technology transfer technology brokerage day 2 full en

Republika SrbijaMINISTARSTVO EKONOMIJEI REGIONALNOG RAZVOJA

Finansira Evropska unija

Technology Transfer, Technology Brokerage

Beograd June 2011. godineIntellectual Property Office

Republika SrbijaMINISTARSTVO EKONOMIJEI REGIONALNOG RAZVOJA

Introducing Workshop 2Support to the commercialisation of academic knowledge

Andrzej Schafernaker, Team Leader SECEP

Session 1Technology Transfer from public research organisations: developing 3rd stream activity

Lisa Cowey Key Expert (Competitiveness and Innovation) ICIP

Outline of talk

• Economic, Political and Legislative Drivers of Innovation from PROs.

• Direct and indirect benefits of 3rd stream activity.

• Models of Technology Transfer.• Technology Transfer Processes

Innovation from Public Research Organisations (PROs)

PRO Mission:• Teaching • Research • Innovation (3rd Stream)• Why are Universities and Research

Institutes being encouraged to get involved in technology transfer…?

Economic And Political Drivers of Innovation

University-Industry technology transfer plays an acknowledged role in economic growth and technological advance.

University licensing activity USA (1999)generated 270,000 jobs, $5 billion in tax revenues$40 billion in total economic activity

• ~12% of USA university inventions are realised though the medium of technology transfer via a new spinout company.

• These new companies have a disproportional success with over 70% of USA start-ups founded since 1980 still in operation

• 20% of spinouts from the Massachusetts Institute of technology (MIT) going on to experience Initial Public offering (IPO)

University spinout activity USA

UK University Activity (2001-2002)

• turnover of spin-off companies increased from £212m to £289m

• number of people employed by spin-offs increased from 10,500 to 12,000.

• number of new patents filed rose 8 %, from 896 to 967.

• Income from IP increased 83 %, up from £18m to £33m

Economic And Political Drivers of Innovation

• University innovation as commercialisation of an invention, is thus considered an important mechanism for economic activity.

Why 3rd Stream activities?

It’s the economy stupid!James Carville

(1992 Clinton Presidential campaign)

Direct vs. In-direct benefits

Technology transfer is not a large revenue generator for the university

UK Lambert Review of 2003 –• unrealistic for universities to seek large financial returns.• public funding for technology transfer offices at

universities is to “enable universities to maximise the wider impact of their research”.

Stanford University (USA):• primary reason for engaging in technology transfer is to

“create the greatest possible economic and social benefits, whether or not they accrue to the university.

In-direct Benefits

Stanford

• remains a leader in technology transfer• has generated more start ups than any other

USA university. • remains a model for many other universities

both nationally and internationally.

Indirect benefits to the Universities

Increased potential for :• participating in interesting and well resourced

collaborative projects• generating publishing opportunities• enhancing the reputation of the university and

research group • attracting high calibre students• improving the chances of long term survival of

the research group.

Perceived Government Benefits

• National industry as a whole• Related employment prospects• Induced investment into the National

technology sector

Legislative Drivers of Innovation

Legislation: considered to be one of the driving forces of university technology transfer.

Who owns the IPR?• 1981 USA Bayh-Dole Act• 1985 UK Devolution of IPR rights from British Technology Group

to Universities• Legislation has made it possible for R&D institutes and universities

to develop their own IPR policies.

How can you exploit your IPR?• Legal transfer of ownership rights.How can you protect your IPR?• Increasingly, universities are using legislation to fight infringement.

Commercialisation of inventions

Legislation allows Universities/ Faculties/ PROs to hold the rights to IPR (“ownership”).

Once ownership of an invention has been unambiguously assigned then innovation can take place.

Inventions are commercialised though a process of “technology transfer”.

Technology Transfer

• Definition• Technology Transfer - “the process whereby

inventions or intellectual property from academic research is licensed or conveyed through use of rights to industry” (Association of University Technology Managers 1998)

• Intellectual property - A product of the intellect that has commercial value.

