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
www.crc.ca
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 governments 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 Canadas
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
www.crc.ca
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 R&D 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 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 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 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
www.crc.ca

Thank You!