CANEUS IP Issues 

INTRODUCTION 

This document begins to develop an IP regimen for CANEUS commercialisation projects.  It is already clear that there will be several different models for commercialisation of CANEUS concepts and that IP issues will therefore be different for each.  There remains however, a common core of principles that should be brought to bear in each case and which should generate results consistent with an over all IP framework.

SHARED INTELLECTUAL PROPERTY (IP)

The first principle is that ownership of the IP will be shared among the following folks:  Concept developers; Commercial project developers; Investors and CANEUS.  IP sharing is essential because IP creation and commercial value-added continues well beyond the laboratory proven concept phase of the process. In order to attract venture capital and skilled commercialisation experts we must be prepared to compensate these commercialisation partners appropriately.

DEVELOPING WEAKER CONCEPTS

If the proven concept is sufficiently far advanced, then no more research is required and the process can move immediately to a commercialisation phase.  This will be the case for most concepts.  When the concept is weaker, some research and development will be required.  This work will generate IP which should belong to the creators with CANEUS receiving a zero fee transferable license for exploitation of the technologies in non-aerospace sectors.  There could be a time delay built into the process for CANEUS’ exploitation based upon its zero fee license.

CANEUS COMMERCIALISATION CORPORATIONS

In some cases, CANEUS proposes to create individual firms to commercialise certain priority technology concepts.  Each firm will be a separate legal entity with its own mix of developers, managers, investors and end users.  CANEUS will facilitate discussions to negotiate an appropriate ownership mix of the firm to be constituted to commercialise the technology on a case-by-case basis.  CANEUS will encourage (perhaps require) end users who are sales targets for the technologies under development to be early adopters and procurers of the technologies developed.  This will help to attract venture capital in conjunction with other funding available through CANEUS.

NEW CANEUS PARTNER COMMERCIALISATION CORPORATIONS

A variant on this case allows an existing firm (not CANEUS) to incorporate a Limited Liability Partnership (LLP) to commercialise technology obtained through CANEUS.  In this case ownership is mixed and negotiations proceed in a manner similar to those described immediately above.  The existing firm, investors, CANEUS and (perhaps) end users might all be partners in this LLP entity.

EXISTING CANEUS PARTNER FIRM AS COMMERCIALISATION CORPORATION

In other cases, CANEUS concepts will attract the interest of existing firms operating in the aerospace and/or defence sectors.  Here, CANEUS will not form a new corporation.  Instead, the existing firm will pay an up-front fee for access to a license for the CANEUS proven concept phase technology.  The license can be either exclusive or non-exclusive.  CANEUS will also negotiate a royalty based upon a percentage of gross sales of products produced based on the CANEUS concept in the aerospace sector.  CANEUS reserves the right to issue additional technology exploitation licenses to entities interested in exploiting the CANEUS technology in sectors other than aerospace / defence.

CANEUS AS “SYSTEMS INTEGRATOR”

In still other cases, CANEUS can perform an interim step (Pre-commercialisation phase) of further developing an unconnected set of technologies.  Here CANEUS will act more as a “systems integrator” pulling together currently unconnected subsystems and technologies to assemble the necessary “critical mass” assembly from which commercial products can be developed.  Background technologies are more central in this case than in others described above.  Background technology suppliers must negotiate with and grant to CANEUS license rights to exploit the technologies to develop the product being produced.  In the commercialisation phase, CANEUS can still constitute a firm to commercialise the technology as described above once the technologies achieve “critical mass” and sufficient integration.

GENERIC SOFTWARE DEVELOPMENT

In the special case of developing generic software to be used to test the reliability of MEMS devices and systems, CANEUS will retain all rights to the IP generated by developing the software under a contractual fee for services agreement with the developers.  CANEUS partners assisting in the development of the technology will be given preferential licensing terms as well as early access to the technology for commercial testing.  Sustaining partners in CANEUS (contributors towards CANEUS operating expenses) will also be given preferential access to such technologies at reduced or zero rates.

VENTURE CAPITAL ATTRACTION

Projects with a narrow aerospace focus and few other applications identified will require relatively more investment from targeted end users as venture capital will be harder to obtain on favourable terms.  For projects with wider applicability and significant potential for spin off applications in various markets the mix of investment will likely shift to include more venture capital reflecting the broader market appeal of the investment.  If promoted properly, a wider range of end users can also be attracted – this being an acid test for broader markets appeal.  CANEUS licensing proposals must take account of these variations.

CANEUS TECHNOLOGY CONCEPT ACCESS FEES

In all cases of new firm creation, CANEUS will retain an ownership position in the firm AND will require an up-front payment for access to the technology and for access to the CANEUS network.  If an existing firm proposes to commercialise a CANEUS concept, the up-front payment required might be larger and a royalty stream based on gross sales of the developed product will also be required.

CANEUS VALUE - ADDED

More generally, CANEUS must focus on orchestrating and aggregating activity across its network and this role will generate revenues to CANEUS. The up-front payment from firms incorporated to exploit CANEUS technologies should be in the $50K range per project and will be used as the base for CANEUS Operations Revenues along with fees from Conferences and revenue eventually accruing to CANEUS as a part owner of new ventures.

Let us not forget or sell short the value-added of CANEUS to this process.  CANEUS offers not just access to a proven but half-baked concept.  We have access to IP expertise, venture capital funds and most importantly, end users whom we will bring to the table. 

For these services the newly established commercialisation entities will be required to pay the up front fee and to give CANEUS an ownership position (in the range of 10%) of the firm itself.  If an existing firm is selected to become the CANEUS commercialisation partner, then sales royalties (based on total sales of the product developed) will replace direct ownership as the compensation mechanism for CANEUS.