China Bio Workshop Eye On China Series (Guangzhou 14 April 10) (2)

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Presentaton regarding intellectual property protection, joint ventures and collaborations in life science ventures in China

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China Bio Workshop Eye On China Series (Guangzhou 14 April 10) (2)

  1. 2. Building Company Value Through Global Partnerships Executive Workshop Guangzhou, China April, 14, 2010
  2. 3. Building Intellectual Asset Value Within Collaborations Stephen Bent James Ewing
  3. 4. Differences Between PRC and US Laws <ul><li>Ownership of IP Assets </li></ul><ul><li>Inventorship and Inventor Compensation </li></ul><ul><li>Safeguarding Key Personnel and Information </li></ul><ul><li>Licensing and Other Tech Transfer </li></ul><ul><li>Patent Office Requirements </li></ul><ul><ul><li>US “duty of candor” </li></ul></ul><ul><ul><li>Elements of descriptive completeness </li></ul></ul><ul><ul><ul><li>SIPO stance on working examples </li></ul></ul></ul><ul><ul><ul><li>US PTO requirement for “best mode” </li></ul></ul></ul>
  4. 5. Capturing Value from Joint Innovation: Value Creation <ul><li>Primary Goal </li></ul><ul><li>To fully integrate R&D goals and IP strategy to advance the common commercial objectives of the collaborators. </li></ul>
  5. 6. Capturing Value from Joint Innovation: Promoting Harmonious Relations (cont.) <ul><li>Clearly defining the roles and obligations of the parties </li></ul><ul><li>Top-down understanding of objectives, milestones and obligations of each partner </li></ul><ul><li>Appropriate governance structure </li></ul><ul><li>Leadership in key positions </li></ul>
  6. 7. Capturing Value from Joint Innovation: Promoting Harmonious Relations <ul><li>Inclusive decision-making and teamwork </li></ul><ul><li>Decision-making based on data </li></ul><ul><li>Importance of Trust/Emphasis on Relationships </li></ul><ul><li>Recognize and celebrate successes </li></ul><ul><li>Evaluate the partnership continually </li></ul>
  7. 8. Capturing Value from Joint Innovation <ul><li>Agreed upon procedures and formats for documentation and invention disclosure </li></ul><ul><li>Education of “bench-level” team members of documentation procedures </li></ul><ul><li>Routine for reporting and evaluation of developments/invention disclosure </li></ul><ul><li>Verified and continuous documentation of project developments </li></ul>
  8. 9. Capturing Value from Joint Innovation <ul><li>Procedures to: </li></ul><ul><li>prioritize invention disclosures </li></ul><ul><li>determine inventorship and ownership </li></ul><ul><li>oversee patent preparation </li></ul><ul><li>determine filing strategy </li></ul><ul><li>oversee prosecution </li></ul><ul><li>resolve disputes efficiently </li></ul>
  9. 10. Building an International Patent Portfolio Cost-Effectively: When and What to File <ul><li>Central Inquiry </li></ul><ul><li>Would the IPRs to a new technical development add value to and advance the common commercial objectives of the collaborators? </li></ul>
  10. 11. Building an International Patent Portfolio Cost-Effectively: When and What to File <ul><li>Pioneering advance vs. incremental improvement </li></ul><ul><li>Alignment with business objectives </li></ul>
  11. 12. Building an International Patent Portfolio Cost-Effectively: When and What to File <ul><li>Patenting vs. trade secret vs. defensive publication </li></ul><ul><li>Status of invention development </li></ul><ul><li>Provisional vs. nonprovisional vs. utility model </li></ul><ul><li>PCT application </li></ul>
