Presentation on theme: "University-Industry Partnerships: Role of Intellectual Property"— Presentation transcript:
1 University-Industry Partnerships: Role of Intellectual Property Dr. Guriqbal Singh JaiyaDirectorSmall and Medium-Sized Enterprises DivisionWorld Intellectual Property Organization
2 KNOWLEDGE AGEUniversities 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 phenomenonKnowledge – 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)
4 The role of universities in the Europe of knowledge Develop effective and close co-operation between universities and industryinnovationstart-up of new companieslicensing of university intellectual propertypromotion of effective university-industry relationsbetter exploit the results of their knowledge in relationship with industryevaluation criteria for the performance of universities
5 SUCCESS FACTORS FOR TECHNOLOGY TRANSFER BusinessAcademicGovernmentCommunityTalentTechnologyCapitalKnow-HowMarket - NeedSuccessfulValue-AddedTechnology TransferG. KozmetzkyUT-Austin
6 Ecosystem [Thanks to Jeff Skinner, UCL] Investors’sLawyersHeadhuntersPR agentsRealestateLeasingBanksAccountantsPatentFirmsOtherstart-upsBrokersItinerant managersConsultantsStudents
7 But why does the government invest in research? Funding ofBasic ResearchIn AcademiaReservoir ofKnowledgeIncreasedEfficiencyNewCompanies(Jobs)NewIndustryTaxesVannevar BushReservoir Theory ofKnowledgeScience, The Endless Frontier, 1945
8 The Business of Academic Research Federal dollars to Universities have continued to climb, even while falling in other sectorsSource: National Science Board Report 2002
9 Traditional academic roles ResearchCreation of new knowledgeBreakthroughs and basis research (about half of all basic research in U.S. conducted by universities)Incremental technical advancesEducationDissemination of knowledgeGraduation of studentsServiceTransfer of knowledge and transfer of technologyExcerpted from: “Technology Transfer from U.S Universities — A Major Driving Force of U.S. Prosperous Economy,” presented by Terry Young, Texas A&M University System Technology Licensing Office.
10 MARKET & BUSINESS PLANNING The Technology Transfer Process7-12 YEARSSCIENCE&TECHINVENTIONIdeaTechnologyFeasibilityTRANSLATIONPrototype/Scale-upProductDevelopmentInitialManufactureCOMMERCIAL-IZATIONFEASIBILITYMARKET & BUSINESS PLANNINGMARKETCAPTUREMarketR&DPro-formaBusiness PlanApplicationsMarketingStrategyBusinessPlanMARKETINGIPOTech TfrFundsFINANCINGSeed CapitalExpansion CapitalRETURNS1
11 Technology Licensing at Stanford Notable Inventions from Stanford Research1971- 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)– DSL ($28.7M)1996 – Improved Hypertext Searching (GoogleTM ($336.5M)
12 University-Industry partnerships: Economic Advantages Licensing agreements are only a small part of the benefits university research generates. Others include:Generation of new knowledgeCreation of human capitalTransfer of tacit knowledgeTechnological innovationCapital investmentRegional leadershipProduction of knowledge infrastructureInfluence on the regional milieu
13 SUCCESS FACTORS FOR TECHNOLOGY TRANSFER BusinessAcademicGovernmentCommunityTalentTechnologyCapitalKnow-HowMarket - NeedSuccessfulValue-AddedTechnology TransferG. KozmetzkyUT-Austin
14 Conflicting Values - Common Interest UNIVERSITYINDUSTRYCommercialization of New and Useful TechnologiesTeachingResearchServiceEconomic DevelopmentProfitsProduct R&DKnowledge for Knowledge’s SakeAcademic Freedom Open DiscourseManagement of Knowledge for ProfitConfidentiality Limited Public Disclosure
15 Blending the University Research and Entrepreneurial Cultures Academicsresearch priorities set by investigatorgrant-seekingpublicationspatenting driven by publicationsserendipitytransfer at early stageIndustryresearch priorities set by managementprofit-seekingproprietarypatenting driven by business decisionscontroladd value before transferring
16 Blending the University Research and Entrepreneurial Cultures Academic perspective;“Why partner with industry?”Application of research for public goodExposure to industry collaborationAdditional source of research fundsBuild research endowmentReward 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 technologyCheaper to support research and to license-in technologyBiotech industry looks to academic collaborations for early stage technology
18 Blending the University Research and Entrepreneurial Cultures How do you begin to bring the twocultures together ?1. Employment Policy2. Policy of Intellectual Property3. Revenue Sharing4. Faculty Involvement
19 Employment PolicyEmployer (University/College/Research Institute) owns all property rights to any intellectual property conceived and/or reduced to practice by its employeesAssignment form part of orientationSalary, supplies, space, other resources of the University are utilized
20 Policy on Intellectual Property OwnershipTransfer of ownershipRights and obligations of faculty (employee)Rights and obligations of the University (employer)Royalty sharingWaivers
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 programsPromote 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 resourceThe patent system in U.S. is the vehicle which permits delivery of the resource to the publicIt is in the public interest to place stewardship of research results in the hands of universities and small businessExisting U.S. policy was ineffective at a time when intellectual property and innovation were becoming the preferred global currencyAs evidence of its scope, consider this: the law eliminated 26 different federal agency policies dealing with the use of the results of federally funded research and development.Source: Howard Bremer, University Technology Transfer Evolution and Revolution, COGR, 1999.