Realising Value: Practical routes for IP Transfer

Technology can be transferred and knowledge can be exchange through one of the following methods:• royalties and fees from licensed IPRs based on staff

innovations and inventions;• university owned companies and joint ventures;• consultancy services;• research contracts;• sponsored research.

Main stages of Technology Transfer

• Identification• Capture• Evaluation• Market

Technology Transfer Models

• All generic models of Technology Transfer or Innovation include:– General Processes– Decision Points (“Controls”)– Documentation (“Tools”)

General processes

• Disclosure• Technology Evaluation • Market Evaluation • Legal (IPR protection)• Route to Market: Licence/Spinout models

In all cases, the process will protect and then exploit IP.

Models of Technology TransferDeal Based Model (Just in Time)• rate of production of IP = expected rate of transfer/

licensing.• prime goal to keep inventory low = minimise un-

reimbursed patent expenses.• Result:

Institution may lose potential innovations because they have to be abandoned.

Inventory Model• does not link the decision to patent to the IP marketing

activitiesdecouples the product production from product sales

• Result: Institution may build a substantial inventory of unlicensed patentInstitution may incur substantial un-reimbursed expenses.

Deal based vs. Inventory?

• The processes, controls and human resources required for efficient implementation of technology transfer will depend on which of the two models predominates.

• The AUTM 2000 Annual Survey suggests that a licensing professional can manage approximately twenty-one new inventions a year and produce about seven licensing deals per year.

Commercial Exploitation of R&D

• Technology Transfer Process

Appendix A: Technology Transfer Process

Yes Further FundingNeeded?

IP Protection

Decision to Proceed

Negotiate & Execute Licence

Agreement

Release to Researcher(s)

No Licensee Found

Distribution of Licence Income

Maintenance of Licence and Patents

YesLicenseeInterested?

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

DocumentedTechnologyOpportunity

General Process

Decision

Document

Non-ConfidentialSummary and

Marketing Strategy

Market toPotential Licensees

Confidential Information Exchange

Spin-out or

License?

Research and Discovery &

InventionDisclosure

Due Diligence &CommercialAssessment

License to ExternalCompany

Spin-Out

DocumentationThe following documents are normally required to support the Innovation process.

• Disclosure• Assignment of Rights• Initial Assessment of the Technology Opportunity• Application for IP Protection:

•Patent•Trademark•Copyright•Registered designs

• Tech- Assessment to assess route to market• License Templates/ Spinout business plan

Stage I Invention Assessment

to assess optimum management strategy for commercialisation

• Claims to Ownership (due diligence)• Feasibility and Scope of Protection• Strength of the technology• Commercial Potential and Value• Stage of Development (EUROs?)• Commitment of inventor (s)

Disclosure

•first signal that an invention has been made •a method of formalising the confidential description of an invention •a basis for determining patentability•the technical information required to draft a patent

Also used to establish the rights to an invention that cannot be patented but may be protected by other means e.g. copyright.

IP Protection

Decision to Proceed

Agreement

No Licensee Found

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

General Process

Decision

Document

Marketing Strategy

Spin-out or

License?

InventionDisclosure

Spin-Out

The key information required on the disclosure form should include:•Title of the invention •Name(s) of the inventor(s)•Design date and date put into practice•Sponsorships where relevant•A description of the invention•Publication dates, existing or projected, if applicable

Disclosure

Examples of disclosure forms

University of Stanford: http://otl.stanford.edu/inventors/resources/disclosure.pdfMIT:http://web.mit.edu/tlo/www/downloads/doc/techdisclosureelectronicfrmdoc.docUniversity of Chicago: http://uctech.uchicago.edu/inventors/inventiondisclosure.shtml

SEE CD ROM

Examples

What qualifies as: “Premature Disclosure”?

