technology transfer: innovation to ......technology transfer — innovation to commercialization...

©2007 Foley & Lardner LLP

TECHNOLOGY TRANSFER:INNOVATION TO

COMMERCIALIZATION

The Summit on Intellectual PropertyFor Wireless Technology

San Diego, CAJune 21, 2007

Adrian R. CyhanSenior Counsel


Overview

Summary – Why engage in technology transactions?Panelist Introductions/Perspectives– Industry: commerce– Government Laboratories: national benefit– Universities: development and dissemination of

knowledge

Structuring Technology Transactions– The issues– What are the “wants” and “needs?”


Any sufficiently advanced technology is indistinguishable from magic.

Arthur C. Clarke, "Profiles of The Future", 1961 (Clarke's third law)English physicist & science fiction author (1917 - )Author of novel: “2001: A Space Odyssey”

Tech. Transactions Provide Value


Technology “Magic”1955 – Polio vaccine1961 – Humans travel to space1982 – Mobile phones: commercial cellular phone service authorized for the USA.1983 – Internet: ARPANET, and all networks attached to it, officially adopt the TCP/IP networking protocol.1990 – Hubble space telescope1990s ~ Today – Nanotechnology


Technology “Life Cycle”

CONCEPTION

Theoretical ResearchInnovation

INCOME

Commercialization of ApplicationsLicensing

DEVELOPMENT

Applied Research geared toward practical application


Who’s Involved in Technology Transactions?

Conception: Theoretical Research – the origins of technology development– Universities– Government research laboratories– Spin-out and start-up companies


Who’s Involved in TT?

Development – applied R&D focused on products and commercial applications – Industry – Companies of all sizes…start-ups to

multinationals


Who’s Involved in TT?

Generating Income– Industry

ManufactureDistributionMarketing and promotion


Who Funds TT?

IndustryVenture Capital/Private EquityGovernment/Industry ProgramsGovernment


Why is TT Important?

Intellectual property rights are an increasing portion of enterprise value– 80% on average– Patent filings are on the rise

“External” R&D/technology development is a growing trend– Value: industry looking to stretch budgets– The “not invented here” mentality is shifting


Why is TT important?Economic development through investment– San Diego area: CONNECT– JVs, collaborations, sponsored research, related

licensing production and research facilities– VC/PE: funding of local start-ups/spin outs

Job creationDevelopment of products that improve quality of life and benefit societyIndustry, government and researchers work & expand relationships with potential employees/employers

12

ViaSat & Tech TransferA quick look at the value and approach to

working with research organizations

13

Corporate overview

20 Year growth & profitability1500 people

Headquarters in CarlsbadMajor Facilities Near Atlanta, Washington DC & Baltimore, MDUS Monolithics Subsidiary in Chandler, AZECC Subsidiary in Cleveland, OHICT Subsidiary in Boston, MAOther Offices in:

BostonRomeSpain

New DelhiBeijingCanberra

14

Revenue Trends

$0

$100

$200

$300

$400

$500

$600

FY02 FY03 FY04 FY05 FY06 FY07

Defense Commercial ProjectedFY End Mar 31

$ milli

on

Q3

15

Recognition

Top 50Space Companies

16

History of stock growth

VSAT compares favorably to most companies

Over 5 yrs, 10 yrs

17

Business Mix

DoDVSAT

AntennaBroadbandUSM ECC

18

University Involvement and Tech Transfer

19

ViaSat Involvement With Universities

ViaSat recruits at most of the top engineering schools

Small number of universities selected for investmentSome funding goes to general purposes

– Corporate affiliates, scholarships, student activitiesSeveral types of project and R&D engagements

– Research Consortium - e.g. UCSD Center for Wireless Communications (CWC)

– Direct project funding– Indirect project funding (e.g. senior design projects)– Project guidance & mentoring– Consulting agreements with faculty/researchers

20

Focus for University Research

Primary goal should be “Basic Research”Advance the state of the art Provide opportunities for student involvement

– PhD & Masters Thesis, even undergrad research– Develop better candidates for both industry and academia

Publication and academic reputation

Secondary goal of IP developmentFor key (breakthrough) inventionsHelp drive competitiveness (regional, national, etc)Opportunities for licensing revenues

Non-goal: product developmentIncluding minor “design” patents

21

Approach to Tech Transfer

Depends on nature of engagement

Consortia (e.g. UCSD CWC)Keep it simple: pre-negotiated for most purposesSee the CWC Royalty-Free non-exclusive licenseSave special cases for special activity

