Both knowledge institutions and companies are often uncertain about how to successfully secure and exploit intellectual property (IP), what legal steps are required and who can provide assistance.
Contractual arrangements in the run-up to innovations
In an innovation process, the need to share secret know-how with others arises early on. As long as no cooperation agreement is reached, a non-disclosure agreement regulates the confidentiality obligations and how the confidential know-how of partners is handled during the pre-contractual stages of business.
A further cooperation agreement shall ensure the parties’ expectations, the work progress, the scope of the services, the time limits and termination, the exploitation of the work results and the IP already included in the cooperation by the parties.
Legal protection of innovations
Once promising results become visible, they must be legally secured. The time factor is decisive in this regard, because the principle of primacy applies: the right secured first is the more right. Patents and utility models help secure technical innovations; a registered design would be a good idea for optical innovations. Trademark and domain registrations support you in the marketing and communication phases of innovation.
Comprehensive protection can be achieved by registering several IP rights at the same time in order to cover the different aspects.
Commercialization of IP
The most common commercialization models for IP rights include the following actions:
- Selling the IP rights
- Licensing the rights to an existing company or a newly established spin-off company
- Granting a license to a spin-off, combined with a participation in the spin-off.
Sale of IP rights
In a sale, a full transfer of ownership of IP rights and/or secret know-how takes place based on a sale and transfer agreement.
In the run-up to the sale, the market value of the IP rights shall be determined. To this end, different approaches exist, whereby tax considerations are also to be taken into account.
After the contractual transfer of ownership, the new owner must be listed in the register of each country.
Licensing of IP rights to a newly established spin-off
In the concept phase, the timely conclusion of a limited letter of intent helps establish the founding idea and provides the founding team with planning certainty.
In the subsequent development phase, concrete considerations are already made on IP exploitation strategies, and the first negotiations take place on the terms and conditions of a license agreement.
In the start-up phase, the spin-off emerges as a legal entity and can thus assume the position of a licensee with whom a license agreement can be signed. If it is agreed that a spin-off will acquire the IP rights at a later stage, a purchase and transfer agreement can be concluded in addition to the license agreement.
Licensing of a spin-off in combination with an interest in the spin-off
This licensing model is in demand because it preserves the liquidity of the spin-off in an early phase. Legally, this arrangement is guaranteed by a license agreement in combination with a corresponding acquisition of company shares. The company shares acquired during the commercialization of IP are often sold to make a profit after an IPO or a sale of the company.
Valuation of the IP portfolio
Both the acquisition of business units and the sale require an expert valuation of the IP portfolio. For this purpose, V.O. has developed a model in consultation with a patent valuation specialist. This model is based on a standardized approach of the Austrian tax authorities to value patents as intangible assets on the company balance sheet. Such a valuation is intended to be a well-founded estimation of the value, based on a multitude of parameters influencing it, without verifying or analyzing each of those parameters in detail. Therefore, the approach is somewhere between that of major specialized firms and that of an online estimate.
The model is designed to identify the most important financial and legal parameters of the patent or application via a single list of questions. This is a model based on expected future revenues and costs (‘income approach’), taking into account both technological and legal risks. The information on which the valuation is based comes primarily from the client.
The model does not take into account the unique individual aspects of each patent or the unique (market or product) situation. Nor is there any in-depth financial check on cashflow or market positions, or a substantive legal assessment of validity, or patent-specific questions per jurisdiction.
The advantage of this approach is that it provides a good indication of value, while the costs are proportionately lower than those of a specialized analysis, which is more in-depth.
Do you have any questions?
Contact one of our experts. V.O. is your partner in all IP matters and offers support in all steps of creation, protection and deployment of your IP.