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

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Presentation on theme: "Dr. Guriqbal Singh Jaiya Director Small and Medium-Sized Enterprises Division World Intellectual Property Organization www.wipo.int/sme University-Industry."— Presentation transcript:

1 Dr. Guriqbal Singh Jaiya Director Small and Medium-Sized Enterprises Division World Intellectual Property Organization www.wipo.int/sme University-Industry Partnerships: Role of Intellectual Property

2 KNOWLEDGE AGE Universities and high schools become the raw material of economic development as coal mines were the raw material of the industrial age !

3 The 21st Century Context for Linking Universities and the Economy The Knowledge Economy – A world-wide phenomenon The Knowledge Economy – A world-wide phenomenon Knowledge – The new raw material driving innovation, competitiveness, and economic development 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) 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)

4 Develop effective and close co-operation between universities and industry Develop effective and close co-operation between universities and industry innovation innovation start-up of new companies start-up of new companies licensing of university intellectual property licensing of university intellectual property promotion of effective university-industry relations promotion of effective university-industry relations better exploit the results of their knowledge in relationship with industry better exploit the results of their knowledge in relationship with industry evaluation criteria for the performance of universities evaluation criteria for the performance of universities The role of universities in the Europe of knowledge

5 SUCCESS FACTORS FOR TECHNOLOGY TRANSFER Academic Business Government Community TalentTechnologyCapitalKnow - How Market - Need Successful Value - Added Technology Transfer G. Kozmetzky UT-Austin

6 Students Brokers Itinerant managers Consultants Ecosystem [Thanks to Jeff Skinner, UCL] Ecosystem [Thanks to Jeff Skinner, UCL] Investorss Lawyers Head hunters PR agents Real estate Leasing Banks Accountants Patent Firms Other start-ups

7 Government Funding of Basic Research In Academia Reservoir of Knowledge Increased Efficiency New Companies (Jobs) Taxes Science, The Endless Frontier, 1945 New Industry But why does the government invest in research? Vannevar Bush Reservoir Theory of Knowledge

8 The Business of Academic Research Source: National Science Board Report 2002 Federal dollars to Universities have continued to climb, even while falling in other sectors

9 Traditional academic roles Research Research Creation of new knowledge Creation of new knowledge Breakthroughs and basis research (about half of all basic research in U.S. conducted by universities) Breakthroughs and basis research (about half of all basic research in U.S. conducted by universities) Incremental technical advances Incremental technical advances Education Education Dissemination of knowledge Dissemination of knowledge Graduation of students Graduation of students Service Service Transfer of knowledge and transfer of technology Transfer of knowledge and transfer of technology

10 MARKET CAPTURE INVENTION Idea TRANSLATION COMMERCIAL- IZATION Technology Feasibility Prototype/ Scale-up Product Development Initial Manufacture FEASIBILITY MARKET & BUSINESS PLANNING Business Plan Marketing Strategy Applications Pro-forma Business Plan Market R&D 7-12 YEARS SCIENCE & TECH MARKETING FINANCING Tech Tfr Funds IPO Expansion Capital RETURNS Seed Capital The Technology Transfer Process

11 Technology Licensing at Stanford 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) Notable Inventions from Stanford Research Notable Inventions from Stanford Research

12 University-Industry partnerships: Economic Advantages Licensing agreements are only a small part of the benefits university research generates. Others include: Licensing agreements are only a small part of the benefits university research generates. Others include: Generation of new knowledge Generation of new knowledge Creation of human capital Creation of human capital Transfer of tacit knowledge Transfer of tacit knowledge Technological innovation Technological innovation Capital investment Capital investment Regional leadership Regional leadership Production of knowledge infrastructure Production of knowledge infrastructure Influence on the regional milieu Influence on the regional milieu

13 SUCCESS FACTORS FOR TECHNOLOGY TRANSFER Academic Business Government Community TalentTechnologyCapitalKnow - How Market - Need Successful Value - Added Technology Transfer G. Kozmetzky UT-Austin

14 Conflicting Values - Common Interest Conflicting Values - Common Interest UNIVERSITYINDUSTRY Commercialization of New and Useful Technologies Teaching Research Service Economic Development Profits Product R&D Knowledge for Knowledges Sake Academic Freedom Open Discourse Management of Knowledge for Profit Confidentiality Limited Public Disclosure

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

16 Blending the University Research and Entrepreneurial Cultures Academic perspective; Why partner with industry? Application of research for public good Application of research for public good Exposure to industry collaboration Exposure to industry collaboration Additional source of research funds Additional source of research funds Build research endowment Build research endowment Reward investigator/inventor Reward investigator/inventor