23 Bayh-Dole ProvisionsEncourage collaboration with industry to promote the utilization of inventionsDisclosure to government within 2 months of inventionUniversities must file patents on inventions they elect to own, and share any monies with inventorsGovernment retains non-exclusive license and march-in rightsRequirement to attempt to develop the inventionPreference to small businesses in granting licensesProducts must be manufactured in the U.S.
24 Bayh-Dole Act 1980Allows 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 researchCritique:Increased commercialization of university research agendaDistraction from basic research (tradeoffs)Hold-ups/Anti-Commons approach to research
25 Bayh - Dole ActGives nonprofit organizations and small businesses the right to:retain title to inventions made in whole or in part with federal fundsgrant exclusive term-of-patent licenses
26 MARKET & BUSINESS PLANNING The Technology Transfer Process7-12 YEARSSCIENCE&TECHINVENTIONIdeaTechnologyFeasibilityTRANSLATIONPrototype/Scale-upProductDevelopmentInitialManufactureCOMMERCIAL-IZATIONFEASIBILITYMARKET & BUSINESS PLANNINGMARKETCAPTUREMarketR&DPro-formaBusiness PlanApplicationsMarketingStrategyBusinessPlanMARKETINGIPOTech TfrFundsFINANCINGSeed CapitalExpansion CapitalRETURNS1
27 One University [Thanks to Jeff Skinner, UCL] Executive(policies)TechtransferofficeGene poolCommerciallyactive scientistsOtheracademics
28 Why Do Universities Transfer Technology Generate licensing revenue and research fundingDissemination of new knowledge for the benefit of societyDevelopment of University technology into productsProvide avenue for faculty members to interact with businessStimulate economic developmentGenerate favorable publicity for the University
29 Patents as source of research funding 25% of life scientists have a patentMedian patent holder owns 2 patentsPatents as the “academic’s lottery ticket”33% of patent holders receive licensing revenues, representing 8% of all life scientists.Average royalties ~$16,500 per patentBut in our sample:One patent accounts for ~90% of those royaltiesOf 1200 patents there are only three that make ~$1million or more.Median annual royalty income is $5,000License 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 industryNo patents, invention disclosures, industry funding, service on industry boards, collaborations, etc.20% of life scientists report private industry funding, accounting for 25% of research budgetsThey still get 54% from federal sourcesOverall 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 All life scientistsScientists who do 100% basic researchFederal (NIH, NSF, etc.)66.971.2*Own university14.615.7Foundations9.59.7Industry5.30.8*State government2.40.9** Significantly different at a 95% confidence level
32 Evidence on hold-up problems: Percent of life scientists reporting constraints Not applicableNone or minor constraintSome or major constraintAffordability of licensing intellectual property61.533.64.9Materials transfer agreements from another university126.96.36.199Materials transfer agreements from private industry56.233.410.4
33 Funding Basic Research Very difficult to fund without federal moneyPatents unlikely to provide much help because“lottery” – unpredictable returnstiming 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 universityBad news that industry won’t fund enough of this research to make up for federal funding
34 Overview of the Technology Commercialization Pathway ResearchIPProtectionInventionDisclosureLicensingTTCEvaluationStrategy
35 Invention Evaluation Process DisclosureElectronicSubmissionTechnologyTransferCommitteeTechnicalReviewPatent SearchMarket AnalysisPatentRelease toInventorHold forFurtherEvaluationTestMarket
36 Invention Evaluation Process Is it protectable?Patent, copyright, know howIs it enforceable?InfringementIs it licensable?The primary reason for investing in intellectual property protection is the ability to license the invention.
