University of California, Berkeley Spinning Off in the U.S. Dr. Gary W. Matkin Associate Dean University Extension University of California, Berkeley

University Technology Transfer Activities Patenting and licensing of university intellectual property Research Partnerships with industry Industrial affiliate or liaison programs Technical/managerial assistance programs Business incubators Research parks Venture capital/business start-up activities Continuing Education

Taking Equity Model Research Institution For Profit Company License For Profit Company Equity License For Profit Company Equity For Profit Company License Equity

Taking Equity Model Advantages Replication after established policy Diversification Equity build up No up-front investment Not dependent for return on one technology

Taking Equity Model Disadvantages Little control Equity dilution Portfolio management overhead cost Case-by-case negotiations Messy (relations with inventors)

Taking Equity Model Issues Inventor share distribution Degree of management involvement Exercising voting rights Board of Director membership Anti dilution opportunities Liquidation policy Limits to percent of ownership

Non-Profit Buffer Model Alternative 1 Assigns IP Ownership Research Institution Non-Profit Subsidiary Receives share of profit & equity buildup For Profit Spin-Off License Equity Tech Licenses

Non-Profit Buffer Model Alternative 2 Selective Assignment Research Institution Non-Profit Subsidiary Receives share of profit & equity buildup Tech License Office License Equity For Profit Spin-off Tech Licenses

Non-Profit Buffer Model Advantages Maintains control Provides initial buffering Can provide markedly increased flexibility Disadvantages Still has non-profit status Hard to attract capital Still removed from marketplace

For Profit Alternative One Research Institution For Profit Subsidiary Creates & Owns For Profit Spin-off License Equity

For Profit Alternative Two For Profit Subsidiary Research Institution Investor(s) Majority Owner Minority Owner For Profit Spin-off License Equity

For Profit Alternative Three For Profit Subsidiary Research Institution Investor(s) Minority Owner Majority Owner For Profit Spin-off License Equity

For Profit Alternative Four Research Institution For Profit Partner New For Profit Venture Investor(s) For Profit Spin-off License Equity Investor(s)

For Profit Alternative Five Research Institution A Research Institution B New For Profit Venture Investor(s) For Profit Spin-off License Equity Investor(s)

For-Profit Alternatives Advantages Immediate entry into market Can attract capital “Rheostat” on control Disadvantages Sometimes little buffering Often loss of control UBIT, legal costs Often high cost

The Arms-Length For-Profit IP Manager Model Research Institution For Profit IP Management Corporation For Profit Spin-offs $ $ + Equity IP Research Institution Tech License IP $ $ IP Research Institution $

The Arms-Length For-Profit IP Manager Model Advantages Little cost to institution Low risk (but low return) Arms-length deal with faculty Ability to gain critical mass, econ of scale Disadvantages Low return “Cherry picking”

The Future of University IP Management University as beneficial holder/clearinghouse University as aggressive defender of IP Research universities united University IP policy as a condition of employment University IP policy and collaborative education Universities as heavies in national and international IP law development

Associate Dean/Director Technology Initiatives Gary W. Matkin Associate Dean/Director Technology Initiatives UC Berkeley Extension gwm@unx.berkeley.edu