CRC-Predict

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• CRC-Predict
• A 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 Shackell
• Manager, CRC Technology Commercialization
• Communications Research Centre Canada

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A Brief CRC Overview

• Primary federal government laboratory for
  advanced communications RD, with approximately
  240 research staff
• Technical advice to Industry Canada to assist in
  development of telecom standards, regulations and
  policy
• Government RD 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 governments centre of
  excellence for communications RD, ensuring an
  independent source of advice for public policy
  purposes
• To help identify and close the innovations gaps
  in Canadas communications sector by
• engaging in industry partnerships through
  collaborative RD
• 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
335 Collaborative Agreements
50 MOUs, MOAs, NDAs 119 Total active
agreements 504 Typical Agreement Volume
Over a Year Licenses 45 Collaborative
RD 40 MOU, MOA
10 NDAs 20 CRC Innovation Centre
Agreements 5 Total 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 1970s
• 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 1990s 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 Northwoods
  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 Northwoods 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 RD in
  telecom network planning tools
• In 2006 Ericsson Canada Inc. purchased Marconi
  Wireless, business unit moves to Gatineau to
  maximize RD tax credits.

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Outcome of Technology Transfer

• June 2007 Another Changing of Guard
• French-based CTS purchases assets of Ericssons
  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 CBCs 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 RD 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 RD
  program
• Significant taxes collected by various levels of
  government based on the high tech job creation

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• Visit us at
• www.crc.ca
• Thank You!