Stevens Institute of Technology
Howe School of Technology Management
Syllabus
EMT 472 – Assessment and Financing of
Technical Business Opportunities
Spring, 2009
Fridays, 2:30 – 5:00 pm
Elliot A. Fishman, PhD
Tel: 201-216-8548
Fax: 201-216-5385
efishman@stevens.edu
Office Hours:
Fridays before class and by appointment
Course Web Address:
http://webct.stevens.edu
Overview
This course is geared toward students from the Schools of Engineering and Science who
are pursuing a minor in Entrepreneurship. Students from other programs may enroll with
the instructor’s permission. This course deals with evaluating and financing technical
business opportunities for commercial exploitation. We treat technical business
opportunities from two distinct vantage points for commercialization:
· Licensing route - Technical business opportunities as IP-protected technology.
· Start-up route - Technical business opportunities that are protected by IP and enable
stand-alone ventures.
Each route to commercialization assumes certain financial risks and benefits, and each
strategy requires particular methods for financing and managing IP. The purpose of this
course is to give the undergraduate student a grasp of fundamental issues for assessing
and financing technical business opportunities that are to be commercialized. The course
is organized into three modules:
Module 1 - Assessing a Technical Business Opportunity
This module will train students to act prudently when confronted with a novel technical
idea. Students are expected to understand concepts of uniqueness, market size, barriers to
entry, marketability, etc. – and then to evaluate their technical business opportunity
against such normative measures. We will have them develop a heuristic framework to
choose between licensing, spinning off, or abandoning a new invention.
Module 2 - Introduction to Law and Economics of Intellectual Property
Students will be introduced to three of the four types of intellectual property (IP) -patents,
copyrights and trademarks.* Students are expected to gauge when each type of IP best
applies for various technical business opportunities. Students will learn the different
types of utility patents (machine, process, composition of matter, business method). We
will expose students to issues on patents claims coverage and have them evaluate the
strength of patent pools and thickets. Once students appreciate the relative strengths of
various forms of IP, we will have them build financial models for licensing scenarios.
Finally, students will be introduced to legal procedures by which IP is enforced. While
Module 2 is geared toward prospective entrepreneurs, it should also be of interest for
those students considering a career in IP law.
Module 3 – Financing Technical Ventures
This module assumes students will not pursue the licensing option with their technical
business opportunity, but instead intend to start a new venture around their idea. Students
will be trained to understand and write each element of the entrepreneurial financial plan,
including: use of proceeds and cash flow analysis; scenario building and spreadsheet
modeling; angel financing and valuation calculations; exit valuations and IRR analysis.
Lectures will focus on the merits and drawbacks of particular kinds of financing – angels,
venture capitalists and government sources. As the course’s culminating exercise,
students are expected to write a complete financial plan on their technical business
opportunity.
The one-term course will make use of the following texts:
Jeffery S. Timmons, New Venture Creation: Entrepreneurship For The 21st Century, 6/e
(McGraw-Hill, 2006), ISBN-10: 0071254382, selected chapters.
Book chapters will be supplemented by Harvard Business Review articles and cases.
Students should log onto WebCT each week to see if new readings or downloads have
been added for the next class session.
2
Learning Goals
After taking this course, the student will be better able to:

Discern between novel ideas that have little chance of commercial success versus
commercially promising ideas that should be protected with strong IP.

Learn tools and methods for valuing IP in venture, licensing and litigation
settings.

Specify what kind of patents and claims coverage would provide for monopolist’s
market power, for those ideas that are to be protected with strong IP.

Construct spreadsheets to financially value technology under various licensing
scenarios.

Identify when technical business opportunities may merit investment capital for
the creation of standalone ventures.

Analyze cash flow needs, compute shareholder dilution at various funding levels,
and perform return on capital calculations.

Understand the principles of intellectual property protection as a strategic asset of
the firm.

