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Generating Revenue from IPBristol & Bath Science Park,9 February 2012, 6-9pm

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Generating Revenue from IP

This Evening’s Programme6:45-8:15 Speakers

Introduction Alastair Watson BEN

Matthew Howell Withers & Rogers

Terence Cosgrove Revolymer

Alex Hall VWV

7:15-8:30 Q & A

8:30-9:00 Networking

Generating Revenue from IP

February, 2012

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Generating Revenue From Intellectual Property

Bristol & Bath Enterprise Network9 February 2012

Matthew HowellPartner

Withers & Rogers LLP

Nortel Patents Sold for $4.5bn

(June 2011)

Google to Buy Motorola Mobility for $12.5

Billion to Gain Wireless Patents (August 2011)

IBM collects $1.1bn in licensing fees

(2009)

Arm Holdings profits up over 40%

(January 2012)

Coke world's most valuable brand

(October 2011)

The Headlines

• A matrix of legal rights established to protect the fruits of intellectual effort...

• ... often a company's investment in Research and Development.

• Balance the interests of the state and business by providing a limited monopoly in exchange for wider dissemination of innovation.

What is Intellectual Property?

Registered Trade Marks

Patents

Common Law Trade MarksRegistered

Designs

Know How

Utility Models Copyright/Database rights

Unregistered Design Right

Registered Rights Unregistered Rights

Trade Secrets

What is Intellectual Property?

• Fortress

• Monopoly in a Box

• Licensing

• Franchising

• Sale

• Patent Box

IP Exploitation Models

1. The Fortress Model

• Create it

• Protect it

• Take it to market yourself

• Keep others out

• In 1991 25% of all vacuum cleaners sold in the UK were made by Hoover

• In 2001 more than half the vacuum cleaners in the UK were sold by Dyson

• In 2001 Hoover’s market share was less than 10%

• In 2010 Dyson’s market share was 40% and operating profits are £190m

Example - Dyson

Dyson DC 01Dyson DC 01

• 19 April1979: Dyson’s first UK patent application filed

• 17 June 1981: European patent application no. 0042723 “Vacuum Cleaning Appliance” filed

• 21 August 1985: Dyson European patent no. 0042723 granted

• 1993: Dyson DC 01 launched• “The first vacuum cleaner not to

lose suction”

Example - Dyson

• In 1998 Dyson sold 1.4m units worldwide, generating revenues of £190m

• In 1999 Hoover launched the “Triple Vortex” vacuum cleaner to compete with Dyson products

• Dyson instigated patent infringement proceedings against Hoover at the UK High Court and won

• In the High Court judgement of 2000, Hoover was ordered to stop supplying the Triple Vortex, Dyson was awarded £4m damages

Example - Dyson

• DC01 also protected by registered design

• Dyson trade mark registered• To date, Dyson has filed >1000 patent

applications• 119 Community Design applications • 65 Community Trade Mark applications

UK Registered Design No. 2027539

UK Trade Mark Registration No. 2000035 (Filed 31/10/94)UK Trade Mark Registration No. 2000035 (Filed 31/10/94)UK Trade Mark Registration No. 2316407 (filed 21/11/2002)UK Trade Mark Registration No. 2316407 (filed 21/11/2002)

Example - Dyson

• Getting the right route to market is critical• Keep innovating - what's right now might

not be so good tomorrow• Patents give you options• Need rights on peripheral features to

build walls

Fortress Model - Advice

• Build specific exploitation company around specific IP rights

• Show some turnover • Sell company (private/IPO)• Walk away and pocket cash

2. Monopoly in a Box

• Classical Licensing Model– License invention to others– Collect royalties– Works well in some (different)

industries

3. Licensing

• Est. 1990 (a JV of Acorn, Apple & VLSI)

• RISC processors

• Market value ~ £1.15bn

Example - ARM

• What IP was in place?– Proof of concept (Acorn Archimedes)– no patents– 12 Engineers in a barn (literally)

Example - ARM

• How was the IP used?– First "products" delivered to VLSI at the end of

1990– Established a reputation and invested in R&D– Expanded patent portfolio (1000+)– 50 million processors/year in 1998– 1 billionth processor shipped in 2001– 10 billionth processor shipped in 2007

Example - ARM

Licensing - Points to Note

• Not just patents - any IP can be licensed• Different types of licence

- exclusive/sole/non-exclusive• Different ways of licensing

- e.g. by territory/technological field• Royalty rates/payments vary depending on type

of licence, number/type/value of rights licensed, market, purpose of licence etc.

