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MAKING THE MOST OF YOUR UNIVERSITY’S

INTELLECTUAL PROPERTY26 NOVEMBER 2008

Organised by:

Paul WellingsLancaster University

Organised by:


The future of IP:

Where should university IP

be in 2020?

26 November 2008

Professor Paul Wellings

Lancaster University

26 November 2008

HIGHER EDUCATION DEBATEPositioning the sector for the

next 10 – 15 years

•On-line education•IP and Research Benefits•Demographic challenges•Research Careers•Teaching and the Student Experience•Part-time Studies•Institutional Performance•International Issues•Academics and Public Policy

Making The Most Of Your University’s Intellectual Property

QUESTIONS FROM THE SECRETARY OF STATE

• The management of IP for the benefit of the university and the wider economy

• Incentives and rewards for institutions and staff

• The links between research students, graduate schools and effective IP generation and exploitation

• The co-ordination of technology transfer offices

26 November 2008Making The Most Of Your University’s Intellectual Property

26 November 2008

KNOWLEDGE TRANSFER COMPONENTS

PATENTS LICENCES EMPLOYER ENGAGEMENT

KNOW HOW

CONSULTANCIES

CPD

INDUSTRIAL DESIGN TEACHING


26 November 2008

A recent report to the UK Funders’ Forum on the university:business interactions identified three barriers to these activities and the effectiveness of our universities in assisting industry and the wider economy:

a) an over-emphasis on IP when universities and businesses work together on collaborative research projects;

b) a lack of clarity on the primary aims of collaborative research, allowing uncertainty as to whether the aim is to generate a direct income for the university or a wider benefit for the economy; and

c) a rather variable implementation of aspects of good practice in the process of negotiation.

FUNDERS’ FORUM 2007


26 November 2008

MAJOR DRIVERS IN THE USA FOR RELATIONSHIPS BETWEEN UNIVERSITIES, INDUSTRY AND GOVERNMENT

Universities: - Bayh-Dole legislation has increased the desire to control who has rights to commercialise; - Universities have been encouraged to be key actors in local and regional economic development; - Breadth of the commercialisation function has increased.

Industry: - Margins have reduced, product lifetime shortened and management decision time reduced; - Funding to universities is now linked to strategic priorities and specific outcomes rather than philanthropy; - Innovation and cost reduction have become simultaneous forces for progress.

Government: - Strategic focus on R&D has increased in some sectors such as pharmaceuticals, biotechnology and security; - Economic development has become a driving factor for all levels of government; - Threat of loss of jobs is continually in the national focus.


26 November 2008

“From a university perspective, a key objective must be to maximise the overall impact of the research – through the research community, through industry where appropriate and upon the world. Industry is always concerned about having access to the research they sponsor in a way that they can use the results most effectively. Government has a priority to maximise the effectiveness and overall benefit of such investments for the state or country, and the public they serve.”

Richard Newton (2002)

OBJECTIVES AND PRIORITIES


UNIVERSITY RESEARCH COMMERCIALISATION

26 November 2008

a) The desired outcome for universities is not to generate a direct financial return as the primary goal

b) Universities should be able to demonstrate how they go about maximising economic, social and environmental impact

c) It is in the interest of universities, industries and governments that impact is maximised as this -

Enhances confidence in the sector Finds the best route to adoption


Financial returns are very skewed:

• In the USA

About 20,000 licences between universities and businesses. Only 0.1% returned more than US $1m in income to the university partner.

• In the UK

BTG protected about 10,000 inventions. Only about a dozen return more than US $1m in income to the university partner

26 November 2008

RETURNS ON COMMERCIALISATON


26 November 2008

INTERNATIONAL BENCHMARKS (2004)

Australia USA Canada UK

a) Av staffing in licensing per institution

4.5 4.2 4.4 4.8

b) Invention Disclosures 23 41 40 45

c) US patents issues 5 9 5 2

d) LOAs executed 9 12 17 22

e) LOA income ($’000s) 1031 3357 1333 1005

f) Start-up 0.7 1.1 1.4 3.6Measures b) – f) – normalised on $US100 million research expenditure


26 November 2008

VARIATION IN UK UNIVERSITY PERFORMANCE

Two thirds of universities run TTOs with 10 staff or less

Median size is 5 staff

In 2004/05 : 20% universities no new inventions25% universities no new patents38% universities no LOAs executed

While 17% universities more than 60 disclosures 4% universities more than 40 patents 6% universities more than 40 LOAs 4% universities more than 7 spin offs


26 November 2008

GRADUATE SCHOOLS AND IP

5 YEAR PERIOD 2002 – 06:

29 Universities less than 100 PhDs in total

UK median only 281

34 Universities produced 75% PhD graduates and 78% patents


The relationships between collaborative research income, patents, IP income, PhD graduations and research publications for UK Universities

26 November 2008Making The Most Of Your University’s Intellectual Property

26 November 2008

CORRELATIONS ON PAIRED ACTIVITY

Collaborative research income

39% 22% 36% 37%

Patents 52% 63% 62%

IP income 43% 41%

PhD graduations

74%

Publications


26 November 2008

THE CORRELATION BETWEEN THE NUMBER OF PHD GRADUATIONS AND PATENTS GENERATED


26 November 2008

REGIONAL DIFFERENCES

The relationship between patents created and PhD graduations is linear

England, NI and Wales: log (patents) = -3.62 + 1.07 log (PhD)

Scotland log (patents) = -2.47 + 1.07 log (PhD)

Scottish Universities are more active in patenting and this is also reflected in licensing income.


