Some Tips for Researchers when Discussing Their Work with a Potential Licensee or Investor

Anyone who is going to license a technology or create a start-up around a new technology sooner or later will have to explain what they are doing to whomever has the money. We can view this explanation as having two phases: Before the NDA and After. (NDA stands for non-disclosure agreement, also called a confidentiality agreement).

Before the NDA

?The dilemma in pre-NDA discussions is you have to tell your potential licensee or investor enough to get them interested in signing an NDA to find out more, but you have to hold back from telling them anything that might affect obtaining or maintaining your intellectual property rights (IPRs) or, much worse, letting them replicate your technology without you.

1.????Send a fact sheet in advance.

The goal in these initial discussions is to establish that what you are offering can meet a specific need or requirement of the other party. They have to believe the technology being offered is real and that it actually can meet that need or requirement. ?(For that reason I like to include a short video with the fact sheet that shows what you have in a non-proprietary way.) They also have to believe they have the absorptive capacity to adapt and, if relevant, mature the technology during new product development.

A fact sheet can help frame this discussion. The fact sheet should be prepared with the recipient in mind. Do enough market research to establish why they likely want to discuss this technology with the inventors. The fact sheet focuses on why the technology should address the benefits being sought, that is what the technology provides. It does not discuss how the technology works beyond indicating in general the scientific and engineering context of the invention, i.e., “This is a new chemical compound that is made using processes commonly found in the industry” or “This is a new chemical compound and the process for making it can be easily implemented by a chemical engineer experienced in the industry using commercially available materials and equipment.”

2.????Never reveal how you do it but only what the technology does.

How you do it is your secret sauce. In a patent, how you do it is described in the Claims, which of course, the stuff the patent actually protects. What it does is compares your technology to current or emerging substitutes. In a patent this is disclosed in the Background of the Invention section. That section explains what the problems are with existing technology, the solutions others have tried but failed or not worked as well as desired and then presents why you assert you can solve the problems with existing technology in a better way.

For example, in the 1990s, despite efforts by many, there was no viable technology for WIFI (wireless local area networks). The problem was reverberation, which occurs where radio waves bounce around the surrounding environment causing an echo that distorts the signal.

The problem was solved by the Australian CSIRO. For them to disclose that they had solved the problem of reverberation gave away no secret sauce. Nor did it give away anything to say the solution involved complex mathematics and detailed knowledge of how radio waves behaved in different environments.?So that kid of thing goes in the fact sheet,

The secret sauce was in applying Fast Fourier Transforms first developed to detect weak signals from black holes amidst the louder natural background radio noise of the cosmos. CSIRO’s patent claims center around using FFT with parallel sub-channels (ensemble modulation) wherein the period of a sub-channel symbol is longer than a predetermined time delay of the non-direct transmission paths, data reliability enhancement through Forward Error Correction (FEC), and data reliability enhancement through bit interleaving to attain high data transfer rates and high reliability in wireless environments with significant multipath interference. This kind of thing does not go in the fact sheet as until the patent application is published it is kept confidential. (Remember the patent may not be granted without revisions to the application or worse, never at all)

3.????You can compare actual or anticipated performance to substitutes already in the market.?

A useful way to do that is to find specification sheets for relevant products on the market today and compare your actual or anticipated performance on those metrics with what’s on the market today or will be in the foreseeable future.?For an example of a spec sheet see Tech specs for Nest Wifi Pro, Nest Wifi, and Google Wifi - Google Nest Help.

If you are new to IP and these kinds of discussion, always have someone from the technology or knowledge transfer office, your IP lawyer, or a competent consultant present and pause long enough to check with them if you can answer the question and any specific guidance they have for how to answer it. If you have to pause to get this guidance, acknowledge that is what you are doing – a professional on the other side gets it as they have to worry about inadvertent disclosures too.

