The Value of Patent Pooling

What does 1850s sewing machine technology have in common with modern fibre Bragg grating (FBG) technology? In each case, licensing blossomed after key patents were pooled.

Patent bundling has been around since 1856 when the Sewing Machine Combination pooled various sewing machine patents. In the early 1990s, CRC and the American company United Technologies Corporation pooled their respective FBG patents into a single bundle through cross licensing. Since pooling all 11 patents that potential licensees need to employ this technology, the package has been licensed to more than 40 companies worldwide, resulting in over $10 million in intellectual property (IP) revenue to CRC alone.

After the success of FBG patent pooling, CRC signed its second cross license agreement with Toshiba to bundle their respective fused coupler technology patents, again leading to increased commercial success.

Recently, CRC has even sold some bundled, older patents, which had achieved limited commercial success. Two patent bundles were sold in the last two years, earning nearly $1.7 million. Along with this revenue, CRC will see savings in patent maintenance costs.

"Securing sales was no easy feat," says Jeet Hothi, Director of CRC's Technology Transfer Office (TTO). Its mandate is to protect, manage and exploit CRC's IP portfolio, and maximize value for CRC and Industry Canada, while providing industrial benefits to small and medium sized Canadian companies.

"After lengthy financial and legal negotiations, agreements were signed," says Hothi, "but receiving the money proved problematic." Because federal contracting regulations do not make provision for commission-based remuneration, CRC had no simple mechanism to collect the gross amount and pay the broker's commission. It had to complete the transaction through an escrow agent.

Despite the difficulties, CRC remains dedicated to ensuring that reasonable resources are committed to seeking the commercial success of all its patents. "In government labs, patents are granted only after spending considerable public funds on R&D," says Hothi. "If no Canadian licensing prospect is available, it's prudent to try to sell these potentially valuable Crown assets on the world market." Hothi explains that the net benefit is the additional funding raised by the lab, which is reinvested in the research programs and shared with the researcher(s) to reward innovation as per the Public Servants Invention Act.

CRC's Technology Transfer Office is the primary contact point for companies and other entities that wish to engage CRC under various forms of collaborative agreements and license arrangements. For more information contact Jeet Hothi, Director, Technology Transfer Office at 613-990-2089 or jeet.hothi@crc.gc.ca.