Region(a)

CollaborativeResearch

Income

(b)

Patents

(c)

IP Income

(d)

PhD graduated

(e)EuropeanRegional

RankEastern England 62392 588 4170 7738 17East Midlands 49351 293 948 4721 47London 81694 1189 10085 12726 35North-Eastern 47609 176 615 2978 78North-Western 82329 372 5538 7105 56South-Eastern 63670 1159 8151 10806 12South-Western 21570 322 1432 4181 37West Midlands 33861 309 5982 5245 42Yorkshire & Humberside 41724 528 2293 7017 72Northern Ireland 14182 149 861 1926 113Scotland 99091 977 14550 8175 89Wales 66332 152 1706 2871 80

(a) Sum of regional university collaborative research incomes (£’000s). (b) Sum of patents listed on Esp@cenetdatabase (2002-06). (c) Sum of university IP income (£’000s). (d) Sum of PhD graduations from regions universities (2002-06). (e) European regional rank (out of 203 regions).

26 November 2008

INDICATORS OF REGIONAL INNOVATION


26 November 2008

INDICATORS OF REGIONAL INNOVATION


26 November 2008

REGIONAL DIFFERENCES

• x 8 range in patent volume across regions• x 17 range in IP revenue across regions

• Only 5 regions have universities which have registered 200 or more patents over the period 2002 -06:

Eastern England Cambridge : 442London Imperial College : 470

University College : 258North-Western Manchester : 231South-Eastern Oxford : 641

Southampton : 265South-Western Bristol : 231

Regional aggregated patent totals and aggregated IP income significantly positive correlation (64%)Making The Most Of Your University’s Intellectual Property

RECOMMENDATIONS

26 November 2008

Primary purpose to create a wide range of economic and social benefits

Sort out variation in behaviour between Departments and Agencies

Look at regional innovation indicators

GOVERNMENT


RECOMMENDATIONS

26 November 2008

Universities should report on how they set out to maximise benefit

Governing bodies should look at IP policies and procedures

The sustainability of graduate schools should be examined

HEFCE


RECOMMENDATIONS

26 November 2008

Universities should look at IP policies and consultancies

“Roberts” funding should be retained and expanded

The regional organisation of TTOs should be enhanced

OTHERS




Organised by:


Douglas Robertson

Newcastle University

Organised by:


Intellectual Property – where are we heading?

A personal view Douglas Robertson

Presentation

My background Some statistics Taking IP seriously, too seriously or not

seriously enough Some statements explored – over-

valuation of IP, standard agreements, confidentiality, open source and open innovation.

The gap in securing value from IP Some conclusions and solutions

Dr Douglas Robertson

Director of Business Development and Regional Affairs at the University of Newcastle

Responsibilities Research funding Technology transfer – consultancy, patents, licensing and

spin-out company formation Regional Affairs Project portfolio of £100m plus per annum University Working Group on higher level skills and employer

engagement. Committee member of UNICO – University TT Association Director of Codeworks Ltd – Digital Industry Cluster support Director of Praxis Ltd – TT training Board Member of the newly formed Institute of Knowledge

Transfer Director of several SMEs over the last 15 years including one

company which grew from 20 to 70 employees over 7 years

Some HE statistics on technology transfer

Things are improving

The conclusion from the slides is the sector is getting better

On international comparisons the UK does well Intellectual Property is not a big revenue earner There is still an enormous tension between

research excellence and commercialisation and impact

There are some simple controlling factors Academic time Technology Transfer Offices resources Business capacity

Compounded by how difficult it is

Do universities stifle innovation through taking IP too seriously?

On occasion YES BUT bad examples do not make good law The length of time involved to vision an

idea into a realisable investment proposition is significant.

Profero – 2 years of development and shaping proposition and technology to raise £4.5m in JV with Calgary

Genetically engineered tomatoes case study

University of Nottingham long term collaboration with ICI, Zeneca Plant Sciences

Trust Exchange of science information Exchange of commercially significant information – overall

business strategy, market information etc The University understood the company and the company

understood the University Unfortunately regulation stifled the innovation in Europe Recent changes in big pharma around open innovation

Do Partners stifle innovation by not taking IP seriously enough

When both the University and its partners treat IP appropriately things happen

Grown up conversations IP negotiation tends to be a legal process

it needs to be a commercial and research conversation.

When only one partner takes IP seriously then…

Do universities over-value IP?

Yes sometimes Why? Because

Valuation is difficult Commercial information is not shared Commercial strategies are not shared Universities have to take a starting position Sometimes because they are pig-headed They have a duty to the researcher They have a duty to public investment

Is it possible that companies under-value IP?

Universities do not respect confidentiality

We do wish to publish But this should not be confused with

being ‘leaky’ University researchers handle 1000’s of

CDAs, MTAs, research contracts and consultancy agreements

Researchers know that a breach of confidentiality will damage their reputation forever

Open source and open innovation is the answer?

Universities across the globe practice open source – Publication of research results is open source

96% of the world’s research takes place outside the UK!

