Owning intellectual property rights can be all very well, if the owner is not a manufacturer or dealer in the products or services covered by the rights.  In these circumstances the rights owner needs either to sell (once and for all) or licence (i.e permit the use of but not transfer) the rights in question to make a profit.

 In addition, where two or more organisations wish to work together towards a common goal, particularly in the context of a technical development, the ownership of, and rights to use, the products of the collaborative development must be thought out and dealt with in advance of the development.

Returning to the position of the owner of existing IP rights, the first issue is whether to sell or to licence the rights.  Whilst licensing may seem the obvious approach (why give something away when you might be able to sell it again in future), the price available for the sale of a right may be higher than for a licence, and the costs of maintaining a right, particularly a registered right such as a patent or trade mark, may mean that continuing to own it may not be economical.  Sales of intellectual property rights are relatively straightforward, the key area of concern being the obtaining of warranties from the seller that he has done everything necessary to keep the right in force and, preferably, that he knows of no reason why the right should not be practiced without infringing anyone else's rights.

Sales are, however, uncommon, as rights owners generally want to keep control of their rights.  Exploitation is then performed by way of licensing.  Here the choices are almost endless:  exclusive (one licensee) vs. non-exclusive (many); worldwide vs. territorial (subject to competition law considerations); licence for one use covered by the right vs. licence for all uses; short term vs. perpetual; payment by royalties vs. payment by lump sum(s); rights to use improvements developed by either party, etc, etc.  The choices are generally driven by the type of market that the right will be used to serve, with different types of rights generally attracting different classes of treatment.

If licensing is too difficult, or too simple, then exploitation via a spin out vehicle may ba appropriate here, typically, a rights owner and a financier will set up a new company with the financier investing cash for a share in the company and the rights owner either licensing or transferring the rights to the company.  The rights owner then receives his reward through the growth in equity value of the company.  This type of approach is often served by the venture capital market.

Collaboration agreements throw up their own specific issues.  The nature and status of the collaborating parties may differ (it is quite common in collaborations between academic and commercial organisations for the academic party to receive rights for non-commercial research and teaching using any rights that result from the collaboration, with commercial exploitation rights being reserved for the commercial partner) and the nature of the business of the collaborators may differ, allowing them to "carve up" the results according to their mutually exclusive businesses.  Access to pre-existing rights may also be required to allow the development to take place and the degree of access and cost (if any) thereof, will always be important elements of the negotiation of the agreement.

VS&H lawyers have many years of experience of technology transfer and collaboration agreements, are members of the Institute of Licensing Executives, an organisation for professionals specialising in technology exploitation, and lecture on the spin out model of technology exploitation.

VS&H act for clients involved in all aspects of technology transfer, from large scale developers of technology, through spin out companies involved in collaborative research to retailers seeking to obtain a competitive edge by investing in know-how.  It is a core area of our commercial practice, feeding back into our equity investment work and is a key area of specialist expertise for the firm.

For further information please contact:

john.davies@vshlaw.co.uk or

martin.jinks@vshlaw.co.uk or

su.knowles@vshlaw.co.uk