Due diligence is important before in-licensing technology from third parties. Key aspects to evaluate include the technology's legal status, ownership, licensing history, strength and ability to withstand challenges. The six main steps of due diligence are: assessing difficulty to invalidate the intellectual property, analyzing timelines and jurisdictions, determining the technology's current phase, evaluating infringement risks, and properly valuing the patent. Careful due diligence helps identify the right technology to license and mitigate risks like invalid intellectual property or inability to commercialize.

1. Importance of Due
Diligence Before In-
Licensing Technology
Origiin IP Solutions LLP

2. Licensing
A license is a contract between a two or more parties that allows the
licensee to make some specified use of the licensor’s property
Authorization to use the property
Otherwise its not available for the licensee due to legal restrictions
Should be in writing
Executed with legal clauses
May be exclusive or non-exclusive

3. Licensing
Express or Implied
• Lum sum royalty
• Running royalty
• Cross licensing
Licensing in return on royalty

4. Purpose
Commercialization of research
results generated in universities
and publicly funded research
institutions
Tool for IP collaboration among
academic and business
organizations
Develop or acquire technology

5. Technology
• Technology status can also be classified:
• Base technology - is ageing technology
which is available or known to all industry
participants; it cannot provide competitive
advantage because of its widespread use.
• Key technology - a proprietary product or
process technology already well embodied
in the processes and products on the
market; is critical to the basis of
competition - it is used by its owners to
differentiate products and services from
those of their competitors.

6. Technology
• Pacing technology - those emerging
technologies which already
demonstrated their ability to change
the basis of competition and as a result
are now moved to the development
stage at many companies; these will
probably become a key technology in
the near future.
• Emerging technology - forward looking
technologies sometimes under
development in substantially different
industries; at an early research stage
with unknown potential, but promising

7. Acquisition of technology
may be to improve their
competitiveness in the
global market by
minimizing time taken to
undertake development
through internal sources.
Licensing the technology
may be to leverage and
exploit technology and
probably desire to see
the product in the
market.

8. Licensing
Assignment

9. Technology
Licensing
In-
Licensing
Out-
Licensing

10. In-Licensing
Definition
• Acquiring rights of third party technology
via agreement
• Ex: A manufacturing company acquires
rights from an innovator to commercialize
the invention
Licensing may be for
• for all
• for few IP Rights
Limited or specified period of time

11. Out-Licensing
Granting the rights
of the technology
to third party
Ex: An innovator
or academic
institution
licenses their
technology to a
manufacture of
the product
Authorizes a third person to
use/commercialize the
technology

12. Out-Licensing
• Generally occurs in case of
• lack of infrastructure
• Lack of manufacturing capabilities
• Lack of marketing strategies
• Lack of awareness of demand/need of the product

13. What to in-license
• Technology licensing occurs only when one of the parties
owns valuable intangible assets i.e Intellectual Property
(IP)
• Patents
• Know-how
• Trade secrets
• Copyrights
• Industrial Designs
• Semi conductors circuits

14. What gets transferred?
Process
Intellectual
Property
Know-how
Methods

15. What to in-
license
If technology is not protected:
No license
Technology in Public domain:
No license

16. Why?
• Alternative to invest in technology creation or R&D
• Saves time
• To bring new products into market
• To balance the competition
• Lack of resources
Human or
Financial

17. Why?
Needs technologies which are
part of industry standards set by
standard-setting organizations
To meet the
requirements/demand of the
public

18. Advantages
Faster access to certain markets
To meet the growth of innovative technologies without R& D
Can invest with proven methods without any trial and error
Saves huge investments and time
Collaborations
Accessing expertise
Ease and quick launch of the product

19. Risks
Technology may not work
High royalties
Failure in market
Technology may become obsolete
Unfavorable or one-sided beneficial clauses
Involves huge cost
Survival in the market

20. Risks
Withstand the competition
Enablement
Lack of technical expertise/support
Practically not feasible
Authentication
Lack of awareness of legal complications
Lack of IP awareness

21. Risks
False documents
Incomplete data
Lack of market awareness
Specific clauses are not executed
No proper valuation of IP
Lack of confidentiality
Strength of IP

22. Risks
Exclusivity clause
Pricing
Estimation of royalties
Timelines
Legal consequences

23. Precautions
• Identifying the technology of interest
Core step
To identify the relevant technology
Based on experience
Availability of the resources
Infrastructure

24. Precautions
• Achieved by identifying the various sources of information
• Ex. In case of Patents, available databases
• Legal status
Various sources from Research Institutes or Private Organizations
Other dedicated online-platforms to showcase the technology