17 Blending the University Research and Entrepreneurial Cultures Industry perspective; Why partner with universities? Research institutions are rich source of new ideas and technology Research institutions are rich source of new ideas and technology Cheaper to support research and to license-in technology Cheaper to support research and to license-in technology Biotech industry looks to academic collaborations for early stage technology Biotech industry looks to academic collaborations for early stage technology

18 Blending the University Research and Entrepreneurial Cultures How do you begin to bring the two cultures together ? 1. Employment Policy 1. Employment Policy 2. Policy of Intellectual Property 2. Policy of Intellectual Property 3. Revenue Sharing 3. Revenue Sharing 4. Faculty Involvement 4. Faculty Involvement

19 Employment Policy Employer (University/College/Research Institute) owns all property rights to any intellectual property conceived and/or reduced to practice by its employees 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 Assignment form part of orientation Salary, supplies, space, other resources of the University are utilized Salary, supplies, space, other resources of the University are utilized

20 Policy on Intellectual Property Ownership Ownership Transfer of ownership Transfer of ownership Rights and obligations of faculty (employee) Rights and obligations of faculty (employee) Rights and obligations of the University (employer) Rights and obligations of the University (employer) Royalty sharing Royalty sharing Waivers Waivers

21 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 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 Promote investment by the private sector in commercialization of federally funded research discoveries for the public good

22 In Passing Bayh Dole, Congress recognizes… Creativity is truly a national resource Creativity is truly a national resource The patent system in U.S. is the vehicle which permits delivery of the resource to the public 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 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 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.

23 Bayh-Dole Provisions Encourage collaboration with industry to promote the utilization of inventions Encourage collaboration with industry to promote the utilization of inventions Disclosure to government within 2 months of invention Disclosure to government within 2 months of invention Universities must file patents on inventions they elect to own, and share any monies with inventors 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 Government retains non-exclusive license and march-in rights Requirement to attempt to develop the invention Requirement to attempt to develop the invention Preference to small businesses in granting licenses Preference to small businesses in granting licenses Products must be manufactured in the U.S. Products must be manufactured in the U.S.

24 Bayh-Dole Act 1980 Allows universities to own and sell/license inventions/novations generated with federal dollars. Allows universities to own and sell/license inventions/novations generated with federal dollars. Motivation: Motivation: Get ideas off the shelf w/o sacrificing university mission (synergies) Get ideas off the shelf w/o sacrificing university mission (synergies) Generate university income for more research Generate university income for more research Critique: Critique: Increased commercialization of university research agenda Increased commercialization of university research agenda Distraction from basic research (tradeoffs) Distraction from basic research (tradeoffs) Hold-ups/Anti-Commons approach to research Hold-ups/Anti-Commons approach to research

25 Bayh - Dole Act 1980 Gives nonprofit organizations and small businesses the right to: Gives nonprofit organizations and small businesses the right to: retain title to inventions made in whole or in part with federal funds retain title to inventions made in whole or in part with federal funds grant exclusive term-of-patent licenses grant exclusive term-of-patent licenses

26 MARKET CAPTURE INVENTION Idea TRANSLATION COMMERCIAL- IZATION Technology Feasibility Prototype/ Scale-up Product Development Initial Manufacture FEASIBILITY MARKET & BUSINESS PLANNING Business Plan Marketing Strategy Applications Pro-forma Business Plan Market R&D 7-12 YEARS SCIENCE & TECH MARKETING FINANCING Tech Tfr Funds IPO Expansion Capital RETURNS Seed Capital The Technology Transfer Process

27 Executive (policies) Other academics Gene pool Commercially active scientists One University [Thanks to Jeff Skinner, UCL] Tech transfer office

28 Why Do Universities Transfer Technology Generate licensing revenue and research funding Generate licensing revenue and research funding Dissemination of new knowledge for the benefit of society Dissemination of new knowledge for the benefit of society Development of University technology into products Development of University technology into products Provide avenue for faculty members to interact with business Provide avenue for faculty members to interact with business Stimulate economic development Stimulate economic development Generate favorable publicity for the University Generate favorable publicity for the University

29 Patents as source of research funding 25% of life scientists have a patent 25% of life scientists have a patent Median patent holder owns 2 patents Median patent holder owns 2 patents Patents as the academics lottery ticket Patents as the academics lottery ticket 33% of patent holders receive licensing revenues, representing 8% of all life scientists. 33% of patent holders receive licensing revenues, representing 8% of all life scientists. Average royalties ~$16,500 per patent Average royalties ~$16,500 per patent But in our sample: But in our sample: One patent accounts for ~90% of those royalties One patent accounts for ~90% of those royalties Of 1200 patents there are only three that make ~$1million or more. Of 1200 patents there are only three that make ~$1million or more. Median annual royalty income is $5,000 Median annual royalty income is $5,000 License revenues account for less than 1% of research budgets for those with patents License revenues account for less than 1% of research budgets for those with patents

30 Is there a commercialization of US university life sciences? 53% of life scientists in our survey have no engagement with industry 53% of life scientists in our survey have no engagement with industry No patents, invention disclosures, industry funding, service on industry boards, collaborations, etc. 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 20% of life scientists report private industry funding, accounting for 25% of research budgets They still get 54% from federal sources 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. 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.

