Tag Archives: commercialisation

Steering Towards Success, The Bishop’s Way

IP (Patent) Licensing and Commercialization Case Study: Bishop Steering

Intellectual Property can be understood as creations of the mind such as inventions, expressions in the form of literary, artistic or other works of expression, symbols, names and images, etc. used in commerce. It can further be divided into Industrial Property or Copyright.[1] Patent as a part of Industrial Property, is an exclusive right granted for an invention – a product or process that provides a new way of doing something, or that offers a new technical solution to a problem[2].

According to 7 USCS § 178a, the term “commercialization” means “the stage in the development or advancement of a technology at which point private enterprise is willing to invest in a full-scale production facility[3]. Even though the definition is derived from US Agriculture Laws, the still be applied constructively and harmoniously with the intellectual property laws under question.

The most common means to attain commercialisation of an asset after sale is either by an assignment or a license. An analogy between a real property and an intellectual property can be drawn for both licensing and agreement. An assignment is “An assignment is a transfer or setting over of property, or of some right or interest therein, from one person to another denoting not only the act of transfer, but also the instrument by which it is effected[4].” This implies that there will be a complete transfer of ownership which may not be favourable. License, on the other hand, is defined under Black’s Law dictionary as “A permission, usually revocable, to commit some act that would otherwise be unlawful[5].” Licence of an Intellectual property can be compared with lease of a real property as ownership rights can be retained while granting the other remaining rights. A license provides the owner a better control over the asset as compares to an assignment.

Intellectual property is useful only when it is suitably exploited in the form of commercialisation by means of licensing. In order to elaborate the impact of licencing of an intellectual property asset, a patent in particular, it is worth mentioning the seminal case of Bishop Steering.

Dr Arthur E. Bishop having both the engineering ingenuity to design breakthrough automotive systems as well as the requisite leadership skills to attract and inspire highly-specialised designers and engineers started what eventually became Bishop Steering Technology Pty Ltd. (Bishop) way back in 1957[6]. He adapted technology originally developed for power-steering systems for World War II aircraft for use in automobiles[7]. And in 2011 became a subsidiary of the German company GMH Stahlverarbeitung GmbH and continued operating under the name Bishop Steering Technology Pty Ltd[8].

One of the earliest patents that had been granted to Bishop Steering was in 1958 for perfection over rack – and – pinion power steering technology. Since then it had been an uphill trajectory as over the years Bishop Steering has filed for more than 500 patents, out of which more than 100 have been successfully registered[9].This generated at its peak almost around 7 million USD by means of royalties, out of which more than 90% are from oversees licensees.

But instead of venturing into materialise it into manufactured product and realising its sale thereafter, the company followed the strategy to go for licensing its patents and other intellectual property assets to other car and car component manufacturing companies, mostly small and medium enterprises and investing the revenue generated in further R&D purposes. The company has a dedicated protection policy regarding its intellectual property and defends it vigorously and prosecutes any infringer[10].

Its strategy to generate revenue and bring its products and related developments to market is actually quite simple, to first create an IP following its licensing[11]. This strategy proved to be favourable after Bishop steering secured its first license from a major Japanese automobile manufacturing firm[12]. Throughout the company’s history, it has strategically used licensing to grow its business, taking full advantage of such business partnerships and adapting contracts to suit the prevailing business environment. From starting with exclusive licenses to licensees, with time, is has positioned itself in the market in such a fashion that it was then able to negotiate for non – exclusive licenses and enter into joint ventures, thereby increasing its sources of income.At one point in time, almost a quarter of motor vehicles produced every year incorporated Bishop technology[13].

Bishop Steering Technology Inc. (Indianapolis/USA) along with Bishop Steering Technology GmbH (Cologne/Germany) were acquired by GMH Stahlverarbeitung GmbH, a subsidiary of Georgsmarienhütte Holding GmbH on 15 January 2011 and till this day belong to the Steering Systems business unit of the internationally-oriented GMH Gruppe. The success story of this company still stands strong today as it inspires numerous enterprises to consider and follow a similar business strategy of creation, protection and licensing of patents and other intellectual property with the aid, advice and counselling of expert patent attorneys.