37 Evaluation Criteria Level of IP Protection Related Industry R&D ActivityInventor Reputation and ParticipationInventor R&D ActivityPromised Benefits and NoveltyMarket SizeCompeting ProductsDevelopment Status and Time to MarketValidation and Performance
38 Overview of the Technology Commercialization Pathway ResearchIPProtectionInventionDisclosureLicensingTTCEvaluationStrategy
40 Balancing Public Good vs. Practical concerns in IP Licensing Internal tensions: $ vs. altruismNon-exclusive or exclusive?(widespread access vs. investment incentive)Exclusive: requires incentives/disincentivesSignificant upfront feesEffective royaltiesAppropriate minimums **Patents costsDiligence milestonesLegal and responsible useExclusive variationsField of useSublicense incentivesReturn of rightsconsortiaNon-exclusive with “sliding scales” of terms
41 Licensing Strategy Option Agreement Early stage technology that requires further developmentProof of principle – add value or reduce riskReach some minimal level of progress to be of interest to investorsDoes not give rights to develop or sell productsExclusive or non-exclusiveConvertible to license agreement on agreed terms
42 Licensing Strategy License Agreement – Existing Company Technology likely to lead to a single productSmall number of large firms that dominate the fieldExclusive or non-exclusiveCapital requirements to enter the industry prevent startups from being competitiveExisting company may be able to get the technology to market faster
43 Licensing Strategy Start-Up Company Formation Platform or disruptive technology with broad patent protectionAbility to generate interest from investorsMarket size sufficientGross margins attractiveViable business modelBegins with an option agreement conditioned upon milestonesInvestmentManagement team
44 Technology MarketingInventors are the single most important step in marketing70% of licensing leads come from the inventorIdentify companies in technology areaNetwork at scientific and industry conferencesRespond in a timely mannerHave a plan for next steps in researchForward all licensing interest to the OTM
45 Technology Marketing OTM Marketing Efforts Technologies available for licensing are on the OTM web siteFocused business development relationships in specific technology areasRelationships with local and national venture capital groupsIndustry conferences
46 Overview of the Technology Commercialization Pathway ResearchIPProtectionInventionDisclosureLicensingTTCEvaluationStrategy
47 Licensing Process Identification of interest Confidentiality agreement for scientific and IP due diligenceDiscussion of license typeOption versus license agreementExclusive versus non-exclusiveNegotiation of financial, business, and legal terms
49 University Approach to Start-Up Company Formation PLATFORMTECHNOLOGYCORPORATE PARTNER/SOPHISTICATED VCLEADMANAGEMENTSEEDFUNDING
50 Faculty Involvement with Start-Up Companies Permitted activitiesHolding of equitySponsored research from companyConsulting relationshipScientific Advisory BoardEntrepreneurial leaveProhibited activitiesHolding of greater than 20% equityServing as PI for sponsored animal research or clinical studyHolding Board of Directors seatHolding 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 roleFaculty 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 humansubjects protocol directors for work related to the company’s interests
52 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.ResponsibilitiesFaculty Member’s responsibilitiesUnderstand University policies relating to conflict of interest, intellectual property, time allowed for consulting, etc.Understand what you’re signing !University’s responsibilitiesDisclosure obligationWhat’s the norm for consulting in Industry?
53 Issues – The Consulting Plus Dilemma Conflicts of Interest and conflicts of commitment –Consulting + sponsored researchConsulting + equity ownershipConsulting + management positionConsulting + clinical trial (human subjects)Use newspaper test
54 IssuesIntellectual 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 researchPotential to compromise future research work or fundingTerms suggested by industry are getting broader and broader
55 Issues Confidentiality and Publication Rights Is it clear what information is considered to be confidential?Freedom to publishIndemnification and Limitation of LiabilityGeneral comments on liabilityConsultant indemnifying CompanyCompany indemnifying ConsultantTry to limit your liability for the work you perform
56 IssuesExclusivityDoes 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
57 TECHNOLOGY TRANSFER, INTELLECTUAL PROPERTY AND EFFECTIVE UNIVERSITY-INDUSTRY PARTNERSHIPS: The Experience of China, India, Japan, Philippines, the Republicof Korea, Singapore and Thailand