Unconventional Financing of Intellectual Property: Patent Donations Varda N. Main Associate...
-
Upload
solomon-peters -
Category
Documents
-
view
218 -
download
0
Transcript of Unconventional Financing of Intellectual Property: Patent Donations Varda N. Main Associate...
Unconventional Financing of Intellectual Property: Patent
Donations
Varda N. MainAssociate Director, Intellectual Property
Rochester Institute of Technology
LES 2001 Annual Meeting
V.N. Main – RIT – LES 2001 Annual Meeting
What’s driving unconventional financing of IP?
Increasing importance of realizing shareholder value from ALL assets
V.N. Main – RIT – LES 2001 Annual Meeting
Means of Leveraging IP
Direct sale Use in product/service Expect to use in future product/service License out Depreciate asset Donate to a not-for profit Dedicate to the public
V.N. Main – RIT – LES 2001 Annual Meeting
When to Consider Donating Patents
Technology is not being used in a product or service
Technology is not expected to be used by the company in future
Licensing revenues do not (or would not) realize sufficient ROI
Technology status after M&A activity
V.N. Main – RIT – LES 2001 Annual Meeting
Patent Donor Eligibility
Company must be profitable Company must have tax liability An independent party must conduct an IP
valuation within 3-6 months Technology must be viable
V.N. Main – RIT – LES 2001 Annual Meeting
Intended Use by Not-for-Profit
Fit with existing research programs Complements existing IP portfolio Recipient must take undivided interest in
donated patent Recipient must use the donated patent in
accordance with its NFP status
V.N. Main – RIT – LES 2001 Annual Meeting
Decision Considerations for IP Donor
Perform due diligence to ensure– Not using the IP– Don’t intend to use the IP– Understand any encumbrances on the IP– Understand status of patent protection
V.N. Main – RIT – LES 2001 Annual Meeting
Donor Benefit
Corporate benefit = (Effective tax rate of corporation)(IP valuation) – (Costs of donation process)
V.N. Main – RIT – LES 2001 Annual Meeting
Valuation of IP
The fair market value of the patents to be donated must be established by an independent third party– Experienced in such valuations– Conducted typically within 3-6 months of execution
of donation agreement
V.N. Main – RIT – LES 2001 Annual Meeting
Benefits to Patent Donor
Tax write-off based on estimation of fair market value Establish closer ties with faculty and students
– Prospective future employees Enhance company image
– In the community– With the university
Enhanced ROI Alternate source of funds for technology development Release from payment of future maintenance fees
V.N. Main – RIT – LES 2001 Annual Meeting
Decision Considerations for NFP
Fit with current research areas Finding a technical champion Projected future patent expenses
– Prosecution– Maintenance
Expectation for revenue streams:– Licenses– Grants– Contracts– Sponsored Research
V.N. Main – RIT – LES 2001 Annual Meeting
US Patent Maintenance Fees
Year Large Entity Fee ($) Small Entity Fee ($)
3.5 880 440
7.5 2020 1010
11.5 3100 1550
V.N. Main – RIT – LES 2001 Annual Meeting
Benefits to Recipient
Additional technology in IP portfolio Complementary IP to existing IP Enhanced relationship with patent donor Potential source of research funds, equipment
and technical consulting Prospect for enhanced revenue streams
through technology transfer
V.N. Main – RIT – LES 2001 Annual Meeting
Who Approaches Whom?
Company >>> university University >>> company Local economic development organization >>>
company >>> university
V.N. Main – RIT – LES 2001 Annual Meeting
Soliciting Recipients
Donor may choose to solicit recipient candidates– Establish bid process– Selection criteria– Typically require proposal from candidates
V.N. Main – RIT – LES 2001 Annual Meeting
Recipient Candidates
Universities NFP research institutions Think tanks Federal, State and Local technology transfer
centers
V.N. Main – RIT – LES 2001 Annual Meeting
What to Look for in a Recipient
Technically qualified On-going research in the field Proven ability to bring technologies to the
marketplace; specifically in that field Existence of a technical champion at the
recipient organization
V.N. Main – RIT – LES 2001 Annual Meeting
Parallel Donation
In conjunction with donation of patents there can be parallel donations of:– Know-how– Show-how– Equipment– Trademarks– Copyright
V.N. Main – RIT – LES 2001 Annual Meeting
Donation Agreement
Resources to be provided by donor– Help with patent preparation, prosecution and
enforcement– Payment of maintenance fees for limited period– Provision of funds for technology development,
equipment and personnel at recipient
V.N. Main – RIT – LES 2001 Annual Meeting
Donation Agreement
Resources to be provided by recipient– Commitment to maintain patent for specified period– Agreement to assume/honor existing
licenses/options– Indemnification of donor– Commitment to seek licensees– On-going research program