University-Industry Partnerships: Role of Intellectual Property by d183fx

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									University-Industry Partnerships:
  Role of Intellectual Property




      Dr. Guriqbal Singh Jaiya
                    Director
     Small and Medium-Sized Enterprises Division
       World Intellectual Property Organization
                www.wipo.int/sme
       KNOWLEDGE AGE


   Universities and high schools
    become the raw material of
  economic development as coal
mines were the raw material of the
         industrial age !
 The 21st Century Context for Linking
    Universities and the Economy

► The Knowledge Economy – A world-wide
  phenomenon
► Knowledge – The new raw material driving
  innovation, competitiveness, and economic
  development
► “Economic success is no longer determined by
  possession (e.g., of raw materials or physical
  prowess), but by capacity to generate new
  knowledge and by the ability of the workforce to
  apply this knowledge successfully” (M. Walshok,
  Knowledge Without Boundaries, 1995)
    The role of universities
 in the Europe of knowledge
► Develop   effective and close co-operation
 between universities and industry
   innovation
   start-up of new companies
   licensing of university intellectual property
   promotion of effective university-industry
    relations
   better exploit the results of their knowledge in
    relationship with industry
   evaluation criteria for the performance of
    universities
SUCCESS FACTORS FOR TECHNOLOGY TRANSFER


                        Business
            Academic                Government

                        Community


       Talent   Technology     Capital   Know-How

                       Market - Need



                      Successful
                     Value-Added
                  Technology Transfer
                                                 G. Kozmetzky
                                                 UT-Austin
   Ecosystem                       [Thanks to Jeff Skinner, UCL]

                                    Lawyers
                     Investors’s
                                                Head
                                               hunters

     Other       PR agents
                                                         Patent
   start-ups
                                                          Firms

        Real
        estate

                                                  Accountants
                 Leasing
                                       Banks                 Students
       Brokers
Itinerant managers
     Consultants
     But why does the government
          invest in research?
       Government
        Funding of                     Reservoir of
      Basic Research                   Knowledge
       In Academia


                                                           New
                          Increased        New
                                                        Companies
                          Efficiency     Industry
                                                          (Jobs)




                                        Taxes         Vannevar Bush
                                                      Reservoir Theory of
Science, The Endless Frontier, 1945                   Knowledge
The Business of Academic Research


Federal dollars
to Universities
have continued
 to climb, even
while falling in
  other sectors
                     Source: National Science Board Report 2002
    Traditional academic roles
•   Research
     • Creation of new knowledge
     • Breakthroughs and basis research (about half of all basic
       research in U.S. conducted by universities)
     • Incremental technical advances
•   Education
     • Dissemination of knowledge
     • Graduation of students
•   Service
     • Transfer of knowledge and transfer of technology
The Technology Transfer Process

                                                    7-12 YEARS


 SCIENCE               Technology      Prototype/        Product         Initial
            Idea                                                                      COMMERCIAL-
    &                   Feasibility     Scale-up       Development     Manufacture
                                                                                        IZATION
  TECH
                   INVENTION                           TRANSLATION




            Market      Pro-forma                          Marketing       Business
                                        Applications                                    MARKET
             R&D       Business Plan                       Strategy          Plan
MARKETING                                                                               CAPTURE
                   FEASIBILITY              MARKET & BUSINESS PLANNING




                                                           IPO
             Tech Tfr
FINANCING                                                                               RETURNS
             Funds Seed Capital                        Expansion Capital
 Technology Licensing at Stanford