Author: Madhur Tulsiani , Intern at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1]http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf

[2] (ibid).

[3]https://www.gpo.gov/fdsys/pkg/USCODE-2011-title7/pdf/USCODE-2011-title7-chap8A-subchapII-sec178a.pdf

[4]http://www.republicsg.info/Dictionaries/2004_Black%27s-Law-Dictionary-Edition-8.pdf

[5] (ibid).

[6]https://www.bishopsteering.com.au/de-en/about-us/history/

[7]http://www.wipo.int/ipadvantage/en/details.jsp?id=4739

[8] (ibid).

[9](ibid).

[10]http://www.wipo.int/edocs/mdocs/sme/en/wipo_reg_ip_guz_02/wipo_reg_ip_guz_02_8_b-related1.pdf

[11]http://www.wipo.int/ipadvantage/en/articles/article_0112.html

[12]http://www.wipo.int/ipadvantage/en/articles/article_0112.html

[13] (ibid).

Advertisements

Hi-tech Patent Licensing Trends

Ever since Software Patents have got easier to get a grant for, protection of computer readable medium claims on a storable media have enforced the Intellectual Property Rights to a much higher level that a software company can have when compared with the counterpart System and Method claims. Although most countries, unlike US, are still opposing in great deal the grant of Software patents, practices in US and shipping of software components from US to the rest of the world poses lack of clarity on the rights of the companies using such a piece of code. Such software patentability issues are also gradually approaching the European Countries with certain courts giving indications of coming closer to US  Software Patent grant practices.

Our mandate in this study is to understand the global software licensing trends and look at the kind of effects such licensing deals are making on competitors and open source players. We would also try and understand the major attributes and/or pointers that motivate players to enter into the strategic licensing with complementary and/or supplementary players in the market. With no major success stories as yet in India in the recent past, our focus would be on recent global patent licensing agreements:

Microsoft and Amazon.com Patent Agreement

“Let only the Mammoths survive?”

On Feb. 22, 2010 Microsoft announced its signing of a patent cross-license agreement with Amazon. The agreement focused on allowing each stakeholder in accessing the other’s patent portfolio thereby covering a broad range of products and technology, including coverage for Amazon’s popular e-reading device, Kindle™, which employs both open source and Amazon’s proprietary software components and its use of Linux-based servers. The deal gives both

Companies access to each other’s patent portfolios and from a strategic perspective could well have been an initiative from Amazon to prevent a suit from Microsoft.

The agreement disclosed that Microsoft would be getting patent coverage for Amazon’s Kindle Ereader technology and Amazon’s proprietary software components deployed on Unix servers and that Microsoft would be getting an undisclosed sum of money from Amazon under the  deal, which with quite surety can be said to be for the IP that Microsoft holds for the user interface designs and OS/Non-OS based software components that the company owns.

Such a deal was a win-win for both the parties with access to Amazons technology on Linux-based servers can be used by the companies for furthering their interests, which in case of Microsoft could be to strengthen its working and existing relationship with Novell. Microsoft and Novell signed a high-impact patent agreement in November 2006 to cover their respective products and ensure easy and powerful virtualization of Linux on Windows and Windows on Linux. The agreement ensured Novell’s continued promotion of Linux as the premier platform for core infrastructure and application services and the company’s commitment to the community through leading-edge development projects as well as the continued promotion of Linux in the marketplace. The patent agreement signed by Novell and Microsoft was designed with the principles and obligations of the GPL in mind. Under this agreement, customers of SUSE Linux Enterprise know they have patent protection from Microsoft in connection with their use of SUSE Linux Enterprise, further encouraging the adoption of Linux in the marketplace.

The deal with Amazon and the aspect of taking in-license of Amazon’s improvement components of Linux-based servers therefore ensured that Microsoft made Windows more compliant and user-friendly for Linux Users.

Trendsetting from such Cross Licensing Patent Agreements:

ü      Only large corporations with thousands or tens of thousands of patents are in the position to enter into cross-licensing agreements with their counterparts. Lets go back and analyze all major cross licensing deals including M/S with Panasonic, or M/S with LG, it has always been a story for the biggies.