25. Precautions
• Identify the specific field of interest
• Check if already licensed to any other party which blocks the use of
technology
• Consider industrial applicability of the technology
• Whether licensor is sole owner of IP
• Ownership of improvements over the licensed technology

26. Precautions
• Examples of on-line platforms containing data on available technology:
Enterprise Europe Network (EEN)
http://een.ec.europa.eu/content/technology-transfer
European Organization for Nuclear Research (CERN)
http://knowledgetransfer.web.cern.ch/technology-transfer/externalpartners/

27. Precautions
Assessment- Public Domain
To assess and
confirm if the
technology is in
public domain
If Yes: License
is required
If no: License is
not required
After identifying the technology, its
crucial to assess if its in public
domain

28. Precautions
• Patents
• Legal Status
• Due to expiration of the statutory term
• Due to failure to file request for
examination
• Due to respond during prosecution
• Due to failure of payment of
maintenance fee
• Invalidation during court proceedings
• Revoked during court proceedings
• Jurisdiction Analysis

29. Precautions
• Copyright
• If the source code of software is protected
• Check the status of the Copyright
• Whether author has given this public domain
• Notice to public to use the work

30. Precautions
Software contains the contact
information i.e Name, email ID,
website etc
Advisable to check the public
status of the work
To check if free source or open
source license

31. 6 Steps
Due
Diligence
Difficult to
invalidate
Timelines Jurisdiction
Phase of the
Technology
Risk of
infringement
Patent
Valuation

32. Due Diligence
• To identify the distance from the
prior art
• How strong the invention is
• Is it owned by the licensor
• Are the rights are properly assigned
by the inventors
• If already licensed to any
competitors
• Jurisdiction of interest
• The phase of the technology

33. Difficult to
Invalidate
• The strength of the Patent
• Risk of invalidation
• Any history of litigation
• Current validation of the patent

34. Timelines
• Actual life of the patent
• Feasibility of using the existing life of the patent
• Whether all statutory timeless are fulfilled
• Legal consequences of timelines

35. Jurisdiction
• IP rights are territorial
• Due care should be taken while in-licensing
to check the status of IP rights in region of
interest
• Check for status of Patent in each
jurisdiction
• Legal status of family patents is crucial
• Freedom-to-operate in specific jurisdiction
• Based on commercial interest
• Patentable subject matter

36. Phase of the
Technology
• Concept/Idea
• Prototype
• Practical feasibility
• Enablement with minimal supervision
• Technical assistance
• Field of use
• Advancement in technology

37. Infringement
Risk
• Analysis of exploitation of the technology
• Clearance search
• Consider the risk of infringement
• Identification of the bypass routes
• Liability in case of suits
• Specific clauses to b executed to handle
infringement suits if any
• No liability if infringement is alleged before
in-licensing
• Costs in case of infringement

38. Patent
Valuation
• Royalties is based on the value of the patent
• Valuation is very critical
• If you don’t know value of your technology you will
never be able to sell it at right price
• Commercial exploitation is based on value of the
patent
• Consider intended use of the technology

39. • How different or valuable is your technology?
• Measure strength of the technology/patent
• Distance from prior art (novelty search)
• Ability to sustain a litigation (invalidation/validation
search)

40. • Market analysis
• Is market ready?
• Market size
• Existing product price and USP

41. Disposable Blood Bag
Technology
• For collection, storage, transportation and transfusion of blood
& blood components.
• The technology provides a hygienic way by eliminating
exhaustive cleaning, rinsing, autoclaving and breakage
problems.
• Bags are available as single, double or triple transfer bags.
• Product has been accepted internationally and exported to
Africa, South-East Asia and Europe.

42. Technology Development
• Sri Chitra Thirunal Institute for Medical Sciences and
Technology, Thiruvananthapuram
• The first licensee was Peninsula Polymers Ltd.,
Thiruvananthapuram in 1983.
• Technology transfer involved Rs. 0.3 m as fee and 3% Royalty for
10 years on non-exclusive mode in 1983.
• Agreement required Research Institute to provide technical
support.

43. Technology Development
• Product introduced in the market at Rs. 10 a bag compared to Rs. 30 a bag of Japanese origin.
• The licensee started marketing the product successfully & it has been an excellent export to other
countries including Europe.
• As a second licensee, technology was transferred to M/s Hindustan Latex Ltd in 1991.
• Rs. 1.65 m as fee and 3 % royalty for 10 years on non-exclusive mode.
• The plant was completed in 3 years and since then has been exporting.
• During 1994, two other licensees were J Mitra & Company and Electro- medical and Allied
Industries. Each paid Rs. 4.5 m as fee and 3 % royalty for 10 years on non-exclusive mode to both
companies.

44. THANK YOU