Discussion

Premature Disclosure

The public release of information relating to an invention before a patent has been filed. •abstracts •poster sessions •seminars•shelved theses

Premature disclosure usually disqualifies an invention from being patented

Premature Disclosure

Non-Disclosure Agreements

• Examples of CDAs• Stanford University see:• http://otl.stanford.edu/pdf/cda.pdf

• MIT see:• web.mit.edu/tlo/www/downloads/pdf/ONE_WAY.IN_1998

-03-03.pdf • web.mit.edu/tlo/www/downloads/pdf/TWO_WAY_1998-

03-02.pdf• web.mit.edu/deshpandecenter/downloads/NDA_Deshpa

nde_Center_2005.pdf

• Inventor Assignment of Invention Form •transfers ownership of the invention to the University of Institute

• University or Institute Assignment of Invention•permits the University or Institute Technology Transfer Office to patent and license the invention.

The University of Virginia send a one dollar coin to each inventor “in consideration of the assignment of the invention to the University” and a letter of thanks!

Assignment of Rights

Stage II Assessment of the Technology Opportunity

•Investigation of Patentability and marketability.

•During the assessment or evaluation period, an invention may be safely disclosed outside the institution under the protection of a Confidential Disclosure Agreement or CDA.

IP Protection

Decision to Proceed

Agreement

No Licensee Found

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

General Process

Decision

Document

Marketing Strategy

Spin-out or

License?

InventionDisclosure

Spin-Out

Application for IP Protection

•Provisional Patent Application•Copyright Application•Trademark Application•Design rights•Database rights•(Others)

IP Protection

Decision to Proceed

Agreement

No Licensee Found

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

General Process

Decision

Document

Marketing Strategy

Spin-out or

License?

InventionDisclosure

Spin-Out

Market Assessment

• Market for invention• Number of potential market sectors• Total Market size• Market Profile • Competitive Market Structure• Economic benefits of invention.• Market inertia to change• Estimated Royalty rates• Anticipated life-span of market• Estimated payback period

License

License Agreement:•20 + page document•dense legal prose•first draft created by the Licensor•Allows all IP Policy to be stated up-front

Multiple drafts before agreement is reached.

(Even starting a spinout may require the IPR to be licensed to the new company)

Outcomes of the Technology Transfer Process

•Invention Protection•Commercialization •Successful Innovation

•Royalties•Equity shares

Pitanja i komentari

• schafernaker@secep.rs• lisa.cowey@icip-serbia.org

• www.secep.rs• www.icip-serbia.org

Session 2 IUniversities, Public Research Institutions and Intellectual Property Rights.

Outline of talk

• What is a PRO IP Policy?• Why are they important?• Situational examples.• What should an IP Policy cover?• What should an IP Policy achieve?• Examples of IPRs for Universities and

research groups.

What is “IP Policy”?

• Legal Ownership of “IP” (Rights Holder)• Coverage of the IPRs• Commercialization rights and

responsibilities• Commercialization process• Benefit sharing• Other issues including “conflict of interest”

Legal Ownership/ Rights Holding

• Who can:• Sell it?• Rent it?• Develop it?

Who owns this piece of land?

“Why do we need IP Policy anyway?”

• Gatorad!

• Invented in 1965 by researchers at the University of Florida and named in honour of the University’s football team.

• When an idea makes a lot of money then the number of people who claim to have been involved increases exponentially

“Me too” claim to ownership of good IP

Money (or kudos!)

Number of people who claim “it was my idea too!”

Disputed ownership: Outcome?

Money made by the inventorsMoney made by the legal profession in resolving disputes

Cost of the dispute

No. of people who claim ownership…

“Nothing to do with me” claim to ownership of bad IP

Legal threats from IP purchaser

Number of people who claim “it was my idea too!”

Who is responsible when Bad IP is sold?

The Oxford Sugar Beat and Crop Dryers Ltd• Established:1926• Patents: Yes • Ownership?

– Unclear - University or Founder?• Patent Claims?

– LOTS!

What does the Patent Promise?

• GB344080 - 3rd May 1931• Inventor: BRYNAR JAMES

OWEN (M.A., iD.Sc., M.Eng., Director of the Institute of Agricultural Engineering, University of Oxford, Oxford)

• An improved apparatus for drying crops artificially.

Who is responsible when Bad IP is sold?

• Outcome: Litigation• University was sued in 1931 for £750,000• This was greater than the governments total annual

grant to the University!