For UK plc open source would only work if UK companies were so innovative as to capture ideas rapidly into commercial development

IPR protection matters for many technologies arising from universities simply because the level of investment required is substantial

The major skills gap in making the most of intellectual property is

‘Visioning’

The major gap in IP and TT is around visioning Visioning research into application – creating the

business model – seeing products and services on the back of ideas

Major national requirement in low intensity R and D industries – i.e. where UK industry is not equipped to translate research into action

Visioning is the key skill in industry and universities use of research – it is in short supply

This is the key management skill in early stage spin-out companies

The most significant under-capitalised resource

The post-doctoral research community 36,000 in the UK At the cutting edge of science and

technology Many lost to science at end of research Major programme of skills development

required Develop a science community skilled in

visioning Fund people with ideas not ideas

The conundrum

TIME

Deg

ree

of

Inte

rest

Idea

Research

ProofOfConcept

Demonstration

Pre-production

Successin market

Academic interest

Commercialinterest

After Chisholm

Who is passionate about filling the gap

TIME

Deg

ree

of

Inte

rest

Academic interest Commercialinterest

Part of the solution populate the gap with resources

TIME

Deg

ree

of

Inte

rest

Technology StrategyBoard

Hybrid funds

National Institute forHeathResearch

MRC TranslationPublic private partnerships

Proof ofConcept funds

Cancer Research Technology

The solution populate the gap with people

TIME

Deg

ree

of

Inte

rest

After Chisholm

TechnologyTransfer Officers

IP fellowships,Postdoc bridgingPostgraduate year 4

MRC /Wellcome TrustTranslation specialists

Industrysecondees

The challenge with the solutionLack of value in the gap

TIME

Deg

ree

of

Inte

rest

After Chisholm

Where are we heading and what do we need to do 1

We need To recognise the skills challenge – Praxis

training delivered to over 1,500 individuals so far – scratching the surface

Technology transfer offices must collaborate with each other and other parts of the public sector and vice versa

To create novel public private partnerships To treat postgraduates and postdoctoral

researchers as key to the future and develop them hand in hand with Technology Transfer Offices

To recognise that the UK is fairly skilled in this area and to build on the successes of the past 5 years

Where are we heading and what do we need to do 2

We need Funders to recognise they provide support in a

complex project economy and seek to simplify rules and regulations which gather at the level of the individual university and researcher

Intellectual property to be taken seriously by all To have commercial conversations NOT legal

negotiations To develop visioning skills of ideas into application To create some highly specialised vehicles The government to hold to the medium to long

term strategy We all need to think of UK plc as the key beneficiary

if everybody (including individual universities) only think of themselves we will not deliver a step change

In conclusion

We are potentially heading to somewhere interesting

BUT We must take risks We must bring new industries and

companies into the conversation We must focus on skills alongside

resources

Questions

Malcolm SkingleGlaxosmithkline

Organised by:


Attitudes to IP in Large Companies

Malcolm Skingle PhDDirector - External Science & Technology

I P Conference26 NovemberWestminster

Talk overview

- IP landscape in Pharmaceuticals

- Role of patents in competitive innovation

- Reflections on the Academic IP scene

- Lambert agreements

- Concluding remarks

IP landscape in Pharmaceuticals

138

318

802

1318

0

200

400

600

800

1000

1200

1400

$ m

illio

n

1975 1987 2001 2006

Year

Estimated full cost of bringing a new chemical or biological entity to market

($ million – year 2005 $)

Source: J.A. Di Masi and H.G. Grabowski, ‘The Cost of Biopharmaceutical R&D: Is biotech Different? Managerial and Decision Economics 28 (2007): 469-479

It takes up to15 years to develop a new drug

For every 5-10,000 molecules synthesised & screened for activity, only 250 reach pre-clinical development, only 5 reach clinical trials and only one reaches the market

Cost to develop a drug in 2006: $ 1.318 billion Only 2 of 10 marketed drugs ever

produce revenues that match or exceed R&D costs.

Pharmaceuticals are generally cheap and easy to copy – generic companies enter mature markets developed by innovator with low entry costs

These features are probably unique to the pharmaceutical industry

Drug Development is a costly & risky business

Drug Discovery Pipeline

Target

Identification

and

Validation

Assay

Development

Lead

Generation

Hypothesis

GenerationCandidate Development Commercialization

Phase

III

Submit Global

Launch

Global

Optimization

Lead

Optimization

First

Human

Dose

Phase

IA

Phase

IB/II

Compound patent filed at Lead Op

Subsequent patents filed over 10-15 years

Product A

75 80 85 90 95 00

A

B

Basic Patent filed (J

an 74)

Product L

aunch (Feb 91)

SPC Expiry (J

an 99)

Data Prot. E

xpiry (D

ec 00)

Generic Launch (D

ec 01)

C

D EF G JHI

Basic Patent Expiry

(Jan 94)

K L M

QR

N O

P

Basic patent/product lifecycleBasic patent/product lifecycle

Patent filings leading to granted patentsPatent filings leading to granted patents

Class of compounds, salts, crystalline forms, use (first & subsequent), formulations, manufacturing processes, purification methods, administration routes, release profiles, combinations

GSK patent between 80 and 100 new inventions each year

Employ approx 250 patent staff :

80% Patents & 20% Trade Marks

Patent types reflect the R&D process

European Patent Office conduct one of the most rigorous patent examinations in the world

2005 Stats at EPO:128,754 applications163,144 searches undertaken104,433 examinations

Only 53% of patents were finally granted

On average it took 44.3 months to approval

A product patent portfolio may comprise between 20 & 40 patents

Getting Patent Approval is not a trivial process

Clinical Trials

StageTypical Number and Type

Of PatientsTypical

DurationPurpose

Phase I 20-100 healthy volunteers Up to 1 yearTo ensure the medicine is safe and find the most suitable dose

Phase II Up to several hundred patients 1-2 years To assess effectiveness and look for side effects

Phase IIISeveral hundred to several

thousand patients2-4 years

To confirm effectiveness and monitor any side effects from long-term use

Phase IVVariable: commonly several

thousandVariable

To develop new treatment uses, compare with other treatments, determine the clinical effectiveness and long-term safety of the medicine in a wider variety of patient types and/or to satisfy conditions of authorisation.

