CRC-PredictA Case Study in Managing Multiple Objectives

In a federal laboratory license to Industry

Presentation to the Federal Partners in Technology Transfer

Ottawa, Ontario June 2, 2008

Kevin ShackellManager, CRC Technology Commercialization

Communications Research Centre Canada

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A Brief CRC Overview• Primary federal government laboratory for advanced

communications R&D, with approximately 240 research staff

• Technical advice to Industry Canada to assist in development of telecom standards, regulations and policy

• Government R&D clients include National Defence, Canadian Space Agency, Public Safety and Emergency Preparedness Canada

• CRC collaborates with industry, universities and research centres nationally and internationally

• CRC Innovation Centre helps small high tech start ups to develop their commercial potential through on-site incubation

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CRC Mission

• To be the federal government’s centre of excellence for communications R&D, ensuring an independent source of advice for public policy purposes

• To help identify and close the innovations gaps in Canada’s communications sector by:– engaging in industry partnerships through collaborative R&D;– building technical intelligence; and– supporting small and medium-sized high technology

enterprises through technology transfer.

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CRC Campus

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Research Branches

• Terrestrial Wireless

• Broadcast Technology (radio and television)

• Satellite Communications and Radio Propagation

• Optical and Broadband Network Technologies

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CRC Technology Transfer 2007/08

Active Agreements:License Agreements 335Collaborative Agreements 50MOU’s, MOA’s, NDA’s 119Total active agreements 504

Typical Agreement Volume Over a Year:

Licenses 45

Collaborative R&D 40MOU, MOA 10 NDA’s 20CRC Innovation Centre Agreements 5Total new agreements 120

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CRC – A History of Radio Science Research

• Radio Propagation Research – an original core competency of CRC dating back to the early 1950s

• Development of manual calculation techniques to predict signal strength and fading of radio waves

• Growth in new radio, TV, and mobile radio services in the 1970s

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Computer-based Modeling & Calculations

• New and more accurate computer-based prediction methodologies required

• CRC took the lead and initiated research in the field of propagation measurement in the 1970’s

• algorithms developed by CRC to more accurately model underlying physical phenomena such as diffraction, topographic scatter and terrain irregularities

• CRC-Predict – considerably more accurate and robust computer-based prediction program

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CRC-Predict Features

• Wireless service planning tool for cellular, mobile wireless, and broadcasting

• Estimates radio signal strengths on terrestrial paths at VHF and UHF

• Works with topographic database• Accurate prediction capability• Internationally acclaimed as one of the most

accurate models compared to other similar models

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Technology Transfer

• Software originally developed to help Department of Communications with radio spectrum allocation across Canada

• Fortran version was widely commercialized through mostly single-user license providing software in executive code form to radio engineers and broadcast network planners for radio and TV transmission planning

• Over 100 licenses issued in early 1990’s in Canada and abroad

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Commercialization Opportunity

• Growth of cellular services; limited spectrum availability and interference issues brought to the forefront

• Ottawa-based Northwood Technologies recognized the robustness of CRC-Predict and entered into a collaborative agreement with CRC in 1997

• Integration of CRC-Predict into Northwood’s DeciBel Planner wireless network planning software

• Non-exclusive license granted to Northwood

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Leading technology in its field

• By 2001 marketability of Northwood’s cellular network planning tool greatly enhanced by addition of CRC-Predict

• Northwood initiated negotiations for exclusive license to secure competitive advantage

– sales of enhanced product with “Government” technology inside exceeded expectations

• CRC regularly approached by competitors for CRC-Predict license

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Securing a deal• Intensive negotiation both internally at CRC and with

Licensee for exclusive field of use license

• Due diligence review of existing licenses to minimize competitive impact (a number of older Fortran source-code licenses were issued which were cause for concern)

• Minimum annual royalty requirements to ensure revenue stream for CRC

• Northwood wanted an exclusive license, while CRC only willing to give a sole license in a field of use specific to telecom applications

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Assignment Rights in Licensing

• Assignment rights became a deal breaking issue

• Standard template response was “no assignment without prior written consent of CRC

• No de facto assignment through a reorganization, merger, consolidation, acquisition or other reorganization….

• Northwood not prepared to sign a license agreement that did not offer rights of assignment to a third party

• A Notwithstanding clause was demanded by licensee

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Benefits to Canada “Notwithstanding”

• Notwithstanding a) above, consent to assignment of this Agreement shall not be unreasonably withheld where:

– i) the assignee undertakes in writing to be bound by all of the obligations of this Agreement; and

– ii) the assignee maintains an active business presence in Canada.

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Benefits to Canadian Economy • Inclusion of tight assignment provisions to ensure continued

exploitation of the technology in Canada

• In 2001 less than 3 months after the Northwood deal closed, tight assignment provisions proved beneficial when multinational Marconi PLC purchased Northwood for $42 Million in cash

• Kanata was designated the new Marconi business unit for wireless network planning worldwide, pulling in former UK-operations for R&D in telecom network planning tools

• In 2006 Ericsson Canada Inc. purchased Marconi Wireless, business unit moves to Gatineau to maximize R&D tax credits.

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Outcome of Technology Transfer

• June 2007 Another Changing of Guard• French-based CTS purchases assets of Ericsson’s

Canadian-based wireless network planning unit• CTS creates a new Canadian entity -- Mentum• Mentum affirms Gatineau as the world product

development centre for its wireless network planning software

• 47 person years of employment at Gatineau office• 4 licensee holders over 10 years – technology

remains exploited in Canada for the benefit of Canadians

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CRC Exploits Broadcast Market With CRC-COVLAB and COVLITE

• CRC retention of “sole” provision proved beneficial

• Licensed to more than 50 broadcasting planners in Canada, Australia, Taiwan, Korea, Japan, Portugal, Germany, Switzerland, and Mexico

• Over $750,000 in licensing revenues from 2001 to 2008

• CRC-COVLAB Designated as CBC’s central broadcast planning tool

• Field of use license allowed CRC to continue to exploit in its primary area of broadcasting interest while industry got telecom

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Lessons Learned• Pressure to close a deal quickly indicates external third-

party forces at play (Northwood acquisition by Marconi)

• Field of Use licensing provides a range of options for licensor during negotiations

• Internal hurdles in licensing can be just as formidable as external (identify opposition early and plan to deal with it)

• Companies prepared to pay for technology if value proposition and sales potential can be demonstrated

• Continuing R&D support critical to the tech transfer success

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Conclusion

• In Summary– Innovative technology development took a decade before

successful commercialization – Originally developed to assist regulatory requirements– Licensed to a Canadian company, with ownership

transferring to three foreign companies– CRC has received over $1 Million in royalties over 10 years

and the companies have created and maintained approximately 50 Canadian jobs over the decade

– License fees and royalties helped further CRC R&D program

– Significant taxes collected by various levels of government based on the high tech job creation

Visit us at

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Thank You!