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License To Kill (Your Competition)
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Business New Haven
1/21/2002
By: Lisa Micali
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While the financial benefits of licensing technology to other companies can be substantial, few companies realize that licensing can also be a powerful strategic tool. A well-designed licensing program, said panelists at a December meeting of the Connecticut Venture Group (CVG), can often forstall competitors from developing competing technologies as well as optimize a licensor's effective use of its own technology.
Panelists for the session, moderated by Frank Marco, a partner with New Haven-based law firm of Mintz, Levin (one of the nation's oldest biotechnology law practices) included: Jon Soderstrom, managing director of the Yale University Office of Cooperative Research (OCR), who addressed the issues from the university/academic perspective; Dennis Rader, principal of Rader Technology Licensing, who focused on the perspective of corporate licensors; Robert Oros, president of Business Development Resources, who discussed user issues from the viewpoint of companies developing products/businesses from licensed technology; and Alan Mendelson, general partner of Axiom Venture Partners, who shared investors' perspectives on issues, obstacles and opportunities.
The crucial role of licensing and technology transfer in optimizing the value of a company's intellectual property and its ability to create new market opportunities is critical to the success of entrepreneurial companies, the panelists agreed.
“When companies license their technologies to others, they naturally tend to focus mainly on generating royalty income, but a broader focus can generate more added-value,” said Rader, whose Woodbridge firm provides consulting services to technology businesses.
Added Rader, who formerly managed worldwide licensing of Mobil Oil Corp.'s exploration and producing technologies, “The licensing process requires expertise in formulating a strategy for managing an enterprise's Intellectual Property (IP), the appraisal of relevant internal and external technologies, and in the negotiation process to finalize agreements that achieve the desired strategic and financial goals associated with a licensing program.
“Executives overlook the substantial value often residing in a company's unused or underutilized patents, trade secrets and general know-how,” Rader added. “Effective execution of intellectual property management and licensing strategies can convert dormant value into bottom-line results.”
Cultivating a licensing strategy tailored to a company's industrial environment, is a primary tool for strengthening competitive advantage, he said. Licensees can also benefit by taking licenses from universities and other companies to gain faster access to existing or proprietary technologies that would otherwise not be available to them.
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