ü      If cross licensing becomes more prominent and industry wide practice, what happens to individual licenses that SME’s corporates and small players who essentially look out primarily for out-licensing opportunities

ü      There might be more to cross licensing than is made public by companies. The GNU General Public License states that “Finally, every program is threatened constantly by software patents. States should not allow patents to restrict development and use of software on general-purpose computers, but in those that do, we wish to avoid the special danger that patents applied to a free program could make it effectively proprietary.  To prevent this, the GPL assures that patents cannot be used to render the program non-free.” Such clauses along with rights conferred under S. 11 of the license agreement would surely not encourage such cross licensing agreement, and in case parties do intend to make the systems more interoperable, a lot of such cross licensing or access to patent information might be happening between corporates without coming onto the public front. It might well be the case that Microsoft has been going around and doing these patent cross licensing deals with companies under NDA’s and they never see the light of days for years.

ü      What happens if such deals strengthen relationships only among Software Major and they collectively initiate legal suits and create a huge entry barrier for start-up’s or players having more effective products but have defensive IP strategies.

ü      How do we answer the following questions also posted and considered by Nosoftwarepatents.com “IBM now owns around 40,000 patents worldwide. No one, and particularly no SME, ever has the chance to look at all of those and ensure that there is no conflict between one’s products and any of IBM’s patents. So IBM approaches companies and offers them a costly license agreement to the entire patent portfolio. Through those deals, IBM not only squeezes money out of the smaller company but also gets access to sensitive information on the business of the other company. In the spring of 2004, the press started reporting that Microsoft is now doing the same. They have already approached around 100 companies, some of which are European, and they said that open-source companies would also be targeted.”

Microsoft and Tom Tom Patent License Agreement

“Is FOSS Community the next Licensing Target for IP Focused Software Majors”

This story started in February 2009 with Microsoft filing a Patent Infringement Suit against the navigation device maker TomTom. The suit alleged infringing of several of TomTom’s products, including some Linux-based products, on a handful of Microsoft’s patents. With most patents in contention relating to car computing systems and navigation, but were two Patents namely #5,579,517 and #5,758,352 that claimed Microsoft’s FAT32 file system.

From a business perspective, even though denied by Microsoft, this could well have been a step taken by the Redmond based company to enforce its patents against the open source community and have broader ramifications for the Linux platform and for mobile device makers.

Without going into much detail as regards the litigation and restricting to the licensing deal between the parties, Microsoft ensured that, as described by, Eben Moglen—a Columbia University law professor and the chairman of the Software Freedom Law Center, the FAT patents remains as a “proverbial Sword of Damocles hanging over the open source community” and warned that Microsoft could use them to do immense damage to the Linux platform. In March 2009, Tom Tom settled the dispute with Microsoft with the terms of the agreement conforming with TomTom’s obligations under the GPL, the license under which Linux is distributed. TomTom has paid to license Microsoft’s patents, including those covering FAT.

The agreement also enforced TomTom to remove the functionality that is covered under the FAT patents to ensure that the code in TomTom’s Linux kernel can continue to be broadly redistributed downstream without patent encumbrances. TomTom’s agreement with Microsoft also provides a guarantee that M/S will not sue TomTom users in the interim period during which TomTom makes the requisite changes to the FAT code.

Trendsetting from such Patent Agreements subsequent to Patent Litigations:

ü      Such an agreement was a completely different path taken by the licensor (M/S) when compared with the earlier mentioned huge cross licensing agreements being done with Novell and Amazon. Is a the size and scope of the party that differentiates the manner in which a litigation and post litigation licensing agreement would be drafted and agreed upon by the parties

ü      Not allowing FAT systems to be a part of the navigation devices of TomTom was such as an aspect of the agreement, which was completely different from how the agreement was devised and written down with Novell, wherein the licensing agreement with Novell was much more collaborative and technology sharing rather than prohibiting parties from using IP’s, which was evident in this case.