  12. 13. Building an International Patent Portfolio Cost-Effectively: When and Where to File <ul><li>First to invent vs. first to file </li></ul><ul><li>National laws regulating first filing </li></ul><ul><li>Foreign filing license requirements </li></ul><ul><li>Technology export licensing requirements </li></ul><ul><li>Commercial markets </li></ul><ul><li>Economics of filing </li></ul>
  13. 14. Building And Managing an International Patent Portfolio Cost-Effectively: Claim Strategy <ul><li>Diversified claiming strategy: who is your audience? </li></ul><ul><li>Types of claims (composition, methods of treatment; apparatus; etc.) </li></ul><ul><li>Independent versus dependent claims </li></ul><ul><li>Economics of claims </li></ul>
  14. 15. Building And Managing an International Patent Portfolio Cost-Effectively: Use of the PCT System <ul><li>Patent Cooperation Treaty (PCT) was signed in June 1970, in Washington, D.C., and became operational in June 1978 with 18 States </li></ul><ul><li>As of September 28, 2009, there were 142 contracting states to the PCT </li></ul><ul><li>PCT establishes a procedure for the filing and processing of a single application for a patent which has legal effect in the countries which are Treaty members </li></ul>
  15. 16. Building And Managing an International Patent Portfolio Cost-Effectively: Use of the PCT System <ul><li>Advantages </li></ul><ul><li>Postpones the major costs associated with internationalizing a patent application (translations; official fees; service fees) </li></ul><ul><li>Provides a basis for patenting decisions </li></ul><ul><li>Accepted and widely used system for patent protection </li></ul>
  16. 17. Harmonizing the IP Strategy with its Business Plan <ul><li>Integrate R&D Goals with Business Plan </li></ul><ul><ul><li>Identify commercialization target(s) and time frame </li></ul></ul><ul><ul><li>Link market projections with IP potential </li></ul></ul><ul><ul><ul><li>Crowded prior art? </li></ul></ul></ul><ul><ul><ul><li>Timing/content of patent filings? </li></ul></ul></ul><ul><ul><ul><li>Freedom to operate? </li></ul></ul></ul>
  17. 18. Case Studies – What Does and Doesn’t Work in Strategic Collaborations <ul><li>Roche - Genentech : Efficient Sales/Management Combines With Innovation Culture </li></ul><ul><li>Amgen – Kirin : Early-Stage Research Transitions to Experienced Product Development </li></ul><ul><li>Fujisawa/Astellas – Sucampo : Misconceptions Over Roles and Capabilities Sinks Partnership </li></ul>
  18. 19. Case Study I – Roche-Genentech <ul><li>March 2009 Roche Holding’s acquires full ownership of Genentech for $46.8 billion </li></ul><ul><li>Roche owned a majority of Genentech since 1990 </li></ul><ul><li>Roche’s three best-selling drugs come from Genentech (Avastin ® , Herceptin ® and Rituxan ® ) </li></ul>
  19. 20. Case Study I – Roche-Genentech (cont.) <ul><li>Cost savings of more than $750 million per year not the main goal of the deal </li></ul><ul><li>Goal was improved coordination on product development </li></ul>
  20. 21. Case Study I – Roche-Genentech (cont.) <ul><li>Challenge is integrating Swiss business culture with Genentech’s free-wheeling and innovative culture </li></ul><ul><li>Genentech’s research and early clinical trial operations will retain autonomy to preserve culture </li></ul><ul><li>Combined commercial business based at Genentech’s headquarters in South San Francisco, Calif. </li></ul>
  21. 22. Case Study II – Amgen-Kirin <ul><li>Amgen, Inc. is the largest US biotech company </li></ul><ul><li>Amgen transitioned from a drug development company to a pharmaceutical manufacturer while maintaining steady sales. </li></ul><ul><li>Amgen owes its transformation mostly to Neupogen ® and Epogen ® . </li></ul>
