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New Paradigms for Industrial PartneringPhyl Speser, J.D., Ph.DCEO, Foresight Science & Technology Incorporated and VP Membership, Association of University Technology Managers

Note: the views expressed here are those of the author alone. Affiliations are for information purposes only.

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CHALLENGES

• How to get deals for early stage technologies.• How to get deals for technologies with little immediate

commercial interest on their own. • How to meet objectives of multiple missions while

being net cash flow positive

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FRAMEWORK FOR DISCUSSION 3

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IPPCore Mission

is to Create

Socio-Economic Benefits

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Corporate Core Mission is Profit, Market Share, and Survival

• No-one buys technology for the sake of technology• Product advantage is critical threshold• Ease of Use and Price count• Risk exists where product advantage cannot be predicted with

certainty5

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Relationships Built via Information and the Ability to Act on It

6Ab

ilit

y t

o r

esp

on

d

Low

High

Likelihood of receiving new informationLow High

U n c e r t a i n t y

Room

for

Man

ag

eri

al Fle

xib

ilit

y

Moderate Flexibility Value

Moderate Flexibility Value

Low Flexibility Value

High

Flexibility Value

Marco Antonio Guimarães Dias, Petrobras and PUC-Rio, Brazil, 2003,

www.puc-rio.br/marco.ind/

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Information About:

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• Economic Value• Income Statement

Focused• NPV• Revenues – Expenses• Revenues – COGS =

Gross Profit • Gross Profit –

(Overhead + G&A) = Operating Income

• Operating Income – (Interest and Taxes) = Net Profit

• Strategic Value• Balance Sheet

Focused• IP as an Intangible

Asset• IP Value is • Upside Income

Potential over time• Affecting Postive

Volatility of Stock Price

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All Industrial Partnering can be viewed through “Option Logic”• Revenues always are uncertain and especially with low TRL

technologies the NPV is often low due to technical and market risk

• There always a strike price• The partner can always fail to strike the option if it does not

pencil at the time of expiration

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GETTING DEALS FOR IMMATURE TECHNOLOGIES

Nothing happens without a sale.David Speser

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Best Practice #1• Integration of Licensing with Sponsored Research• TRL and NPV Driven• Integrates well with Concurrent Engineering• Possible Harbinger of Paradigm Shift• Shift in the way value is calculated

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Linking with Product Line Managers

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Portfolios of Companies

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Portfolios and Partnering

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Product Advantage• Examine Areas of

Strength• Strong IP Portfolio in

Technology Niche• IPKit® Potential

• Unique Facilities• Solid Core Staffing

• Intersection with User Needs • 5-10 yr. Roadmap • Trends in Dominant

Design Favorable15

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IPKits®

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PVGO

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First Mover Advantage

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Extracting PVGO

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Technologies Currently Used or Associated with the Dominant Design

Technologies New to Dominant Design

Functionalities and/or Features Currently Found In or Associated with the Dominant Design

Incremental Innovation – Focused Teams In-House or at Traditional Vendor

Radical Innovation – CRADA or Contract Research with Universities or Government Labs or Contract work at Non-Profit R&D Performers and Non-Traditional Vendors (Spin-Up or Out)

Functionalities and/or Features New to the Dominant Design

Adaptive Innovation –Multidisciplinary Teams In-House or Contract Research with Vendors, Non-Profit R&D Performers

Disruptive Technologies – Multidisciplinary Teams at Small Companies and Think Tanks or CRADA with Universities or Government Labs (Spin-Out or Up)

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Federal Funding as Leverage

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Govt. orFoundationSubsidy

Sponsored Research

Transition Development

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Field of Use Consortia/Optioning

   

NASA  

Medical    

Mining  

Resource Mgt.  

Aerospace    

Technologies

Mission I

mp

ortance

(1-

5)

Earth O

bservatio

n

Grea

t O

bservatories

Diognosti

c Imaging

Phototherapy

Optica

l Surgery

Mineral

s Analysis

Deposit Locatio

n

Global Warming

Precision Agriculture

IR, UV, Visible

Sensors

Cockpit Displays

Lase

r Weapons

Multispectral image analysis   5 5 5 2 3 1 3 5 5 5 3 1Wavefront control   5 5 2 2 5 1 3 3 3 5 2 5Software Wavefront Manipulation   5 5 5 2 5 1 3 4 4 5 3 3Specialised Calibration Laboratories   5 5 2 1 1 2 2 1 1 3 1 2

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Legend:Brown – NASA, High confidenceGreen - Market research based, Moderate confidenceRed- Guess, Market research neededBlack-- Experience based, Moderate confidence

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Best Practice # 2• Diversification of Licensee Customer Segments• TRL and Translational Funding Driven• Supply Chain Model: Uni → SB → MLE

• Multiple Transaction/Player Deals

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Corporate Venture

SBIR/STTRState Funds

Other FederalAgency Funding

Agency Mission Funds → → → → →

PharmaMed. Devices

Chemicals/MaterialsITDefenseTransportationAreospaceElectronics/Optics

Acquisition, Merger, IPOEarly Orders

Angel Funds → → Venture Capital → → → → → →22

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Using In-Kind as “Funding”

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Virginia Military Institute Fire and Leaf Cutting Ant Control• USDA CRADA to Validate

• University of Rhode Island• Partner with Sloan-

Kettering using GE Medical Funding for Clinical Trials

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Worst Practices• Treat all technologies as equally important• Patent everything• No formal prioritization scheme

