Embed Size (px)
Citation preview
LES COMMUNITY CONVERSATIONS
NOVEMBER 27, 2012
NANOTECHNLOGY COMMITTEEHIGH TECH SECTOR WEBINAR:
The Path to Creating, Managing and Extracting Value from IP in Nanotechnology
2
WEBINAR OUTLINEOpening
◦ Erin Murphy, Manager – Chapter Relations, LES
Speaker Introductions◦ Luca Escoffier (Moderator), CEO, Usque ad Sidera,
LLC
Speaker Presentations◦ Sarah Rouse, Corporate IP Counsel, Onyx Pharmaceuticals◦ Ken Epstein, Principal, NewCap Partners, Inc.◦ Lance Criscuolo, President, Zyvex Technologies◦ Efrat Kasznik, President, Foresight Valuation Group;
Chair, Nanotech Committee, High Tech Sector, LES
Audience Q&A
3
IP Landscape for Nanotechnology Based Inventions
Sarah Rouse Janosik, Ph.D., J.D.◦Corporate IP Counsel, Onyx
Pharmaceuticals ◦Registered Patent Attorney
4
Speaker Presentation: Sarah Rouse Janosik, Ph.D., J.D. Corporate IP Counsel, Onyx Pharmaceuticals
1. IP landscape for nanotechnology-based inventions
2. How is the patenting of nanotechnology inventions different from other fields?
3. What are the major implications of the introduction of the AIA for nanotechnology applicants?
4. What is the best way to perform a nanotechnology due diligence assessment to structure for investment?
5
Nanotechnology is at the forefront of technology innovation across multiple disciplines, with the common scheme being scale.
“Nanophase” is a special state of subdivision implying that particles or atomic clusters have average dimensions smaller than approximately 100 nm (100x10-9 m).
Cascade Blue/SiO2 Nanoparticle
Nanotechnology
6
Nanophase materials frequently exhibit unique properties not observed in their larger bulk phase counterparts such as enhanced magnetic properties, increased structural activity, altered electrical or optical activity, or altered chemical or biological activity.
Nanotechnology-based inventions are currently being used in biomedicine, electronics, information technology, environment and sanitation applications, energy production, lithography, data storage, optics, aerospace applications and molecular robotic manufacturing, among other areas.
The global market for nanotechnology-based products is projected to be US $2.41 trillion by 2015.*
Nanotechnology
*Nanotechnology: A Global Strategic Business Report, Global Industry Analysts, Inc., October 2010.
7
IP Landscape for Nanotechnology-Based Inventions
Broad overlapping patent rights granted to nanotechnology-based
inventions have resulted in a “patent thicket”.
A “patent thicket” is a situation where unreasonable breadth of patent
claims of issued patents increases the potential for patent litigation and
makes commercialization difficult or impossible for a new entrant in a
particular business sector.
– Carbon nanotubes
– Dendrimers
– Quantum Dots
Many practitioners fear that the patent thicket will hamper research and
innovation in nanotechnology.
8
Maneuvering through the Nanotechnology Patent Thicket
Cross-licensing
– Parties license patent rights among themselves with promise not to
sue one another
– Viable strategy for late-comers looking to enter saturated
nanotechnology field
Patent Pooling
- Parties assemble overlapping patent rights into single agreement,
with each party taking exclusive or non-exclusive rights to a
particular field of use covered by the combined patents
- Risk that parties will overvalue own contributions, thereby
foreclosing participation by new parties
9
How is the Patenting of Nanotechnology Inventions Different from Other Fields?
As many nanotechnology inventions already exist at the macroscale,
certain claims to nanotechnology inventions could be deemed
anticipated by their larger-scale counterparts.
- When drafting the claims of a nanotechnology patent application,
the improvement offered by the invention should be emphasized
A mere decrease in size to the nanoscale may be deemed as obvious.
- Where the invention is not merely a reduction in size, but rather a
solution of a new problem, the claims should focus on the solution
10
How is the Patenting of Nanotechnology Inventions Different from Other Fields?
Use of overly-broad or unspecific terminology in nanotechnology
applications may result in the rejection of claims for lack of written
description or enablement.
- When possible, well-known terms of art should be used to describe
the invention
- Ambiguous or unclear terms should be clearly defined and
consistently used in the specification
- Characterization techniques (e.g., atomic force microscopy (AFM),
powder X-Ray diffraction (PXRD), scanning electron microscopy
(SEM), particle size analyzers, zeta potential measurements) and
sample preparation should also be clearly described in the
specification
11
What are the Major Implications of the Introduction of the AIA for Nanotech Applicants?