• Direct outcome: Company settled for 10% of claim, mainly paid by the Ministry of Agriculture UK

• Indirect outcome: Oxford University wanted nothing to do with Innovation, commercialisation and spinout companies for a long, long time!

• Who is “responsible” for a result that emerges from a University Research Laboratory? (who is responsible for side effects!?)

“Clean” IP

• Ownership is clear• Undisputed• Smoothes the path of technology transfer • Keeps Universities out of the Law courts• Underpinned by a good IP Policy

Issues to be addressed by an IP Policy

1. coverage of intellectual property policy;2. ownership of intellectual property;3. disclosure of intellectual property;4. marketing, commercialization and licensing of

patents;5. distribution of income;6. rights and obligations of an inventor and the

institution;7. other pertinent issues.

Do all IP Policies look the same?

• No!– Effective IP Policy reflects local conditions –

they may not transfer successfully. – read and reflect but do not borrow

indiscriminately• All IP Policies address the same issues.

– How they deal with them differs.– Examples?

Oxford University

• The University takes ownership and responsibility for commercialisation of IP through the TTO “Isis Innovation”.

• Benefits are shared with inventors according to a published “revenue and benefits sharing scheme”.

• The University reserves the right to take an equity stake in a spinout company.– Lots of licensing deals– The Oxfordshire area has many “spinouts”.

Cambridge University

• For many years the University had a policy of giving legal ownership of IP to the inventors.

• The University “waived all rights” to ownership and benefits.– Few University licensing deals– The Cambridgeshire area has many “start-ups”. (“The

Cambridge phenomenon”) – Was the area of science influential?

• Policy is being reversed

Oxford vs. Imperial

• Oxford IP policy includes undergraduate students

• Imperial College London IP Policy excludes undergraduate students– Same “issue” (who is included?)– Different decision

Oxford University vs. Oxford Brookes University

• Oxford University commercialises though a wholly owned legal company “Isis Innovation Ltd”

• Oxford Brookes University commercialises through an internal University department “The RBDO”.– Same issue: who is responsible for

commercialisation?– Different decision regarding the “vehicles”

GROSS ROYALTIES

Less assignable patent and licensing costs

NET ROYALTY INCOME

INVENTOR’S SHARE50 %< US$100,00025 %> US$100,000

CORNELL RESEARCH FOUNDATIONOperation and unrecovered patents and marketing costs for all inventions 35 %

REMAINING NET ROYALTY INCOME

Shared by:Unit and Sub-unitInventor’s Research Program

University40 %

Revenue Sharing Model: Cornell Research Foundation of Cornell University

Total net Researchers University Department Isis revenue personally General Fund Funds Innovation

to £72k 61% 9% 0% 30%

to £720k 31.5% 21% 17.5% 30%over £720k 15.75% 28% 26.25% 30%

Tangible Financial Benefits to Scientists, Departments and University

Licensing Revenue sharing at Oxford University

Revenue Sharing Model: University of Oxford

Differences in Processes: University of Virginia Patent Foundation

University of Reading UK

IP Protection

Decision to Proceed

Agreement

No Licensee Found

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

General Process

Decision

Document

Marketing Strategy

Market toPotential

Licensees

Spin-out or

License?

InventionDisclosure

Spin-Out

Why do these differences occur?Ownership/ Right Holders

• Reasons are often highly practical• Who has the resources (time, money and

inclination) to undertake commercialisation?• Inventors at Cambridge may have felt that it was

“their idea” but they lacked the resources to commercialise.

• A dedicated TTO and a fair benefit sharing scheme can be the solution.

TTO a department or a separate Unit?

