COUNCIL OF SCIENTIFIC &
INDUSTRIAL RESEARCH (CSIR)
GOVERNMENT OF INDIA / WORLD INTELLECTUAL
PROPERTY ORGANIZATION (WIPO)
GENEVA

Proceedings of the

CSIR-WIPO Workshop

On

Negotiating Technology Licensing Agreements

4-8 July 2005

Organized by
World Intellectual Property Organization (WIPO)

In cooperation with

Council of Scientific and Industrial Research
Government of India

Habitat World, India Habitat Centre

New Delhi, India

CSIR-WIPO Workshop

On

Negotiating Technology Licensing Agreements

4-8 July 2005, New Delhi

EXECUTIVE SUMMARY

  • Organized by WIPO in cooperation with CSIR, the Workshop provided practical knowledge in the field of technology transfer and licensing negotiations to CSIR personnel thus contributing to more effective transfer of technology.

Inauguration by MoST

  • Inaugurated by Shri Kapil Sibal, Minister of State for Science & Technology and Ocean Development, on 4 July 2005 at the India Habitat Centre, New Delhi.
  • In his inaugural address, the Minister expressed hope that the Workshop would deal with several issues such as IP ownership in case of research involving two countries, or IP ownership in case a drug is manufactured by one person and the biological material belongs to another. He also wondered whether licensing to developing countries could be made at affordable prices.
  • Shri Sibal emphasized that with the ushering in of the product patent regime, Indian pharma companies were also gearing up to invest in R&D. In view of India’s expertise in developing high-quality drugs at cheaper prices, big international players are willing to come to India and forge partnerships with Indian pharma companies.
  • The Minister said that India needed to exploit this expertise. The key, however, would be negotiating with the Western world and extracting the maximum profit.

DG-CSIR’s Deliberations

  • Addressing a special session at the Workshop, Dr R.A. Mashelkar, Director-General, CSIR remarked that the workshop could not have been held at a better time when the IP movement in CSIR is growing and gaining in status.
  • Dr Mashelkar felt that a lot more required to be done to bring about a radical change in the patent scene in the country and that from being a nation of copiers we need to gradually evolve to become a nation of innovators.
  • However, he was happy that things had begun to change as far as patenting activity in the country was concerned. He referred to the basmati patent in the US, which the CSIR fought and got revoked successfully. “It has been a century of change. From 1898 to 1998—from Bose to Basmati, India has come a long way,” he said.
  • However, Dr Mashelkar felt that the country had not yet latched on to the culture of patenting and commercialization in a big way. “Creation of wealth out of investment is critical,” he said.
  • He emphasized that Indians needed to become clever not just in innovating but also in patent writing.
  • He felt that this could be achieved by making it possible for scientists to access more scientific information; a beginning in this direction had already been made by providing access to CSIR scientists to 3000 e-journals through the network project called e-Journals Consortium.

Topics Covered

  • The five-day workshop covered a wide gamut of topics such as mining patent information; developing a patent strategy; establishing a marketing plan for technology commercialization; basic principles of technology licensing including licensing negotiations and preparing agreements; commercial and financial considerations in licensing; confidentiality issues and litigation, and so on.

Recommendations

  • The Workshop came up with several important recommendations.

Institutional Strengthening

  • Set up a strong team at the lab level to negotiate patent commercialization consisting of Scientist (Inventor); Representative of Business Development Group; IP Manager of the lab; Representative of Finance, and an Observer (Senior Scientist).
  • Integrate Business Development Group and IPR Group in CSIR for better exploitation of technology/know-how.
  • Create the post of an IPR Coordinator in CSIR.
  • Create a strong IP protection group to take care of infringements.

Emphasis on Valuation & Commercialization

  • Make the generation of Intellectual Property and wealth generation an integral part of the proposal right at the time of submission of project.
  • Take up further development of IP after filing of patent so as to give value to the patent and help in IP licensing.
  • Revaluate technologies/processes/know-hows/designs developed in CSIR labs that have not yet been licensed/commercialized.

