Alexander Poltorak, PhD, CEO of General Patent Corporation International, a private company he founded in 1987 to assist inventors and IP owners in licensing and enforcing their IP rights, says viewing your deals only as “carrot” licenses, as opposed to their potential also as “sticks,” may limit the effectiveness of your overall licensing results. Poltorak explains: “A ‘carrot license’ is a license taken voluntary by a licensee that is not yet using the patented technology and is under no obligation to license it. The value proposition in carrot licensing is, ‘License our patent because our patented technology is superior to yours and you can make more money and/or save costs with it.’” A ‘stick license,’ on the other hand, “is appropriate when the patented technology is already in use, i.e., when the patent is infringed. In this case the marketing pitch is not to sell the prospective licensee on the benefits of the patented technology — they are already using it — but to sell them on the strength of your patent and your resolve to enforce it. The value proposition in this case is ‘license our patent, or we’ll see you in court.’”

It is conventional wisdom, says Poltorak, that all university TTO licenses are “carrot” licenses. Accordingly, most TTO managers assume all marketing efforts should be concentrated in this area. However, “what people do not understand is that every carrot license is essentially a stick license in disguise,” he asserts. “Everybody understands the unspoken threat of patent infringement. Everybody knows what you have, and the only reason to license is to avoid litigation; a non-exclusive license is nothing more than a covenant not to sue.” What does this have to do with IP marketing? “Since every carrot license is a stick license in disguise, you must back up your marketing efforts with patent enforcement efforts,” Poltorak advises. “It is a necessary adjunct of marketing, because it ultimately impacts your ability to license. If your ‘stick’ is very soft and made out of rubber, people will never buy a patent from you — they will just use it, because there is no threat there. That’s why every tech transfer program at a university must be backed up by a parallel patent enforcement program.” If word gets out that your university hesitates to enforce its patents, he cautions, “this is bad news for the university tech transfer program. Under these circumstances, who would want to take a license if they know they can infringe with impunity?” A detailed article on Poltorak’s approach to IP marketing appears in the September 2009 issue of Intellectual Property Marketing Advisor. For subscription information, CLICK HERE.

Posted September 22nd, 2009 under Intellectual Property Marketing

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