• Internal department – an extension of the University -more acceptable to researchers? (University Zagreb)

Vs.• Legal advantages of separate legal entity (sue

the TTO and not the University) (Rudjer Innovations)

And• Cultural differences of a “business unit” (the

need to sit mid-way between 2 environments)

Regional Examples (Croatia)• University Zagreb (Rectorate Unit)• (Medical School Faculty TTO)

• Rudjer Boskovic Institute• (RI doo)

• University of Rijeka (Rectorate Unit + STeP doo)

• University Osijek: Medical School TTO + strategic relationship with Ceder Sinai Medical Hospital , Los Angeles SAD

Undergraduates included or excluded

• Is the value of undergraduate IP worth the effort to commercialise? – Leave then outside the system

vs.• Is there a long term benefit in encouraging

and supporting undergraduates to become more entrepreneurial?– Draw them into the system

Process Difference

• USA vs. European – First to Patent (Europe)– First to Publish (USA)

• Internal vs. External IP Evaluation committee

• Transfer of ownership vs. transfer of rights to commercialise

Deal with the Issues YOUR way

• To summarise• All IP Policies deal with the same set of

issues• HOW they deal with them reflects

– Country– Local Laws (National and by-laws)– Resources– Stakeholder preference

Issues to be addressed by an IP Policy

1. coverage of intellectual property policy;2. ownership of intellectual property (rights

holding);3. disclosure of intellectual property;4. marketing, commercialization and licensing of

patents;5. distribution of income;6. rights and obligations of an inventor and the

institution;7. other pertinent issues.

IP Policy: ObjectivesAn Intellectual Property Policy should help to achieve the

following objectives:1. Public Benefit2. Protection of Academic Freedom3. Fair Distribution4. Timely and Efficient Technology and Knowledge

Transfer5. Promotion not inhibition6. Establish standards7. Promote mutually beneficial rewards8. Compliance with applicable laws and regulations9. Ensure awareness of differing IP systems10. Conflict Resolution

Abdicating Control vs. Taking Control

• Fear and uncertainty• Disinclination to engage in

Innovation activities• IP Policy• Conflict of Interest Policy• TTO/ Designated

Commercialisation Unit

Useful Resource

• World Intellectual Property Organisation (WIPO): Guidelines on Developing IP Policy for Universities and R&D Organizations.

• http://www.wipo.int/export/sites/www/uipc/en/guidelines/pdf/ip_policy.pdf

• Regional Examples of IP Policies and TTO Operation on CD ROM

Pitanja i komentari

Session 2 IIUnderstanding Intellectual Property Rights.

Mr Nataša Milojević, SavetnikZavod za intelektualnu svojinu/

Session 3Technology and Market Evaluation.

Overview

• Evaluation as part of the TT processes• Decision making aids (established

methods, processes and procedures) • Use of decision trees and rating and

ranking methods.

IP Protection

Decision to Proceed

Agreement

No Licensee Found

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

General Process

Decision

Document

Marketing Strategy

Spin-out or

License?

InventionDisclosure

Spin-Out

Technology transfer models

• Inventory based– Patent those discoveries that look promising, market and license

later.– Institution may build a substantial inventory of unlicensed patents– Institution may incur substantial un-reimbursed expenses.

• Deal based– Market first, only patent if deal is found. – Rate of production of IP = expected rate of transfer/ licensing– Inventory kept low, minimising un-reimbursed patent costs

Evaluation Continuum

TimeTechnology Assessment

Market Assessment

Ownership

Stage of Development

Commercial Potential

Protectability

Tech- Assessment

• to assess optimum management strategy for commercialisation

• Traffic Light systemGoProceed with cautionSTOP!

Technology/ Invention Assessment

6 Pillars approach1. Ownership2. Feasibility and Scope of Protection (IPR)3. Strength of Technology4. Commercial Potential and Value 5. Stage of Development6. Commitment of Inventors

If one pillar is weak/ non existent = see red!

Legal Ownership(Who owns this piece of land?)

• Who can:• Sell it?• Rent it?• Develop it?

1. Ownership

• Assignment– Have rights to this technology been pre-assigned to a third

party?• Joint Inventorship

– Number of co-owner institutions• Funding (Source of funding)

– e.g., corporate, state, etc.• Other Agreements

– Material Transfer Agreements, Memorandums of Understanding, etc.

