Converting a products supply business into a licensing business

Converting a products supply business into a licensing business

The issue

Our client was one of the leading drug delivery companies in the world specialising, in particular, in syringes, with a substantial share of the worldwide market for their sale as products. Although it had an extensive R&D and Patents department and had newly developed ground-breaking technology for needleless injection it had rarely, if ever, licensed out its technology. Rather than selling needleless injectors, it appreciated that if it could license its technology to drug companies who would pre-fill the needleless injectors with the drugs they were selling, our client’s royalty on the sales could be substantially greater than the profit it could make merely by selling the injector devices, as it would take a royalty based on the value of the pre-filled injector. The issues it faced were: could exclusivity be given and if so how could it go about structuring licence deals to maximise its revenue for this activity? Was it even possible to structure a licensing deal that was compliant with Europe-wide competition and licensing rules?

How we helped achieve our client’s goals

By finding mechanisms of defining different and non-overlapping therapeutic applications, we were able to ensure that exclusivity could be given to each drug company without contravening exclusivity given to other drug companies.

A standard IP licence precedent was produced which gave effect to our strategy and given the uncertainties of European competition and technology licensing law at the time, this was reviewed at our suggestion, on an informal basis, by the EC Commission who were extremely comfortable with both the strategy we had devised and its implementation through the draft licensing agreement.

Our client was then able to go to the leading world-wide drug companies offering to license its technology, on the basis of the precedent we had produced. Although that precedent was then negotiated separately with each drug company, the methodology remained the same. Our client was accordingly able to move from being a product supply company to an IP licensing company regarding this particular technology.