Utilizing IP to Access Funding


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Exploiting IP Through Licensing

IP can be more than just a protection of your ideas. It can be used to leverage unique non-equity funding alternatives. This lunch will explore whether your IP portfolio could be licensed to add cash to your business. The discussion will also touch on the advantages and pitfalls of licensing as well as the various kinds of licensing possibilities.


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Utilizing IP to Access Funding

  1. 1. Nutter McClennen & Fish LLPSeaport West155 Seaport BoulevardBoston, Massachusetts 02210Telephone 617.439.2000www.nutter.comTCN Expert Lunch:Maximizing Value Through IPJune18, 2013
  2. 2. Nutter McClennen & Fish LLP • www.nutter.com 2IP Is A Potential Asset•  Knowledge & Understanding Needed toRealize Its True Potential•  IP Has Many Uses – Build Value, AttractInvestment, Protect Revenue Stream,Build Revenue Stream
  3. 3. Nutter McClennen & Fish LLP • www.nutter.com 3PATENTS: WHAT THEY ARE ANDWHAT THEY ARE NOT•  Right to exclude others•  NOT a right to use your own patentedinvention•  A’s patented invention may be animprovement that is dominated by B’searlier patent•  A’s use/sale of its own patentedinvention may result in suit by B
  4. 4. Case Study #1•  Start-Up With No IP Strategy•  Single Patent Application for aGen 1 Product•  Narrow Claims•  Failed to Keep Patent FamilyAliveNutter McClennen & Fish LLP • www.nutter.com 4
  5. 5. Case Study #1 (Continued)•  Unprepared for Investor DueDiligence• Couldn’t articulate patent strategy•  Freedom-to-Operate IssuesUncovered• Reactive (Not Proactive) vis-à-visThird Party Patents•  Result: No FundingNutter McClennen & Fish LLP • www.nutter.com 5
  6. 6. Case Study #2•  Second Patent Application for Gen 2• Broader Disclosure•  Goal: Raise money to Develop andMarket Product•  Relying on IP to Build Value – attractinvestment, achieve exclusivity•  Learned that IP Needs FocusNutter McClennen & Fish LLP • www.nutter.com 6
  7. 7. Case Study #2 (Continued)•  Intense Due Diligence• Gained Understanding of Marketplace• Increased Knowledge of Patent Process, PriorArt, and Use of Claim Strategies• Able to Articulate Expected Patent Coverage•  FTO Looked Clean• Aware of Relevant 3d party Patents and ableto Explain Path to Market•  Result: Successful FundraisingNutter McClennen & Fish LLP • www.nutter.com 7
  8. 8. Surprise!•  Product Fails•  Original Strategy of SuccessfulProduct Marketing is Untenable•  All Investment at RiskNutter McClennen & Fish LLP • www.nutter.com 8
  9. 9. New Strategy•  Monetize the IP Portfolio•  IP Portfolio Comprises MultiplePatents• Claims Specific to Intended Product• Broader Claims• Applications Still PendingNutter McClennen & Fish LLP • www.nutter.com 9
  10. 10. Executing The New Strategy•  Aware of Competitor’sProposed Product Launch• Market Knowledge Pays Off!•  Build Case for PatentInfringement•  File Continuation With ClaimsTargeting Competitors Product• Adds Another Picket to the FenceNutter McClennen & Fish LLP • www.nutter.com 10
  11. 11. Success!•  Aggressively ApproachCompetitor•  Explain and DemonstrateInfringement•  Result: Sale of CompanyAssets for Good ROI, withoutLitigationNutter McClennen & Fish LLP • www.nutter.com 11
  12. 12. Takeaways•  Initial Lack of (or Poor) Strategy CreatedRisk, Facilitated Failure• Don’t Rely on a Single Application•  Increased Sophistication EnabledAggressive IP Portfolio Development•  Knowledge of Competition CreatedOpportunity•  Flexibility & Focus Enabled SuccessNutter McClennen & Fish LLP • www.nutter.com 12
  13. 13. Nutter McClennen & Fish LLP • www.nutter.com 13What Is An IP Strategy?An IP Strategy is the playbook that describeshow intellectual property will support thebusinessThe IP Strategy Should Identify:•  Offensive uses of IP – How will you create barriers toentry that keep competitors behind you•  Defensive uses of IP – How will you keep control ofthe important aspects of your business•  IP liabilities – How will you avoid the potholes
  14. 14. Nutter McClennen & Fish LLP • www.nutter.com 14Why Do You Need An IP Strategy?•  Align IP with Business Goals•  Competitive Advantage•  Attract Funding•  Revenue Source
  15. 15. Nutter McClennen & Fish LLP • www.nutter.com 15How Do You Develop an IP Strategy?  Identify Business and Technology Goals  Evaluate Your Existing IP Portfolio  Know the Competition  Strengthen Your IP Portfolio  Track Your IP Portfolio
  16. 16. Nutter McClennen & Fish LLP • www.nutter.com 16Identify Goals•  Identify both business and technology goals forcompany•  Identify key players (competitors, partners, customers)•  Identify technology direction (within company andindustry)•  Determine offensive goals (asserting IP against others;revenue generation), defensive goals (using IP as ashield), and market purpose (e.g., to demonstratecompany innovation, gain funding, etc.)•  Align the goals, industry and technology information,and portfolio use goals.
  17. 17. Nutter McClennen & Fish LLP • www.nutter.com 17Evaluate Your IP PortfolioReview patent portfolio (asset/liability approach)  Inventory IP Assets•  Identify them – What are they?•  What do they cover? Do they support the story?•  Does the company have clear title to them? – If not,they can go from Assets to Liabilities.  Inventors IP Liabilities•  Third party rights that you might not be aware of•  Third party rights you might be aware of
  18. 18. Nutter McClennen & Fish LLP • www.nutter.com 18Evaluate Your IP Portfolio (cont.)Assess Freedom to Operate:  Conduct regular searches  Review all Prior Art  Identify potential problems  Review and assess validity
  19. 19. Nutter McClennen & Fish LLP • www.nutter.com 19Strengthen Your IP Portfolio  Multiple Patents: don’t rely on a single patent  Multiple Claim Types: cover paper, bench top,and commercial embodiments, as well asmethods of manufacturing and methods of using  Keep patent families alive  Cover competitor products/systems  Cover Any Design Arounds  Consider foreign protection  Consider other forms of IP (trademarks, tradesecrets, copyright, agreements)
  20. 20. Nutter McClennen & Fish LLP • www.nutter.com 20Track Your IP Portfolio Over TimeRegularly Update and Check Your Progress AgainstYour IP Plan  One good way is an IP Review Committee•  Meet regularly, once a month to once a quarter•  Review business model – any changes? New products?•  Push contributors for Invention Disclosures for key new technologies/product differentiators•  Select which invention disclosures warrant, from IP and budget perspectives,patent application filings and which should remain secret•  Track competitors – any new products? Patents?•  Identify Licensing or Partner/Consultant issues•  Include Marking/Sales as well as CTO/Engineering Committee
  21. 21. IP Strategy: Track Your PortfolioRegularly Update and Check Your ProgressAgainst Your IP Plan•  Make sure your plan stays up to date•  Is your business model changing?•  Does your product roadmap have a new turn?•  Are you achieving your goals?•  Are you generating the data you need to create theright IP assets?•  Are your patent applications progressing?•  Has the PTO put a crimp in your plans?Nutter McClennen & Fish LLP • www.nutter.com 21
  22. 22. Nutter McClennen & Fish LLP • www.nutter.com 22THANK YOU