Halevy Greenberg & Co. L A W O F F I C E S Gross Kleinhendler Hodak Practical IP Issues and...

Halevy ▪ Greenberg & Co.L A W O F F I C E S

Gross ▪ Kleinhendler ▪ Hodak

Practical IP IssuesPractical IP Issuesand Challenges and Challenges

in Israeli Company’s in Israeli Company’s Ordinary CourseOrdinary Course

of Businessof Business

Amir Halevy, Adv., Managing Partner

Renana Dolev Harel, Adv., Head of IP Dept.

5th of December, 2005

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Gross ▪ Kleinhendler ▪ HodakHalevy ▪ Greenberg & Co.

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IntroductionIntroduction

Lecture Outline:

Safeguarding your IP

Exploiting your IP



Part IPart I

SafeguardingSafeguardingYour IPYour IP


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Incorporation of Commercial EntityIncorporation of Commercial Entity

Rights to IP / Assignment of IP Protection of IP

Patents/Trade marks Confidentiality and Non-Disclosure Non-Compete


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Investment and M&A AgreementsInvestment and M&A Agreements

Term Sheet Due Diligence Agreements Exhibits


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Term SheetTerm Sheet

Technology IP Rights Confidentiality Non-Compete


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Due DiligenceDue Diligence

Due Diligence Employment Agreements with previous employers

Non Compete Rights to IP

Rights of Third Parties Non Infringement of IP Rights Universities/R&D Institutions License/Royalties

Patent Attorney Opinion


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Investment and M&A AgreementInvestment and M&A Agreement

Precise Definitions Good Title Good Standing License/Royalty Security Measures Non Infringement

Company Rights Third Party Rights

Israeli Research and Development Law, 5744-1984 Indemnification

Company Views Investor / Buyer View


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Israeli Research and DevelopmentIsraeli Research and DevelopmentLaw, 5744-1984Law, 5744-1984

Law applies to all companies who receive grants from the Israeli Chief Scientist, even after full return of the grants.

Latest Amendments Manufacturing outside of Israel “Exits” by sale of know-how to non-Israeli entities


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Israeli Research and DevelopmentIsraeli Research and DevelopmentLaw, 5744-1984Law, 5744-1984

Transfer of know-how abroad: Sale or transfer of know-how

Allowed after receipt of approval Subject to repayment formula to be agreed on in future

regulations

Transfer of know-how in exchange for the transfer of substitute know how to Israel Committee may approve transfer of know how with no

additional charge


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Israeli Research and Development Israeli Research and Development Law, 5744-1984Law, 5744-1984

Manufacturing Abroad Obligation to Israeli portion of product manufacture unless:

Impossible Unrealistic Uneconomical

Manufacturing abroad allowed without transfer (sale) of know-how

Terms: Manufacturing of up to 10% - no approval required Manufacturing of more than 10% - approval required

may be subject to a lump-sum compensation of up to 120% of the grant amount


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ExhibitsExhibits

Assignment Agreement Employment Agreement

Rights to IP Non Compete

IP Status reports Opinion of IP Counsel and Patent Counsel



Part II Part II

Exploiting Your IPExploiting Your IP


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Israel is a Leading Nation in IP Production Israel is a Leading Nation in IP Production But Do We Know How to Protect It?But Do We Know How to Protect It?


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Growth Rate of U.S. Patents

1790

1955

2003

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1750 1800 1850 1900 1950 2000 2050

Year

Cu

mu

lati

ve N

um

ber

of

Pate

nts

Issu

ed

Intangible Assets Value > Tangible Assets Value Soaring Patent Filings Ability to Freely Operate is Difficult to Ascertain

Problem: Patent ExplosionProblem: Patent Explosion


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Solution: IP AnalysisSolution: IP Analysis

Plan before acting! Receive perspective on patent coverage and

danger zones: Relevant technologies “Blocking” patents and potential design-arounds Mitigation of infringement threat Companies and inventors in the space


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Patents are like Real EstatePatents are like Real Estate