Role of patents in competitive innovation

Competition in Therapeutic Innovation

• Many scientists seeking to solve same problems in different or similar ways from similar starting points at the same time

The first to market is generally quickly followed by several others

– >15 beta blockers

– 9 protease inhibitors

– 15 NSAIDs

– >10 statins

The first mover is rarely the most successful

The period of exclusivity for first movers is shrinking

The period of exclusivity for first entrants to a therapeutic class is decreasing (US data)

Source: DiMasi & Paquette (2004)

1.2

3

4.1

7.2

10.2

7.7

1.8

2.8

5.1

5.9

8.2

7.2

1995-98 (n=18)

1990-94 (n=15)

1985-89 (n=14)

1980-84 (n=5)

1970s* (n=9)

1960s (n=8)

Firs

t-in

-Cla

ss A

ppro

val Peri

od

Years

MeanMedian

Without patents there would be no innovation

Given the costs & risks of drug development, without a period of exclusivity against copyists there would be no investment in pharmaceutical innovation

Pharma do not seek therapeutic area exclusivity (anti-virals, antibiotics)

Patent protection promotes therapeutic & innovative

competition

Over 6,000 compounds in development

Source: Adis R&D Insight Database, customized run (December 2007)

540

1,415

1,704

2,742

0

500

1,000

1,500

2,000

2,500

3,000

Num

ber

of C

ompo

unds

in

Dev

elop

men

t in

2007

Japan Europe Rest of World USA

Compound differentiation New drugs tested against “gold standards”

Patent competition drives improvements:Increased Efficacy Decreased Side-effectsDecreases ADRsDecreased drug-drug interactionsDecreased dosingSpecialised drug delivery systems

Patients benefit from a range of products with differing characteristics

Quarterly Enalapril Sales in the UK

0

5,000

10,000

15,000

20,000

25,000

Sal

es (

£ m

illio

n)

Protection

Expiry

Source: IMS Health MIDAS database

Quarterly Enalapril sales in the UK

Changing face of Innovation

The Past….Large Corporate R&D facilitiesSecretive smart scientists, low level of collaboration

Closed Innovation

The Present…..leaner business unitsIncreased levels of collaboration

More outsourcing, more partnerships

Open Innovation

“Closed” Innovation “Open” Innovation

Open innovation

“No matter who you are, most of the smartest people work for someone else”

Bill Joy, Sun Microsystems

Changing Landscape of I.P

More small companies owning & licensing basic IP

Many companies not in manufacturing, only generating technology/IP

More patent aggregators, who take on patents from universities & small companies

Patents used as bargaining chips

Observations on the Academic IP

Sectoral differences not always appreciated by ILO’s

Software development c.f development of a medicine

GSK make a lot of software code open source

e.gs. Imaging algorithms, Computational modelling

Failure to undertake Due Diligence

Enthusiastic academic and/or over zealous ILO often to fail to adequately benchmark their technology

Little competitor analysis

Over-valuation of I.P

Some academics work on a technology for many years & truly believes that it is the “golden egg”

Academics often fail to consider the development hurdles & costs

e.gs. non-druggable NCE’s; Cost of product; Scale up

Think strategically about I.P options Patent & LicenceExclusive vs non-exclusive

Collaborate with IndustryShare development costsShare risks & rewards

Patent & Spin-outPortfolio of patents yielding more than one potential product

and/or service

Protection of Arising I.P from academic-industry collaborations

Important to determine who files & controls I.P before a collaboration starts

Protracted negotiations on I.P & costs waste time & money

If you find a mutually acceptable I.P solution then re-use it & share best practice

Lambert Agreements

First Lambert agreement executed by GSK & University of Manchester on 24th March 2005

Richard Livings / Tamsin Sayer

Manchester launch 21st Feb 2005

Proposed Agreement types:

Lambert Terms IPR

1 Sponsor has non-exclusive rights to use in specified field; no sub-licences

University

2 Right to an exclusive licence to some or all IPR

University

3 Assignment University

4 Sponsor owns, university has right to use for non-commercial purposes

Sponsor

5 Contract research: no publication without permission

Sponsor

0

10

20

30

40

50

60

70

Lambert 1 Lambert 2 Lambert 3 Lambert 4 Lambert 5

GSK Lambert agreements executed

Assignment ContractLicence

GSK Lambert Agreements in UK

UCL 11 Oxford University 10 Kings College London 10 University of Cambridge 10 Imperial College 9 University of Manchester 6 University of Nottingham 4 University of Sheffield 4 University of Bradford 4 School of Pharmacy 3 University of Leicester 2 University of Buckingham 2 Royal Marsden Hospital 2

GSK Lambert Agreements in Mainland Europe

Belgium– Katholieke Universteit, Leuven

Cyprus– University of Cyprus

Germany– Charitie University Hospital,

Berlin– University of Frankfurt– University of Leipzig

Greece– University of Athens

Sweden – Karolinska Institute (2)– University of Lund

Ireland– University College Cork– University of Galway– Trinity College Dublin

Italy– Scuole Internazionale, Tieste– Universita degli Studi di Milano

The Netherlands– Academic Medical Centre,

Amsterdam– Leiden University

Spain– Universitat Autonoma de– Barcelona– Parc de Recerca Biomedica de– Barcelona

Switzerland– ETH Swiss Federal Institute of

Technology– University of Zurich

Lambert 1-5 agreements

GSK have now executed > 130 agreements

GSK Lambert agreements with………

26 UK universities

19 institutions in mainland Europe

In 14 countries

The Lambert toolkit has helped accelerate GSK contract execution in the UK and mainland Europe

Lambert Consortium AgreementsAgreement AEach member of the Consortium owns the IP in the Results that it creates and grants

each of the other parties a non-exclusive licence to use those Results for the purposes of the Project and for any other purpose.