Legal Support

  • Recruit and hire management and techno-legal experts.

e-forum

  • Create a portal on IP under the supervision of IPMD wherein any IP-related matter of concern to any CSIR laboratory can be discussed and solutions sought.

IP Awareness and Training

  • Create awareness amongst scientific community in all CSIR labs by drawing a team of experts from TNBD, IPMD and CSIR scientists who have undergone training in the Workshop.
  • Introduce R&D Management Studies under CSIR-Deemed University curriculum with subjects such as R&D Project Proposal Evaluation; R&D Project Management; IP Management; Innovation Management; R&D Business Management; Knowledge Management; Portfolio Management; Technology Valuation and Evaluation; Risk Analysis.

Patent Databases

  • Install a comprehensive patent search and patent mapping mechanism. Project proposals should justify the objective of R&D as a consequence of the patent mapping exercise.
  • Make available a centralized CSIR patent database with licensing and other relevant information as well as information about available manpower skills in CSIR.

Trade Secrecy

  • Formulate policy for visitors to labs and holding meetings with clients, with restrictions on sensitive locations.
  • Formulate policy ensuring Non Disclosure Agreement (NDA) for all employees; corresponding policy for students and trainees.
  • Ensure proper surveillance to prevent leakage of classified information.

Policy Formulation

  • Formulate MTA Guidelines in consultation with all the sectors in which CSIR is operating.
  • Formulate flexible policy for pricing of technology for the purpose of commercialization and avoidance of procedural delays.
  • Negotiate fixed annual royalty with SMEs since they adopt different accounting procedures.
  • Let ownership of IP lie with Research Institute in case of joint research, and exclusive license for reduced royalty with the partner industry with a clause for successful commercialization within stipulated time, failure of which would lead to termination of non-exclusivity of license.

Proceedings of the Five-day

CSIR-WIPO Workshop on

Negotiating Technology Licensing Agreements

BACKGROUND

In today’s new trade and patent regimes, the importance of intellectual property rights (IPR) and their role in the new world economy cannot be denied. Innovative technologies have come to acquire centrestage. And with the world becoming a global marketplace, the market for these technologies is virtually limitless. In fact, competitiveness in the global arena today has come to be defined by the ability to commercialize intellectual property assets generated as a result of research and development.

In India too, over the past few years, patent activity has shown remarkable growth. But this growth has been confined to a few organizations and private entities such as major drug companies. Certain research organizations like CSIR are also playing a key role in this process. Ten years ago, CSIR secured only five to six US patents per year. In 2003, it secured 196 US patents in a single year. In fact, CSIR has been constantly among the top three in the list of top fifty PCT filers brought out by the World Intellectual Property Organization (WIPO) for the developing countries and has maintained a 30% to 40% share of the US patents granted to Indians in India.

Of late, Indian institutions and organizations have started realising that to survive in the international markets they have to use patent as a strategic tool. And that in keeping with the demands of a knowledge society they need to redirect their research efforts towards creating innovative and novel products/processes that can be protected through patents.

If the country has to hold its own in the international markets, the patenting movement has to spread through all the sectors. But, more than patenting, the country needs to latch on to the growing trend of commercializing new technology. To remain competitive in the global arena, companies and organizations today need to develop effective mechanisms for intellectual property licensing and technology transfer as these are important factors in strategic alliances, joint ventures, and turnkey projects.

Licensing, which is the right granted by an owner of an asset to another to use that asset while still retaining ownership of that asset, is one way of exploiting intellectual property. Licensing offers several advantages both to the licensor and the licensee:

  • It makes good business sense to use or adopt a cost-effective technological solution that has already been found by others and is available in the market rather than invest one’s own time and money.
  • It is an essential source of revenue for many companies, universities, and research institutions, which maximize the earning potential of their technology by licensing it to potential users.
  • It enables a company to exploit other markets by allowing the licensee to apply the technology to a different market.
  • It allows quick entry into foreign markets and involves fewer financial and legal risks than conducting overseas operations.
  • By disseminating the technology to a wider group of users, licensing acts as a catalyst for further development and commercialization.
  • It overcomes many of the barriers that can impede the export of manufactured products.

