Licensing Boot Camp: Intellectual Property & the Business of Biotech

Transcription

1 Licensing Boot Camp: Intellectual Property & the Business of Biotech Hemmie Chang Chair, Licensing & Strategic Alliances Group, Foley Hoag LLP March 25, Foley Hoag LLP. All Rights Reserved. Life Sciences Practice

2 Licensing Volume Outpaces M&A 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 2

3 Who Owns the Invention? An inventor owns his or her invention Co-inventors jointly own the entire invention Who is an inventor? First to file for patent, unless derived from another So why don t grad students own their patents? Assignment is typical condition of employment/use of facilities 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 3

4 Assignment of Patent Rights Patent Rights Typically Assigned to Employer, University, or Government Agency Up Front 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 4

5 Harvard IP Policy (cont.) Assignment of Patent Rights 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 5

6 IP Ownership When does the institution own its employees work? Employment agreement saying does hereby assign created an automatic assignment. Preston v. Marathon Oil (Fed. Cir. 2012) Agreement saying agree to assign did not, so later transfer by employee took precedence. Stanford v. Roche (Fed. Cir. 2009), aff d other grounds (U.S. 2011) Note in ex-us academic institutions inventions not typically assigned to institution in writing 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 6

7 University Technology Transfer Offices FY12 Technology Transfer Activity Total Invention Disclosures Startup Companies U.Cal. 1,776 MIT 694 Harvard (3.4/100 discl.) 1 16 (2.3/100 discl.) 10 (2.7/100 discl.) 1. For MIT Startups, Venture Capital financed or $500K minimum funding Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 7

8 National Institute of Health funding (Awards by Location, FY 2011) Cluster $ (in millions) Rank Greater Boston $2, New Jersey/New York City $1, San Francisco Bay Area $1, Los Angeles/Orange County $1, Suburban Maryland/DC/Arlington $ Raleigh-Durham $ Seattle $ San Diego $ Source: Jones Lang LaSalle IP, Inc. Life Sciences Cluster Report Global Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 8

9 What is a License? Common IP license types Patent license Unpatented technology (trade secret) license Copyright license Software license Trademark license Any combination of the above Highly variable and specific to the situation 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 9

10 License Agreement or Option License Agreement provides licensee access to another party s technology Can be exclusive Can be non-exclusive If parties cannot get to yes on License Agreement, Option Agreement can be an initial step for monetizing IP 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 10

11 License vs. Assignment (Sale) License is different from outright sale or assignment of patents and trademarks Rights retained by owner Ability to control: e.g., field, territory, term, products, sale channels, use Choose exclusive or limited rights Control who else can use the rights Rights can revert upon termination Can license multiple times 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 11

12 Reservation of Rights - NOTE that academic institutions and non-profits may be required to reserve rights for academic, non-profit or governmental purposes (e.g. Bayh- Dole restrictions) - Companies may also want to explicitly carve out uses, products, fields or territories for themselves or third parties (e.g. internal research) 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 12

13 Co-Development & Marketing/Distribution One party may fund development by the other Incentives created by up-front funding, milestone payments, supply arrangement, and/or royalties. If smaller party has technology close to commercialization, enter partnership for marketing and distribution 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 13

14 Recipe for a License What are your business goals? What is the technology? What rights are to be created, transferred or licensed? How will the licensed technology be used, developed, supplied, or sold? What s the financial deal? How can you get out of the agreement? What is the big thing that can go wrong? 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 14

15 License grant Key License Terms Patent rights (35 USC 271, 35 USC 262) Make, have made, use, sell, offer to sell, or import Covenant not to sue Term, e.g., life of patent, time-limited Licensee (affiliates, subcontractors, collaborators) License scope Exclusive; co-exclusive; non-exclusive Field, e.g., indication, product, consumer vs. doctor Territory, e.g., US, ex-us, worldwide, Japan, ROW 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 15

16 Show Me the Money Upfront Fees Milestones Royalties 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 16

17 Consideration Key License Terms Upfront; milestones (development, annual sales, per product, one-time or aggregate) Royalty rate (for patents, step-down for know-how, anti-stacking); lump sum; minimum payments Brulotte v. Thys (U.S. Supreme Court) Royalty base (e.g., net sales, which products) Sublicense income Recordkeeping and audit rights Can Licensee challenge licensed patent? Medimmune; Rates Technology 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 17

18 IP Ownership Background IP - Each party may bring IP to the table - Often this is the crown jewel of the company - Prior to entering into any collaboration, company should get their IP in order - Critical to clearly demarcate the buckets of IP each party owns 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 18

19 IP Ownership Improvements or Foreground IP Ownership may be determined based on: - Field: Licensee owns all improvements in the licensed field - Contribution: Each party owns all improvements it solely develops, and improvements developed together can be owned by one or both parties (joint IP) 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 19

20 Key License Terms Control over IP: prosecution, infringement, and enforcement Limits on publication; Confidentiality Restrictions on further transfer Sublicense (one-tier or multiple tiers) Assignment To acquiror by merger or sale of all or substantially all assets to which this license relates Liability and Indemnification Termination 2014 Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 20

21 Q&A Hemmie Chang, Chair Licensing & Strategic Alliances Group Dana Gordon, Deputy Chair Intellectual Property Group Foley Hoag LLP 155 Seaport Blvd. Boston, MA v Foley Hoag LLP. All Rights Reserved. Life Sciences Practice 21