If you cannot disclose something or are uncertain about disclosing something, acknowledge that fact. ?Better to error on the side of cation than lose your IP by making a public disclosure. Besides, curiosity is a wonderful thing. By pausing before answering, the listener wonders what you will say. If prudence dictates saying “I sorry. I’ve been told not to discuss this without an NDA”, the listener wonders what could be so special and wants to know. Hopefully they want to know badly enough that they will sign an NDA.

4.????When in doubt say, " Let me get back to you on that one after I check what I can disclose."

The same considerations for number 3 above, also apply here.

After an NDA is in Place.

?The get the deal without disclosing more than is necessary to get the deal. If a deal does not happen, less disclosure always is better. Even with scrupulously honest and respectable, law-abiding, NDA adhering people, when you provide confidential information you are educating them about your approach which may trigger other ideas than yours for solving their challenges. ?

1.????Stay within the parameters of the NDA, do not disclosure other information or subject matter.

NDA’s specify the specific information to be disclosed or what general area of the information to be disclosed. They also describe how confidential information is to be marked or labelled, if in writing or multimedia, or what procedures are to be followed, audio (oral) or visually disclosed live. Anything outside of the area that is not confidential under the NDA, Nor is anything not appropriately identified as confidential. That means the receiving party need not treated the information as confidential. So, it is only prudent to carefully observe the "boundaries" set by the NDA during discussions.

An example helps illustrate this point. Suppose you have an NDA in place that covers discussions related to your “chemical compounds and methods of using them for the suppression of fire ants”. It requires confidential information to be clearly marked or, within two hours of any discussion in which a disclosure is made, an email must be sent o the recipient which identifies any confidential information disclosed. ?Under this NDA, a discussion about other research going on involving the control of black widow spiders using a totally different technical approach would not be covered. Further, anything provided on paper or transmitted electronically not watermarked as confidential or otherwise clearly labelled as such is not covered. If you meet by chance in a coffee shop and after some small talk say something about your technology which may be confidential, and you do not follow-up within the time limit with an email identifying what was confidential, not covered by the NDA.?The same would be true of a phone conversation initiated in which the other party asks a question whhosed answer requires confidential information.

2.????Provide a fact sheet in advance. If you will do a demo, prepare a check list of what features, functionality, processes, parts and components, etc. you will demo. Have your technology transfer or knowledge transfer office, IP lawyer, or competent consultant review these documents to make sure they are protected information.?After providing these to documents, ask the other party if they want any other information in advance or to see anything else during the demo. If they do, make sure the information or demo items can be protected under the NDA.

From a marketing standpoint providing a fact sheet ensures what you want their decision makers to see, is clearly stated. This fact sheet is different from the pre-NDA one as it discloses the secret sauce. Because it does, it has a confidential watermark or some other way of identifying it as containing confidential information.

The same considerations apply to the checklist. As you demo, have the representative of the other party check off what they have seen. “Yep, the fire ants are attracted to the bait. Yes, they ingest it. Etc.” Makes sure the decision-makers know what you assert is real.

Since these two documents have been provided in advance, during discussions and demonstrations, stick to them. You can elaborate on the information in the fact sheet or expand on your description of what you are demoing, but anything else is out of scope without first checking to make sure it is protected. The rule of thumb is: Better Safe than Sorry.

By the way, when doing facts sheets and demos, check all information, descriptions and test results to be provided for accuracy. Practice your demos a few times in advance to make sure they work as intended. I have few war stories from when I trusted others to do this, which of course were a nightmare when they occurred.

3)???After the discussion/demo, if you elaborated on anything or expanded on your planned descriptions during a demo, send an email (or use whatever other procedure is agreed upon in the NDA) to the other party clarifying your provided confidential information.

In the US, this additional step is called CYA for covering your ass.

4)???Keep a running confidential FAQ ?which stems from all the questions raised during confidential discussions about this technology, regardless of with whom. Keep this one for yourself but use it to prepare fact sheets and to answer questions during discussions and demos.

The reason this FAQ is not sent to the other party is to limit the release of confidential information to what is necessary to close the deal.