Get competitive advantage from our experience and strategic thinking.   Click on a link you are interested in to see our answer to common inquiries in that practice area. Financing and Corporate Structure Business Strategy Licensing Patents Copyrights and Copyright Licensing Valuation Legislation Outsourcing/Insourcing Export Control Note: The following answers are not intended as legal advice and should not be considered so. It is recommended that you seek legal counsel for the specific problem you may have. Financing and Corporate Structure Q: How do I set up my company so that it can be financed? Is my existing company properly set up for a private financing? A: Companies that will commercialize technology, copyrights or other intellectual property need to be arranged in such a way that investment can proceed in an orderly manner. Most important is that the appropriate controls over dissemination of the intellectual property have already been instituted, and that appropriate ownership by the investment vehicle is complete prior to the investment process. In addition, the capital structure of the company has to appropriately reflect the contribution and risk adoption of the stakeholders. It is best that this be done cleanly so that the financing process can be conducted smoothly. Click here to see how our experience can help solve your problem. Q: A customer has proposed a joint venture to develop ancillary technology that works with my technology. What is right and wrong with this? A: Joint Ventures can be tricky to set up properly. Contribution of intellectual property rights as well as disposition of jointly created rights raises complexities that interact with the governance aspects of the organization. All possible scenarios have to be thought through and the appropriate contractual mechanisms put in place prior to closing, in order to protect against a downside situation where the joint venture becomes injurious to one of the participants. Click here to see how our experience can help solve your problem. Q: I want to buy a company's technology. What is the best way to go about this? A: Many factors play into how to go about acquiring technology. The range of options begins with a purchase of the company and ends with a licensing transaction. Each form of a transaction has different allocations of risk and reward. It is important to consider what the overall strategic goals of the acquisition are, and what risks are of concern before deciding on a specific methodology. In addition, formulation of the acquisition should appropriately mitigate these risks. Click here to see how our experience can help solve your problem. To Top Business Strategy Q: How do we plan to commericalize our technology? A: Formulating a plan for commercialization requires several steps. First, an analysis of the invention in light of trends in the related art is important. Second, consideration of potential application markets is made. In those markets, conclusions are drawn as to where in the technology development cycle the market is. In light of that, a decision is made about which of these markets has advantageous timing. Analysis of market players will indicate how the invention should be packaged and delivered. On these bases, a plan can be established that results in an appropriate implementation and a direction for selling the technology. During this process, an intellectual property strategy is formulated so that the technology is adequately protected and maintains its long-term value. This strategy is also critical because during the development phase on the way to disposition, there will be follow-on inventions that can be equal to or more valuable than the seminal invention. Click here to see how our experience can help solve your problem. Q: Are there ways my intellectual property can generate revenues other than in my existing business? A: Companies often overlook the fact that their use of a patented technology is in a narrow field while the invention has applications outside the purview of the business. In such cases, it may be advantageous to consider how to derive revenue from such ancillary applications. This process requires analysis of the invention, analysis of the patent portfolio, the strategic plan of the existing business, and a tactical plan to position the invention in a manner that attracts a customer. Click here to see how our experience can help solve your problem. Q: How can I maximize the value of my technology in the market? A: A licensing strategy that carefully considers independent market segments is the first step. It is critical that technical and market trends are considered so that the appropriate covenants maintain distinctions that produce diverse revenue sources rather than conflicting channels and diminished returns. In addition, it is important to consider the overall intellectual property strategy so that the inherent value of the property is preserved across all market segments. Click here to see how our experience can help solve your problem. To Top Licensing Q: What should I be asking my customers to do in order to protect my product? A: It is important that technology customers be limited in the manner which they can "use" the technology. Companies should not overlook the fact that some legal doctrines provide that customers can, in the absence of contractual obligations, do things with the technology that are injurious to the strategic position of the technology provider. Click here to see how our experience can help solve your problem. Q: How do I make sure that my deals do not have built-in liability that my company cannot handle? What can be done to fix this? A: It is important to review licensing transactions considering all possible outcome scenarios. This is important on whichever side a party to a deal sits. A price for a license is only determinable when the relative allocations of risk are decided. It is important for young companies to recognize when certain deals involve taking on enterprise liability. Insurance may be possible for some risks, but the costs may be prohibitive or may involve actually shouldering risks that the insurance will not cover. Contractual terms can be set up that help mitigate risk, but planning the endeavor so that the technology is positioned well is very helpful. Click here to see how our experience can help solve your problem. To Top Patents Q: Is it worth obtaining a patent on my company's technology? What is involved and how much does it cost? A: Deciding on whether to patent an invention is a decision with drastic potential risks and potentially huge rewards. Several basic factors inform the decision: how distinct the invention is from the prior art, the characteristics of the technology and how it will be used, the amount of cash that can be devoted to the patenting process, and what the patent is to provide. Often a patent is viewed as "property" that instantly makes a company valuable. This is not always the case. For