spinning off in the u.s. dr. gary w. matkin associate dean university extension university of...
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Spinning Off in the U.S.
Dr. Gary W. Matkin
Associate Dean
University Extension
University of California, Berkeley
University Technology Transfer Activities
• Patenting and licensing of university intellectual property
• Research Partnerships with industry• Industrial affiliate or liaison programs• Technical/managerial assistance programs• Business incubators• Research parks• Venture capital/business start-up activities• Continuing Education
Research Institution
For Profit Company
For Profit Company
For Profit Company
License
Equity
License
Equity
Equity
License
Taking Equity ModelTaking Equity Model
Taking Equity Model
Advantages– Replication after established policy – Diversification– Equity build up– No up-front investment– Not dependent for return on one technology
Taking Equity Model
Disadvantages– Little control – Equity dilution– Portfolio management overhead cost– Case-by-case negotiations– Messy (relations with inventors)
Issues– Inventor share distribution– Degree of management involvement– Exercising voting rights– Board of Director membership– Anti dilution opportunities– Liquidation policy– Limits to percent of ownership
Taking Equity Model
Non-Profit Buffer ModelNon-Profit Buffer ModelAlternative 1Alternative 1
Research Institution
Non-Profit Subsidiary
AssignsIP Ownership
Receives shareof profit & equity
buildup
For Profit Spin-Off
License E
quit
y
Tech Licenses
Non-Profit Buffer ModelAlternative 2
Research Institution
Non-Profit Subsidiary
For Profit Spin-off
Selective Assignment
Receives shareof profit & equity
buildup License E
quit
y
Tech LicenseOffice
Tech Licenses
Advantages– Maintains control– Provides initial buffering– Can provide markedly increased flexibility
Disadvantages– Still has non-profit status– Hard to attract capital– Still removed from marketplace
Non-Profit Buffer Model
For Profit Alternative One
Research Institution
For Profit Subsidiary
For Profit Spin-off
Licen
se Eq
uit
y
Creates&
Owns
For Profit Alternative Two
Research Institution
For Profit Subsidiary
For Profit Spin-off
License E
quit
y
MajorityOwner
Investor(s)MinorityOwner
For Profit Alternative Three
Research Institution
For Profit Subsidiary
For Profit Spin-off
License E
quit
y
MajorityOwner
Investor(s)MinorityOwner
For Profit Alternative Four
Research Institution
For Profit Partner
For Profit Spin-off
License E
quit
y
Investor(s)New For Profit Venture
Investor(s)
For Profit Alternative Five
Research Institution A
Research Institution B
For Profit Spin-off
License E
quit
y
Investor(s)New For Profit Venture
Investor(s)
For-Profit AlternativesAdvantages
– Immediate entry into market– Can attract capital– “Rheostat” on control
Disadvantages– Sometimes little buffering– Often loss of control– UBIT, legal costs– Often high cost
The Arms-Length For-ProfitIP Manager Model
Research Institution
For Profit Spin-offs
Tech LicenseResearch Institution
Research Institution
For ProfitIP
ManagementCorporation
IP
$
$
$
IP
IP
$ + Equity
IP
$
IP
Advantages– Little cost to institution– Low risk (but low return)– Arms-length deal with faculty– Ability to gain critical mass, econ of scale
Disadvantages– Low return– “Cherry picking”
The Arms-Length For-ProfitIP Manager Model
The Future of University IP Management
• University as beneficial holder/clearinghouse
• University as aggressive defender of IP
• Research universities united
• University IP policy as a condition of employment
• University IP policy and collaborative education
• Universities as heavies in national and international IP law development
Gary W. MatkinAssociate Dean/Director Technology Initiatives
UC Berkeley Extension