► Notable   Inventions from Stanford Research
 1971- FM Sound Synthesis ($22.9M)
 1974 – Recombinant DNA ($255M)
 1981 – Phycobiliproteins ($46.3M), Fiber Optic
 Amplifier
 ($32M), MINOS ($3.4M)
 1982 – Amplification of Genes ($30M)
 1984 – Functional Antibodies ($120.6M)
 1986 – CHEF Electrophoresis ($2.1M)
 1990-1992 – DSL ($28.7M)
 1996 – Improved Hypertext Searching (GoogleTM
 ($336.5M)
 University-Industry partnerships:
      Economic Advantages
► Licensing   agreements are only a small part
  of the benefits university research
  generates. Others include:
► Generation of new knowledge
► Creation of human capital
► Transfer of tacit knowledge
► Technological innovation
► Capital investment
► Regional leadership
► Production of knowledge infrastructure
► Influence on the regional milieu
SUCCESS FACTORS FOR TECHNOLOGY TRANSFER


                        Business
            Academic                Government

                        Community


       Talent   Technology     Capital   Know-How

                       Market - Need



                      Successful
                     Value-Added
                  Technology Transfer
                                                 G. Kozmetzky
                                                 UT-Austin
Conflicting Values - Common Interest

                       UNIVERSITY           INDUSTRY
  Knowledge for                                           Management of
 Knowledge’s Sake                                       Knowledge for Profit


                    Teaching
                                                     Profits
            Research           Commercialization
                               of New and Useful
            Service               Technologies
                                                   Product R&D
              Economic
              Development

  Academic Freedom                                       Confidentiality
   Open Discourse                                   Limited Public Disclosure
 Blending the University Research
   and Entrepreneurial Cultures

► Academics               ► Industry
   research priorities      research priorities
    set by investigator       set by management
   grant-seeking            profit-seeking
   publications             proprietary
   patenting driven by      patenting driven by
    publications              business decisions
   serendipity              control
   transfer at early        add value before
    stage                     transferring
Blending the University Research
  and Entrepreneurial Cultures

       Academic perspective;
      “Why partner with industry?”
 ► Application   of research for public good
 ► Exposure   to industry collaboration
 ► Additional   source of research funds
 ► Build   research endowment
 ► Reward    investigator/inventor
Blending the University Research and
      Entrepreneurial Cultures
       Industry perspective;
    “Why partner with universities?”
► Researchinstitutions are rich source of
 new ideas and technology
► Cheaper  to support research and to
 license-in technology
► Biotechindustry looks to academic
 collaborations for early stage technology
Blending the University Research and
      Entrepreneurial Cultures


   How do you begin to bring the two
          cultures together ?
   1. Employment Policy
   2. Policy of Intellectual Property
   3. Revenue Sharing
   4. Faculty Involvement
    Employment Policy
► Employer  (University/College/Research
 Institute) owns all property rights to any
 intellectual property conceived and/or
 reduced to practice by its employees
► Assignment   form part of orientation
        supplies, space, other resources of
► Salary,
 the University are utilized
Policy on Intellectual Property

   ► Ownership
   ► Transfer of ownership
   ► Rights and obligations of faculty
     (employee)
   ► Rights and obligations of the
     University (employer)
   ► Royalty sharing
   ► Waivers
                 The Bayh-Dole Act
                 Public Law 96-517
         Patent and Trademark Act of 1980

►   Allow small business and non-profit organizations to retain
    title to innovations made under federally-funded research
    programs
►   Promote investment by the private sector in
    commercialization of federally funded research discoveries
    for the public good
          In Passing Bayh Dole,
          Congress recognizes…

►   Creativity is truly a national resource
►   The patent system in U.S. is the vehicle which
    permits delivery of the resource to the public
►   It is in the public interest to place stewardship of
    research results in the hands of universities and
    small business
►   Existing U.S. policy was ineffective at a time when
    intellectual property and innovation were becoming
    the preferred global currency