Infringement

Assignment

License

Security Interest

Patent Maintenance Fees

Patent Office Registration

Design, Market, Sell

Position w/ Tech. & Market

Scope of Claims

How well patent prepared

Trespass

Sale

Lease

Mortgage

Annual Property Tax

Title, Registration

Design, Build, Exploit

Location

Square Footage

FinishesSource: Morrison & Foerster LLP


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The Patent LandscapeThe Patent Landscape

DANGER ZONEFortressBlocking

Unclaimed Valuable Land

Valuable Land

The Market

Big HouseBad Location

Public Land/ Prior ArtInvalid Patent

Technical Standard

Source: Morrison & Foerster LLP


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When and why should you perform When and why should you perform IP Analysis?IP Analysis?

IP audit and valuation Patent strategy and portfolio development Transactions

Merger & Acquisition (in new business area) Joint Venture Licensing

Joining standards group or licensing pool Freedom to operate Understanding competitor patent position Identify opportunities for future R&D


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IP Evaluation ProcessIP Evaluation Process

PerformSearch

Define Scope

Select Patents ofInterest

Map Trends

Analyze Patents

Design

Around?Display results

InvestigateOwners

MitigateInfringement


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Return of Investment – IP Return of Investment – IP ExploitationExploitation

Secure financing Royalties Protect market share Deter third party infringement suits

Acquire a license to competitor’s patent Provide a bargaining chip

Collaborations


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Business Aspects of Licensing Business Aspects of Licensing AgreementsAgreements

Nonexclusive v. Exclusive Worldwide v. Defined Territory – geographical

parameters. Perpetual v. Specific Time Frame – temporal

parameters. Irrevocable Nontransferable Royalty Free v. Royalty Bearing Unrestricted Use v. Field of Use


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Time is Money – Time is Money – Perpetual v. IrrevocablePerpetual v. Irrevocable

Perpetual license Irrevocable license Perpetual license or Non-Perpetual license

can be revocable or irrevocable. Analogy –

perpetual regards a string of infinite length; irrevocable regards a string (of any length) that

cannot be cut.


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Field of UseField of Use

Unconstrained rights to use or make commercial use of intellectual property.

Limitation of use through definition of Field: by product by function performance criteria physical characteristics markets combination with other products or technology technical or use aspects


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Field of UseField of Use

Tailored to the technology. Value of the license according to scope of

granted rights. Specification of future trends, research,

technology, etc. – prefer a non-generic clause.


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Revenues and CompensationRevenues and Compensation

Nonrecurring Fees v. Recurring Fees Nonrecurring Fee Recurring Fees:

Periodic fixed fee. Royalties - volumes or percentage of revenues.

Royalty terms vary according to licensed technology, license scope and exploitation.


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Business Leverage in License Business Leverage in License TerminationTermination

Expiration v. Automatic Renewal Adjustments usually require agreement of

all parties Leverage for Licensee –no change in terms if

the parties cannot agree, but the renewal term will commence anyway.

Leverage for Licensor – the term of the license shall end without renewal if the parties cannot agree on new terms.


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Surviving TerminationSurviving Termination

No Post Termination Rights v. Post Termination Rights Ability to meet customer orders received. Rights of use but no rights to title. Freedom to operate Non-Compete


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Business Collaboration with Business Collaboration with Universities/R&D InstitutionsUniversities/R&D Institutions


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Income of $39M in 2005Income of $39M in 2005 toto TTC of the Hebrew UniversityTTC of the Hebrew University


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IP of University/R&D InstitutionsIP of University/R&D Institutions

Technology Transfer Company (“TTCs”/”TTOs”) Converting scientific findings into commercial assets

Ownership of IP resulting from university employees Profit making company Identification and protection of IP Assist researchers in finding potential investors and in

creation of profitable license deals/spin-out companies Cash incentives - substantial amount of the profits (usually

40% or more) back to the researcher and his team



Q&AQ&A


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Thank YouThank You

Contacts:Contacts:

[email protected]@gkh-law.com

[email protected]@gkh-law.com

Halevy Greenberg & Co. L A W O F F I C E S Gross Kleinhendler Hodak Practical IP Issues and...

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