Agreement BThe other parties assign their IP in the Results to the lead Exploitation Party

who undertakes to exploit the Results. (Alternatively the Lead Exploitation Party is granted an exclusive licence).

Agreement CEach party takes an assignment of IP in the Results that are germane to its core

business and undertakes to exploit those Results.Agreement DEach member of the Consortium owns the IP in the Results that it creates and grants

each of the other parties a non-exclusive licence to use those Results for the purposes of the Project only. If any member of the Consortium wishes to negotiate a licence to allow it to exploit the IP of another member or to take an assignment of that IP, the owner of that IP undertakes to negotiate a licence or assignment

http://www.innovation.gov.uk/lambertagreements/index.asp?lvl1=3&lvl2=1&lvl3=0&lvl4=0




Lambert agreements: Key message

Lambert toolkit represents agreements that have already gone through a useful round of negotiation

The final agreements represent an acceptable compromise to both academic & industrial users

Wholesale amendment or adaptation can have a significant adverse impact on their value

GSK will not waste their time reviewing heavily modified Lambert agreements

Concluding remarks

Summary

Strong I.P essential & is the foundation of any technology driven organisation

Portfolios of multiple patents held by different parties do not impede innovation

There would be no competitive therapeutic innovation without patents

To be successful in taking new medicines into the clinic we need to dramatically increase our partnering activity to drive innovation through new business models

We are looking for

innovation wherever

it may originate

Alison Patten-HallMorgan Cole

Organised by:


London and Quadrant Housing TrustOsborn HouseOsborn TerraceLondon SE3 9DR

www.morgan-cole.com delivering high quality legal services from offices in wales and southern england

© Morgan Cole 2008

26 November 2008

Making the most of your University’s Intellectual Property

Alison Patten-HallMorgan Cole

Who Owns University IP?

www.morgan-cole.com delivering high quality legal services from offices in wales and southern england 90

Introducing Morgan Cole

• “Commentators agree that you have to recognise this active and accomplished group. This energetic and commercial practice serves…the needs of both rights holders and those threatened with infringement proceedings”

• Business law firm

• Dedicated Education Team

• Thames Valley, Bristol and Wales

• 50 partners, 450 staff

http://www.morgan-cole.com/index.html


What are Intellectual Property Rights?

• Intellectual Property Rights are legal property rights and they can be bought and sold like any other property

• They are a valuable asset to an organisation and can create revenue through exploitation and licence agreements

• Forms of IP include:- Copyright - Registered and unregistered design rights- Patents- Trade Marks

• Confidential information and know-how



What is IP?



IP Ownership – general rules

• First owner of work is the author or inventor

• Except if the work is created by an employee in the course of their employment (copyright) or in the course of their normal duties (patents)

• Owner Applicant and “inventor” need to be distinguished in relation to patents

• Joint ownership

• Moral rights



How does a University acquire ownership of IP?

• By virtue of an employment relationship automatically acquires rights

• By virtue of some other contractual arrangement where IP is “assigned” to University from a third party

• Students



What does this mean in practice?

• Employed academic staff – some issues and questions to consider

- what is meant by course of employment?

- what does your employment contract say about IP?

- teaching and academic materials – who owns them?

- work done in the holidays by staff

- grant funded research – what does the contract say about IP?




• Seconded and visiting staff from another University

- who employs them?

- what contract do you have in place?

- jointly owned IPR – the issues




• Students

- no employment relationship – IP retained by student

- should student IP be owned by their University?

- why would University want to own this IP?

- undergraduate and post graduates – different treatment?

- policy and legal considerations

- how would you get IP assigned from students?



A different question

• Who should own University IP?

- what’s equitable?

- who’s best placed to commercialise IP?

- is ownership always what you want?

Think of other licensing options



Next steps ...... Some considerations

• What IP do you want to own and why?

• Can you identify IP generated in your University?

• Are you in a position to exploit successfully IP you own?

• IP policy

- do you have one?

- is it up to date?

- is it relevant to your IP strategy?

- can you police and enforce?

- do students and staff know about it – TRAINING and EDUCATION



And finally

• Our survey says ...............


Teri WilleyCambridge Enterprise

Organised by:


Intellectual Property and Spin-Outs26 November 2008

Teri F. Willey, Chief ExecutiveCambridge Enterprise Limited, University of Cambridge

[email protected]

Outline

• Cambridge Enterprise

• University intellectual property

• University start-ups and spin-outs

• Intellectual property in start-ups and spin-outs

• Examples

• Further reading

Cambridge Enterprise Mandate

“In the order of precedence:

1. aid in the transfer of knowledge from the University via commercialisation;

2. aid staff and students in making their ideas more commercially successful; and

3. produce a financial return for inventors, departments and the University.”