America Invents Act (“AIA”) went into effect September 16, 2012
Overhaul of US patent system
- Patent prosecution
- Patent litigation
- USPTO post-grant proceedings
Fundamental change in approach to inventorship
- Transition from first inventor to invent to first inventor to file
- Independent conception of invention by a first filer can result in an
awarded patent regardless of whether another invented first
US approach to inventorship now homogeneous with rest of the world
12
AIA: Transition from First to Invent to First to File Patent System
Applicable to patent applications with an effective filing date of March
16, 2013 or later
Pressure to file first must be balanced with enablement requirements
- Specification of patent application must describe how to make and
use the invention in such full, clear, concise and exact terms to
enable a person skilled in the technology to carry out the invention
without undue experimentation (the ”enablement requirement”)
- Enablement is determined as of the filing date of the patent
- Nanotechnology commercialization significantly lags development:
nontechnology-based inventions often exist on "paper" and have
not been fully realized in a laboratory setting
13
What is the Best Way to Perform a Nanotech Due Diligence Assessment to Structure for Investment?
Patents = key business assets
- Weak patent position can prevent financing
- Weak patent position can prevent acquisition
- Weak patent position can have negative impact on valuation
A robust patent portfolio is based upon and supports business strategy
At a minimum, the portfolio:
- Covers key products/services
- Creates barriers to entry
- Provides ammunition against competitors
14
Defensive Patent Portfolio Management Strategy
Strengthening Patent Protection:
- Strategically file for patents in key markets
- Refine claim language
• Make it easy to determine infringement
- Fill in gaps in claim coverage
• Layer protection (e.g., genus, species claims)
• Review claims with inventors and consider design around
possibilities
• Consider alternative claim-drafting strategies
- Consider in-licensing/acquisition of additional IP
15
Offensive Patent Portfolio Management Strategy
An understanding of competitive landscape is key
- Continuous monitoring efforts
- FTO, validity opinions
Blocking competition
- New patent filings (anticipate competition)
- Old patent filings/new claims (mining existing disclosures)
Complementing the portfolio of a potential acquirer
- May held differentiate you from your competitors during acquisition
- May help equalize valuation leverage if the potential acquirer holds
relevant IP
16
Nanotechnology Commercialization:Industry & Investment Opportunities
Ken Epstein◦Principal, NewCap Partners, Inc.
17
Speaker Presentation: Ken Epstein, Principal,NewCap Partners, Inc.
1. What is your experience in developing nanotech products in a large company, like Dow?
2. What is the real potential of the nanotech
industry? 3. Is nanotechnology an industry or just
another technology?
4. How do investors see this promising field?
18
Nanotechnology Commercial History Background
R&D (and even commercial products) from sub 100 nm materials has been going on in both industry and research laboratories since the 1980’s even before it had a name (“Nanotechnology” around 2000)
Some successful early nanoparticle commercialization products in the 1980’s and 1990’s include: A mixture of micro and nano metal catalysts to produce new generation
of plastics (resulted in large IP legal battle between Exxon and Dow on the catalyst technologies scope, freedom to operate, and application coverage).
Polymer systems including nanoparticles (<10%) for structural applications (e.g. General Motors used on extended step for handicap vans)
Nanoparticles added to cement to allow extended life to move long distances and pour cement in large cities (Tokyo was one of first cities to use).
11/27/2012Ken Epstein, Principal NewCap Partners
Ken Epstein, Principal NewCap Partners
19
Early Dow Chemical Nanotech Product
I have been in Nanotechnology since 1986 when I worked as a venture manager at the Dow Chemical Company--(Dow group referred to this area as its sub-sub micron particles, solutions or products)
First successful commercial Dow nano-product was a sub 100 nanometer 100% tungsten carbide tool (normally use metal like Nickel or Cobalt as binder-WC/Ni or WC/Co) with applications including: High pressure highly abrasive resistant water jet cutting tools for aerospace (composites) Replacement of diamond coated metal tools for high speed automated cutting tools Early color HP inkjet nozzles because some inks are very abrasive
IP Coverage-Global: Patents and trade secrets on manufacturing process (high pressure, very short time-<60
seconds)) Patents and trade secrets covered use of multiple materials (metals, ceramics,
combinations) Patents and trade secrets covered multiple applications LOST GLOBAL COVERAGE ON ONE KEY PATENT APPLICATION DUE TO SENIOR SCIENTIST
PRESENTING DATA AT TECHNOLOGY MEETING 3 DAYS BEFORE OFFICIAL PATENT APPLICATION WAS FILED.
ALL PARTS BUSINESS WAS SOLD TO KENNAMETAL IN 1996-KENNAMETAL STILL USING THIS TECHNOLOGY TO MAKE PARTS FOR SPECIALTY TOOLS MARKETS.