  22. 23. Case Study II – Amgen-Kirin (cont.) <ul><li>1984 Kirin Brewery Co., Ltd. of Japan and Amgen, Inc of the United States launch joint venture company Kirin-Amgen, Inc. (Kirin-Amgen) </li></ul><ul><li>Epogen ® and several other Amgen products were developed through Kirin-Amgen </li></ul>
  23. 24. Case Study II – Amgen-Kirin (cont.) <ul><li>Kirin-Amgen grants exclusive manufacturing, patent and marketing rights to Amgen in the U.S. </li></ul><ul><li>Amgen pays Kirin-Amgen royalties on sales. </li></ul><ul><li>Kirin-Amgen reimburses Amgen for R&D expenses. </li></ul>
  24. 25. Case Study III – Fujisawa/Astellas – Sucampo <ul><li>1998-- Sucampo enters into a Development Agreement with Fugisawa/Astellas (“Astellas”) for Sucampo to develop tacrolimus eye drops containing Astellas's compound, FK506 (&quot;FK506&quot;) for the treatment of dry eye syndrome. </li></ul><ul><li>Parties later contract for the exchange of safety information relating to FK506 (“Safety Agreement”). </li></ul>
  25. 26. Case Study III – Fujisawa/Astellas – Sucampo (cont.) <ul><li>February 2005-- United States Food and Drug Administration (&quot;FDA&quot;) issued two alerts regarding a link between cancer and the use of Protopic ® </li></ul><ul><li>March 2005-- FDA requires that Protopic ® carry a black box warning due to cancer risk. </li></ul>
  26. 27. Case Study III – Fujisawa/Astellas – Sucampo (cont.) <ul><li>March 2005 </li></ul><ul><li>Sucampo suspends its tacrolimus eye drops development program </li></ul><ul><li>Sucampo sues Astellas alleging breach of a Safety Agreement by failing to disclose the FDA's concerns over Protopic ® </li></ul>
  27. 28. Building Company Value Through Global Partnerships Jim Chapman
  28. 29. Positioning Your Business and IP Portfolio with Potential Partners and Investors <ul><li>The Company has a solution or potential solution to a big problem in the market </li></ul><ul><ul><li>Unique Technology </li></ul></ul><ul><ul><li>Protectable </li></ul></ul><ul><li>The Company has a management team uniquely gifted to solve the problem </li></ul><ul><ul><li>Personnel with a strong track record of success </li></ul></ul><ul><ul><li>Have key relationships necessary for success </li></ul></ul><ul><ul><li>Strong domain expertise </li></ul></ul>
  29. 30. Positioning Your Business and IP Portfolio with Potential Partners and Investors (cont.) <ul><li>The Company has Customers that Buy or are Committed to buy the Product </li></ul><ul><ul><li>High quality customers that are reputable </li></ul></ul><ul><ul><li>Which will give references </li></ul></ul><ul><li>The Company is Operating in a Large Market </li></ul><ul><ul><li>Capable of supporting large companies </li></ul></ul><ul><ul><li>The market is rapidly growing or is ready to take off </li></ul></ul>
  30. 31. Positioning Your Business and IP Portfolio with Potential Partners and Investors (cont.) <ul><li>Clean Up the Company </li></ul><ul><ul><li>Financial/Accounting Systems </li></ul></ul><ul><ul><li>Unorthodox Practices </li></ul></ul>
  31. 32. Best Practices for Successful Joint Ventures and Strategic Partnerships <ul><li>Carefully Select the Partner </li></ul><ul><ul><li>Experience </li></ul></ul><ul><ul><li>Integrity </li></ul></ul><ul><ul><li>Expertise </li></ul></ul><ul><ul><li>Strong track record of collaboration </li></ul></ul><ul><ul><li>A bad partner can make a good project fail </li></ul></ul>
  32. 33. <ul><li>Understand Each Party’s Interests and Work to Keep Them Aligned </li></ul><ul><ul><li>Why is a Joint Venture or SP a preferred option? </li></ul></ul><ul><ul><li>Short Term vs. Long Term </li></ul></ul><ul><ul><li>Profitability vs. Market Share </li></ul></ul><ul><ul><li>Tong Chuang Yi Meng </li></ul></ul>Best Practices for Successful Joint Ventures and Strategic Partnerships (cont.)
