1. CRC-Predict A Case Study in Managing Multiple Objectives In a federal laboratory license to Industry Presentation to the Federal Partners in Technology Transfer Ottawa, Ontario June 2, 2008 Kevin Shackell Manager, CRC Technology Commercialization Communications Research Centre Canada

2. www.crc.ca A Brief CRC Overview Primary federal government laboratory for advanced communications R&D, with approximately 240 research staff Technical advice to Industry Canada to assist in development of telecom standards, regulations and policy Government R&D clients include National Defence, Canadian Space Agency, Public Safety and Emergency Preparedness Canada CRC collaborates with industry, universities and research centres nationally and internationally CRC Innovation Centre helps small high tech start ups to develop their commercial potential through on-site incubation

3. www.crc.ca CRC Mission To be the federal government’s centre of excellence for communications R&D, ensuring an independent source of advice for public policy purposes To help identify and close the innovations gaps in Canada’s communications sector by: –engaging in industry partnerships through collaborative R&D; –building technical intelligence; and –supporting small and medium-sized high technology enterprises through technology transfer.

4. www.crc.ca CRC Campus

5. www.crc.ca Research Branches Terrestrial Wireless Broadcast Technology (radio and television) Satellite Communications and Radio Propagation Optical and Broadband Network Technologies

6. www.crc.ca CRC Technology Transfer 2007/08 Active Agreements: License Agreements 335 Collaborative Agreements 50 MOU’s, MOA’s, NDA’s119 Total active agreements504 Typical Agreement Volume Over a Year: Licenses 45 Collaborative R&D 40 MOU, MOA 10 NDA’s 20 CRC Innovation Centre Agreements 5 Total new agreements120

7. www.crc.ca CRC – A History of Radio Science Research Radio Propagation Research – an original core competency of CRC dating back to the early 1950s Development of manual calculation techniques to predict signal strength and fading of radio waves Growth in new radio, TV, and mobile radio services in the 1970s

8. www.crc.ca Computer-based Modeling & Calculations New and more accurate computer-based prediction methodologies required CRC took the lead and initiated research in the field of propagation measurement in the 1970’s algorithms developed by CRC to more accurately model underlying physical phenomena such as diffraction, topographic scatter and terrain irregularities CRC-Predict – considerably more accurate and robust computer-based prediction program

9. www.crc.ca CRC-Predict Features Wireless service planning tool for cellular, mobile wireless, and broadcasting Estimates radio signal strengths on terrestrial paths at VHF and UHF Works with topographic database Accurate prediction capability Internationally acclaimed as one of the most accurate models compared to other similar models

10. www.crc.ca Technology Transfer Software originally developed to help Department of Communications with radio spectrum allocation across Canada Fortran version was widely commercialized through mostly single-user license providing software in executive code form to radio engineers and broadcast network planners for radio and TV transmission planning Over 100 licenses issued in early 1990’s in Canada and abroad

11. www.crc.ca Commercialization Opportunity Growth of cellular services; limited spectrum availability and interference issues brought to the forefront Ottawa-based Northwood Technologies recognized the robustness of CRC-Predict and entered into a collaborative agreement with CRC in 1997 Integration of CRC-Predict into Northwood’s DeciBel Planner wireless network planning software Non-exclusive license granted to Northwood

12. www.crc.ca Leading technology in its field By 2001 marketability of Northwood’s cellular network planning tool greatly enhanced by addition of CRC-Predict Northwood initiated negotiations for exclusive license to secure competitive advantage –sales of enhanced product with “Government” technology inside exceeded expectations CRC regularly approached by competitors for CRC- Predict license

13. www.crc.ca Securing a deal Intensive negotiation both internally at CRC and with Licensee for exclusive field of use license Due diligence review of existing licenses to minimize competitive impact (a number of older Fortran source-code licenses were issued which were cause for concern) Minimum annual royalty requirements to ensure revenue stream for CRC Northwood wanted an exclusive license, while CRC only willing to give a sole license in a field of use specific to telecom applications

14. www.crc.ca Assignment Rights in Licensing Assignment rights became a deal breaking issue Standard template response was “no assignment without prior written consent of CRC No de facto assignment through a reorganization, merger, consolidation, acquisition or other reorganization…. Northwood not prepared to sign a license agreement that did not offer rights of assignment to a third party A Notwithstanding clause was demanded by licensee

15. www.crc.ca Benefits to Canada “Notwithstanding” Notwithstanding a) above, consent to assignment of this Agreement shall not be unreasonably withheld where: –i) the assignee undertakes in writing to be bound by all of the obligations of this Agreement; and –ii) the assignee maintains an active business presence in Canada.

16. www.crc.ca Benefits to Canadian Economy Inclusion of tight assignment provisions to ensure continued exploitation of the technology in Canada In 2001 less than 3 months after the Northwood deal closed, tight assignment provisions proved beneficial when multinational Marconi PLC purchased Northwood for $42 Million in cash Kanata was designated the new Marconi business unit for wireless network planning worldwide, pulling in former UK- operations for R&D in telecom network planning tools In 2006 Ericsson Canada Inc. purchased Marconi Wireless, business unit moves to Gatineau to maximize R&D tax credits.

17. www.crc.ca Outcome of Technology Transfer June 2007 Another Changing of Guard French-based CTS purchases assets of Ericsson’s Canadian-based wireless network planning unit CTS creates a new Canadian entity -- Mentum Mentum affirms Gatineau as the world product development centre for its wireless network planning software 47 person years of employment at Gatineau office 4 licensee holders over 10 years – technology remains exploited in Canada for the benefit of Canadians

18. www.crc.ca CRC Exploits Broadcast Market With CRC-COVLAB and COVLITE CRC retention of “sole” provision proved beneficial Licensed to more than 50 broadcasting planners in Canada, Australia, Taiwan, Korea, Japan, Portugal, Germany, Switzerland, and Mexico Over $750,000 in licensing revenues from 2001 to 2008 CRC-COVLAB Designated as CBC’s central broadcast planning tool Field of use license allowed CRC to continue to exploit in its primary area of broadcasting interest while industry got telecom

19. www.crc.ca Lessons Learned Pressure to close a deal quickly indicates external third-party forces at play (Northwood acquisition by Marconi) Field of Use licensing provides a range of options for licensor during negotiations Internal hurdles in licensing can be just as formidable as external (identify opposition early and plan to deal with it) Companies prepared to pay for technology if value proposition and sales potential can be demonstrated Continuing R&D support critical to the tech transfer success

20. www.crc.ca Conclusion In Summary –Innovative technology development took a decade before successful commercialization –Originally developed to assist regulatory requirements –Licensed to a Canadian company, with ownership transferring to three foreign companies –CRC has received over $1 Million in royalties over 10 years and the companies have created and maintained approximately 50 Canadian jobs over the decade –License fees and royalties helped further CRC R&D program –Significant taxes collected by various levels of government based on the high tech job creation

21. Visit us at www.crc.ca Thank You!