Technology licensing
02/01/2001
By Mark Diorio
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Technology licensing is prolific in many industries, including the pharmaceutical and biotechnology arenas, and is used heavily for consumer products. Licensing has revolutionized software, as well. It has even found a viable position in semiconductor product design. But, is it a logical alternative for the commercialization of products or technology in the semiconductor packaging sector? And while there have been many attempts, have you ever seen a technology licensing model that actually worked in the packaging sector?
Technology licensing in the packaging assembly and test area has been attempted many times during the past 20 years by several companies. National tried to license its TapePak, Motorola the BGA, IBM the C4 process, ESEC the 3P molding process; all have had mixed results. However, in all cases where technology licensing has occurred in the packaging segment, I have never observed a true long-term success story. By this, I mean that I have never seen the industry at-large embrace any of these technology positions or products proposed for licensing by any of these companies (nor others, for that matter).
No Such Luck
This is not, however, all that strange, given the nature of the packaging industry. In the packaging world, in the little segment of semiconductor application, while we tell ourselves that we are very much needed, the semiconductor industry as a whole still sees us as an evil necessity. Therefore, any expenditure for packaging technology licensing (truly an "extravagance") is likely met with considerable senior management scrutiny. After all, in semiconductors the product is the semiconductor device and not the package.
And while a package renders a device useful, it is not what the end- customer is usually buying and, therefore, has little intrinsic value. In other words, it's not considered worth millions of dollars in licensing fees or royalty payments, especially if senior management continuously queries, "Where do these packaging guys come off with such lofty desires, thinking we'll spend such an amount on a packaging technology? After all, don't we pay our packaging engineers to do that job? Why do we have to pay someone else for their technology? Can't our packaging engineers figure a way around these patents?"
In my opinion in packaging, there really has never been a success story in licensing. And while there have been some very good efforts by all of the aforementioned companies, no one technology has truly persevered or propagated to the level of its initial aspirations. And in almost every case of technology licensing, the industry has expended gross amounts of resources in attempting to work around these patentable licensing positions
I have always advocated that a reasonable technology licensing scheme would work better if the company gave the licenses away at a minimal price in an attempt to get as many users and as much infrastructure behind the packaging innovation as possible (thus making it a "cost-effective" solution). The intention would be to foster multiple users and suppliers, and ultimately create a significant royalty stream. It is possible that this approach would have resulted in the pervasiveness of the technology to a greater extent because it encourages both sides to become winners and does not penalize anyone should it not.
A Surplus of Patents
Of late, we have been plagued by "patent posterity" - an epidemic of people and companies filing as many patents as possible in the hopes that somebody someday will need it or use it or infringe upon it...and then, they will collect on their patent. Whether they understand the application at all is not required; they just file patents based on ideas they have or have gleaned from you or have read about. Or perhaps they have seen the potential their technology can provide and have filed packaging application patents in the hopes that you'll want to make that kind of package and will need to acquire their technology. They keep the patent attorneys very happy. One colleague of mine professed, "We will be the Microsoft of packaging!" to which I replied, "Good luck!" because I have never seen any company succeed in package technology licensing and there have been some very good ones that have thrown their hat in the ring.
There have been individuals who, from time to time, have possessed patents and have been successful in enforcing them and rendering collections from large companies because they (either knowingly or unknowingly) were infringing upon the patent's claims. I can recall two such occurrences during the past 20 years. But I feel this is a different subject altogether and should not be confused with the matter of deciding whether you will license your technology. How the courts react to such claims is somewhat unpredictable. I don't see such a situation useful to the industry at-large even though an individual may prosper off of someone else's ill intent.
A Word to the Wise
Now, with all that said, perhaps you still are considering to license your packaging technology. You possess something that you think the packaging world needs. You would like to encourage its use and hopefully, just hopefully, you will make a few bucks in the bargain. You are probably asking, "Should I sell the rights to one company or license the technology to a variety of others? Should I go it alone or should I take in a financial or a strategic partner? How can I receive royalties?"
Well, my suggestion is to do your research. If you want to find a model to follow, then follow one that has met with success and make sure it can apply to the market you are pursuing. There is one publication you can refer to as a basic guide written by Ronald Louis Docie of Docie Marketing and Invention Services (www.docie.com) that may help get you started. But, more valuable than anything else is a keen understanding of your market. If you can understand how the packaging and assembly market sector truly works, then - and only then - do you stand a chance. Then, may you have some idea of what this market is willing to buy or license.
MARK DiORIO, chief executive officer, can be contacted at MTBSolutions Inc., 1630 Oakland Road, Suite A102, San Jose, CA 95131-2450; 408-441-2173; Fax: 408-441-9700; E-mail: [email protected].