11/27/2012
Ken Epstein, Principal NewCap Partners
20
Is Nanotechnology an Industry or a Technology?
Nanotech really describes a broad scope of technologies that can service a wide array of different markets and applications so I would say that Nanotechnology is a platform technology
Nanotechnology is still a relatively new platform for technology and solution development for markets and industries
Typically, it takes more than 20 years to really establish technology in commercial applications
Zyvex is an example of a successful small nanotech company that developed applications using nanotechnology to push the commercialization of nanotech solutions.
11/27/2012
Ken Epstein, Principal NewCap Partners
21
Nanotechnology IP Issues
There have been billions of dollars spent over last 10 years in nanotech R&D and initial commercialization
Nanotech IP area is quite crowded globally with more than 10 governments and a large number of global public companies (e.g. IBM, BASF, Dow, DuPont, Sumitomo, Toray, Defense & aerospace companies, etc.) funding, working on, and filing patents in addition to all the nanotech start-ups
The number of nanotech patents globally (e.g. China, Japan, Europe) has increased significantly as these governments fund nanotech institutes for commercialization and scale-up applications
The major IP issue for commercialization is “freedom to operate”-slows down commercialization and is an investment obstacle. Particularly sensitive for IP that does not have global patent
protection for applications
11/27/2012
Ken Epstein, Principal NewCap Partners
22
Nanotechnology IP Issues
Nanotech IP global strategy becomes one of key components of commercialization strategy if company wants to be successful
As most of the audience knows, IP Strategy includes not only patents, but also trade secrets, publishing to protect application use, and trademarks and copyrights.Unfortunately, most of the people working at the
nanotech companies, government labs, and even large corporations, do not understand how to maximize their total IP strategy to help commercialize products
Other panelists more qualified than I will address issues and ways to strengthen Nanotech IP strategy.
11/27/2012
Ken Epstein, Principal NewCap Partners
23
Investment Opportunities/Issues for Nanotechnology
Investors are more interested in what the nanotechnology will do to help them make money (financial investors) or what it will do to extend use of existing company (strategic investors) system or product that they are selling rather than the technology and IP (hard for technology people to appreciate)
Nanotechnology is presently at a stage that it is still a tool or platform for making products or systems work better. The next generation of nanotech breakthroughs will bring disruptive solutions to some market segments.
Nanotechnology solutions have been slower to be adopted in most applications in that there is usually new capital needed by customer to introduce the nano-solution either to improve the system or replace a component or subsystem
The quickest success for Nano-solutions has been where the product or solution can be dropped into the existing system with minimum capital expenditure or change in system. There is an IP opportunity for development of nanotech solutions to be able
to fit into existing systems with minimum capital expenditures.
11/27/2012
Ken Epstein, Principal NewCap Partners
24
Valuation/Investment Climate for Nanotechnology
Investment climate for nanotech companies has been difficult in the last few years There are still many nanotech companies with technologies still
looking for markets Both corporate and financial investors have changed their
appetite for nanotech investments—now looking for solutions or components (e.g. battery) to scale-up and commercialize rather than platform of materials or technologies
IP covering applications, products, and solutions rather than just materials and processes to make nano products has become more important to investors in the nanotech space-Freedom to Operate
Nanotech groups now should seek investors or corporate partners that understand the market space/potential cost and efficiency benefits where the nanotech solution can be used so that the IP and technology value can be maximized.
11/27/2012
25
Bringing Nanotech Products to Market: Opportunities & Hurdles
Lance Criscuolo◦President, Zyvex Technologies
26
Speaker Presentation: Lance Criscuolo, President, Zyvex Technologies
1. What is the key to your success in commercializing nanotechnology? How is the process different from a large company, like Dow?
2. Why has nanotechnology seem to take so long to materialize in the commercial world, where is it today and what is expected in the future?
3. How difficult is it to have an international business involved in nanotech products and how difficult is to be in compliance with national and international regulations?
27
‣ What helps our success?
‣Our willingness to move down the value chain
Technology Intermediates End Products
‣ How are we different from Dow or Coning?
