1. Commercialization Processes Yumiko Hamano Project Coordinator WIPO University Initiative Innovation and Technology Transfer Section, WIPO Skopje, April 1 – 3, 2009

2. Outline Technology Transfer Technology Transfer IP Policy and IP management Key Issues IP Policy and IP management Key Issues Commercialization Commercialization Collaboration Agreements Collaboration Agreements © 2009 Yumiko Hamano

3. Growing Technology Transfer Activities from University Example: US in 2006 $ 45 billion R&D expenditures $ 45 billion R&D expenditures 4,963 new licenses 4,963 new licenses 12,600 current valid licenses from Universities to Companies 12,600 current valid licenses from Universities to Companies 697 new products introduced into the market 697 new products introduced into the market 4,350 new products in last 8 years 4,350 new products in last 8 years 550 new start-ups 550 new start-ups 5,724 new spinouts since 1980 5,724 new spinouts since 1980 Source: AUTM © 2009 Yumiko Hamano

4. Change in Legal Framework US - Bayh Dole Act (1980) The Bayh-Dole Act allows the transfer of exclusive control over inventions generated from government funded researches to universities Abolition of the Professor’s privilege Germany: 2001 Reform of Employee Law Austria: 2002 Denmark: 2002 Act on Inventions at Public Research Institutions University Law Japan: Japan: 1995 Basic Law of Science and Technology 1998 Law promoting tech. transfer from universities 1999 Japanese version of Bayh Dole Act 2000 Law facilitating univ.-industry collaboration 2004 Change in legal status of public universities (semi-autonomous institutions) © 2009 Yumiko Hamano

5. Globalization of R&D Nokia + University of Cambridge (Nanoelectronics) Microsoft + Inria: French computer science institution (IT) Hewlet-Parckard = IT Laboratory in San Petersburg Creation of European Institute of Technology (a research network without a localized headquarter) by the European Commission: €3.2b 2008 - 2013 Increased partnerships beyond national frontiers: © 2009 Yumiko Hamano

6. Technology Transfer ….. the process of transferring scientific research results, technical expertise or know-how developed by an individual, enterprise, university or organization to another individual, enterprise, university or organization. …..Effective technology transfer results in commercialization of a new product or service…. © 2009 Yumiko Hamano

7. IP Management 1. Infrastructure Establishment of an IP Office Establishment of an IP Office IP Guidelines/Policies IP Guidelines/Policies R&D planning/strategy R&D planning/strategy Research funding Research funding 2. Capacity Building IP training IP training 3. Protection of IPR Identification of IP Identification of IP Invention disclosure Invention disclosure Patent application procedures Patent application procedures Patent Information search Patent Information search Legal matters Legal matters Administration of legal issues Administration of legal issues 4. Exploitation of IPR Marketing of new technology Marketing of new technology Licensing and monitoring deals Licensing and monitoring deals Commercialization Commercialization Incubation Incubation © 2009 Yumiko Hamano

8. IP Management in Universities Technology Management Business Legal aspects © 2009 Yumiko Hamano

9. IP Management in Universities Technology Management Research strategy Research planning Research contracts Patent Information Search Technology evaluation (marketability/ Patentability) Invention disclosures Technology transfer process © 2009 Yumiko Hamano

10. IP Management in Universities IP and legal aspects IP and legal aspects IP information dissemination IP training IP awareness/ capacity building IP guidelines/ policies Research contracts Record keeping and management Patent application procedures Legal matters Licensing agreement Management of active patents/ licenses © 2009 Yumiko Hamano

11. IP Management in Universities Research funds management University-Industry collaboration Patent application monitoring Marketing Evaluation of commercialization potential Technology valuation Licensing negotiation incubation Start up/ Spin-off company Research investment Business Business © 2009 Yumiko Hamano

12. Institutional IP Policy IP Policy: Principles of actions adopted by an organization or an individual – often legal implication © 2009 Yumiko Hamano

13. Importance of IP Policy IP Policy provides:  Clear rules and guidelines for research operations  The legal framework for commercialization  Guidance for IP and technology management procedures  Clear policy on ownership criteria and benefit sharing  Consistency of approach (in a systematic manner)  Transparency in decision making process  Objectivity in measurement and fosters:  Transfer of technology generated in the university  Innovation and creativity in the university  (Local) economic growth © 2009 Yumiko Hamano