example, consider cases where enforcement is difficult and the trade-secret aspect of the invention is lost upon publication of the application. Hence, it is important to seek strategic advice that fully recognizes how a patent might fit into the business strategy of a company. Click here to see how our experience can help solve your problem. Q: Are there ways of protecting our technology without a patent? A: Patent protection is not the only way to protect a company's technology. Other ways include using technology to mask the invention so that it can remain a trade secret. Also, a fully developed plan of continuous obsolescence and replacement may, in some cases, provide more upside than patent protection over a static position. The specifics of an intellectual property strategy require in-depth study of the company, its technology, and product planning. Click here to see how our experience can help solve your problem. Q: How should I describe my invention in order to get the strongest position in the market? A: Patents that have "narrow" claims can be defeated most readily by a competitor "designing around" the claims. It is critical that a study be conducted on a technology that includes not the best version of a technology, but also its inferior approximations. It may be advantageous to patent the inferior approximations as well as the best instances of the invention. Click here to see how our experience can help solve your problem. Q: How do I enhance my competitive position with an intellectual property strategy? A: Adopting an intellectual property strategy is an important aspect of business planning. This is because many of the problems encountered are best prevented at the early stages of technical development. An excellent example of this is the on-sale bar under patent law: no patent will issue on an invention offered for sale or in public use (in the U.S.) more than one year prior to the filing date. Thus, a decision that a patent is essential made more than a year after customers have expressed interest in a technology may be too late. A review of the technology, product strategy, development efforts and business plan provide the basis of planning ahead, so that policies are in place that prevent these kinds of problems. Click here to see how our experience can help solve your problem. To Top Copyrights and Copyright Licensing Q: My website is going to distribute music and movies. How do I legally do this? A: Music distribution is a two-dimensional topic. On one hand, there is the sound recording license and the license to the intangible song. The other dimension is the type of use: for example, whether distributing copies or publicly performing, (e.g. broadcasting a transmission). These categories also have overlap, and in the digital distribution area there are some aspects of the process still being worked out among the stakeholders. But before a website can offer music for download or other transmission, it will need a license to do so, unless the website owns the sound recording and the song. Click here to see how our experience can help solve your problem. Q: I want to distribute music through a website. How do I protect my position when I deal with digital rights management providers? A: Digital rights management is the linchpin of getting paid when music is distributed over a network. It is critical that the appropriate contractual language be included in any distribution license that involves digital rights management aspects, so that it is possible to properly police and enforce the distribution agreement. Click here to see how our experience can help solve your problem. To Top Valuation Q: I have a customer for my technology. How much should the royalty be for the license? A: Royalty determination is a complex topic. As mentioned in the section on licensing, pricing is fundamentally dependent on the allocation of risks under the terms of the license. With that starting point, a financial model can be created that can inform the pricing determination. In addition, consideration of comparable and non-comparable intellectual properties are considered. Click here to see how our experience can help solve your problem. Q: Is the asking price for some valuable intellectual property realistic? A: When acquiring intellectual property, it is typically more important to consider the strategic purpose of the acquisition than the "fair market value" of the technology. It is important to model the strategic advantage the technology will provide, and the range of financial outcomes. After that, consideration of ancillary revenues from licensing can be considered. However, it is important that the results of the model be carefully interpreted based on other aspects of the intellectual property that affect the risks underlying the entire endeavor. Click here to see how our experience can help solve your problem. To Top Legislation Q: How should I respond to proposed government regulation of my technology business? A: Government regulators typically first issue a "Notice of a Proposed Rulemaking." Also, proposed regulations are issued for comment from interested parties. It is vital to respond to these invitations, either as an individual company or as part of an industry trade group. It is important to consider the strategic implications of the process, and the political position of the stakeholders and plan ahead for a range of outcomes. A regulation that is issued can be challenged in court, but the process is complex and expensive. Click here to see how our experience can help solve your problem. To Top Outsourcing/Insourcing Q: What are the risks and advantages in hiring a company to develop technology? Howdo I address the risks when finalizing my transaction? A: Outsourcing development work can be advantageous because you can take advantage of someone else's experience rather than building it up on your own. This can save significant amounts of time. On the other hand, the proper incentives need to be built into the deal to avoid time delays. In addition, there are often unexpected problems, and the deal has to address how those situations would be handled. Further, the intellectual property ownership issues should be worked out before the project begins in order to avoid what is called a "stick-up." Click here to see how our experience can help solve your problem. To Top Export Control Q: Does my technology require a license in order to export it? How is that determined? A: Any technology that is considered "dual use", meaning having applications both in civilian and military or intellgence contexts, is subject to a requirement that a license be sought prior to exportation. Whether a given technology is dual use or considered on the munitions list requires a careful consideration of the technology, its destination oversees and the dense set of regulatory categories that might apply. Click here to see how our experience can help solve your problem. To Top   © Sabety+associates 2002