• Extension of licensing• Franchisor licenses brand (usually trade mark),

know how, get up in exchange for franchise fee and ongoing royalty

• In exchange, franchisee benefits from reputation, knowledge and corporate image of franchise, but must adhere to standards, rules and guidelines established by franchisor

4. Franchising

5. Sale

• IP is property, and can be sold just like any other form of property, e.g. Nortel Patent Auction

• Sell unwanted/redundant IP, e.g. patents, brands/trade marks

• IP often a key part of sale of a business - strong IP portfolio can increase the value of the business

• DSG is one of Europe's leading specialist electrical retailing groups

• DSG owns the well known trade marks

and• As part of its IP review DSG reviewed:

- trade marks which they proposed to use but never launched- trade marks which were no longer part of their strategy

• Selling these registered trade marks generated money to spend on other more valuable brands

Example

IP Exploitation

• Models not mutually exclusive– e.g. can use a fortress model in home market

to keep out competitors, but licence in other territories to achieve market penetration

• Different IP rights can be complementary– e.g. protect technology with patents whilst

building and protecting brand with trade marks and designs

• Tax break for holders of UK and European patents

• Due to come into force in April 2013

• Reduction in corporation tax to 10% for profits attributable to patents

• Applies to profits from sale of patented products and to licensing income

• Speak to your tax advisor!

Patent Box

Thank you

Matthew Howell

Partner

Withers & Rogers LLP

mhowell@withersrogers.com

Getting a good commercial deal

Alex Hall, Senior Solicitor

Lawyers & Parliamentary Agents

Introduction

• Firm of 51 partners, 200 lawyers and over 300

staff

• Office in Bristol (Head Office) and London

• Full service commercial law firm

• Commercial team – frequently advising on

existence, protection, exploitation and

enforcement of intellectual property

Generating Revenue from IP Getting a Good Commercial Deal

• What rights do you think you have? Have you

actually got them?

• Importance of correctly documenting terms

• How are you intending to exploit the rights?

What are the key terms?

• Enforcement as a means of maintaining and

developing value

What rights do you have?Do you actually have them?

• Copyright, trade mark, design right, patent, know how, trade secret

• Ownership

• Protection

• Rights that can’t be registered

• Rights that can be registered

• Confidentiality

Documenting the terms

• Memorandum of Understanding / Heads of

Terms

• Document the terms accurately in a binding

agreement

• Thinking of divorce when getting married

Methods of exploitation and key documentation

• Sale – Business Sale Agreement, Share Sale

Agreement, Assignment

• Classic Licence – Licence Agreement

• Joint Development and Exploitation –

Development Agreement

• Joint Venture – Joint Venture Agreement

• Franchise – Franchise Agreement

Key terms

• Rights – exactly what is being dealt with?

• Exclusivity – is the right exclusive or non-exclusive?

• Territory – is the right restricted to a territory?

• Duration – what is the length of the contract? Are there

renewal terms?

• Breach – reduction in territory / termination / reduce

rights

• Payment – royalty / guaranteed payments / equity / mix

Enforcement rights in contract

• Knowing a right or contract is well enforced can deter

third parties from infringing and increase IP value

• Notification of infringement / providing assistance with

actions / contribution to cost

• Interest – how is it calculated?

• Dispute Resolution – is there a procedure?

• Termination – breach / material breach?

• Governing law – English law and English jurisdiction?

Case Study

• Well know brand in the UK fashion industry:

• number of outlets and concessions in UK,

typically licensing model;

• very experienced in negotiating;

• wanted to expand internationally;

• strong bargaining position.

Case Study (Contd.)

• Rights – trade marks (registered and

unregistered);

• Model – combination of classic licensing with

joint venture;

• Key terms – Exclusivity, guaranteed payments

and royalties, termination;

• Enforcement – rights now registered in China.

Chinese firm to assist enforcement

Alex Hall, Senior Solicitor

ahall@vwv.co.uk 020 7665 0813

Lawyers & Parliamentary Agents