14. Key issues 1. Ownership 2. Benefit Sharing 3. Government’s rights 4. Collaboration between Univ.-Industry 5. Choices of Commercialization 6. IP Management Unit in Univ. 7. IP Management Procedures 8. IP and costs 9. Conflict of Interest 10. Incentive © 2009 Yumiko Hamano

15. Technology Transfer Stakeholders University University Professors Professors Researchers Researchers Students Students Faculty of research unit Faculty of research unit Guest researchers Guest researchers TTO/ TMO TTO/ TMO Governments Governments Partner Industries Partner Industries Partner universities Partner universities Public Public © 2009 Yumiko Hamano Image source: Google

16. Ownership Who owns IP generated by publicly funded research?  Generally national law defines who owns IP (inventions) arising from work conducted for an employer  In some cases, national laws specifically address ownership of inventions arising from publicly sponsored research  Sometimes IP ownership covered in different laws © 2009 Yumiko Hamano

17. Ownership 2  Government  University (e.g., Germany, Austria, Japan, China, South Korea, UK, France, US, Denmark )  Inventor/ Faculty (e.g., Finland, Italy, Norway, Sweden) © 2009 Yumiko Hamano

18. Benefit Sharing How are the revenues from research commercialization shared among faculty, university, government funder and other stakeholders?  The distribution proportions differ by institution  Inventor  University  On average,  Inventor/ Faculty: 25% - 50%  University 50% - 75% (in many cases, the university provides part of its portion to the TTO (or the administrative unit) and the laboratories of the creator 1/3: 1/3: 1/3 – institution portion often used for funding research ) © 2009 Yumiko Hamano

19. Commercialization Donation, licensing and sales of IP Donation, licensing and sales of IP Start-up and Spin-off Start-up and Spin-off What types of commercialization of research results should the university support and encourage? © 2009 Yumiko Hamano

20. Commercialization Commercialization Based on the idea of publicly founded research belongs to the Public. Potential problems: IP may be exploited by a third party outside the country IP may be exploited by a third party outside the country Commercialization may involve use of existing IP (Who pays the costs for the use of the IP?) Commercialization may involve use of existing IP (Who pays the costs for the use of the IP?) Company may not invest (no exclusivity) Company may not invest (no exclusivity) No incentive to commercialize No incentive to commercialize © 2009 Yumiko Hamano

21. Licensing Agreements The owner of IP permits another party to make, have made, use, sell, copy, display, distribute, modify, etc. © 2009 Yumiko Hamano

22. Commercialization Commercialization A route of commercialization where an IP rights holder gives another entity the authority to exploit to make, have made, use, sell, copy, display, distribute, modify, etc.) the IP - in return, the licensee will pay royalties A route of commercialization where an IP rights holder gives another entity the authority to exploit to make, have made, use, sell, copy, display, distribute, modify, etc.) the IP - in return, the licensee will pay royalties The most popular and sustainable way of commercializing IPR The most popular and sustainable way of commercializing IPR Managed through written legally bound agreements Managed through written legally bound agreements Agreements stipulate details of extent of rights of exploitation (key terms: subject matter, scope, exclusive or non-exclusive, fields of use, territory coverage, amount of royalties, periods of royalties, length of exploitation etc.) Agreements stipulate details of extent of rights of exploitation (key terms: subject matter, scope, exclusive or non-exclusive, fields of use, territory coverage, amount of royalties, periods of royalties, length of exploitation etc.) © 2009 Yumiko Hamano

23. License Agreements (2) An IP license may be for an invention arising from publicly funded research. An IP license may be for an invention arising from publicly funded research. Or it may follow a research agreement or collaboration. After the IP is developed, the university may then grant a license to the funder. Or it may follow a research agreement or collaboration. After the IP is developed, the university may then grant a license to the funder. IP generated by the university are often licensed to a “spin off” company from the university. IP generated by the university are often licensed to a “spin off” company from the university. © 2009 Yumiko Hamano

