Rob McInnes

You have been described as a “licensing master”. Tell us about your proudest achievement in the licensing space.

I started out in Big Law before junior lawyer rotation through different practice areas was common, so the specialisation of my practice into intellectual property (and subsequently into IP transactions) was very rapid! IP licensing has not just been my primary area of practice for more than 30 years, it has also been my primary intellectual and professional interest – or rather, passion.

My proudest achievement has been laying the contractual foundations for multiple transfers of life-changing healthcare technology from premier universities, medical research institutes and government labs into the hands of capable, well-resourced licensees and spin-out teams. My first large multi-party cross-border collaborative research and licensing deal, which I completed as lead lawyer in my third year post-qualification, led to the development, FDA approval and launch of the first 30-day-wear contact lens using technology developed in my home city. After that, I was hooked on technology commercialisation!

Which recent decisions or legislative developments have had the biggest impact on IP strategy in Australia in the past few years?

IP licensing in Australia has been somewhat affected by the 2019 removal of an express statutory exemption for certain conditions in licence agreements, from certain provisions of Australia’s laws relating to anticompetitive conduct. However, Australia’s competition law regulator was quick to issue guidance noting that intellectual property, by its very nature, is intended to grant exclusivity and that the mere exercise of exclusive IP rights through licensing will not be regarded as anticompetitive. The regulator did take the opportunity to clarify that licensing conditions controlling prices or output or used to create a cartel will be considered unlawful.

Australia’s highest court has also recently adopted the doctrine of patent exhaustion, abandoning the prior doctrine of implied licensing of use of patented goods in favour of the US approach. The High Court did not address territorial issues around the doctrine of exhaustion in its judgment, so it remains to be seen whether exhaustion also applies to products that cross Australia’s borders.

Drafters of Australian contracts are also getting used to a 2018 change to insolvency law, which prevents the enforcement of certain contractual rights that would otherwise be enforceable solely on the basis of a party’s insolvency. In practical terms, this prevents the exercise of termination for insolvency clauses in licence agreements.

Part of your legal practice involves training and mentoring. What is the most important piece of advice you can offer to aspiring IP lawyers?

The Licensing Executives Society’s Australia/New Zealand chapter has a formal mentor matching programme, and I am an enthusiastic participant. As a solo practitioner I also find many opportunities to mentor young and early-career participants in the Australian start-up and technology commercialisation ecosystems. These days, most of my mentoring activities and relationships arise out of angel investing. With a portfolio of more than 20 companies, I have many opportunities to offer mentoring-style guidance and development to start-up teams.

In the world of legal transactions, I try to model collegiate and ethical dealmaking practices to young and early-career IP lawyers on the other side of my deals, and to in-house lawyers within client companies. I have a thriving and growing practice in the delivery of formal training workshops and deal-specific workshops for individual clients.

What are the biggest mistakes that foreign licensees make when licensing technology and intellectual property out of Australia, and how can they avoid these?

Australia is a benign legal and cultural jurisdiction in which to do deals. Its laws are generally ascertainable, comprehensible and rational, and I like to think that we are, on the whole, pleasant to deal with and viewed as those that hold to their bargains. So there is no long list of traps to consider when licensing technology in Australia. Australia’s laws, legal culture and dealmaking style are closer to Anglo-American norms.

That said, the Patents Act does contain what might broadly be described as ‘patent misuse’ provisions that deal with forcing or bundling unpatented items, and continuation of licence terms after expiry of licensed patents. Local advice is recommended for licences that raise these issues and cover Australia.

What, in your view, makes a world-class IP portfolio?

It is all about balance. Australian research organisations and innovative companies often do not have the resources that their international counterparts apply to IP protection and management. This is in part due to the relatively small size of the Australian economy and also because Australia was somewhat late to the party when it came to senior managers gaining awareness of the importance of IP rights.

So in Australia, a key aspect of IP portfolio development is raising awareness from the ground up among researchers and from the top down among senior management. Despite intangible rights making up the vast bulk of corporate assets (and not just within high-tech companies), it is still rare for Australian MBA courses to have content focused on intellectual property and the management of intangibles.

Cost effectiveness is also crucial when building and managing an IP portfolio based on Australian R&D. When spending Australian dollars in expensive international markets with strong currencies, it is necessary to seek value for money, as well as alignment between overall strategy, R&D planning and IP management.

How would you characterise the current IP transactions space in Australia, and how do you expect this landscape to evolve as more industries are affected by technological convergence?

Currently I would say that the Australian IP transactions market is characterised by an excess of demand over supply for practitioners who are confident, experienced dealmakers. This applies as much to business development executives as it does to lawyers.