ü      The major trendsetting in the present case was the manner in which software development might start reacting to the FOSS community. Even though M/S is giving an all together different perspective by stating that lawsuit represents an isolated issue and that the company does not intend to broadly sue Linux users, the underlying intention might well be to identify all potential open source development companies, study their product development/functionality specification details, and to then identify potential infringement areas.

Fractus and Motorola sign Global Patent Licensing Deal

“IP Brokerage Firms do Matter”

April 7, 2010, Fractus S.A. of Barcelona, Spain announced that it has entered into a non-exclusive, worldwide patent license agreement with Motorola, Inc. The agreement includes a license under all of Fractus’ patents related to internal antennas and covers the sale of all Motorola products. More importantly, IPotential, LLC served as broker for Fractus in the negotiation of this license agreement.

A quick search at USPTO reveals that Fractus at the present moment has 41 Granted and 20 Published Patents in antenna domain (multilevel, multi-band etc) and have claimed directed towards both communication devices and antennas. The point to make is the manner in which relatively smaller companies when compared with telecommunication giants like Motorola when guided properly are able to license the technology in the anticipated manner and at attractive valuations.

Subsequent to the deal, in May 2010, the licensor filed a patent infringement case against ten cell phone manufacturers in the Eastern District of Texas, Tyler Division, Case No. 6:09-cv-203.

With not many details available on the commercials of the deal between the companies, it surely has some key takeaways for us:

ü      Fractus is a small but an early pioneer in developing internal antennas for cellular phones and other industries. Founded in 1999, and along with being immensely innovative in the domain of antennas for multi-band cell phones, remains an active supplier of antennas and has shipped millions of antennas worldwide. The company for its innovative work has been named a 2005 Davos World Economic Forum Technology Pioneer and one of Red Herring’s top innovative companies for 2006. It has also won the 2004 Frost & Sullivan award for technological innovation and the 2007 Elektra European Electronics Industry R&D Award. The point to take home is for a focused yet small Indian and/or International Player on the strategy. It could well have been the case that the deal with Motorola majorly happened only because the company needed funds for suing other major companies in the concerned domain.

ü      The second takeaway is the alliance with an IP Licensing and Commercialization partner who understands not only the industry operations and technologies in detail but also the manner in which licensing negotiations need to be held and potential licensees be approached. In the above mentioned case, IPotential LLC who partnered with the licensor, was a technology industry’s leading provider of complete intellectual property (IP) strategy and patent monetization services and has expertise in both patent sales and patent licensing.

About the Author: Mr. Tarun Khurana, Partner and Patent Attorney in Institute of Intellectual Property Research & Development (IIPRD) and can be reached: Tarun@iiprd.com.  Currently, He is Managing Patent Licensing Issues in the Hi-tech domain and some of his success stories can be found at http://iiprd.com/

Indian Pharmaceutical Industry Licensing Deals: Case Studies

  • Glenmark Pharmaceuticals

Glenmark, research-driven, global, integrated pharmaceutical company with Research Focus on Inflammatory Diseases, Metabolic Disorders and Pain has a presence in over 80 countries around the world.

The Company has a proven track record of entering into Licensing deals with Big Pharma and entered into Outlicensing deals in 2004 with Forest laboratories for Oglemilast, a drug that was potentially indicated for chronic obstructive pulmonary disorder (COPD) and asthma and was still in the Development Phase at the time of entering into the deal. The potential value of the deal was $ 190 million in US. Glenmark later entered into an agreement with Teijin Pharma Ltd in Japan for the same molecule where the deal value was $53 million. Till date, Glenmark has received $35 million from Forest and $6 million from Teijin.

In a case of In-licensing, Glenmark announced in 2005 a collaborative agreement with Napo Pharmaceuticals for Napo’s proprietary molecule Crofelemer, indicated for four distinct disease categories. Glenmark has Crofelemer rights for diarrhea Indications in 140 Countries. Currently the drug is into the Phase 3 trial and the product launch is expected to happen sometime in mid-2010.

Glenmark entered into an outlicensing agreement with Merck in 2006 for Melogliptin, an anti diabetes target. Glenmark received $ 31 million as upfront payment for the same. But, in an unfortunate development Merck decided to drop off the agreement due to a shift from the focus on anti diabetes segment (2008). Currently, Glenmark is developing the drug on its own and have completed the Phase IIb trials.

