Maximising licence revenues

Maximising licence revenues

The issue

Our client, D, was a small company that had been spun out of a university pharmacy department a few years previously. Its business depended upon a class of chemicals covered by patents that it owned, which had applications in a number of fields in addition to pharmaceuticals. The largest and most easily exploitable field appeared to be in the oil industry. Due to poor advice earlier, D had granted an exclusive, worldwide licence for the oil industry to a company that was slow to develop the technology, and was not yet paying any royalties. D’s objectives were:

  • to obtain an income from its IP in the oil industry; and
  • to develop the technology for other fields of use.

How we helped to achieve our client’s goals

The main reason for the under-performance of D’s licensee was that it was under-resourced for developing the technology to the state necessary for proper exploitation. We could see that there were in fact many possible applications in the oil industry. Our advice to D was that its IP should be licensed separately to different licensees for a large number of fields of use which we identified. This would ensure each use received the proper development that it needed within a reasonable time, and also that the royalty income would be maximised.

D could not put in place such a system of licenses for the oil industry, because of its existing exclusive licence, which was due to run for the duration of the patents. We analysed the terms of the licence, and were able to advise that they were not compliant with the technology transfer block exemption, and were therefore unenforceable. In consequence, D was able to terminate its unsatisfactory licence at little cost, and start talking to a number of companies which had the resources and will to devote to developing and exploiting specific fields of use.

The added benefit to D was that, because we had, together with D, already identified potential uses, D was able to initiate specific research, and the new licensees were immediately interested in funding collaborative R&D programmes in those fields. With the income, including funding for collaborative R&D, now coming in from licensees in the oil industry, D’s resources were freed up to pursue developments in the pharmaceuticals and other fields.