31 Percent of lab funding from different funding sources Source All life scientists Scientists who do 100% basic research Federal (NIH, NSF, etc.) 66.9 71.2* Own university 14.615.7 Foundations9.59.7 Industry5.3 0.8* State government 2.4 0.9* * Significantly different at a 95% confidence level

32 Evidence on hold-up problems: Percent of life scientists reporting constraints Not applicable None or minor constraint Some or major constraint Affordability of licensing intellectual property 61.533.64.9 Materials transfer agreements from another university 49.139.111.8 Materials transfer agreements from private industry 56.233.410.4

33 Funding Basic Research Very difficult to fund without federal money Very difficult to fund without federal money Patents unlikely to provide much help because Patents unlikely to provide much help because lottery – unpredictable returns lottery – unpredictable returns timing of liquidity (cant borrow against expected licensing earnings). timing of liquidity (cant borrow against expected licensing earnings). reinforced by basic nature of research that are less likely to generate valuable patents. 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) Industry funding small and unlikely to ever be much more than that (time horizon) Good news that stem cells wont likely be the Trojan horse that brings commercialization into the university Good news that stem cells wont likely be the Trojan horse that brings commercialization into the university Bad news that industry wont fund enough of this research to make up for federal funding Bad news that industry wont fund enough of this research to make up for federal funding

34 Overview of the Technology Commercialization Pathway Strategy Invention Disclosure TTC Evaluation IP Protection Licensing Research

35 Invention Evaluation Process Invention Disclosure Electronic Submission Technology Transfer Committee Technology Transfer Committee Technical Review Patent Search Market Analysis Patent Technology Release to Inventor Hold for Further Evaluation Test Market

36 Is it protectable? Is it protectable? Patent, copyright, know how Patent, copyright, know how Is it enforceable? Is it enforceable? Infringement Infringement Is it licensable? Is it licensable? The primary reason for investing in intellectual property protection is the ability to license the invention. The primary reason for investing in intellectual property protection is the ability to license the invention. Invention Evaluation Process

37 Evaluation Criteria Level of IP Protection Level of IP Protection Related Industry R&D Activity Related Industry R&D Activity Inventor Reputation and Participation Inventor Reputation and Participation Inventor R&D Activity Inventor R&D Activity Promised Benefits and Novelty Promised Benefits and Novelty Market Size Market Size Competing Products Competing Products Development Status and Time to Market Development Status and Time to Market Validation and Performance Validation and Performance

38 Overview of the Technology Commercialization Pathway Strategy Invention Disclosure TTC Evaluation IP Protection Licensing Research

39 Licensing Strategy IntellectualProperty Start-UpCompanyLicenseAgreementOptionAgreement

40 Internal tensions: $ vs. altruism Internal tensions: $ vs. altruism Non-exclusive or exclusive? Non-exclusive or exclusive? (widespread access vs. investment incentive) (widespread access vs. investment incentive) Exclusive: requires incentives/disincentives Exclusive: requires incentives/disincentives Significant upfront fees Significant upfront fees Effective royalties Effective royalties Appropriate minimums ** Appropriate minimums ** Patents costs Patents costs Diligence milestones Diligence milestones Legal and responsible use Legal and responsible use Exclusive variations Exclusive variations Field of use Field of use Sublicense incentives Sublicense incentives Return of rights Return of rights consortia consortia Non-exclusive with sliding scales of terms Non-exclusive with sliding scales of terms Balancing Public Good vs. Practical concerns in IP Licensing

41 Licensing Strategy Option Agreement Option Agreement Early stage technology that requires further development Early stage technology that requires further development Proof of principle – add value or reduce risk Proof of principle – add value or reduce risk Reach some minimal level of progress to be of interest to investors Reach some minimal level of progress to be of interest to investors Does not give rights to develop or sell products Does not give rights to develop or sell products Exclusive or non-exclusive Exclusive or non-exclusive Convertible to license agreement on agreed terms Convertible to license agreement on agreed terms

42 Licensing Strategy License Agreement – Existing Company License Agreement – Existing Company Technology likely to lead to a single product Technology likely to lead to a single product Small number of large firms that dominate the field Small number of large firms that dominate the field Exclusive or non-exclusive Exclusive or non-exclusive Capital requirements to enter the industry prevent startups from being competitive Capital requirements to enter the industry prevent startups from being competitive Existing company may be able to get the technology to market faster Existing company may be able to get the technology to market faster