  33. 34. Best Practices for Successful Joint Ventures and Strategic Partnerships (cont.) <ul><li>Build and Maintain the Relationship </li></ul><ul><ul><li>Communication </li></ul></ul><ul><ul><li>Face-to-face meetings </li></ul></ul><ul><ul><li>Honesty and integrity </li></ul></ul><ul><ul><li>Facing problems </li></ul></ul><ul><ul><li>Understand your partner </li></ul></ul>
  34. 35. <ul><li>Make sure the Project is Economically Viable </li></ul><ul><ul><li>Analysis should be based upon sound economic criteria </li></ul></ul><ul><ul><li>Be able to reach profitability in the foreseeable future </li></ul></ul><ul><li>Know and Follow the Rules </li></ul><ul><ul><li>Obey all Chinese laws and regulations </li></ul></ul><ul><ul><li>Comply with the US Foreign Corrupt Practices Act </li></ul></ul>Best Practices for Successful Joint Ventures and Strategic Partnerships (cont.)
  35. 36. Best Practices for Successful Joint Ventures and Strategic Partnerships (cont.) <ul><li>Create a Strategy to Deal with Problems </li></ul><ul><ul><li>Develop a government relations strategy </li></ul></ul><ul><ul><li>Milestones for projects </li></ul></ul><ul><ul><li>Escape strategies for different stages of a project </li></ul></ul>
  36. 37. Best Practices for Successful Joint Ventures and Strategic Partnerships (cont.) <ul><li>Other </li></ul><ul><ul><li>Use a detailed contract </li></ul></ul><ul><ul><li>Expect tremendous competition </li></ul></ul><ul><ul><li>Protect intellectual property </li></ul></ul><ul><ul><li>Develop an efficient, workable management and operational plan </li></ul></ul>
  37. 38. Negotiating with Americans Chinese vs. American Negotiation Approaches <ul><li>Cultural Values and Ways of Thinking </li></ul>Haggling Culture Argumentative Culture Seeks the Way Seeks Truth Circular Sequential Holistic Reductionist Relationship Oriented Information Oriented Hierarchical Egalitarian Collectivist Individualist Chinese American
  38. 39. Negotiating with Americans Chinese vs. American Negotiation Approaches (cont.) <ul><li>Negotiation Approaches </li></ul>Forging a Relationship Forging a Deal Enduring Impatient Questioning Aggressive Explanations First Proposals First Limited Authority Full Authority Formal Informal Long Courting Process Short Meeting
  39. 40. Leveraging Private and Government Funding Sources Within and Outside of China <ul><li>Sources </li></ul><ul><ul><li>Chinese Government Agencies. </li></ul></ul><ul><ul><li>Chinese Government backed venture capital funds. </li></ul></ul><ul><ul><li>Foreign Venture Capital Funds with Chinese operations. </li></ul></ul><ul><ul><li>Foreign Venture Capital funds without Chinese Operations. </li></ul></ul><ul><ul><li>Domestic Chinese Venture Capital Funds. </li></ul></ul><ul><ul><li>Angel investors. </li></ul></ul><ul><ul><li>Strategic investors. </li></ul></ul>
  40. 41. Leveraging Private and Government Funding Sources Within and Outside of China (cont.) <ul><li>Approaching Funding Sources. </li></ul><ul><ul><li>Use direct relationships. </li></ul></ul><ul><ul><li>Use intermediaries – “Zhongjian Ren” </li></ul></ul><ul><ul><ul><li>Have someone with credibility or “Guanxi” make an introduction. </li></ul></ul></ul><ul><ul><li>The role of the Executive Summary. </li></ul></ul><ul><li>The Initial Meeting. </li></ul><ul><ul><li>Company explains the problem to be solved, the business, management team, technology, customs and risks. </li></ul></ul>
  41. 42. Resolving Disagreements Between Partners <ul><li>Communication - The result of building a strong relationship </li></ul><ul><li>Negotiation - </li></ul><ul><li>Mediation </li></ul><ul><ul><li>Informal - Zhongjian Ren </li></ul></ul><ul><ul><li>Formal - Use of dispute resolution mechanism </li></ul></ul>

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