Support of the University Mission

• Being best in class at knowledge and technology transfer, guards a core University mission: basic research and its support

• Basic research results have the best potential to be disruptive in a market/commercial sense

• These types of results will have the best economic, financial and societal impact if we are poised to work with them

• Confidence and capability to deliver may address/reverse the proliferation of government programmes driving research funding toward incremental applied and managed research

Cambridge Enterprise Group

WithExisting

Companies

WithNew

Companies

Principles

1. Accept cases into the portfolio with the strongest potential to make a significant positive impact and where using commercial channels is the most reasonable means to carry the idea forward

2. Take the course which supports commercialisation of the technology and work creatively to add value (or de-risk) the technology through the use of patent, proof of concept and evaluation and assessment resources

3. Work effectively with the inventor(s) to support their aspirations, manage conflicts and encourage synergy with the mission of the University

4. Find the best partner (licensee or start-up senior management and investors) to take the idea forward

5. Negotiate fair and reasonable terms which reflect the contribution of the assets and expertise being transferred

6. Negotiate and close the greatest number of the best possible deals

7. Look after the deals once they are closed to encourage commercialisation and optimise returns

Why Universities Protect & Exploit Their Intellectual Property

• Inventions are embryonic and require investment of time and money to turn them into products

• Protection is necessary to encourage and safeguard investment

• Patenting need not conflict with the practice of publishing

• Makes available the results of research for the benefit of society, to enhance economic development and the quality of life

• Required by research sponsors

• Motivates staff - results are used, unfettered income, sponsored research and consultancy opportunities

• Creates opportunities for staff and students to work with and for industry

• Induces investment that is good for the economy

• Generates very modest unhypothecated income which can be used to support programmes, encourage innovation and seed new ideas

Why Universities Are Involved In Spin-Outs

• Forming a company is the most efficient and effective way of achieving successful dissemination/commercial exploitation of a discovery

• An existing company does not exist poised to take the idea forward

• Interim development is needed in a company setting before it will be of interest to one or more commercial partners

• New ventures can be critical to local/regional/national economic development

• Expectations set by policy makers and funders

• Potential (modest) returns through royalties and equity realisations which can be used to support programmes and seed new ideas

Challenges For Universities Involved In Spin-Outs

• Resources (people and money)

• Expectations (order of magnitude and timelines)

• Decision paths (multiple stakeholders each with different objectives)

• Overlapping and multiple programs

• Access to capital and management

• Return on investment and what it means to the university

Investment In Early Stage Companies Can Further The University Mission and Positively Impact The Economy

Intellectual Property Rights and Spin-Outs

• Type and nature of the intellectual property rights determines how they may be exploited

• Intellectual property rights are a matter of expediency not principle – an asset to be used to protect investment and to encourage innovation

• Intellectual property based assets may be the initial assets which provide that value basis of a new company

• Intellectual property rights are negative rights i.e. rights to stop others• Freedom to operate issues may be as critical to an intellectual property

strategy as defensive rights• Intellectual property strategy is crucial and should be considered

throughout the course of business and product development • Ethical and global trade considerations – TRIPS ( agreement on Trade

Related Aspects of Intellectual Property Rights) also relevant especially for universities

Intellectual Property Rights and Spin-Outs

• Remuneration for intellectual property rights transferred into a spin-out can be in equity, royalties, milestone payments or other

• The principle is to capture value which reasonably reflects the contribution of the intellectual property rights to the value of the company or margin on the product that the company produces/sells

• This can change over time hence the use of equity and royalties to reflect the dilution of additional required investment (equity) and rewards as risk is reduced (royalties on sales of products)

• Its not just responsible to seek fair remuneration when transferring such assets, it is irresponsible not to considering how the returns are used

Cambridge Enterprise Equity Portfolio

The Cambridge Enterprise Group currently holds equity in 68 companies. Over half of the equity holdings were acquired through transferring intellectual property rights.

Solexa – Investment And Trade Sale Led To Market

• Breakthrough approach for economical analysis of individual genomes

• Seed investment in 1998 from University Venture Fund and Abingworth

• 2 VC rounds, a reverse take over and PIPES followed

• Sale to Illumina in 2007 generated exit and route to market

• Long development with committed investors resulted in successful path to market and 9x return to follow-on investors on exit

Genapta – Smart Development Funding Increased ROI

• Application of telecoms optical expertise to compound screening

• Investment from University seed funds in 2002 and 2003

• Smart funding and small angel investment followed

• Sold in 2007 for £2M

• Acquisition provided the needed route to market

• IRR for University of 20%

CDT – Seed Investment Developed Commercial Opportunity

• Disruptive P-OLED technology with significant market

• Seed investment in 1992 from University Venture Fund and others

• 3 VC rounds, a floatation and PIPES followed

• First licensees in 1996, first high profile commercial product in 2002

• Sale to Sumitomo Chemical Company in 2007

• Ongoing relationship with the University

• Income from licences and equity returned to department

Books and reports Author Publisher

Spin-offs and start-ups in UK universities Douglas Hague and Kate Oakley

CVCP, 2000

The High-Tech Entrepreneurs Handbook Jack Lang and Cambridge

Entrepreneurship Centre

Pearson Education Ltd., 2002

The definitive business plan Richard Stutely Financial Times Prentice Hall, 2nd Edition, 2002