• Inventorship– Number of inventors/authors

2: Feasibility and Scope of Protection• Timing

– Publications exist or are planned• Strength

– Ability to work around patent• Enforcement

– Infringement detection • Security

– Ability to exclude others from practicing

• Challenge– Aggressive area of US or Worldwide Patent/Copyright activity

• Reach– Worldwide protection

Patenting: we can- but should we?

• Use patent decision trees• See Handout

Patenting Decision Guide

Patenting Decision Guide SR

Factors effecting the Protection Decision

• For patenting decisions – look at the patterning decision guide

However… also think about• The availability of funding• The existence of other projects• The other pillars!

3. Strength of Technology

• Uniqueness of the invention• Emerging alternatives• Novelty of the invention• Breadth/ Edge of technology• Applicability of technology (integration)• Legislative issues• Standards• Environmental Impact

You may need impartial experts to address these issues

4. Commercial Potential and Value• Ability to identify market need• Potential market size• Availability of market contacts• Feedback from industry contacts• Market Location• Market Place Competition• Ability to compete in the market place• Time to Market• Regulations• Significance• Licensing Barriers• Timeliness… etc….etc

Do not fall in to the trap of analysis paralysis!

5. Stage of Development• Understanding

– Ability to understand the IP• Reduction

– Simulation/Experimentation has been done• Trial History (Medical/ Health Sciences)

– certain information required by the regulatory processes has been compiled.• Prototypes

– The technology demonstration has occurred• Production

– Amount of scale up needed• Financial

– Investment needed for development– Investment needed for use

Link strongly to 6: Commitment of the inventors

6. Commitment/ Experience of inventors

• Lead Inventor Profile• Scientific reputation of Group.• Existence of a Project “Champion”• Level of support available.• Existing commercial Links

The importance of this issue is often underestimated

Starting Point: The Invention Disclosure Form

• What do you think your invention is?• How and why does it work?• How does your invention improve on the

present situation and what is new about it?• Are there any other uses of the invention?• Do you know of any published literature

relevant to your invention? Have you done any searching for published literature, and if so where?

• Has the invention been tested in the laboratory or has it been used? If so please give results.

Invention Disclosure Form

• In which markets do you think this invention or design will find most success?

• List three key commercial benefits of the invention/ design.

• Name any commercial contact who my be interested in this invention.

• Attach any relevant sketches.

Invention Disclosure Form

• The completed form should be treated as confidential information

• The Invention Record Should Be Signed And Dated By All Named Researchers.

Availability of Disclosure Forms

• Often available for download from the organisation web-site– http://otl.stanford.edu/inventors/resources/di

sclosure.pdf

• Becoming available on-line– http://otl.stanford.edu/inventors/disclosures.

html• Generic (EN/SR) Example of Disclosure form on CD ROM

Following Disclosure

• Assessment Process usually begins with an interview with the inventor to gain a better understanding of :– the scientific merit and– to determine if there are any commercial partners

already in the inventors mind.• The Assessment Process includes a due

diligence process to establish whether the invention can be protected.

• Due Diligence takes place very early in the Assessment Process.

Due diligence process

• Many Universities have developed Disclosure Forms that will also permit full Due Diligence to commence– http://www.isis-innovation.com/researchers/IP-1.pdf

• Some have Disclosure and Due Diligence in a single booklet which covers all aspects of the University IP Policy– www.brookes.ac.uk/res/policies/ip_policy.pdf

Structuring the Tech Assess ProcessExisting Methodologies

• The Texas TechAssess™ Scorecard • An assessment tool used to organize and

communicate the various business aspects that affect the ability to successfully transfer technology.

• Offers an organized method to study areas of strength and weakness in an invention's potential for technology transfer.

• Each area contains subtopics that weigh the potential impact of an invention's characteristics on its potential for successful transfer.

• Demonstration.

Translation

• A process developed to fit a model.• This is a useful example…..• Be critical!• Think about adaptation and

localisation for your own use.• Do not blindly apply without

thought.

WARNING: Numerical evaluation sheets

• TOOLS.• It help us to avoiding missing something we

should consider. (useful check lists )• BUT do not rely just on a number to take a

decision!

• 49% out?• 50% in?