Australia has historically punched above its weight in terms of funding and the quality of research carried out in public sector research institutions such as universities, government labs and medical research institutes. This contrasts with below average (by developed countries’ standards) business investment in R&D. Over the past few decades, governments have implemented schemes to bridge the gap between public and private sector environments and increase collaboration in the development and commercialisation of new technologies. So, the most noteworthy aspect of Australia’s IP transactions environment is the focus on tech transfer between public and private sectors as opposed to strictly business-to-business transactions.

Tech convergence been particularly relevant in my primary practice area of healthcare and life sciences. Five to 10 years ago there was a clear separation between licensing of (usually patented) healthcare and life sciences technologies, and licensing of software and IT. I had the luxury of being able to focus on the former, and often referred the latter to friends and colleagues in the profession with more of an IT background! But now there are hardly any healthcare or life sciences deals that I work on that lack a key element involving the use or licensing of IT as part of the package of technologies involved in the transaction.

What do you enjoy most about your work and why?

At this stage of my career, what I enjoy most about my work is doing a bit less of it! Readers who look me up on LinkedIn will see that I am happy to describe my current role as “projects I enjoy with people I like”.

Since becoming a solo practitioner in 2018, I have intensified the focus of my practice on licensing and R&D agreements (and related material transfer agreements and NDAs) in healthcare and the life sciences, although I still find it hard to say no to an interesting mining or heavy engineering technology project. Most importantly, I no longer carry out intensive drafting work and will almost never be the only lawyer working on a transaction. The scope of my practice is now:

• advice on IP portfolio management and IP commercialisation strategy;
• structuring IP deals and planning for negotiations;
• reviewing and commenting on existing or proposed contracts (but not drafting them);
• helping with negotiations, inside or outside the room; and
• training and mentoring.

Accordingly, I will usually work in conjunction with a client’s existing commercial law firm, offering strategic, structuring and negotiation advice, but without carrying out contract drafting. Pleasingly, many Australian firms now recognise that I am not a competitor for their core legal work, but rather a source of referrals of work from well-prepared and well-advised clients.

As a one-man team, how do you stay abreast of the latest industry developments both in Australia and internationally?

While a solo practice will always be somewhat constrained in terms of available resources compared to established law firms, we live in wonderful times for professionals to keep abreast of current developments. I am old enough to remember manually updating looseleaf services in large law libraries, but I doubt anyone misses those days.

Now, I maintain current awareness just like any lawyer in any firm – with subscriptions that cover the practice areas that I operate in. Because most of my deals are cross-border, I am careful to cover developments in major overseas markets (while being sure not to hold myself out as practising foreign law).

Of course, I am grateful to all of the Big Law firms that regularly publish high-quality informative newsletters and updates in my practice areas, written by their hard-working and very bright associates!

What issues are concerning your clients at present, and what advice are you giving to them to help them overcome these?

Many of my clients are spin-out companies from public sector research organisations and, at present, the primary concern for many of them relates to equity funding. I also engage with the funding question through my angel investment portfolio companies.

As an IP transactions lawyer I have limited influence over the ability of my clients to attract funding, but I do encourage them to:

• be well prepared for due diligence by investors;
• know what deal they are doing before getting involved in exchange of lengthy legal drafts;
• manage their IP portfolio spending carefully, having the courage to abandon cases that may no longer be highly relevant; and
• be structured and prepared so as to maximise the availability of non-dilutive funding, such as tax incentives and government grants.

How has the Australian licensing landscape evolved over the course of your career?

That is a big question. At the start of my career, intellectual property was known as ‘industrial property’ and was practised in Big Law firms by the weirdos at the end of the corridor – others saw them as the department of miscellaneous legal work that nobody else wanted to do! Australian industry was dominated by oligopolies of established firms with very little culture of innovation. Start-ups were rare and the pinnacle of career achievement was to get a safe job in a big company. Crusty old engineers, some of whom had risen to senior management roles, would loudly proclaim that all intellectual property should be protected as trade secrets, which, to some extent, had validity because the tech workforce would maybe join the company in their 20s and stay there for 40 years.

The current environment is, of course, totally different – primarily due to the increasing focus on start-up companies as a means of bringing new technologies to the market. While previously most significant Australian business was conducted in large, vertically integrated companies (many of whom were subsidiaries of multinational groups), the Australian business environment is now home to a start-up ecosystem consisting of innovators, entrepreneurs, funders, largely sympathetic government enablers and service providers – such as myself – that create the web of contractual relationships that bring new technologies to market in an entirely different way.

It is a great pleasure to be part of this ecosystem and to participate in the networks that bring life-changing healthcare and life sciences technologies to fruition based on the world-class output of Australia’s research sector.