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Best Practices for Technology Development and Sourcing Transactions

  • Best Practices for Technology Development and Sourcing Transactions-

    Companies in industries that are marked by relatively expensive research efforts and lengthy product development timelines – such as pharmaceutical companies – have a particular need to mitigate the costs and risks of early stage research. Some companies have addressed this challenge by participating in R&D collaborations in which participants cross-license IP, coordinate research efforts, and share research results. These collaborations are sometimes called “innovation incubators” or “patent pools.” Participating entities engage in joint reviews of research outcomes to determine whether particular research should be shelved, given additional funding for further joint development, or claimed by one collaborator for further in-house development (e.g., in exchange for royalties to be paid to the shut-out collaborators, which can vary depending on the future uses and value of the IP in question).

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Best Practices for Technology Development and Sourcing Transactions

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  • Best Practices for Technology Development and Sourcing Transactions-14

    Companies in industries that are marked by relatively expensive research efforts and lengthy product development timelines – such as pharmaceutical companies – have a particular need to mitigate the costs and risks of early stage research. Some companies have addressed this challenge by participating in R&D collaborations in which participants cross-license IP, coordinate research efforts, and share research results. These collaborations are sometimes called “innovation incubators” or “patent pools.” Participating entities engage in joint reviews of research outcomes to determine whether particular research should be shelved, given additional funding for further joint development, or claimed by one collaborator for further in-house development (e.g., in exchange for royalties to be paid to the shut-out collaborators, which can vary depending on the future uses and value of the IP in question).

In recent years, the pace of technology and business change has rapidly increased, requiring new commercial models and changes to the existing models. Companies – all companies, not just technology companies – must now regularly update technology across their entire organizations and customer-facing services and products.

Successful technology projects boost revenues, distinguish a company and its offerings from the competition, and transform and improve a company’s relationships with its customers. Failure, on the other hand, can have a profound impact on product development, customer service and market reputation for years to come. Consequently, planning for technology innovation and deployment projects requires careful mapping of strategic objectives, deliverables, and realistic work-around options. 

Laurence Jacobs and Nicholas Smith, partners at Milbank, Tweed, Hadley & McCloy, have identified a variety of transaction structures that companies can use to develop new technologies and to leverage existing infrastructure, technologies, and customer bases. They have also focused on the relative strengths and weaknesses of these models in fostering technology innovation and best practices when designing and managing a project to develop and deploy technology or technology services.