      Source: Howard Bremer, University Technology Transfer Evolution and Revolution, COGR, 1999.
       Bayh-Dole Provisions
► Encourage    collaboration with industry to promote
  the utilization of inventions
► Disclosure to government within 2 months of
  invention
► Universities must file patents on inventions they
  elect to own, and share any monies with inventors
► Government retains non-exclusive license and
  march-in rights
► Requirement to attempt to develop the invention
► Preference to small businesses in granting licenses
► Products must be manufactured in the U.S.
      Bayh-Dole Act 1980
► Allows universities to own and sell/license
  inventions/novations generated with federal dollars.
► Motivation:
    Get ideas off the shelf w/o sacrificing university
     mission (synergies)
    Generate university income for more research
► Critique:
    Increased commercialization of university research
     agenda
    Distraction from basic research (tradeoffs)
    Hold-ups/Anti-Commons approach to research
  Bayh - Dole Act 1980
►Gives   nonprofit organizations and
 small businesses the right to:
  retain title to inventions made in
  whole or in part with federal funds
  grant exclusive term-of-patent
  licenses
The Technology Transfer Process

                                                    7-12 YEARS


 SCIENCE               Technology      Prototype/        Product         Initial
            Idea                                                                      COMMERCIAL-
    &                   Feasibility     Scale-up       Development     Manufacture
                                                                                        IZATION
  TECH
                   INVENTION                           TRANSLATION




            Market      Pro-forma                          Marketing       Business
                                        Applications                                    MARKET
             R&D       Business Plan                       Strategy          Plan
MARKETING                                                                               CAPTURE
                   FEASIBILITY              MARKET & BUSINESS PLANNING




                                                           IPO
             Tech Tfr
FINANCING                                                                               RETURNS
             Funds Seed Capital                        Expansion Capital
One University               [Thanks to Jeff Skinner, UCL]




                    Executive
                    (policies)
                                        Tech
                                      transfer
                                        office


                           Other
                         academics
  Gene pool
 Commercially
active scientists
Why Do Universities Transfer
       Technology
► Generate  licensing revenue and research funding
► Dissemination of new knowledge for the benefit of
  society
► Development of University technology into
  products
► Provide avenue for faculty members to interact
  with business
► Stimulate economic development
► Generate favorable publicity for the University
    Patents as source of research
               funding
► 25%   of life scientists have a patent
   Median patent holder owns 2 patents

► Patents    as the “academic’s lottery ticket”
   33% of patent holders receive licensing revenues,
    representing 8% of all life scientists.
   Average royalties ~$16,500 per patent
   But in our sample:
     ► One  patent accounts for ~90% of those royalties
     ► Of 1200 patents there are only three that make ~$1million or
       more.
     ► Median annual royalty income is $5,000
     ► License revenues account for less than 1% of research budgets
       for those with patents
Is there a commercialization of
  US university life sciences?
►   53% of life scientists in our survey have no
    engagement with industry
      No patents, invention disclosures, industry
       funding, service on industry boards,
       collaborations, etc.

►   20% of life scientists report private industry
    funding, accounting for 25% of research budgets
      They still get 54% from federal sources

►   Overall in the life sciences, 67% of all research
    funding comes from federal sources, 15% from own
    university sources, 10% from private foundations,
    and only 5% from private industry.
    Percent of lab funding from
     different funding sources
Source                               All life         Scientists who
                                   scientists         do 100% basic
                                                         research
Federal    (NIH, NSF, etc.)           66.9                 71.2*
Own university                        14.6                15.7
Foundations                            9.5                 9.7
Industry                               5.3                0.8*
State government                       2.4                0.9*

* Significantly different at a 95% confidence level
       Evidence on hold-up problems:
 Percent of life scientists reporting constraints
                                Not        None or      Some or
                             applicable     minor        major
                                          constraint   constraint


Affordability of licensing    61.5         33.6          4.9
intellectual property

Materials transfer            49.1         39.1         11.8
agreements from another
university
Materials transfer            56.2         33.4         10.4
agreements from private
industry
           Funding Basic Research
►       Very difficult to fund without federal money
►       Patents unlikely to provide much help because
         “lottery” – unpredictable returns
         timing of liquidity (can’t borrow against expected licensing
          earnings).
         reinforced by basic nature of research that are less likely to
          generate valuable patents.