Funded (or partially funded) research projectsPre-negotiate (usually) shared rights/licensing

Funded & directed student projectsNot likely to generate significant IP, but owned by company

University IP generated without corporate fundingWe have no experience with this yet – you tell me

22

ViaSat’s Tech Transfer “Hot Buttons”

Protection of our background IP

Ability to get "right to operate" for any research that we fund (even partially)

In a simple pre-negotiated manner

Universities focused on significant research Versus high volume of tiny "implementation" patents

Paying a fair and reasonable value for IP licenses

Ability to interact with institution without excessive bureaucracy

Technology Ventures CorporationTechnology Ventures CorporationGeorge Friberg, Senior Director

Albuquerque, New Mexicowww.techventures.org

[email protected]

Intellectual Property for Wireless TechnologyIntellectual Property for Wireless TechnologySan Diego, CASan Diego, CA

June 20 June 20 --21, 200721, 2007

TVC Overview• Founded 1993 by Lockheed Martin Corporation

• Part of management contract for Sandia National Laboratories

• Non-profit, 501(c)(3) charitable foundation

• Commercialize technologies from national laboratories & regional research universities

• Focus: start-up technology companies seeking equity capital

• Goals: job creation, funding, business formations

©

NNSA Cooperative Agreement

• NNSA Cooperative Agreement, Sept. 2002

• $3.5M FY06 Congressional appropriation

• Expansion to support LLNL, LANL, & the NTS

• Collaborative effort among TVC, Labs, & NNSA

©3

Value Proposition

• Innovators: high impact business case formulation

• Investors: identification of high-value investments

• Create a dynamic business infrastructure attractive to innovators and investors

©4

IdeaBusiness Plan

PrototypeBeta

SalesProfitability

Decreasing RiskDecreasing Risk

$ 100K

$ 1M

$ 10M

Dec

reas

ing

Ret

urn

Dec

reas

ing

Ret

urn

Venture CapitalBanks

AngelsFFF

Gov’t

IPOStrategicPartners

Courtesy of Tom Stephenson/Verge©6

TVC Innovation ModelAttracting

TechnologiesPortfolio

DevelopmentPortfolio

CommercializationPortfolioFunding

Technology Sourcing

Technology Screening

Portfolio Acceptance

Proposal Approval

Business Plan

Equity Capital and

Other Funding

DOE/NNSA National

Laboratories

Research Universities

Other R&D Institutions

Private Sector

Rework or Maturation

Assessment Process

Market Research

Business Case

Investment Needs

Technology Readiness

Assistance Process

Entrepreneur Training

Forecast Financials

Presentation Plan

Start-Up Companies

Rapid Acceleration

High QualityPrivate SectorJob Creation

$200 to $500 millionSilk purse - sow’s ear

Champion (LMCO)

9,081 jobs

Deal Flow (Labs & universities)

Funding (state)

VC

89 start-ups

$731 million(61% equity: VC 57%, Corp. 29%, angel 14%)

9

Federal Laboratory Technology Transfer or Commercialization

Research Development

Boundary of the Lab

NEW MARKET

NEW MARKET

Projects CURRENT MARKET

CURRENT MARKET

Adapted from: Chesbrough, Open Innovation

ESTT

CRADAWFO/NFE

IP LICENSE

Technology Commercialization

Technology Transfer

Existing or prospective industrial partner having problem

LLNL IPAC Process in making referrals to TVC

inquiry from LLNL inventor or principal

investigator

Needs help with business

plan or issue or funding?

Coordination with home directorate, legal, and LLNL

Conflict of Interest

Coordinator for review and approval

Reason for inquiry?

personal

Program development

Yes OK to refer

Refer to TVC to provide entrepreneurial support, coaching, and introduce company or individuals to potential

investors.

Entrepreneurial Inquiry

TVC

New Ventures

(NV)

SNL Line

IP List

Personal Conflict of Interest

CPR 001.2.3

Technology Commercialization

CPR 200.3.2

COI FormSF 4890-A

COI Mitigation Plan

Non-disclosure Agreement (NDA)

Separation

ESTT Request Memo

Outside Employment

FormSF 4890-OE

Business Plan Summary

SNL Licensing

Kick-off Meeting

ESTT Request Memo

License Negotiations

New Ventures

SNL Legal NV SNL

LineESTT

ESTTCPR 200.3.5

Acknowledgment of IP Obligations

SNL Legal

ESTT Packet Review

CPR 200.3.5

no

yes

Request to License

*Some cases exist where this has occurred--no new licenses will be issued to employees staying on role without Deputy Director approval.