However, licensing may involve certain disadvantages as well. For instance, the licensee could become the licensor’s competitor leading to loss of revenue for the licensor. Besides, companies relying on licensed technology may become too technologically dependent, which could eventually become a barrier to their future expansion.

There are many complex issues involved with licensing of technology such as bankruptcy and insolvency, standards, product liability, insurance, patent misuse and competition, ethics, and so on. Licensing of technology is a complex and serious process involving technical, financial, legal, and other matter. Each licensing situation is unique and therefore it is difficult to apply the experiences of others or theoretical rules to the situation at hand. Licensing of intellectual property from publicly funded organizations especially remains a challenging problem the world over.

Having created a niche for itself in the IP arena, CSIR is now systematically making efforts for the valorization of its IP portfolio. These initiatives would help to partner with licensing firms abroad to leverage CSIR’s intellectual property internationally to form research collaborations, business partnerships and licensing deals.

WORKSHOP OBJECTIVE

To provide a basic knowledge, understanding, and guidance in negotiating technology-licensing contracts and to give a valuable insight and a competitive edge to personnel dealing with technology transfer and licensing agreements within the CSIR that a five-day “CSIR-WIPO Workshop on Negotiating Technology Licensing Agreements” during 4-8 July 2005 at India Habitat Centre, New Delhi. The Workshop was organized by the World Intellectual Property Organization (WIPO) in cooperation with the Council of Scientific & Industrial Research (CSIR), Government of India.

The Workshop was expected to provide practical knowledge in the field of licensing negotiations and thus contribute to more effective transfer of technology and foster entrepreneurship.

WORKSHOP FACULTY

The faculty for the workshop consisted of experts drawn from different fields:

  1. Dr Guriqbal Singh Jaiya, Director, Small and Medium-sized Enterprises Division, World Intellectual Property Organization (WIPO)
  2. Mr Paul Schwander, Principal Administrator, European Patent Office (EPO), The Hague, Netherlands
  3. Mr Philip Mendes, Principal, Innovation Law, Brisbane, Australia
  4. Mr Donald Bollella, Principal, DB Technical Consulting, California, USA
  5. Dr Prabuddha Ganguli, Chief Executive Officer, VISION-IPR, Mumbai
  6. Mr R.K. Gupta, Head, Intellectual Property Management Division, CSIR, New Delhi.

PROCEEDINGS

INAUGURAL SESSION

The Workshop was inaugurated by Shri Kapil Sibal, Minister of State for Science & Technology and Ocean Development, on 4 July 2005 at the India Habitat Centre, New Delhi.

In his welcome address, Mr V.K. Gupta, Director, National Institute of Science Communication And Information Resources (NISCAIR), CSIR, New Delhi hoped that the Workshop would address the critical issues relating to technology licensing that would go a long way in strengthening the IPR activity within CSIR.

Dr Guriqbal Singh Jaiya, Director, Small and Medium-sized Enterprises Division, World Intellectual Property Organization (WIPO), in his opening remarks said that CSIR had flowered under Dr Mashelkar’s dynamic leadership and that its IP potential was well recognized. He said that WIPO was looking forward to a long-term partnership with CSIR and sharing its expertise.

Delivering his inaugural address, Shri Kapil Sibal expressed hope that the Workshop would succeed in throwing up solutions to several vexed issues such as the issue of IP ownership in case of research involving two countries, or IP ownership if a drug is manufactured by one person and the biological material belongs to another. He also wondered whether licensing to developing countries could be made at affordable prices.