24. License Agreements (3) Example:Cohen Boyer patent on recombinant DNA, invented at Stanford University and University of California, was licensed non-exclusively over a period of 17 years to many licensees resulting in hundreds of millions of dollars US in royalties. Ownership remained in the universities throughout the life of the patent. Example:Cohen Boyer patent on recombinant DNA, invented at Stanford University and University of California, was licensed non-exclusively over a period of 17 years to many licensees resulting in hundreds of millions of dollars US in royalties. Ownership remained in the universities throughout the life of the patent. © 2009 Yumiko Hamano

25. Start-up and Spin-off Spin-offStart-up Created byUniversity Outside Univ. Technologies Owned by University Licensed by University Financed byUniversity Outside funder Managed by University staff Outside Univ. © 2009 Yumiko Hamano

26. Commercialization Commercialization Example: US in 2006 550 new companies were created based on new technologies generated by 195 US universities550 new companies were created based on new technologies generated by 195 US universities Over 80% were based in the university’s home stateOver 80% were based in the university’s home state Over 600 (15% of total US licensing ) licensed to these companiesOver 600 (15% of total US licensing ) licensed to these companies 50% of all licensing agreements to SMEs50% of all licensing agreements to SMEs Source: AUTM © 2009 Yumiko Hamano

27. Major Challenges to commercialize R&D results Lack of IP management infrastructure Lack of IP management infrastructure Lack of strategic research planning Lack of strategic research planning Gap between basic research and market needs Gap between basic research and market needs Lack of funds for IP protection Lack of funds for IP protection Lack of IP knowledge Lack of IP knowledge Lack of expertise to manage TT and commercialization process Lack of expertise to manage TT and commercialization process Lack of entrepreneurial skills Lack of entrepreneurial skills Lack of support (Government, University senior managers) and incentive Lack of support (Government, University senior managers) and incentive Conflict of interest (University vs. Industry) Conflict of interest (University vs. Industry) © 2009 Yumiko Hamano

28. Privately Funded Research Is private funding for defined research project permitted? Privately funded research is where the resources are supplied by private enterprises or organizations:  Contract research: Research which is conceived and funded by industries to provide a solution to a specific problem  Sponsored research: Where a university conceives a research project and prepare a proposal for funding and where the funding agency is not directly a beneficiary of the research results  Collaborative research: Research collaboration between a public university and private research unit of an enterprise or private organization © 2009 Yumiko Hamano

29. Privately Funded Research and IP (2) To encourage privately funded research, university should have an institutional IP policy that provides clear provisions on:  Approval procedures for privately sponsored research proposals  Ownership of IP generated from privately sponsored projects  Licensing rules and procedures of IP generated from privately sponsored projects  Confidentiality issues of privately sponsored projects © 2009 Yumiko Hamano

30. Different Types of Research Collaboration contracts Research collaborations are managed by legal agreements such as:   Contract research agreement   Collaborative research agreement   Material transfer agreement   Confidentiality agreement   Participation agreement   License agreement © 2009 Yumiko Hamano

31. Common Types of Agreements Intellectual Property Licenses Development Collaboration Agreements Research Services Agreements Consulting/know how Agreements Material Transfer Agreements Confidentiality Agreements (NDA) © 2009 Yumiko Hamano

32. Collaboration Agreement or Joint Research Agreement Two or more parties, each having special skills and assets, cooperate to develop and possibly commercialize a new technology. © 2009 Yumiko Hamano

33. Development Collaboration Agreement (2) Assets include “background technology” and new technology/IP to be developed which defined in a Specification. Assets include “background technology” and new technology/IP to be developed which defined in a Specification. Often parties are commercial entities, but may include public universities and research institutions. Often parties are commercial entities, but may include public universities and research institutions. Development obligations and deadlines are well defined in a Statement of Work. Development obligations and deadlines are well defined in a Statement of Work. The parties define ownership of the newly developed IP in the contract. The parties define ownership of the newly developed IP in the contract. Payments may be in installments geared to milestones. Payments may be in installments geared to milestones. © 2009 Yumiko Hamano