• Use spreadsheet analysis to inform not replace decision making.

Who takes the Decision to protect?

• The has the authority? (Rector? Dean? Head of Institute?)

• Who recommends? (IP Advisory Group)

• Who briefs? (UTT, Consultants, Experts)

How is the decision taken?

• In a fair, timely and transparent manner!• Rating and ranking may help.

Inventions are awarded points (rating)Inventions are compared (ranking)Permits optimum use of limited funds

The TechAssess ScoreCard™ is a "Rating/Ranking" approach to the assessment of technologies.

Rating and Ranking

See example handouts:

• “investment_conversion_eligibility_form”

• “investment_ranking_form”

Return of Rights

• If the PRO decides to waive its rights to the invention, then the invention may be re-assigned to the inventor(s).– free to commercialise it at their own

risk and cost.

Confidentiality

• An invention and associated information must remain confidential prior to any IP protection.

• The University usually encourages publication, provided that the implications for possible commercial exploitation and existing confidentiality obligations are considered first.

• If you wish to publish or make any public disclosure concerning a possible invention you should first seek advice on the most appropriate form of action.

• USE “CDA” and “NDA”.

Summary

Good Technology and Market Assessment Decision are:

• Not the result of crystal ball gazing!• Are:

Structured and Balanced (6 pillars)Based on informed decision and experienceConsider multiple view-points

Pitanja i komentari

• lisa.cowey@icip-serbia.orgschafernaker@secep.rs

• www.icip-serbia.org• www.secep.rs

Session 5Technology transfer through Licensing and Spinout.

Outline of talk

• Rational• Definitions• Models• International and Local Examples

IP Protection

Decision to Proceed

Agreement

No Licensee Found

Disclosure

Evaluation

Marketing

Post Licence

TTAG Review=

General Process

Decision

Document

Marketing Strategy

Spin-out or

License?

InventionDisclosure

Spin-Out

The need for commercialisation

• A Patent is a bill– Total cost of a sample European Patent ~€32 000– Total cost of a sample Euro-PCT Patent ~€47 000

• A license is a revenue stream– In 1995 the University of California system earned $58.5

million in licensing income (fees and royalties)

• Successful marketing ensures the conversion from money out to money in

Technology Transfer = ROI (Return On Investment)

From IP strategy to marketing strategy

Key to marketing strategy:Deciding on best Route to Market to

commercialise invention:license it to established company

or spin out (form a new company)

A spinout company

Definition of “spinout company”

• “the term used to describe a limited company set up to develop and exploit intellectual property

(IP) commercially.”

Spinout vs. Startup?

• Spinout: in UK/ USA a term usually reserved for companies in which the university has an equity stake.

• Start-up: the university does not have equity, but licenses IP to the company in exchange for monetary royalties only.

• Spinoff (but not out..): company still embedded in the Research Organisation. Has not fully transferred knowledge and technology.

Terms are often used loosely and interchangeably

Spinout vs. Licensing

Licensing may be most appropriate if:• it is a niche technology • there is a single patent • the technology fits an existing company's

IP/product portfolio • licensing is a common strategy within the

industry sector

Spinout vs. LicensingSpin-outs originating from research institutions are usually set up when:• Licensing is not possible!

– there is no existing business to approach about a significant breakthrough in a field of work.

• Strength of then IP sufficient to warrant extra effort, risk, infrastructure and delay in receiving revenue.– the work has clear possibilities to generate many products and

applications and so potentially could be extremely valuable. – “platform opportunities” or “disruptive technologies”.

• Further investment is required in the technology and associated infrastructure in order to reach the market and this can only besecured by having a legal entity.

Spinout vs. Licensing

Other considerations prior to starting a spinout:• entry to the market by a new company is

relatively easy with few significant barriers • the marketplace is fragmented with a lot of small

companies • there is a group of founders motivated to start a

company • it is likely that investment funds can be raised for

a company • there is a financial exit route for investors,

including the University

Spinout is more complicated than licensing• Spinouts require more Infrastructure that a

license deal (people, money, buildings, manufacturing facilities etc…)

they are thus more risky• It will take longer than licensing to realise a

revenue stream back to the inventors and University.

