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Your source for expert commentary on IP management issues.
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About
Editor-in-Chief, Anatole Krattiger
Editorial Board
Concept Foundation
PIPRA
Fiocruz, Brazil
bioDevelopments- Institute
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Why This Topic Is Important
This section addresses the crucial step of determining what, if anything, the commercial use and value of
a piece of IP-protected technology or genetics might be. The primary lessons of this section are that such
value is highly uncertain and difficult to assess. Yet, an understanding of the issues and methods involved
provides central insight into the nature of the problem of transferring technology from a scientific
laboratory to the market.
Key Implications and Best Practices: Section 9
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.
- The best approach by your TTO is usually to disclose inventions early and disclose often.
- You should even consider disclosing what you think might not yet be a full invention. Experience shows that scientists are, in fact, not very good at determining when they have an invention. In many cases, they have a dozen when they themselves think they have none!
- If your TTO officers decide not to file for patents, you shouldn’t be discouraged. This is not a critique on your research, its importance, or its relevance. the TTO has many priorities to balance, including financial.
- It can be challenging to negotiate licensing agreements that are fair to everyone and conducive to “moving” inventions to innovations. it is generally far better to make an imperfect deal than no deal at all. People do not benefit until technology is developed and distributed.
- Some of the key questions TTOs address early on when an invention has been made is whether a patent application should be filed at all, how the invention would be marketed, and what value the invention might add to existing processes or products or what value might come out of a new product or process. Determining how to translate an invention into an innovation that makes a difference in people’s lives (economically or socially or both) is one of the principal reasons technology transfer offices exist.
- Scientists must insist that the TTO have transparent procedures for reviewing invention disclosures and making decisions. You should not only be informed of the basis and rationale for a decision, but also, in most cases, be fully involved in the process.
- It is important to keep a detailed record of your research procedures. Your records may help determine inventorship and may provide clues as to the value of your inventions.
- Once your TTO patents your invention, don’t expect a big revenue flow. For a TTO, quite often the best approach is to get as many licenses as possible completed in a short period of time, even if an individual license does not provide the maximum possible income. The more licenses, the higher the probability that one, or a few, will generate returns. Both you and senior management should be supportive of the overall deal making of the TTO rather than criticizing individual deals. Naturally, TTO officers need to follow procedures, apply policies, and be well trained in deal making.
- Additional research by yourself or your group often increases both the likelihood of finding a licensee and the economic value of the license. But this is only true if the research is specifically aimed at reducing the risks of commercializing the technology. Basic research may do little to reduce these risks. Discuss this issue with your TTO officer. Especially in an academic environment, he or she will be reluctant to provide unsolicited advice regarding this issue.
- Remember that licensing incomes reward the commercial value, and not the scientific value, of your invention. technology licenses may provide you with follow-on grants and other intangible incentives to conduct further research.
 Abstract
Technology Valuation: An Introduction
by Robert H. Potter
Abstract:
This chapter explains the basics of the various ways of estimating value of a new technology, focusing on the importance of agreeing on the value before finalizing a technology transfer deal. Indeed, value is simply the negotiated amount arrived at between two parties. Although there are many ways to place a value on a technology, most licensing deals focus on royalty amount, since it spreads the risk between the technology provider and the developer. The percentage assigned to royalty has to be negotiated. Several factors will affect royalty value: level of market demand, the improvement the technology can bring to the final product, whether or not other investments will be needed to develop the final product, and, most importantly, the predicted rate of uptake in the marketplace. Some understanding of these factors, or at least the procedures used to estimate them, will enhance one’s ability to negotiate a deal that will both help bring the technology to market and nurture the relationship between the parties, thus facilitating any future technology transfer deals.
Abstract
Valuation of Bioprospecting Samples: Approaches, Calculations, and Implications for Policy-Makers
by William H. Lesser, Anatole Krattiger
Abstract:
In this chapter, the revenue consequences of varying collection fees and royalties with regard to germplasm prospecting contracts are demonstrated. Principal factors are the uncertainty of finding marketable products and the value of these products. Negotiation factors are finding a good balance between collection (initial) fees as opposed to royalty (delayed) payments. Emphasizing collection fees reduces total payments except when national interest rates are very high. Reducing the risk of failure through in-country screening, including the use of indigenous knowledge, is a potentially valuable activity. Issues for contract negotiators are outlined and the implications for biodiversity conservation discussed. Conceptually, the highest valuation approach, royalties, will most encourage conservation, but as the future is typically heavily discounted, collection payments may get more attention and be most effective. Policy considerations for national governments, nongovernmental organization (NGOs), and development agencies are reviewed and it is concluded that grants/loans and training/equipment for in-country screening should be given a high priority as a potentially viable activity in the long term.
It should be noted that the figures and calculations in this chapter are merely for illustration. The valuation of samples, and by extension a country’s biodiversity, is a negotiation and will depend on many factors, including alternative investment options by a company, alternative technologies that could be used for lead compounds, interest rates, and a range of risk factors, such as the political situation in a given country surrounding the national debate on bioprospecting. The latter point is a key factor: valuation is always a calculation that has important political consequences. Another complicating factor is the need for confidentiality with which a country and company will hold its overall business estimates. Neither a company nor a country will be likely to share their valuation basis purely for negotiation purposes and because neither want to tip off other entities about the opportunity. It is therefore concluded that, from a practical perspective, the proper valuation is the one that (1) provides the country with compensation and other benefits such that it does not feel taken advantage of and can withstand criticism from its constituents and (2) provides the licensee (typically a company) with a reasonable cost of obtaining the crucial raw or semifinished goods it requires as an input to its business.
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