►       Industry funding small and unlikely to ever be much
        more than that (time horizon)
         Good news that stem cells won’t likely be the Trojan horse
          that brings commercialization into the university
         Bad news that industry won’t fund enough of this research to
          make up for federal funding
Overview of the Technology
Commercialization Pathway
    Research




   Invention                     IP
   Disclosure                Protection              Licensing



                   TTC                    Strategy
                Evaluation
Invention Evaluation Process
               Invention                Electronic
 Invention
               Disclosure              Submission




                                       Technology
                                        Transfer
                                       Committee


                          Technical                  Patent Search
                           Review                    Market Analysis


                                       Technology
                                        Transfer
                                       Committee



                                                  Hold for
               Patent          Release to                               Test
                                                  Further
             Technology         Inventor                               Market
                                                 Evaluation
Invention Evaluation Process
► Is   it protectable?
   Patent, copyright, know how
► Is   it enforceable?
   Infringement
► Is   it licensable?
   The primary reason for investing in intellectual
       property protection is the ability to license the
       invention.
          Evaluation Criteria
► Level of IP Protection
► Related Industry R&D Activity
► Inventor Reputation and Participation
► Inventor R&D Activity
► Promised Benefits and Novelty
► Market Size
► Competing Products
► Development Status and Time to Market
► Validation and Performance
Overview of the Technology
Commercialization Pathway

    Research




    Invention                     IP
    Disclosure                Protection              Licensing



                    TTC                    Strategy
                 Evaluation
    Licensing Strategy
            Intellectual
             Property




  Option     License       Start-Up
Agreement   Agreement      Company
Balancing Public Good vs. Practical concerns in IP Licensing

      Internal tensions: $ vs. altruism
      Non-exclusive or exclusive?
                (widespread access vs. investment incentive)
      Exclusive: requires incentives/disincentives
           Significant upfront fees
           Effective royalties
           Appropriate minimums **
           Patents costs
           Diligence milestones
           Legal and responsible use
      Exclusive variations
           Field of use
           Sublicense incentives
           Return of rights
           consortia
      Non-exclusive with “sliding scales” of terms
         Licensing Strategy
► Option   Agreement
   Early stage technology that requires further
    development
   Proof of principle – add value or reduce risk
   Reach some minimal level of progress to be of
    interest to investors
   Does not give rights to develop or sell products
   Exclusive or non-exclusive
   Convertible to license agreement on agreed
    terms
         Licensing Strategy
► License   Agreement – Existing Company
   Technology likely to lead to a single product
   Small number of large firms that dominate the
    field
    ►Exclusive   or non-exclusive
   Capital requirements to enter the industry
    prevent startups from being competitive
   Existing company may be able to get the
    technology to market faster
          Licensing Strategy
► Start-Up   Company Formation
   Platform or disruptive technology with broad patent
    protection
   Ability to generate interest from investors
     ► Market size sufficient
     ► Gross margins attractive

   Viable business model
   Begins with an option agreement conditioned upon
    milestones
     ► Investment
     ► Management   team
      Technology Marketing
► Inventorsare the single most important step
 in marketing
   70% of licensing leads come from the inventor
► Identifycompanies in technology area
► Network at scientific and industry
  conferences
► Respond in a timely manner
► Have a plan for next steps in research
► Forward all licensing interest to the OTM
    Technology Marketing

►OTM   Marketing Efforts
  Technologies available for licensing are
   on the OTM web site
  Focused business development
   relationships in specific technology areas
  Relationships with local and national
   venture capital groups
  Industry conferences
Overview of the Technology
Commercialization Pathway

    Research




    Invention                     IP
    Disclosure                Protection              Licensing



                    TTC                    Strategy
                 Evaluation
      Licensing Process
► Identification of interest
► Confidentiality agreement for scientific and
  IP due diligence
► Discussion of license type
   Option versus license agreement
   Exclusive versus non-exclusive
► Negotiation   of financial, business, and legal
  terms
      License Agreement terms
► License   grant
     Exclusive or non-exclusive
     Field of use
     Territory
     License term
► License   Consideration
     Upfront fee
     Maintenance fees / Minimum annual royalty
     Royalties
     Other – Milestones, equity
University Approach to Start-
  Up Company Formation