‣We don’t have the resources (time) to wait for technology to be adopted
Success and Differentiation
Customer Value Line +
IP value also increases as you move down the value chain
28
‣Why does adoption take so long?‣It is the nature of the business
Products drive growth
‣ Factors that drive adoption
‣Supply chain validation
‣Product adoption cycles
‣Perception, Hype, and Regulatory
‣Value
Success and Differentiation
Growth/Adoption
Graphene
Connectio
n to
IP
‣ Our position is that IP is significantly more valuable when directly connected to a product
IP Value
Value Position
Technology Intermediates
End Product
29
IP Connection
30
‣How do regulations affect adoption?‣Regulations are potential product/industry killers
‣When you introduce Nano – it gets tougher
‣Regulations can also be driven by perception
‣ Degree of difficulty goes up significantly when you are dealing with a foreign country
Regulatory Climate
31
IP Valuation in Nanotechnology: Challenges and Methodologies
Efrat Kasznik◦ Chair –Nanotechnology Committee, LES High Tech
Sector◦ President, Foresight Valuation Group, LLC◦ Lecturer, Stanford Graduate School of Business
32
Speaker Presentation: Efrat Kasznik, President, Foresight Valuation Group LLC
1. What is your approach to the valuation of IP in an emerging field, like nanotechnology?
2. Is nanotechnology different from other emerging fields?
3. What is the difference between valuation and evaluation of a technology? Would it be more appropriate to perform an evaluation of nanotech IP rather than a quantitative valuation?
4. What role does IP valuation play in supporting technology transfer in the nanotechnology field?
General IP Valuation Methods
Method Description Advantages Disadvantages When Used
Market
Based on market transactions
involving comparable intangibles
Market driven, reflects market
prices (supply and demand
equilibrium)
Comparable transactions are
not always available
Most desirable, but rarely used (lack of market
data)
Income
Based on future economic utility
generated by the intangible (royalties
or incremental profits)
Straight forward approach, based
on observable industry norms (royalty rates)
Input factors may be hard to
estimate: Future projections,
Royalty rates, Market
penetration
Most Commonly used
Cost
Based on estimation of the
cost to replicate/reproduce
the intangible
Easy to calculate – based on known factors (time and materials, hourly rates, overhead)
No measure of utility or market
demand
When neither Market nor
Income methods are applicable
IP Valuation in Emerging Markets
Litigation Very HighDamages Award
Mergers & Acquisitions Very High Financial
Reporting
Inter-company transfers Very High Transfer
Pricing (Tax)
Spin-Off High
Investors’ due diligence
In-Kind Contributions High Joint
Venture
Sell/Buy IP Medium
Monetization
Licensing /Cross Licensing Medium
Negotiation Support
R&D Investments Medium
Internal Decision/Planning
Portfolio Management Medium
Internal Decision/Planning
Market Assessments Medium
Internal Decision/Planning
Initial Estimate Low
Threshold analysis
Emerging
Developed
Event Scrutiny LevelPurpose of Valuation
35
How is Nanotechnology Different?
◦Nanotechnology is similar to other emerging fields: The main challenge is valuing basic research and
tech transfer from university to industry
◦There is no easy way to model cash flows when products are years away Many speculative assumptions need to be made
on future events.
◦Nanotech differentiator - its interdisciplinary nature Applications in multiple industries Understanding where in supply chain revenues
are realized is critical to modeling cash flows
36
The Difference Between Valuation and Evaluation of a Technology
◦ An “evaluation” involves a non-quantitative assessment of factors : Specific to the technology: development, market,
regulatory Specific to the IP: quality of patents Evaluation is a preliminary phase to
commercialization or monetization strategy formation
◦ A “valuation” involves the assignment of a precise dollar value to an IP portfolio Required in situations involving financial
reporting, tax reporting, litigation and other compliance reporting
37
When is it More Appropriate to Perform an Evaluation vs. a Valuation?
◦ It depends on the circumstances of the transaction: Patent sales - rely primarily on evaluation of the
patents and some heuristic (non-formal) valuation Financial reporting – requires valuation of the
fair value of the IP, with no evaluation preceding the analysis
◦ Often we combine a quantitative assessment (the valuation) with a qualitative assessment (the evaluation) when analyzing nanotechnology IP
◦ Valuing Nanotechnology IP may be challenging as the regulatory and market uncertainties make predictions very difficult
Role of IP Valuation in Nanotechnology Tech Transfer : A Case Study
TECHNOLOGYInformation
PRODUCT &SERVICES
Information
MARKETInformation
FINANCIALInformation
Applications: packagingProducts : Plastic bottle
Unit sales: BottlesSelling Price: $0.06 /bottleMarkets: US
Unit Sales: 2 bill. bottlesGrowth Rates: 15%Market Penetration: 5%
Royalty rates: 3%, 10 yearsDiscount rates: 15%
This analysis is related to the valuation of nano-composite material technology (patents and know-how) for tax purposes by a large US chemical company
We applied the relief from royalty method, one of the most common methods for valuing royalty-bearing intangibles
39
Conclusions Audience Q&AThank you!