How to Build and Invest in Successful University Spinouts

Eds. Kenny Tang, Ajay Vohora, Roger Freeman

Euromoney Books, 2004

AUTM Technology Transfer Practice Manual, Volumes I to III

AUTM members AUTM www.autm.net

Lambert Review of university/business collaboration

http://www.hm-treasury.gov.uk/media/DDE/65/lambert_review_final_450.pdf

Richard Lambert HMSO for HM Treasury, 2004

Starting a Technology Company http://www.enterprise.cam.ac.uk/building/starting.html

Eds.Miranda Weston-Smith and Peter Luebcke

Cambridge Enterprise, University of Cambridge 2006

Cambridge Enterprise Limited

University of Cambridge

10 Trumpington Street

Cambridge

CB2 1QA

UK

Tel: +44 (0)1223 760339

Fax: +44 (0)1223 764888

Email: [email protected]

www.enterprise.cam.ac.uk

The Cambridge 800th Anniversary Campaignwww.foundation.cam.ac.uk

Lita NelsenM.I.T

Organised by:


Tech Transfer—A US perspective

Lita Nelsen Massachusetts Institute of

TechnologyLondon

November, 2008

Purposes of University Technology Transfer

Research Invention (and IP) Development Innovation

• New products and medicines • Bring new technology into industry

for economic competitiveness• Encourage entrepreneurship for local

and national economic development

A short history of university technology

transfer• 1960-1980 Some patent licensing in US and UK universities; not widespread

• 1980: Bayh-Dole Act in US begins acceleration of tech transfer, and competence builds in tech transfer offices

• Early 1990’s: Many US universities acquire competence; emphasis on spinouts begin; UK government begins increased emphasis on technology transfer, particularly spinouts

• Late 1990’s: Japan and Taiwan pass “Bayh-Dole-like” Acts.

Singapore, Hong Kong, Germany, Finland, Brazil, China, South Africa, and many other countries begin or strengthen their systems for technology transfer from their universities and research institutes.

• 2000-2006: Interest in technology

transfer is global. Countries beginning to look to technologies developed at their universities for economic development in the “Knowledge Economy.”

Intense interest in developing technology transfer capabilities and looking for ways to accelerate learning it

Benefits of tech transfer to the university

• Bring fruits of university research to the public (“Get the technology developed” and “give the public the benefit of the research they fund”)

• Allow investigators to “make their findings real”

• Bring real world problems into the laboratory through relationships with industry

• Opportunities for graduates

But does tech transfer make money for the university?

Forms of revenue to the university from tech transfer

• Licensing and Spinouts

• Collaborative Research

Revenue from Technology Licensing and Spinouts

• The U.S. Experience

25 years after Bayh-Dole, US Tech Transfer has matured: Fiscal Year

2004 results

• New Issued US Patents: > 4000• New Licenses Agreements: >4900• Total Active License Agreements:

>28,000• New Startup Companies: >470• Total Startups since 1980: >5000

But direct financial income to the universities themselves is still

limited:All US Universities: FY 2004

• Licensing revenue from >200 research institutions, FY 2004: $1.4 Billion (U.S.)

• BUT…this is on a research base of: $ 41 Billion

• Thus, Licensing revenue, after 25 years of experience averages

only 3.4% of research expenditures

And the revenue distribution is highly skewed

• More than half of the total US revenue is accounted for by fewer than 25 “blockbuster” patents– Usually a pharmaceutical

• Very occasionally, a spinout company will go public and yield a ONE-TIME windfall– But most spinouts yield only a little revenue, if

any.

It’s a lottery: do you know how to get lucky?

The Societal Impact is much Larger!

• More than 4000 new companies formed from US university intellectual property

• Estimate over 500,000 jobs in development and production of new products based on university licenses

• Significant tax returns to the government

• Many new medicines developed based on patents from university research

• Significant number of new startups have developed into large, successful companies (e.g. Google! from Stanford)

• Biotech and Information Technology (IT) clusters in a number of cities with large research universities (Boston, San Francisco, San Diego, North Carolina, etc.)– Majority of new biotech companies

spin directly out of university research

Another benefit:Entrepreneurship awareness

• Awareness of spin-outs is now pervasive in many U.S. universities—both in the science and engineering schools and the business schools

• Many successful role models—leading to a multiplying effect

• Business school curriculum changes• Business plan contests, venture clubs, etc.• Venture capital and angel investors seeking

out new opportunities in universities

The MIT example

• 4000 undergraduate students• 6000 graduate students• >$550 million in research funding

—all competitive grants• About 15% of this funding--$80

million/year—is sponsored by industry

Technology Licensing Office Statistics

• 500 new invention disclosures/year• 100 new technology licenses/year• 15-30 new companies/year• Over 650 active licenses• About 300 spinout companies total

Our Strategy: do a lot!

The Volume Strategy• Aim to maximize the number of

technologies being developed– Rather than try to pick a few

“winners” and concentrate on them

• 100 license/year—20-30 startups

Advantages of the “Volume Strategy”

• Maximizes participation of faculty and students in the technology transfer process

• Maximizes number of technologies invested in by companies and VC’s

• Maximizes probability of hitting a home run

• Technology is probably too early to be able to pick the winners!

Why are we able to do so much?

