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Editor-in-Chief, Anatole Krattiger

bioDevelopments- Institute

CHAPTER NO. 12.6 Patent Licensing for Small Agricultural Biotechnology Companies
Editor's Summary, Implications and Best Practices

Krattiger A, RT Mahoney, L Nelsen, JA Thomson, AB Bennett, K Satyanarayana, GD Graff, C Fernandez and SP Kowalski. 2007. Editor’s Summary, Implications and Best Practices (Chapter 12.6). From the online version of Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices. MIHR: Oxford, U.K., and PIPRA: Davis, U.S.A. Available online at www.ipHandbook.org.

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Key Implications and Best Practices:
For Government Policymakers
For Senior Management
For Scientists
For Technology Transfer Officers

Editor's Summary

Small agricultural biotechnology (agbiotech) companies need strong IP portfolios. IP portfolios are the foundation for R&D, encouraging outside investment and funding, and making product commercialization possible. In-licensing – so-called because a company takes IP rights (and their attendant responsibilities) into its IP portfolio – is especially important. In-licensing allows a company to obtain IP rights without having to invest in research. This chapter discusses in-licensing as it applies to small agbiotech companies. It describes the types of technologies that may be in-licensed and the procedures and typical terms for in-licensing these.

After an overview of the rights that a patent confers on its owner, the chapter explains the differences between nonexclusive and exclusive licensing. A nonexclusive license gives the licensee freedom to operate for the patented technology, but does not give the licensee a monopoly on the use of that technology. An exclusive license gives the licensee freedom to operate for the patented technology and a monopoly on its use; in other words, an exclusive licensee temporarily “owns” the patent. An exclusive license gives the licensee greater power, but that power comes at a higher cost. Small businesses should carefully consider their goals, as well as their resources, so that they can make the most of both types of licensing.

A competitive IP portfolio depends not only on the types of patent rights obtained but also on the kinds of technologies that are in-licensed. A competitive portfolio of a small agbiotech company should include patents and licenses for enabling technologies, trait technologies, and plant material.

The chapter discusses license agreement conditions. It explains the rights conferred by a license (the rights granted to the licensee), the compensation that the licensee must give the licensor for the use of the license, liability issues, diligence terms, the responsibilities of the licensee, the term and termination of licenses, the assignability of licenses, and other important provisions.

Regardless of whether it is based in a developed or developing country, a small agbiotech company can build its IP portfolio and market position through in-licensing. The company must determine what licenses it will seek, whether it will seek these rights on a nonexclusive or exclusive basis, and under what terms it is willing to in-license the patent. The more a business knows about in-licensing, the more likely it is to thrive in the marketplace.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

Support policies and legislation that are beneficial to small biotechnology firms. Such firms can drive economic development as well as bring innovations in health and agriculture to those who need them.

For Senior Management (university president, R&D manager, etc.)

The company should develop a patent plan for each R&D project: in other words, it should explore the possibility of licensing technologies that would be useful for research. The patent plan will need to change if the research plan changes. It is common practice for small agbiotech companies to acquire a series of nonexclusive licenses so that they have the right to develop technologies that they can eventually use to create new products.

For Scientists

If you need to use a patented technology, consult with your institution’s technology transfer office.
In-licenses can be conferred for either research or commercialization. In the U.S., the exemption for experimentation or research under patents is limited, while certain other countries offer more exemptions for research-stage work.

For Technology Transfer Officers

Normally, each company involved in licensing has a team that includes one or more in-house technical people (and often the head of research), as well as one or more business people.
It is particularly important to ensure diligence from an exclusive licensee.
There are three key ways that a license grant, either nonexclusive or exclusive, can be limited or defined: territorial limitations, field-of-use limitations, and limits on duration.
Patents can protect products, methods of making, methods of using, or any combination of the three. It is necessary for a company to obtain a patent license when the patent claims the product or processes in question.
Conduct comprehensive IP audits to determine where your IP assets are, when IP protection is needed, whether there are potential IP liability issues, if there are licensing needs and/or opportunities, and if there are inventions to be harvested.

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