Technology transfer technology brokerage day 2 full en

Republika Srbija
MINISTARSTVO EKONOMIJE
I REGIONALNOG RAZVOJA

Technology Transfer, Technology Brokerage

Beograd June 2011. godine
Intellectual Property Office

Finansira Evropska unija

Republika Srbija
MINISTARSTVO EKONOMIJE
I REGIONALNOG RAZVOJA

Introducing Workshop 2
Support to the commercialisation of
academic knowledge

Andrzej Schafernaker,
Team Leader SECEP


Session 1
Technology 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


University spinout activity USA

• ~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)


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 Transfer
Deal 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
activities
decouples the product production from product sales
• Result:
Institution may build a substantial inventory of unlicensed patent
Institution 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


Appendix A: Technology Transfer Process Disclosure

General Process Evaluation
Research and
Decision Marketing
Discovery &
Invention Document Legal
Disclosure Commercial Exploitation of R&D
Post Licence
IP Non-Confidential
Protection Summary and = TTAG Review
Due Diligence & Marketing Strategy
Commercial

• Technology Transfer Process
Assessment

License to Spin-out
Documented External or Spin-Out
Technology Company License?
Opportunity

Market to Negotiate &
No Licensee Yes
Potential Execute Licence
Yes Further Interested? Agreement
Decision to Licensees
Funding
Proceed
Needed?

No Distribution of Licence
Confidential Income
Release to No Licensee Information
Researcher(s) Found Exchange
Maintenance of
Licence and Patents


Documentation
The 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.


Disclosure

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


Examples

Examples of disclosure forms

University of Stanford:
http://otl.stanford.edu/inventors/resources/disclosure.pdf
MIT:
http://web.mit.edu/tlo/www/downloads/doc/techdisclosur
eelectronicfrmdoc.doc
University of Chicago:
http://uctech.uchicago.edu/inventors/inventiondisclosure.
shtml

SEE CD ROM


Premature Disclosure

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


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


Assignment of Rights

• 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!


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.


Application for IP Protection

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


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


Technology Transfer, Technology Brokerage

Beograd June 2011. godine
Intellectual Property Office


Session 2 I
Universities, Public Research
Institutions and Intellectual Property
Rights.

Lisa Cowey
Key Expert (Competitiveness and
Innovation) ICIP


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

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

Money (or kudos!)


Disputed ownership: Outcome?

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

Cost of
the
dispute

No. of people who claim
ownership…


“Nothing to do with me” claim to
ownership of bad IP
Number of people who claim “it was my idea too!”

Legal threats from IP purchaser


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”


Revenue Sharing Model: Cornell Research Foundation
of Cornell University

GROSS ROYALTIES

Less assignable patent and licensing costs

NET ROYALTY INCOME

CORNELL RESEARCH FOUNDATION
INVENTOR’S SHARE
Operation and unrecovered patents and
50 %< US$100,000
marketing costs for all inventions 35 %
25 %> US$100,000

REMAINING NET ROYALTY INCOME

Shared by:
Unit and Sub-unit University
Inventor’s Research Program 40 %
60%


Revenue Sharing Model: University of Oxford

Tangible Financial Benefits to Scientists, Departments and University
Licensing Revenue sharing at Oxford 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%


Differences in Processes: University of Virginia
Patent Foundation


University of Reading UK


Research and
Decision Marketing
Discovery &
Disclosure
Post Licence
IP Non-Confidential
Commercial
Assessment

License to Spin-out
Opportunity

No Licensee Yes
Funding
Proceed
Needed?

Confidential Income
Maintenance of
Licence and Patents


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: Objectives
An Intellectual Property Policy should help to achieve the
following objectives:
1. Public Benefit
2. Protection of Academic Freedom
3. Fair Distribution
4. Timely and Efficient Technology and Knowledge
Transfer
5. Promotion not inhibition
6. Establish standards
7. Promote mutually beneficial rewards
8. Compliance with applicable laws and regulations
9. Ensure awareness of differing IP systems
10. Conflict Resolution


Abdicating Control vs. Taking Control

• Fear and uncertainty
• IP Policy
• Disinclination to engage in
Innovation activities • 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


Session 2 II
Understanding Intellectual Property
Rights.

Mr Nataša Milojević,
Savetnik
Zavod za intelektualnu svojinu/


Session 3
Technology and Market Evaluation.

Lisa Cowey
Innovation) ICIP


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.



Research and
Decision Marketing
Discovery &
Disclosure
Post Licence
IP Non-Confidential
Commercial
Assessment

License to Spin-out
Opportunity

No Licensee Yes
Funding
Proceed
Needed?

Confidential Income
Maintenance of
Licence and Patents


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

Market Assessment

Commercial Potential

Protectability

Stage of Development

Ownership

Technology Assessment
Time


Tech- Assessment
• to assess optimum management
strategy for commercialisation

• Traffic Light system
Go
Proceed with caution
STOP!


Technology/ Invention Assessment
6 Pillars approach
1. Ownership
2. Feasibility and Scope of Protection (IPR)
3. Strength of Technology
4. Commercial Potential and Value
5. Stage of Development
6. 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 Process
Existing 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_elig
ibility_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 experience
Consider multiple view-points


Pitanja i komentari

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

• www.icip-serbia.org
• www.secep.rs


Session 5
Technology transfer through
Licensing and Spinout.

Lisa Cowey
Innovation) ICIP


Outline of talk

• Rational
• Definitions
• Models
• International and Local Examples


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


Spin-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 be
secured by having a legal entity.


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


Why is Licensing preferably to spinout?

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!)


University spinout activity USA

•~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)


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 university
Or
• 50% academic founders
• 50% the university


IK/ USA Spinout Company Creation

Institute Dr Zeleni Dr Crveni
30 shares 35 shares 35 shares
30% 35% 35%

IP Spinout
Company
100 shares

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


Round 1 Investment

Investor Institute Dr Zeleni Dr Crveni
100 shares 30 shares 35 shares 35 shares
50% 15% 17.5 % 17.5%

Spinout
Company
200 shares
Share Dilution for founders


Option Pool

Investor Institute Dr Zeleni Dr Crveni Option Pool
100 shares 30 shares 35 shares 35 shares 22 shares
45% 13.5% 15.8 % 15.8% 9.9%

Spinout
Company
222 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
Research Group New Managing
Head tec
hn Director
int ol o
er c gy
ha
ng
e

moves
Senior Scientist Research Director

University New Company
Support Finance & Admin
Sales & Marketing
Scientists
Production
Scientists


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 Finance
The 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 Context
Oxford 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

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en

Ac
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to
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Supportive University


Spinout in Serbia

• SBAN
• Novi Sad University and Technology
Incubator Model


Technology transfer technology brokerage day 2 full en

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