Office of Technology Transfer and Economic Development

January 26, 2006

University of Hawai`i

Office of Technology Transfer and Economic Development (OTTED)

Revenue-oriented service center Help UH personnel identify, protect, and

commercialize their inventions/creations Help build UH research enterprise Generate licensing income

Support State economic development initiatives

UH Business Plan Competition

OTTED offering up to $20,000 in additional prize money

Recipients must base their business plan on a UH technology available for licensing through OTTED

Recipient(s) must be 1st, 2nd, or 3rd place winner(s)

Money must be used to help commercialize the technology generally means that winning team becomes a

licensee

Award goes to highest placing winner

Technology Licensing

Evolution of the relative value of tangible and intangible assets to total value

100 years ago, tangible assets generally accounted for 90+% of a company’s value . . .

90%

10%

Today, the value of many companies is derived from their intangible assets.

100 years ago Today

University technologies are valuable . . .

. . . and will become more valuable as companies continue to leverage their R&D budgets through the acquisition of outside technologies

Technology Transfer Process

Invention Disclosure

Marketing& Protecting

Legal protection available?

Licensing

UH ownership ?

Yes

No

Yes

No

Commercial interest ?

YesNo

Return to

inventor

TLG activitiesSolicit, accept, administer invention disclosures

TLG activitiesEvaluate,market,protecttechnologies

TLG activitiesNegotiate,formalize,auditlicenses

Note: This chart is necessarily brief - it represents only the most basic functions of the technology transfer process. Please contact the Technology Licensing Group (539-3817) with questions or for further information about your invention and the technology transfer process.

Stage 1

Stage 2

Stage 3

Licensing as a Business ModelLicensing as a Business Model

Licensor – Inventor/owner of technology

Licensee – User License – contract not to sue Consideration – usually financial

but may include other consideration, such as cross license

Why license university technologies?

Technologies – early stage, high risk Technological risk – it may not work Market risk – unknown demand

Licensee – reduces risk Reduces R&D expenses Proves concept, may provide working model

Permits end users to “kick the tires”, lowers market uncertainty

Establishes relationship with University Licensor – expands income potential

Reduces/eliminates mfg., mktg., dist’n costs May help identify new income opportunities Establishes relationship with company(ies)

Possible Deal Structures

Traditional licensing w/fees, royalties

Equity participation Spin-offs/start ups

Sublicensing Options Sponsored research agreements

With/without option to acquire license

Compensation, Diligence, Patents, and Liability

Compensation Structures and Alternatives

Up-front fees Royalty arrangements Milestone payments Patent registration costs Liability/indemnification

Up-front fees

Good for University Reduce University’s financial risk Offset University’s previous out-of-pocket

expenses (research costs, patents, etc.) Generally not refundable nor creditable against

future royalties BUT …

Increase licensee’s financial risk May reduce licensee’s research sponsorship

commitment May “lock in” licensing rights

Royalty arrangements

Permits University to share in the success of commercialization

University’s increasingly willing to be flexible in their approach and royalty requirements

Equity can be exchanged for royalties

Milestone payments

Milestones should follow natural development of the technology

Often tied to diligence provisions Levels revenue flow to University in

early years Equity can be exchanged for cash

payments.

Payment of Patent Expenses

Licensed patent = licensee pays Business expense Cost sharing for multiple licensees

each licensee pays 1/n of patent expenses

licensor may limit licensee’s liability, cap or set n>1

Liability Issues and Disclaimers

Licensee takes all the blame and the responsibility and the cost

University takes all the credit and none of the responsibility …and wants to be paid for it

Liability Issues

Licensee assumes fitness for use

Licensee assumes product liabilityand names university as

additional insured Licensee/university each

assumes liability for its own employees

Success Stories and Exemplary Technologies

Past Business Plan Participants/Winners

Pipeline Communications and Technology, Inc. telecommunications and antenna technologies company has 7 employees, is in pre-production

phase Hawaii Environmental BioSolutions

dairy waste processing company has 0 employees, is in start-up phase

Research Analytical Labs diagnose and treat pre-term labor status of company unknown

Examples of UH technologies available for licensing

Hydrogen storage materials Biodegradable biopolymers Hydrogen/oxygen production

from water Acoustic wave micromixer Wastewater treatment with zero

valent iron Ventilating roofing system

Contacting OTTED

Websitehttp://www.otted.hawaii.edu

Email/Phone Richard Cox, rcox@hawaii.edu, 539-3818 Gaylene Anderson, gaylenea@hawaii.edu, 539-3836 Lisa Matsunaga, matsunag@hawaii.edu, 539-3826 Ann Park, apark@hawaii.edu, 539-3829 Jonathan Roberts, robertsj@hawaii.edu, 539-3828 Andrea Yuen, ayuen@hawaii.edu, 539-3823