43 Licensing Strategy Start-Up Company Formation Start-Up Company Formation Platform or disruptive technology with broad patent protection Platform or disruptive technology with broad patent protection Ability to generate interest from investors Ability to generate interest from investors Market size sufficient Market size sufficient Gross margins attractive Gross margins attractive Viable business model Viable business model Begins with an option agreement conditioned upon milestones Begins with an option agreement conditioned upon milestones Investment Investment Management team Management team

44 Technology Marketing Inventors are the single most important step in marketing Inventors are the single most important step in marketing 70% of licensing leads come from the inventor 70% of licensing leads come from the inventor Identify companies in technology area Identify companies in technology area Network at scientific and industry conferences Network at scientific and industry conferences Respond in a timely manner Respond in a timely manner Have a plan for next steps in research Have a plan for next steps in research Forward all licensing interest to the OTM Forward all licensing interest to the OTM

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

46 Overview of the Technology Commercialization Pathway Strategy Invention Disclosure TTC Evaluation IP Protection Licensing Research

47 Licensing Process Identification of interest Identification of interest Confidentiality agreement for scientific and IP due diligence Confidentiality agreement for scientific and IP due diligence Discussion of license type Discussion of license type Option versus license agreement Option versus license agreement Exclusive versus non-exclusive Exclusive versus non-exclusive Negotiation of financial, business, and legal terms Negotiation of financial, business, and legal terms

48 License Agreement terms License grant License grant Exclusive or non-exclusive Exclusive or non-exclusive Field of use Field of use Territory Territory License term License term License Consideration License Consideration Upfront fee Upfront fee Maintenance fees / Minimum annual royalty Maintenance fees / Minimum annual royalty Royalties Royalties Other – Milestones, equity Other – Milestones, equity

49 LEADMANAGEMENT SEEDFUNDING PLATFORMTECHNOLOGY CORPORATE PARTNER/ SOPHISTICATED VC University Approach to Start- Up Company Formation

50 Faculty Involvement with Start-Up Companies Permitted activities Permitted activities Holding of equity Holding of equity Sponsored research from company Sponsored research from company Consulting relationship Consulting relationship Scientific Advisory Board Scientific Advisory Board Entrepreneurial leave Entrepreneurial leave Prohibited activities Prohibited activities Holding of greater than 20% equity Holding of greater than 20% equity Serving as PI for sponsored animal research or clinical study Serving as PI for sponsored animal research or clinical study Holding Board of Directors seat Holding Board of Directors seat Holding management position in licensing company Holding management position in licensing company

51 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 companys interests

52 Background/Context Faculty Consulting 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. 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 Responsibilities Faculty Members responsibilities Faculty Members responsibilities Understand University policies relating to conflict of interest, intellectual property, time allowed for consulting, etc. Understand University policies relating to conflict of interest, intellectual property, time allowed for consulting, etc. Understand what youre signing ! Understand what youre signing ! Universitys responsibilities Universitys responsibilities Disclosure obligation Disclosure obligation Whats the norm for consulting in Industry ? Whats the norm for consulting in Industry ?

53 Issues – The Consulting Plus Dilemma Conflicts of Interest and conflicts of commitment – Conflicts of Interest and conflicts of commitment – Consulting + sponsored research Consulting + sponsored research Consulting + equity ownership Consulting + equity ownership Consulting + management position Consulting + management position Consulting + clinical trial (human subjects) Consulting + clinical trial (human subjects) Use newspaper test Use newspaper test

54 Issues Intellectual Property: Companys general rule: The company owns any intellectual property created by the consultant that relates to the research he/she does for the company Intellectual Property: Companys 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 Consultants research with the University: How does this impact the Consultants 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) 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 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 Potential to compromise future research work or funding Terms suggested by industry are getting broader and broader Terms suggested by industry are getting broader and broader

55 Issues Confidentiality and Publication Rights Confidentiality and Publication Rights Is it clear what information is considered to be confidential? Is it clear what information is considered to be confidential? Freedom to publish Freedom to publish Indemnification and Limitation of Liability Indemnification and Limitation of Liability General comments on liability General comments on liability Consultant indemnifying Company Consultant indemnifying Company Company indemnifying Consultant Company indemnifying Consultant Try to limit your liability for the work you perform Try to limit your liability for the work you perform

56 Issues Exclusivity Exclusivity Does the contract provide that you cant do overlapping or related research for others? Other language purporting to restrict you or the University? Does the contract provide that you cant 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.) Use of University resources in the consulting arrangement (includes space, equipment, students, etc.) Tax Issues related to receipt of consulting income Tax Issues related to receipt of consulting income

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


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