Shri Kapil Sibal said that unlike the situation in the early 70s when the 1970 Patent Act provided no protection to intellectual property (IP), the scenario had altered dramatically today. Back then, reverse engineering helped the Indian pharma industry come up with life-saving drugs at prices that were many times cheaper than the ones produced by the West. While this helped the Indian pharma industry grow phenomenally, it also showcased to the West the country’s drug manufacturing facilities that were capable of producing high-quality drugs at low prices.

But now with the ushering in of the product patent regime from January 2005, the rules of the game have changed. While on the one hand, Indian pharma companies are gearing up to invest in R&D, on the other hand, with the West realizing that it is difficult to sell a drug for which R&D cost is 1.2 billion dollars, they are willing to make a shift to countries where cost of manufacture is low. “Big international players are willing to come to India and forge partnerships with Indian pharma companies,” said Shri Sibal. “They are also agreeing on value arbitration. This is happening especially in the field of vaccines.”

The Minister said that India needed to exploit this scenario. “We have good manufacturing facilities and can provide high-quality drugs at lower prices,” he said. “The key, however, is negotiating with the Western world and extracting the maximum profit.” And this is where he felt that the CSIR-WIPO workshop would go a long way in empowering scientists to leverage their strengths while negotiating technology licenses.

WORKSHOP SESSIONS

Monday, 4 July 2005

Management of Intellectual Property in CSIR Laboratories

The first session began with Mr R.K. Gupta’s presentation on Management of Intellectual Property in CSIR laboratories. He said that CSIR is the largest funding R&D organization in the country with a mission to serve the nation by providing scientific industrial R&D that maximizes the economic, environmental, and societal benefits for the people of India.

Although the patent cell existed since the inception of CSIR, very few patents were obtained initially. However, post 1995 there has been a boost in patenting of drugs, biotech etc. Mr Gupta gave an overview of the structure and functions of the Intellectual Property Management Division (IPMD) of the CSIR, the patent portfolio of CSIR, monitoring structure, current IP exploitation policy and strategies and challenges faced by various CSIR laboratories.

He informed that to stimulate innovation, appreciation to scientists in the form of monetary incentives and otherwise is a part of the policy. Also targets are set to enhance the patent portfolio to meet the post WTO challenges. Articulate data was provided to spell out the current status of CSIR’s IP development and the key areas of innovation. Other points discussed included valorization of IP, licensing of IP and distribution of the monetary benefits received through licensing to all contributors. The success stories involving different laboratories came last, highlighting the beneficial consequences of the IP policy.

IPR and Public-Private Technology Transfer

Dr Prabuddha Ganguli, Chief Executive Officer, VISION-IPR, Mumbai, speaking on the challenges that India faced in public private partnerships for collaboration amongst publicly funded research institutes and industry, said that government, institutions, and individuals are all partners in the game. They can serve the interests of the nation only by networking.

There should also be some strategy for linking knowledge incubators with business enterprises. For this, there is a need to integrate IPR in the knowledge generation and transfer process. But from where does one start?

Several national agencies including industry associations are providing IPR awareness and facilitation programmes, even international agencies are getting involved in developmental activities at the grassroots level, for example, UNIDO, some NGOs, WIPO and others. Several institutes have even started forming Sec. 25 companies and taking equity.

He further said that IPR being a multi-tier innovation process it is now a necessity to give its economy the required competitive edge. For the first time, IPR has been made a part of the country’s National S&T Policy 2003, which is rare for any country. The S&T Policy has emphasized the establishment of an Intellectual Property Rights (IPR) regime, which maximizes the incentives for the generation and protection of intellectual property by all types of inventors. It is necessary to provide a strong, supportive, and comprehensive policy environment for speedy and effective domestic commercialization of such inventions.

We must set in mechanisms to achieve synergy between industry and scientific research by creation of autonomous technology transfer organizations as associate organizations of universities and national laboratories to facilitate transfer of the know-how generated to industry. The scientists and technologists must be encouraged to transfer the know-how generated by them to the industry and be a partner in receiving the financial returns.