34. Research Services Agreements Contract research Contract research Service agreement Service agreement One party establishes goals and pays, the other party conducts research toward the goals One party establishes goals and pays, the other party conducts research toward the goals Results may be owned by paying party Results may be owned by paying party Inventions and patents assigned to paying party Inventions and patents assigned to paying party Copyright work made for hire Copyright work made for hire Not commonly performed by public institution Not commonly performed by public institution © 2009 Yumiko Hamano

35. Research Agreements Funded research Usually applied to researches conducted by public institution, like university Usually applied to researches conducted by public institution, like university Party agrees to support research at institution Party agrees to support research at institution Support can be money, equipment Support can be money, equipment Institution generally owns results of research Institution generally owns results of research May have shared ownership May have shared ownership Paying party usually receives exclusive license or option for right to exclusive license Paying party usually receives exclusive license or option for right to exclusive license May be limited to field of use of interest to party May be limited to field of use of interest to party Institution is free to license to others in other fields Institution is free to license to others in other fields © 2009 Yumiko Hamano

36. Confidentiality Agreement/ Non- Disclosure Agreement (NDA) A legal contract through which the parties agree not to disclose information covered in the agreement. A legal contract through which the parties agree not to disclose information covered in the agreement. A confidentiality agreement creates a confidential relationship between the parties to protect any type of information. A confidentiality agreement creates a confidential relationship between the parties to protect any type of information. Commonly signed in the process of research collaboration or licensing agreement. Commonly signed in the process of research collaboration or licensing agreement. © 2009 Yumiko Hamano

37. Material Transfer Agreement (MTA) A contract that governs the transfer of tangible research materials between two organizations, when the recipient intends to use it for his or her own research purposes. A contract that governs the transfer of tangible research materials between two organizations, when the recipient intends to use it for his or her own research purposes. The MTA defines the rights of the provider and the recipient with respect to the materials and any derivatives. The MTA defines the rights of the provider and the recipient with respect to the materials and any derivatives. Biological materials, such as reagents, cell lines, plasmids, and vectors, are the most frequently transferred materials. Biological materials, such as reagents, cell lines, plasmids, and vectors, are the most frequently transferred materials. MTAs may also be used for other types of materials, such as chemical compounds and even some types of software. MTAs may also be used for other types of materials, such as chemical compounds and even some types of software. Source: University of California © 2009 Yumiko Hamano

38. Successful Collaborations Identify IP licenses and IP issues in different types of agreements Identify IP licenses and IP issues in different types of agreements Identify and define who will own the background IP? Who will own new IP? who will do the work? by when? Identify and define who will own the background IP? Who will own new IP? who will do the work? by when? Be aware of the difference between research services agreements and IP licenses. Be aware of the difference between research services agreements and IP licenses. © 2009 Yumiko Hamano

39. Cost of Protection and Maintenance of IP  Inventor compensation  Legal fees associated with patent prosecution (filing fee, search fee, examination fee, attorney’s fees, translation, patent grant fee etc.)  Patent annuity/ maintenance fees  Legal/ business fees associated with patent licensing  Legal fees associated with patent enforcement How to afford the cost of protection and maintenance of IP? © 2009 Yumiko Hamano

40. Conflict of Interest  Mandate of universities vs. those of industries  Social Concern  Institutional Concern  Individual concern How are conflicts of interest and commitment handled? © 2009 Yumiko Hamano

41. Conflict of Interest 2   Loss of public trust   Increasing government concerns   Potential legal liability Why is management of conflict of interests important? © 2009 Yumiko Hamano

42. Incentive Scheme How should universities and R&D institutions encourage and motivate scientists/ researchers? Training on IP knowledge Capacity building Involvement of scientists/ researchers in the process of IP and technology management Financial compensation Fixed percentage of royalties lump sum Inventor’s award Personal program Promotion scheme Framed certificate of inventors Dinner with dean/ the senior management of university thanking inventor/ research team © 2009 Yumiko Hamano

44. Thank you for your attention. Image source: Google yumiko.hamano@wipo.int

45. WIPO web site: www.wipo.int WIPO University Initiative web site: WIPO University Initiative web site: www.wipo.int/uipc/en Image source: Google