In 2007, Glenmark’s in-house developed molecule for a potential treatment of pain was outlicensed to Eli Lilly for an upfront payment of $ 45 million. Only a year after the deal, work on the clinical trial of the molecule was stalled. Both Glenmark & Eli Lilly are currently working on the way forward on the molecule.

Despite suffering setbacks from 2 out of 3 key licensing deals, spirits at Glenmark are high, courtesy the success it is enjoying in the Generics segment. Only last week, Glenmark Generics ltd, was able to ink 3 key agreements that has not only strengthened its position in the global generics market but also established Glenmark as an aggressive player that knows how to make maximum from an opportunity.

Following two patent law suits filed by Glenmark, Medicis Pharmaceutical came to an agreement with Glenmark to let the latter launch the former’s dermatological product Vanos in 2013, long before the patent is set to expire in 2023. In a separate arrangement, Glenmark and Medicis have agreed to jointly develop a product from the former’s pipeline to treat acne. Glenmark is to receive an upfront of $5 million from Medicis. Apart from this, Glenmark had entered into a licensing deal with Sanofi-Aventis for the development and commercialization of novel molecules to treat chronic pain. It has also announced a licensing deal with Par Pharmaceutical to market Ezetimibe tablets.

Very clearly, Glenmark’s business model involve a lot of in-licensing and out-licensing arrangements and the Company wish to ride upon the success of such deals to project itself as an innovation driven global pharmaceutical player. Add to it the rapidly rising of clout of Glenmark in Generics space and its deal-signing spree with pharma majors and it is not difficult to understand on why Glenmark is set to make its mark in the Global Pharmaceutical domain.

  • Dr Reddy’s Laboratories

Dr Reddy’s has been a frontrunner in many aspects of the Indian Pharmaceutical Industry Growth Story that has been witnessed by the globe. Licensing is one of such aspect. In fact, even during the times when India had just opened its gate to a global economy, Dr Reddy’s had inked its first Outlicensing deal.

In 1997, an in-house developed anti-diabetic molecule, DRF 2593 (Balaglitazone), was licensed to Novo Nordisk. In fact, with this deal Reddy’s became the first Indian pharmaceutical company to out-license an original molecule. But, late in 2004, after phase II studies, Novo Nordisk decided to terminate further clinical development of balaglitazone, as the phase II results did not suggest a sufficient competitive advantage for balaglitazone compared to existing products. Post this development, Dr Reddy’s entered into an agreement with Rheoscience for Balaglitazone (DRF 2593). As on January 2010, Blaglitazone (DRF 2593) Phase III clinical trials were announced.

A year later, Dr Reddy’s licensed another anti-diabetic molecule, DRF 2725 (Ragaglitazar), to Novo Nordisk. In 2003, Novo Nordisk, which had suspended trials on Ragaglitazar in 1999 on finding tumors in long-term animal studies, decided to terminate further trials on the molecule completely.

In 2001, Dr Reddy’s Out-licensed DRF 4158, a potential dual-acting insulin sensitizer, to Novartis for an upfront payment of US $55 million. Later in 2003, Novartis decided to discontinue working on DRF 4158, but continued collaborating with Reddy’s for additional development compound that is a dual-acting insulin sensitizer.

Despite a low success rate from its licensing deals, Dr Reddy’s went ahead with one of its molecule and despite criticism from its original licensing partner, Reddy’s now have successfully completed Phase III trials of the same molecule. This clearly depicts the conviction and faith in one’s abilities that Dr Reddy’s has demonstrated for its first in-house developed drug molecule. This in itself stands as a testimony to Dr Reddy’s capabilities to mark new beginnings for Indian Pharma Sector.

About the Author: Mr. Abhishek Sahay is a Senior Patent Consultant at Institute of Intellectual Property Research & Development (IIPRD). Currently, He is working on Patent Licensing Issues in the Life Sciences domain and some of his success stories can be found at http://iiprd.com. He can be reached at abhishek@iiprd.com.