 PLATFORM            CORPORATE PARTNER/
TECHNOLOGY            SOPHISTICATED VC




   LEAD                    SEED
MANAGEMENT                FUNDING
      Faculty Involvement with
        Start-Up Companies
► Permitted    activities
     Holding of equity
     Sponsored research from company
     Consulting relationship
     Scientific Advisory Board
     Entrepreneurial leave
► Prohibited   activities
   Holding of greater than 20% equity
   Serving as PI for sponsored animal research or clinical
    study
   Holding Board of Directors seat
   Holding management position in licensing company
    Faculty start‐ups: “Best Practices”
►   Faculty must
►   • Separate their on‐going University research from company work
►   • Understand that their primary commitment is to the University
►   – Only advisory/consulting roles with the company
►   – Limit consulting for the company to 13 days a quarter, per University
    policy
►   • Take a leave of absence if engaging in a management role
►   Faculty must not
►   • Negotiate with the University on behalf of the company
►   • Receive gifts or sponsored research from the company
►   • Involve University staff in activities at the company
►   • Involve company personnel in Stanford research
►   • Involve current students in company activities
►   • Involve junior faculty who are in a dependent role in company
    activities
►   • Use University facilities for company purposes
►   • Undertake human subjects research or supervise faculty who are
    human
►   subjects protocol directors for work related to the company’s interests
          Background/Context
►   Faculty Consulting
     Rationale – having faculty engaged with the corporate community
       may provide important opportunities to advance science and research
       and quality of medicine and patient care BUT there are issues and
       problems that must be addressed.
     Responsibilities
        ►   Faculty Member’s responsibilities
               Understand University policies relating to conflict of interest,
                intellectual property, time allowed for consulting, etc.
               Understand what you’re signing !
        ► University’s responsibilities
        ► Disclosure obligation


►   What’s the norm for consulting in Industry?
  Issues – The Consulting Plus
            Dilemma
         of Interest and conflicts
►Conflicts
 of commitment –
  Consulting + sponsored research
  Consulting + equity ownership
  Consulting + management position
  Consulting + clinical trial (human
   subjects)
  Use newspaper test
                       Issues
► Intellectual      Property:      Company’s general rule: The company
  owns any intellectual property created by the consultant that relates to
  the research he/she does for the company”
► How does this impact the Consultant’s research with the University:

     Scope of work – length of time (e.g. broad vs. narrow
      scope, one-day speakers’ board versus two year
      consulting relationship)
     IP ownership – (remember: disclosure to UR). If
      Company owns it, you lose the right to use it in your
      research
     Potential to compromise future research work or
      funding
     Terms suggested by industry are getting broader and
      broader
                 Issues
►Confidentiality and Publication Rights
  Is it clear what information is considered to be
   confidential?
  Freedom to publish


►Indemnification and Limitation of Liability
   General comments on liability
   Consultant indemnifying Company
   Company indemnifying Consultant
   Try to limit your liability for the work you perform
                Issues
► Exclusivity
   Does the contract provide that you can’t do
    “overlapping” or “related” research for others?
    Other language purporting to restrict you or
    the University?
► Use of University resources in the
  consulting arrangement (includes space,
  equipment, students, etc.)
► Tax Issues related to receipt of consulting
  income
     TECHNOLOGY TRANSFER,
  INTELLECTUAL PROPERTY AND
EFFECTIVE UNIVERSITY-INDUSTRY
PARTNERSHIPS: The Experience of
  China, India, Japan, Philippines,
 the Republicof Korea, Singapore
           and Thailand

► http://www.wipo.int/freepublications/en/int
 property/928/wipo_pub_928.pdf

								
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