• Use one approach for all technologies

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GETTING DEALS FOR TECHNOLOGIES WITHOUT COMMERCIAL TRACTION

If opportunity doesn’t knock, build a door.Milton Berle

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Best Practice 1:

• Aggregate Into Portfolios• Nortel Portfolio

• Wireless Freedom to Operate and Ability to Exclude

• $4.5 billion • Apple Inc., Microsoft Corp.,

Research in Motion Ltd., EMC Corp., L.M. Ericsson Telephone Co., and Sony Corp

• Numbers Count (~6000 here)

• Avoid supporting Non-Operating Companies (Trolls)

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Best Practice #2• Express Licenses• Recognize most licenses lose money when transaction costs

included• Adopts Southwest Airlines “Remove the Aggravation for

Customers” Approach• Many Models as Disruptive to Existing Dominant Design

• Glascow Easy Access Social Benefit Model• DoE, UNC, Hawaii Give-Away Cheap Model• Foresight 3-Tier Model

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Long TermNow Short-TermSorting Criteria:

1) Strength of Intellectual Asset Portfolio

2) Importance of Income Generation and Knowledge Dissemination in Mission

3) Revenue From Market(s)

4) Staff/Contractor Efficiency and Efficacy

© Foresight Science and Technology

High

Low

Long-Term Sustainable Competitive Advantage

Short and Mid-Term Competitive Advantage

Custom Negotiated License – Sr. Staff w Clerical or Intern

Field of Use ExpressLicense - Clerical

Open Source License-Clerical or Intern

Now Later

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University of Glasgow Easy Access IP• Focus on low value

technologies • Technology is free so long as

viable business plan (with milestones) leading to economic or social benefit

• No guarantee of IP maintenance unless paid for

• Can be exclusive or non-exclusive

• Foresight Twist: Charge for Consulting/Knowhow Transfer

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AUTM GTP

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Best Practice #3• Portfolio Aggregation• Quantity Is Sometimes as Important As Quality• Stacking is increasingly common

• Many Models• Dating Sites and Auction Houses• Portfolio Aggregators like Intellectual Ventures• Strategic Aggregators like Foresight IPKit® Mutual Funds

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Source: Wayne JohnsonVice President, HP University Relations, “Globalization: Implications for ERCs,” Worldwide, November 17, 2005

Best Practice #4• Pipeline

Relationships• Interaction with

Multiple Units• Repeat “Games”

rather Single “Games”• BP energy

Biosciences Institute at UC Berkley

• Siemens Ocean Power Initiative

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• Use Partners to Leverage Other Programs, Foundations, and Associations for Funding• NIST’s use of SBIR to

Mature its Inventions• Gates, Coulter, Lokey

Foundation Biomedical Translational Funding

• State High Tech Economic Development

• International Collaboration Funds

Spin-Up Companies

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Worst Practices• Excessive reliance on “Social Media” or passive web posting• Leave in “bottom drawer” and pay patent maintenance fees

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MEET MULTIPLE MISSION WITH POSITIVE CASH FLOW

• A well-defined imagination is the source of great deeds. Chinese Fortune Cookie

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Best Practice 1: Lean Six Sigma

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Best Practice 2: Knowledge Capture and Sharing

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• Knowledge Capture and Sharing Infrastructure• Web Infrastructure• Data

• Market Data• Targets• Companies• Venture• Funding Sources

• Terms• Licenses• Sponsored Research• CRADA

• Knowhow• Training • Experts Directory

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Best Practice 3: Benchmarking

• AUTM Benchmarking• Access to Benchmarking

Data in Licensing Surveys

• Network with Colleagues Globally• Techno-l, Linked-In• Annual and Regional

Meetings

• AUTM Practice Manual• Basic to Advanced

Training• CLP and RTTP credits

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Highlights from the AUTM U.S. Licensing Activity Survey Summary: FY2009 include:• 658 new commercial products

introduced • 5,328 total license and options

executed • 596 new companies formed, 435 of

which had their primary place of business in the licensing institution’s home state

• 3,423startup companies still operating as of the end of FY2009

• $53.9 billion total sponsored research expenditures

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Best Practice #4• Moving the TTO Outside the University• Useful where:

• University Culture and/or Legal Constraints make “Ethical Business” Operations and Interactions Difficult or Impossible

• Economies of Scale and Scope desired• More flexibility of approaches desired

• Models• Captive Foundations• Captive Corporations• Contractors• Owned by one user• Independently owned

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Best Practice #5• Focus on Regional or Technological Ecosystems• Research suggests universities can stimulate Economic

Development Waves• In Sweden, Linköping University’s Cleantech Cluster Model

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Regional Ecosystem

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Industries

Technologies

Buyers &Sellers

Technological Ecosystems

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Worst Practices• Accepting it is OK to run a loss operation• Inadequate in-reach and training of faculty and staff• Failure to create mechanisms for linkage with local businesses

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Join the Association of University Technology Managers• Get a Global Support Network for Licensing and Other Deals• Meet the Buyers at Meetings and On-Line via GTP• Private rooms and scheduling for deal making between sellers

and buyers of technology• Professional Development Courses and Webinars• Benchmarking and other Metrics• Practice Manual

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• Nothing happens without a sale.David Speser

• If opportunity doesn’t knock, build a door.Milton Berle

• A well-defined imagination is the source of great deeds. Chinese Fortune Cookie

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