CPR 200.3.2*

Stay at SNL

yes

no Letter of Intent

ENTREPRENEURIAL INQUIRY SNL

IP for Wireless Technology Conference Post-Conference WorkshopTechnology Transfer — Innovation to Commercialization

June 21, 2007

William J. Decker, PhDAssistant Director –Physical Science LicensingUCSD Technology Transfer &Intellectual Property Services

UCSD TechTIPSUCSD TechTIPS ……pipeline to innovationpipeline to innovation

University-Industry Technology Transfer = A Natural Partnership

“The value of an idea lies in the using of it.” . . . Thomas Edison

Universities - generators of novel ideas Industry - developers of products and profits with the ideas


Significance of UniversitySignificance of University’’s s Contributions to IndustryContributions to Industry

“The Small Business Administration . . . compared the rates of return on R&D dollars in small and large companies that have a relationship with a university . . . companies with a university affiliation, regardless of size, had a rate of return almost twice that of companies with no University affiliation . . .”

INC, MagazineApril 1993


About UCSD


UCSD Research

~ 1600 faculty members (~1300 FTE); 20,000 undergraduate students + 5,000 graduate students

~ $733 million in extramural funding in FY2006 (71% Federal; 19% private; 3% state/local; 7% Industry)

~ 60% life sciences~ 30% physical

sciences/engineering


UCSD - Stats Reflect Goals

Over 300 innovation disclosures in each of FY03, FY04 & FY05 - a portfolio of >1400 innovations available

UCSD credited with formation of >100 startups using licensed UCSD innovations

FY2005 licensing revenue >US$21 million

Over 360 active licenses (7/2006)

~86% US businesses~50% CA~35% San Diego


TechTIPS MissionFacilitate the transfer of UCSD innovationsfor the public benefit

Enhance the research experience of UCSDresearchers through technology transfer

Promote and target regional economic developmentby leveraging UCSD innovations

Provide financial incentives to researchers tostimulate technological innovations


It Takes More Than Research . . .Turning research discoveries into new ideasCrystallizing ideas into inventions and technologiesRecognizing commercial utilities of inventionsProtection of intellectual property rights for commercial

developmentMatching up with proper partners (licensing, services)Incubation and nurturing. . . for Technologies to Mature into an Industry

Research + Technology Transfer + Commercialization Support = San Diego High-Tech & Biotech Industry

University-Industry PartnershipSan Diego - Technology’s Perfect Climate


Select UCSD Licensees

Accelrys Inc.Applied BiosystemsApplied Micro Circuits CorporationCisco SystemsEli LillyGenentechGeneral ElectricHughesInvitrogenMonsanto Company


Bill Decker

Ph.D. from UVA in Engineering Physics, with a dissertation entitled "Numerical Studies of Bifurcations and Chaos in Natural Convection".

Five years at a small biomedical device with 6 issued US patents, 4 issued non-US patents, and other patents pending in the US, Europe, Japan, and Hong-Kong

With UCSD TechTIPS for almost 6 years. Helped negotiate agreements with Fortune 10 companies, licensed numerous start-ups.


UCSD’s Center for Wireless Communications Revised Patent Process


New Process•New process complete in 90 days vs. 2 years

•All licensing terms known up-front, no hidden fees, no surprises, no negotiation

•Easy low-cost buy decision, ensuring IP access while you wait for the market

•If IP not relevant, cancel anytime


Main Elementso Non-exclusive royalty-free license o Share of patent costso One-time $10K fee at patent issuance (approx 3 years)o One-time $10K fee upon first commercial use (approx

2 to 7 years out)o Life of patent rightso No reports, no audits, all information known up-fronto Cancel anytime if IP not relevanto For the same cost, receive a license vs. an option to

license


Comparison

YesNoYesJoint IP ownership

KnownUnknownUnknownTerms at time of work start

NoYesYesRoyalty

NoYesYes Issue fees/ stock

YesYesYesPatent Costs

CWC Agreement (proposed)

CWC Agreement (current)

Standard UC Sponsored Research


Key Issues


Specifics of University-Industry Interaction – 1 of 2

Direct funding of research costs through contracts and grants. Gifts and endowments (including endowed chairs) designated for colleges, schools, departments, or individuals. University-industry exchange programs and student internships. Specialized programs designed by the University for continuing education and training of professionals, primarily through University Extension.


