1. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology “Techniques for Obtaining and Analyzing External Licence Agreements” Michael J. Merwin and Colleen M. Warner Hugo Valente Pedro Torres (Março 2003)

2. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Resume: Provide a guide to using unrelated licence agreements to develop a framework for negotiating a new agreement, focusing on: - Sources of Information - Advantages vs. Disadvantages - Search Strategies - Analysis Methods Case Study ► ►

3. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Context Licensor Patent, trade mark, formula… Licensee Manufacture Licence Agreement

4. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology The Problem ? Negotiating a Licence Agreement Strategies ? Doing a background work and being prepared. Understanding of previous contracts: how deals are structured. ► ► How ?

5. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Getting Background Information Means: Internal Agreements Financial Analysis External Agreements Past agreements modified to meet new circumstances. To focused on the payment terms. Based on existing agreements, including those involving other contracting parties

6. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology The Problem ? Obtaining copies of competitor’s licence agreement Solution ? SEC – Security and Exchange Commission “ any franchising or licence agreement or other agreement to use a patent, formula, trade secret, process or trade name upon which [the] registrant’s business depends to a material extent ” must be incorporated in the firm’s public filings.

7. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Channels to access this information DIS – Disclosure Information Services ► On-line and CD-ROM data base ► Public Filings at the SEC (Chicago, New York and Washington) ►

8. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Advantages vs. Disadvantages. Full text copies of actual agreements. More time intensive SourceAdvantagesDisadvantages DIS. Requires fewer company resources. Can be expensive. Available everywhere. Requires an understanding of what is available On-line & CD-Rom. Requires fewer company resources. References only the most current 10-K. Available everywhere. "Full Text" does not include exhibits. Only available in a limited number of areas

9. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Framework for Analyzing Licence Agreements

10. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Framework for Analyzing Licence Agreements

11. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Case Study - Involves a company in Mexico that manufactories casual sportswear for women and Children; - Involves a president trip to the United States; - Involves NAFTA (North American Free Trade Agreement) and 1996 Olympics; - Determine the costs and conditions of negotiating a trademark licence agreement with U.S. Athletic footwear company Business Manager

12. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology - Marketing company experienced in licensing -Required estimates of projected sales volume, manufacturing and licensing costs Search of public sources to identify the terms of similar license agreements (determine the royalty payments and other associated costs) 14 Agreements Analyzed Marketing plans Basics of licensing arrangements Legal considerations Financial model ?

13. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Socks, leg and ankle warmers, head and wrist bands Sunglasses and optical frames Sandals and beach thongs Men’s shirts, shorts, and sweat clothing Skateboards Plastic headwear, excluding children’s toy market Adult exercise equipment Footwear, apparel, and fashion accessories Women’s and children’s shoes, socks, hosiery, purses, and bags Fashion dolls, doll clothing, and accessories Girl’s woven and knit sportswear and active wear Junior sportswear, including fashion active wear Socks and women’s legwarmers T-shirts, sweat shirts and pants, and active type shorts 10 7 on multipack socks 7 10 3.5 6 10 5 6 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Royalty Rate (%)Product# Fourteen Agreements and their Royalties as Percentage of Sales

14. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology # 7 10 7 on multipack socks 10 3.5 6 5 6 10 Nontextile Agreements Sunglasses and optical frames Sandals and beach thongs Skateboards Plastic headwear, excluding children’s toy market Adult exercise equipment Fashion dolls, doll clothing, and accessories Textile Agreements Socks, leg and ankle warmers, head and wrist bands Men’s shirts, shorts, and sweatclothing Footwear, apparel, and fashion accessories Women’s and children’s shoes, socks, hosiery, purses, and bags Girl’s woven and knit sportswear and activewear Junior sportswear, including fashion activewear Socks and women’s legwarmers T-shirts, sweat shirts and pants, and active type shorts 2 3 5 6 7 10 1 4 8 9 11 12 13 14 Royalty Rate (%)Product Royalty Rate Comparison of Textile and Nontextile Agreements ~ 10% {

15. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Five Key Factors of Various Agreements

16. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Agreements per Royalties, Dates and Markets #MarketDateRoyalty Rate (%) First Time Period Second Time Period 8 9 12 11 13 14 4 1 Indonesia, Hong Kong, Singapore Malaysia and Philippines Canada U.S. Canada U.S. 9/1/83 4/1/84 12/1/85 1/1/86 4/1/86 6/1/86 11/15/86 7/1/87 3.5 6 5 10 10, 7

17. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Agreements per Licensor Services and Advertising Requirements Marketing Merchandising Samples etc Existência de assistência  Pagamento de quantia para anúncio do produto

18. Innovation and Technology Transfer MSc. Engineering Policy and Management of Technology Report for the Company President - Because Mexico has only a limited amount of U.S. Media exposure, the company should only be willing to pay between 5 and 6 % of sales for the use of the athletic footwear logo; - The company should negotiate any lump-sum payments to serve as prepayments of the royalties based on net sales. In addition, the licensor will require guaranteed minimum payments; however is recommended that the company negotiates either a grace period or a low minimum for the first year; - The company should anticipate an agreement that will have a one to three year duration with renewal options that might extend the agreement another two to six years; - It would be possible for the company to pursue a certain level of marketing assistance and know-how from the licensor; however, it would have to be prepared to accept requirements pertaining to advertising expenditures. A cost/benefit analysis be performed (Expected advertisement payments VS Expected return from assistance)