Acquire an operational knowledge of the various forms of intellectual property –
patents, trademarks, copyrights, and trade secrets and techniques to exploit a
company’s technology for economic gain.
Pedagogy
Classes will consist of lectures and discussion. This course emphasizes the case method,
which requires active student participation and debate. In many cases, the information
provided will be sufficiently ambiguous that there is no “right” answer. Just as in the real
world, students will be expected to weigh costs and benefits based on uncertain or
imperfect information. Problem solving is developed in a collaborative setting, alongside
those who may have opposing views. For the case method to be an effective classroom
experience, it is imperative that each student read each case ahead of time and come
prepared with a critical point of view.
On one or two occasions throughout the term, we may invite a guest lecture from industry
to lend perspective. On a weekly basis, students are also encouraged to share their own
corporate experiences as it relates to the material.
3
Required Text(s)
Books:
You may purchase these or use a copy on reserve at SC Williams Library
Jeffery S. Timmons, New Venture Creation: Entrepreneurship For The 21st Century, 6/e
(McGraw-Hill, 2006), ISBN-10: 0071254382, selected chapters.
Required Readings (Harvard Business School Cases and Notes)
All Articles will be posted on WebCT several weeks prior to the assigned class date,
except for the HBS cases, which students are to purchase and download themselves
from www.hbsp.com
Harvard Business Review Cases and Articles –
You must purchase copies of these and download these directly from HBS Publishing
www.hbsp.com
1.
2.
3.
4.
5.
6.
7.
Discovering New Value in Intellectual Property (HBR R00109);
The Protection of Intellectual Property in the United States (HBS 9-897046);
Intellectual Property and Strategy (HBS 9-704-493);
Case: Palm Computing (A) (HBS9-396-245)
Case: X-IT and Kiddie (9-803-041)
Intellectual Asset Valuation (9-801-192)
Case: Priceline vs. Microsoft (9-802-074)
Articles from Miscellaneous Sources
These will be posted to WebCT
8.
Fishman, Securitization of IP Royalty Streams: Assessing the Landscape,
Technology Access Report
9.
USC Title 35 – Patents
10.
USC Title 17 - Copyrights
11.
USC Title 15 – Unfair competition
12.
Article on Business Method Patents from BusinessWeek
13.
Sample License Agreement A
14.
Sample License Agreement B
15.
Sample License Agreement C
Assignments
1. Reading and Class Participation. Students are expected to attend each class and
read all assigned materials ahead of time. Active class participation is required of
each student, each week, and class participation will weigh heavily in the final
grade.
4
2. Cases and Write ups. Students are expected to prepare to discuss each of the
assigned cases; cases are due at the start of class, before group discussion takes
place.
3. There will be a mid-term quiz.
All written work is to be submitted by the dates stipulated. Late work will be
automatically graded down by 10%.
Midterm Quiz
Class participation
Case write-ups (4)
25%
15%
60% (15 pts. each)
Total
100%
Ethical Conduct
The following statement is printed in the Stevens Graduate Catalog and applies to all
students taking Stevens courses, on and off campus.
“Cheating during in-class tests or take-home examinations or homework is, of course,
illegal and immoral. A Graduate Academic Evaluation Board exists to investigate
academic improprieties, conduct hearings, and determine any necessary actions. The
term ‘academic impropriety’ is meant to include, but is not limited to, cheating on
homework, during in-class or take home examinations and plagiarism.“
Consequences of academic impropriety are severe, ranging from receiving an “F” in a
course, to a warning from the Dean of the Graduate School, which becomes a part of the
permanent student record, to expulsion.
Reference:
The Graduate Student Handbook, Academic Year 2003-2004 Stevens
Institute of Technology, page 10.
Consistent with the above statements, all homework exercises, tests and exams that are
designated as individual assignments MUST contain the following signed statement
before they can be accepted for grading.
____________________________________________________________________
I pledge on my honor that I have not given or received any unauthorized assistance on
this assignment/examination. I further pledge that I have not copied any material from a
book, article, the Internet or any other source except where I have expressly cited the
source.
Signature ________________
Date: _____________
Please note that assignments in this class may be submitted to www.turnitin.com, a webbased anti-plagiarism system, for an evaluation of their originality.
5
Course Schedule
Syllabus: EMT 472 Fall 2008 - Technology Asessment & Financing
Session #
Date
Lecture Topic
Reading Beforehand
1
4-Sep
Field Trip to Whitney Museum - Buckminster Fuller Exhibit
n/a
2
11-Sep
Technology Assessment
Segway Scooter
questions on Fuller exhibit
3
18-Sep
Guest Lecture: Heath Leadership Lecture Series: Greg Gianforte ********* Babbio 122 5 PM ************
4
25-Sep
Intro to Intellectual Property
Patents
5
2-Oct
Guest Lecture: Keith Lobo, MS 78 Venture Capital ********Babbio 319 3:30 PM *************
6
9 0ct
Copyrights * Trade Secrets
Trademarks
7
16 0ct
IP Valuation 1: DCF
8
23-Oct
IP Valuation 2: Comps
and other ways to value IP
Razgaitis Chapter 7
slides download from WebCT
Discovering New Value in IP
The Protection of IP in the US (HBS 9-897-046)
IP and Strategy (HBS 9-704-493)
USC Title 35, Title 17
Homework Due
Analayze claims language
of a patent (in class)
Trade secret exercise
(in class)
DCF Analysis
of a patent portfolio
(in class)
patent portfolio valuation
exercise (in clas)
9
30-Oct
open book quiz
open book quiz - use all readings to date
Hand in take-home quiz
10
6-Nov
Licensing Agreements
downloads from WebCT
13-Nov
12
20-Nov
Non-compete agreements
Confidentiality Agreements
Non-disclosure Agreements
Appropriation & Leakage
downloads from WebCT
11
downloads from WebCT
Mark up licensing
agreements (in class)
Mark up
agreements exercise
(in class)
Pixar Case
13
4-Dec
Start-ups
downloads from WebCT
Kiddie Fire Ladder case
6