• But, the long term gains may be greater (and they can be fun and fulfilling!)

Why is Licensing preferably to spinout?

•~12% of USA university inventions are realised though the medium of technology transfer via a new spinout company.

•These new companies have a disproportional success with over 70% of USA start-ups founded since 1980 still in operation

•20% of spinouts from the Massachusetts Institute of technology (MIT) going on to experience Initial Public offering (IPO)

University spinout activity USA

Oxford University

• Total external investment to date in spin-outs (post 1997): £336m

• £36m Seed/Business Angels &• £300m Venture/Institution Capital stock

exchange listing• Six AIM Listed companies combined

market capitalisation (value) of £280m

USA/UK spinout: Equity Division

When a spinout company is created then the stakeholders may hold equity shares in the new venture.

Typically at creation:• 33% academic founders• 33% department• 33% the universityOr• 50% academic founders• 50% the university

Institute30 shares

Dr Zeleni35 shares

Dr Crveni35 shares

Spinout Company

100 shares

IK/ USA Spinout Company Creation

Is the IP Licensed free or with royalties to the spinout?

Institute30 shares

Dr Zeleni35 shares

17.5 %

Dr Crveni35 shares

Spinout Company

200 shares

Investor100 shares

Round 1 Investment

Share Dilution for founders

Option Pool

Institute30 shares

Dr Zeleni35 shares

15.8 %

Dr Crveni35 shares

Spinout Company

222 shares

Investor100 shares

Option Pool22 shares

Control and Value

•Dilution reduces control•100% Full control•<50% Shared control

•Value of shares should increase“its better to have a small piece of something

than all of nothing

Oxford Catalysts (December 2005) Market Capitalisation: £65M

Supporting and Nurturing a Spin-out

• Strategy• Seed funding• Incubation• Raising Finance• Management Team• Business Support• Future challenges

Spin-out Strategy

University

Research Director

New Company

Support

Scientists

Finance & Admin

Sales & Marketing

Production

Scientists

New ManagingDirector

Senior Scientist

Research Group Head technology

interchange

Oxford University Challenge Seed Fund

• Launched in 1999 – £4 million– Development projects, spin-out seed equity– University £1m, Treasury, Wellcome & Gatsby £3m– Deployed into a total of 68 projects

• £4m investment has resulted in Equity stakes in 21 spin-outs, 4 completed licensing deals & 35 active technology projects

• These 21 spin-outs have attracted £40m seed/venture investment

Incubation: Reducing Risk

• Begbroke Science & Business Park

• Owned & operated by Oxford University

• University research labs• Business Incubator &

premises for new companies

• Central meeting room and café

Raising FinanceThe commercialisation of an invention can be lengthy and

expensive. The venture will pass though a number of stages:

• R&D• Patent• Prototype• First Product• Market Entry• Trade Sale/ IPO• Post IPO

• All these stages will require finance.• There is a risk and a value associated with each part

of this process.

Funding – Bridging the “Equity Gap

• Start-ups:– Bank– FFF (Friends, Family, “Fools”!)

• Spinouts:– University Seed Funds– Private equity, (Business Angels, Specialists

investors, VCs).– ROI (Return on Investment)

• Bank Rate: 4%• Angel (Risk) Investment : 25%

Oxford Spinout in ContextOxford University• 1 patent per week, 8 new companies per year (average)• Own Seed Capital Fund and Business Angel Network• 3 Local Business Angel Networks• Very significant incubator and Science Park Investment• A lot of ‘re-cycling’ of spinout managers and academic entrepreneurs

Oxford University• 3,700 researchers• 5,000 doctoral students• Most Powerful UK Research University

– Research Fortnight Most Innovative UK University – Cross Atlantic Capital Competition Highest Research Spend in UK – £264 million (2004/2005)

Spinout: Essential Ingredients

Access to finance

Supportive University

Spinout in Serbia

• SBAN• Novi Sad University and Technology

Incubator Model

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