1. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
UK University and Technology
Transfer
Michael Blakeney
Queen Mary, University of London

2. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Outline
• University technology transfer background
– What and why?
– Government policies and existing structure
• Technology transfer
– Protection (laws) + Exploitation (business)
• Comparison of UK and US technology transfer
• Trend and challenges

3. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
What is University Transfer
Technology
• Transfer the rights to use and commercialise
intellectual properties resulting from university
research to industry.
• Vehicles
– Sponsored/collaboration research
– Consultancy
– Intellectual Property protection
– Licensing and spin-out companies
– Graduate training & professional development

4. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Why Universities Transfer
Technologies
• University:
– Enhance industrial collaboration and increase
university research income
– Applied research influence markets/products
– Retain entrepreneurial faculty
• Industrial communities
– Access leading edge scientific research and enhance
ability in R&D
• Public at large
– Benefit from innovation and influence local economy

5. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
UK University TT Background
• Strong government support
– Higher Education Innovation Fund (HEIF2: £187m)
• Lambeth report
• Knowledge & Technology Transfer Association
• University Technology Transfer Offices
– University subsidiary vs. Independent company
– Activities:
Royalty/Milestone ManagementPatent Prosecution
Establishing spin-out companyEvaluation and Marketing
Negotiation and drafting License
agreements
Invention Disclosure

6. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Protection of Intellectual Property
• IP ownership
– Research Councils vest IP in universities
– Industrial sponsors require IP ownership
– Joint ownership is common
– University IP policy
• Staff: Employee invention, ownership belongs to university
• Students?
• IP subject matter
– Patent, know-how, copyright, database right, design
right

7. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Patenting
• First-to-file vs First-to-invent
– Avoid immature disclosure
– Impact on academic publication
• Patenting strategy:
– UK national filing, proceed to PCT application
– Costs roar after going to PCT national phase
– Seeking exploitation within 30 months after initial filing
– Potential problems?
• Costs:
– UK filing: 3-5K, PCT: 10-15K, PCT nationals: 15-25K

8. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Copyright
• Copyright of software, database arising from
research belongs University.
• University waives the ownership of the copyright
of research report, books, papers etc. in favour
of the authors
• Impact of E-learning

9. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Know-how/Trade Secret
• Advantage for process invention:
– Resultant product is not readily linked to the patented
process
• Disadvantage: identifiable?
• Licensing agreement
– Complex negotiation + lower royalty income
• Spin-out: mixture of patent and KH is effective
• Challenge: what if inventor leaves university?

10. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Commercial Research and
Consultancy
• Industrial collaborators pay university to carry out
research or consultancy
• IP ownership:
– Company usually owns foreground IP
– University owns background IP
– Clear cut?
• Value of the contract: direct cost + overhead (over
100%)
• Further exploitation:
– Unbalanced negotiation power
– Licensing background IP to explore foreground IP

11. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Licensing vs. Spin-out
Shareholding
of the spin-out
company
•Inherent risks
•Medium-long return
•Hard slog with no
return
•Product development
•Involving more
people/energy/money
•Really add value
Spin-out
Percentage of
the licensing
incomes
•Could be one-off
(exclusive)
•Under-performed
licensee
•Avoid initial high R&D
costs
•Spread risks (royalty)
•High short-term incentive
Licensing
Inventor
Benefit
ConsPros

12. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Licensing (1)
• Technology: Sold rather than bought
– Patents are not granted
– Speculative market value
– Need significant product/application development
• Grant of license
– Patent, know-how, copyright of software etc.
– Broad licensing rights with exclusivity, multiple field of
use and wide territory to compensate potential high
risks
• Often combined with development agreement

13. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Licensing (2)
• Considerations:
– Upfront payment: cover sunk patent costs
– Milestone payment
– On-going royalty fee with minimum royalty targets
– Equity of licensee company in place of royalty
• Royalties: based on net sales
– Depends on type of technology, stage of development, size of
market, strength of patent and perceived risk
• Examples:
– university deals: 25:75 rule
• Process(<1%), patented compound with significant market (8%),
generally (3-6%)
– BTG deals
• Software (0-10%), Pharmaceuticals and health care (5-10%),
telecommunication (10-15%)

14. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Licensing (3)
• Improvements
– Joint ownership?
• Warranties and liabilities
– Condition of patent, the results, compliance
– Disclaimer
• Performance Management
– Best endeavour

15. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Spin-out
• Technology – potential for sustainable high
value
– Large market
– Strong competitive advantage
– Protectable Intellectual property
• Company - the vehicle to capture the value
– Legal format: Limited liability
– Professional management
– Access to capital through equity investment
– Access to market

16. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Sources for Seed Funds
• Money from family and friends
• Organic growth – revenue
• Bank loan
• University Challenge Fund (CLCUCSF)
• Angels (rich individuals)
• Commercial Fund (BT Brightstar, Gentech)
• Venture Capitals (3i, TTP ventures)
Increased risk!

17. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
How
• IP assigned/licensed to the spin-out
• Equity split between University and inventors (50:50)
• Cash investment for equity sets company value
• Business planning and professional management
• Product development, marketing and sales
• High risk, high return
– potential to be worth £100m in 5 to 7 yrs, ROI: 30-50%
• Exit: trade sale or IPO

18. ECEC--ASEAN Intellectual Property Rights CoASEAN Intellectual Property Rights Co--operationoperation ProgrammeProgramme (ECAP II)(ECAP II)
Comparison of UK and US
technology transfer
333%1550Spin-outs created
39%$31.4m$12.1mLicensing income
72%280202Licenses yielding income
172%120206Licenses signed in year
110%399440Invention disclosure
UK as % USUS universitiesUK universitiesPer $1bn research
• Wright, Binks, Vahora and Lockett, University Commercialisation Survey, 2002, Nottingham
Business School, Unico and AURIL