Scale-up validated Market Ready Market Deployment Technology Readiness Level (TRL) 1 2 3 4 5 6 7 8 9 Intellectual Property research results A valuable asset which, like physical property, can be traded bought, sold or leased But, unlike physical property there are many more ways of extracting value Oxford, September 2014 13
Many Different Business Models Sale Licence Licence to a spin out Spin out Licensing Joint Venture Investment Joint venture Venture fund strategic alliance Increasing level of involvement Many different skills and resources needed for exploitation IP Management Market Analysis IP Analysis and Assessment Legal Licence Negotiation Company Formation Access to finance for further development Raising investment for spin-outs Entrepreneurial Management Sales and Marketing Oxford, September 2014 14
STOP Build the best offer Building the best offer What is the best technology transfer package? Can I improve it through partnering or acquisition? Oxford, September 2014 15
Bamboo Bike Method for Joining But the package is much more than just a patent.. Oxford, September 2014 16
The offer package includes: Patent in method of joining bamboo Design rights in safety certified frame, and some component parts Copyright in engineering drawings and manufacturing manuals Know-How (manufacturing techniques) Marks (trademarks, etc) Trade secrets And the transfer training STOP Build a better offer by working with others? Oxford, September 2014 17
2 + 2 > 4 Usually, you only have a piece of the jigsaw Combining IP/research outputs with others can enhance value and unlock the opportunity (clusters!) working with others can enhance value and unlock the opportunity HP Laser Printing The HP Laserjet, launched in 1984, was based on technology licensed in from Canon. Canon tried to enter the page printing market with the same technology but failed to catch HP, who had by then established their dominance in the market. 30 years later HP is still the market leader! HP shipped 12.6m units in 4Q13, Canon (no. 2) shipped 6.5m (source IDC, Feb 2014) Oxford, September 2014 18
STOP Choose the best exploitation route(s) What exploitation route? Sale? Start a new company? Licence to an existing company? Joint Venture? Further research? Oxford, September 2014 19
Sale? (Usually) only for granted patents Lower return than other routes No further involvement License or Start-up? Same commercial objectives different routes. Who is in the best position to productise and to bring the technology to market? Further development Trials Regulatory Oxford, September 2014 20
Licensing? Granting the right to use your property under certain agreed terms and conditions, such as Territory Field of use For a limited time For evaluation only Provided you do a good job with it! etc License or Start-up? Licensing relies on licensee having the expertise and resources Takes advantage of the expertise, resources and market know-how of companies already operating in the field. Can address different fields of use and geographical areas Company formation needs to acquire expertise and resources A critical mass of expertise (management, financial, sales, marketing, manufacturing, technical, administrative), and an committed and enthusiastic team Resources for developing, manufacturing and marketing can be very large, particularly if worldwide Oxford, September 2014 21
Licence or Start-up? Market & Technology Licence Established markets and suppliers Evolutionary/incremental technology The IP fits a gap in someone else s portfolio The IP is a one-off standalone invention Start-up/Spin-out New market for new suppliers Revolutionary or platform technology The IP can deliver a unique and independent business advantage There is a pipeline of potential products Licence or Start-up? Finance and return on investment Licence Low financial commitment Can have early returns Licensee might fund further R&D with inventors The inventors have no interest in a commercial role Start-up/Spin-out More capital more risk Returns take longer (via IPO or trade sale) Company will need to finance further R&D The inventors are interested in a commercial role Oxford, September 2014 22
STOP Financing Innovation Financing 3 main stages Financing early stage technologies to make ready for licence or sale Financing a start-up Financing a company for growth and exit by investors Oxford, September 2014 23
Risk vs Reward when to invest, and how much? High investment risk Low investment risk Early stage TRL 1-3 Market ready TRL 7-9 Investment depends on availability of cash, and motives of investor Financing Innovation Pre-seed and Seed Funding Objectives Market research Make investment ready Strengthen for licensing Proof of Concept Prototypes Sources Own funds Friends & Family Loans Business Angels Institution seed funds EC SME Instruments Oxford, September 2014 24
Financing Innovation Start-up Funding Objectives Set up company systems Early product development (making ready for market) PR, marketing and sales Sources Business Angels Institution seed funds Early stage venture funds Financing Innovation Growth & Consolidation Funding Objective Growth (Round 1) Build up early manufacturing and sales. To avoid risk of overtrading Consolidation (Round 2) Working capital to consolidate position Source Business Angels Venture funds Venture funds Oxford, September 2014 25
Financing Innovation Mezzanine & Exit Funding Objective Mezzanine Funding Expand profitable company not quite ready for IPO/sale Exit or Bridge Funding To prepare for IPO or trade sale Source Venture funds Venture funds STOP Summary Oxford, September 2014 26
Summary Exploitation strategies 1. Understand the landscapes (market, technology, IP, etc) 2. Know where you want to get to (TRL Level) 3. Build the most attractive offer by: building a portfolio of IP (i.e. not just patents!) working with others adding value through development changing market perceptions 4. Choose the most appropriate routes (licensing, start-up, JV, etc) 5. Understand what funding will be needed to reach your objectives Summary People do not buy technology They buy goods and services that satisfy their needs and wants It is about People not Technology Oxford, September 2014 27
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Union (2011-2014) Presentation produced by Dr. Eugene Sweeney, Iambic Innovation Ltd. June 2014 Credits istockphoto.com/maridav (slide 1) istockphoto.com/bliznetsov (slide 2) Iambic Innovation Ltd (slide 2,3,6,8,9,15,28,30.40,44,52) Oxford Brookes Universiy (slide 36,37,38) Disclaimer/Legal Notice The information and advice contained in this presentation is not intended to be comprehensive and attendants are advised to seek independent professional advice before acting upon them. The is not responsible for the consequences of errors or omissions herein enclosed. Re-use of information contained in this presenation for non-commercial purposes is authorised and free of charge, provided the source is acknowledged. The use of images other than in the mere reproduction of this presentation is prohibited. The is not responsible for any impact or adverse effects on third parties connected with the use or re-use made of the information contained in this presentation. The is managed by the Commission s Executive Agency for Small and Medium-sized Enterprises (EASME), with policy guidance provided by the Commission s Enterprise and Industry Directorate - General. Even though this leaflet has been developed with the financial support of the EU, the positions expressed are those of the authors and do not necessarily reflect the official opinion of EASME or the Commission. Please see our full disclaimer at www.iprhelpdesk.eu. Oxford, September 2014 29