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Best Practices for Technology Development and Sourcing Transactions

  • Best Practices for Technology Development and Sourcing Transactions-

    It goes without saying that careful allocation of IP ownership, licenses, and royalty provisions in such arrangements should be worked out in great detail. Despite the complexity of the IP aspects of this strategy, the innovation incubator model has proven to be a valuable tool for entities that find themselves contending with daunting R&D costs and low rates of R&D success. We are increasingly seeing companies across various sectors use the innovation incubator model with great success.

    A further wrinkle to the innovation incubator model is that because these patent pooling arrangements often involve collaboration between entities that otherwise compete in the marketplace, participating entities must be mindful of antitrust regulations. As a result, any company considering the innovation incubator model should complete a review of relevant antitrust regulation before joining in.

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Best Practices for Technology Development and Sourcing Transactions

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  • Best Practices for Technology Development and Sourcing Transactions-15

    It goes without saying that careful allocation of IP ownership, licenses, and royalty provisions in such arrangements should be worked out in great detail. Despite the complexity of the IP aspects of this strategy, the innovation incubator model has proven to be a valuable tool for entities that find themselves contending with daunting R&D costs and low rates of R&D success. We are increasingly seeing companies across various sectors use the innovation incubator model with great success.

    A further wrinkle to the innovation incubator model is that because these patent pooling arrangements often involve collaboration between entities that otherwise compete in the marketplace, participating entities must be mindful of antitrust regulations. As a result, any company considering the innovation incubator model should complete a review of relevant antitrust regulation before joining in.

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.