Specifics of University-Industry Interaction – 2 of 2

Participation of industry representatives on campus and systemwide advisory groups. Cooperative research projects, some of which include government participation, and the use of specialized facilities.Use of unique University facilities on a fee-for-service basis. Licensing University Intellectual Property


Important Issues for Most Universities

Maintaining the integrity of the university research and education missions

Responding to new funding initiatives and growing expectation of the university’s role in technology-driven economy

The balance is different for different universities (even campuses)


Eight Important Concerns for Dispensing with Rights to Future Research - #1

1. Open Dissemination of Research Results and InformationAgreements with external parties shall not abridge the ability

of University researchers to disseminate their research methods and results in a timely manner. The most fundamental tenet of the University is the freedom to interpret and publish or otherwise disseminate research results in order to support the transfer of knowledge to others and maintain an open academic environment that fosters intellectual creativity.



2. Commitment to StudentsAgreements for research relationships with external parties

shall respect the University's primary commitment to the education of its students.



3. Accessibility for Research PurposesAgreements with external parties shall ensure the ability of

University researchers to utilize the results of their research to perform future research.



4. Public BenefitAgreements with external parties shall support the ability of

the University to make available for the public benefit in a diligent and timely manner any resulting innovations and works of authorship.



5. Informed ParticipationAll individuals involved in research governed by a

University agreement with an external party shall have the right and responsibility to understand the rights and obligations related to future research results embodied within the agreement.



6. Legal Integrity and ConsistencyCommitments concerning future research results made in

agreements with external parties shall be consistent with all applicable laws and regulations and the University's contractual obligations to others.



7. Fair Consideration for University Research ResultsAgreements with external parties shall provide fair

consideration to the University and the general public for granting commercial access to future University research results.



8. Objective Decision-MakingWhen establishing or conducting University relationships

with external parties, decisions made about rights to future research results shall be based upon legitimate institutional academic and business considerations and not upon matters related to the personal financial gain of any individual.


TechTIPS

http://invent.ucsd.edu

[email protected]

858-534-5815858-534-7345 (FAX)


Technology Transaction Types

Licensing: leveraging technology for income/profit or other benefitCollaborative/Sponsored research– Commercial, B2B– Commercial/Academic/Government


The Common Thread: Documenting Technology Transactions is Key

Agreements – defining the relationship and managing risk – Reduce uncertainty– Account for the parties’ contributions– Specify rights in technology


Structuring Technology Transactions

Strategic considerations– Finding the right partner– What do the parties want out of the transaction?– “Transfer of rights” vs. licensing– Financial/other contributions– Negotiation: getting to “yes”


What do we want/need?

- Avoid setting royalties in collaborative agreements; negotiate later- Inventors required to share in royalties

- % age of license royalties flow to Gov’t. (incl. minimums, annuities)- Inventors share in royalties

-Fair and reasonable value-Exclusive/nonexcl.

Royalties

-Negotiate use rights later in collaborations-Short exclusive option periods, less than one year after patent filing

- Reservation: Gov’t Purpose Rts.-Only patented or protected IP can be licensed- Rts. can flow to inventor if lab declines to protect

- Full, pre-negotiated rights to use funded IP- Exclusive option periods that allow for valuation

Rights in “New”Technology

UNIVERSITYGOV’T LABINDUSTRYWant/Need



-Administratively difficult to track

- “Outbound” BIP rights vary, and may be tailored for specific cases.

-Protection of own BIP- Avoiding “blockage:”Identification of other BIP and rights to use

Background IP


- Non-discrimination in research

“Everything” is controlled

Compliance –avoidance of strict sanctions

Export Controls



- University laboratory environment makes confidentiality difficult.

- Strict identification policies- Explicit designation

Variable; sensitive business information may warrant strict protection

Confidentiality

-Research: university may take responsibility for its own acts.- Licensing: indemnification by licensee required

-Full indemnification by licensee required-Warranty – “AS IS”-“Fairness of Opportunity”

-Expect to take responsibility for own actions-Don’t expect responsibility from univ. or gov’t partner for company’s acts

Warranties & Indemnities



Structuring Technology Transactions

Agreements – “Hot button” issues– Export controls – transferring information

internationally– Finding the “right” partner


Improving the Situation

Understanding where your partner is coming fromUtilizing “master” or “template” agreements– GUIRR Project

“Long-term” perspective: building partnerships based on relationships/trustBalancing royalties and “fields of use.”– Appropriate allocation of rights utilization

Sharing in risk/uncertainty


Panelist Contact Info.

Steve Hart: [email protected] Friberg: [email protected] Decker: [email protected] Cyhan: [email protected]


THANK YOU!

technology transfer: innovation to ......technology transfer — innovation to commercialization...

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