• LOTS of world-class technology—dependent on government support of basic research

• Good IP protection• Consistent Tech Transfer policies

throughout the university– It’s about Impact, not (primarily)

Income• An experienced Technology Licensing

Office

A pervasive entrepreneurial eco-system is a key

ingredient• Well networked in a highly

entrepreneurial geographical area with managers, capital, support services

• Many activities where the university, its students and faculty mix on a continuing basis with the business community– Companies– Venture capitalists– Angel investors

MIT components of the “entrepreneurial eco-system” • Deshpande Center: sponsors research “with

startup potential”—with business “catalysts”

• $100 K Student Business Plan Contest• Venture Mentoring Service• MIT Enterprise Forum• Entrepreneurship Center at Sloan School of

Mgmt.• Student Venture Capital and

Entrepreneurship Clubs• The Technology Licensing Office

• And lots of role models!– Both faculty and students

• Students and faculty are continuously exposed to people who have started companies—and to people who fund them

• Students graduate with a sense that “I can do it too”. Changes life-time expectations

Entrepreneurship is in the air!

Issues

Staffing: Technology Transfer is a talent-based endeavor!

• Requires people who are:– Technically trained– “Bilingual” in Academia and Industry– Can command respect of faculty and

business– Can handle complexity– Good communicators– Good negotiators– And Dedicated to the mission

Producing/Training Tech Transfer Staff

• Increasing need for staff• “You can’t learn it from a

book”• And there are no university

courses

To date, most have been trained by an Apprentice System

• Look for academic and/or business credentials with “inherent talent” for tech transfer

• Throw them into the deep end of the pool• Coach and hope they learn how to swim

before they drown--or ruin the reputation of your tech transfer office

• Or steal them from another university

Growing need to professionalize training

U.S.: Almost completely reliant on Association of University Technology Managers (“AUTM”)– All volunteer– No government support– Three 2-day courses given annually– Annual Meeting (“where the

community teaches itself”)

UK: more concentration on professional development

An Example: Praxis Courses Ltd.• Begun as a project under the Cambridge MIT

Institute• Morphed into a free-standing non-profit

company with funding from DTI and others• Board and courses run and taught by leaders

from the university tech transfer community (as volunteers)

• 10-20 courses per year around the UK• Over 2000 attendees to date• Close collaboration with UNICO to form “a

community of professionals”

Other Worries: As technology transfer becomes pervasive

• Will it change the nature of universities?

Is that good or bad?

The answer will probably vary by country—and may vary between universities in a given country--depending on the definition of:

THE MISSION OF THE UNIVERSITY

U.S.

• Concern about and emphasis on education, discovery research, and dissemination of knowledge as the core mission of the university

• Technology transfer defined as a byproduct--not a purpose—of the university

• Technology transfer must not distort the traditional academic values

• Will conflicts of interest (both for professors and for the university itself) lead to the public losing confidence that the university is a source of unbiased knowledge?

• Will “privatization” of research results retard the progress of science?

The leading US universities remain committed to the

traditional academic values in research

• Discovery and dissemination as the primary mission

• Investigator-initiated research (rather than work-for hire)

• Open publication of all research, with minimal delay

MIT and Industry-Sponsored Research

• About $80 million in industrial sponsored research– (ca. 15% of on-campus research)

• 150-200 industrial agreements negotiated/year

• 6-8 “Umbrella agreements” in place– multi-year (5-10 yr), multi-$million– all “project-by-project” (competitive

proposals from faculty chosen jointly by steering committee)

– No “department-wide” or “field-wide” agreements

MIT and Industrial Sponsors

• Collaboration with or sponsorship by industry on fundamental, publishable academic research of interest both to the principal investigator and the company sponsor

• Suitable for research training of graduate students and postdocs

We don’t do

– “Testing” or “Work for Hire”– “Problem solving” for product

development– Consulting (It’s done privately without

use of university facilities)– Classified or secret research at the

university

Rules of engagement

• Sponsor pays “full cost”: – Direct costs x 1.65 (“65% overhead”)– Same (audited) overhead rate as for US

govt. grants—no “profit”

• All research must be promptly publishable—and sponsor may not “censor” – Small delay to get patents filed

Intellectual Property

• MIT owns all inventions by its employees or students made under the grant– No exceptions, no assignment

• Sponsor gets:– Free non-exclusive license to practice

inventions– Option to negotiate for a royalty-bearing

exclusive license

Rules for spin-out companies

• We do not “incubate” spinout companies in our labs

• Nor will we accept research support (“collaborative research”) from the spinout company

“Keeping a Chinese Wall between the university and its spin-out companies”

A different mission definition in the UK

• Technology transfer from universities is seen as a key part of the government’s economic strategy

• Universities have three co-equal missions: education, research, and contribution to the economy

• Major government financial support of technology transfer and especially spinouts

Consequences of UK Mission Definition

Increasing blending of university academic mission and technology transfer mission

Leading to different ways of doing things:

Some differences in UK practice from US

• Embedding of spin-out companies

within university research laboratories• Confidential research with industry• IP protection of “know-how,” limiting

dissemination both within and outside the university

• Equity investment of university funds in spin-out companies

UK Results

• Rapid development of competence in “venturing”—active incubation of spinout companies. A new and vibrant model.

But…

• Somewhat unrealistic financial expectations

• Competition for university facilities between the academic and technology transfer activities

• Worries beginning about preserving UK competence in basic research

Maximizing the Societal Benefits of Technology Transfer

Balancing:• Academic and Economic Priorities

of the System as a Whole• Long term research benefits vs.

shorter term development• Local financial benefit to the

individual university vs. long term objectives

Like most elements of technology transfer….

• No simple, clear-cut answers• Long-range perspective is critical

Forethought and Wisdom Needed!

Thank you!



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