History, Status, and Trends for Technology Transfer in U.S.

Universities & The Stanford Model

Presentation by Jon Sandelin

Stanford University

Office of Technology Licensing

jon.sandelin@stanford.edu

http://otl.stanford.edu

Presentation Areas

Methods of Technology Transfer Evolution of University T/T in the U.S. Role of Bayh/Dole and AUTM Current Status of University T/T in U.S. Evolving Trends in the U.S. Types of Industry-University

Relationships at Stanford University

Methods of Technology Transfer

Graduated Students Publications Conferences Visiting Scholars/Industry Visitor Programs Industrial Affiliates Programs Research Sponsorship and Faculty Consulting Licensing to Established Companies and to

Start-Up Companies

Stanford Office of Technology Licensing

Our mission: to promote the transfer of Stanford technology for society's use and benefit while generating unrestricted income to support research and education

Founded in 1970; $55k Royalties 1st Yr To Date: 4,950 Invention Disclosures;

1,320 Issued Patents; 2200 Licenses; $552M in Royalties ($255M from C/B)

OTL FY2002 Results

295 Invention Disclosures $52.7M in Royalties

– high of $61.2M in FY1998– $0.4M from Sale of Equity

111 Licenses Granted; 13 Start-Ups Office Budget of $2.6M; Staff of 25 $3M for Legal Fees ($1.5M reimbursed)

OTL Start-Ups

115 to date; with 75% in last 5 years 45% Medical; 35% Software/IT; 10%

Sensors; 10% Other: Equity in 80% 9 (so far) have failed 15 (so far) Equity Sold for $22 Million

– Abrizio (PMC-Sierra) = $9.7 Million– Amati (Texas Instruments) = $8 Million– Vxtreme (Microsoft) = $0.8 Million

Stanford Policies

Ownership of Intellectual Property– With University if:

• Part of University work responsibilities; or

• More than incidental use of University Resources

Income/Equity Sharing– Royalties: 15% to OTL, then 1/3 each to

Inventors; Inventors Dept; Inventors School– Equity: 1/3 to Inventors; 2/3 to Special Fund

Start of Licensing Activity

1920s: Wisconsin Alumni Res. Fdn. 1930s: Iowa State Patents Foundation 1940s: MIT; Kansas State Res. Fdn. 1950s: University of Minnesota 1960s: University of Utah; Salk Institute; 1969: Stanford University 1970s = 15; 1980s = 82; 1990s = 73

Historical Events

1907: UC Berkeley; Cottrell Patent 1912: Research Corporation founded by

Frederick Cottrell 1925: University of Wisconsin;

Steenbock Patent; Formation of Wisconsin Alumni Research Foundation

More Historical Events

1927/29: Harvard University; Minot and Murphy invention; Committee Study; Decision not to patent

1951: MIT; Forrester Patent; RCA Interference; Royalties in 1960/70s

1969: Reimers launches Stanford TLO under Marketing Model; Cohen/Boyer $

Evolution of Patenting & Licensing in U.S.

Before 1980 - few U. S. Universities were involved with Patenting & Licensing

1980 - Bayh/Dole Law enacted 1980 to 1990 - SUPA/AUTM facilitates

convergence on Best Practices 1990 to 1999 - AUTM Annual Surveys

document Rapid Growth in University Licensing Results

Bayh/Dole Law of 1980

Option to Ownership of Government Sponsored Inventions (2 Years or 90 Days before Patent Bar Date)

If Option Exercised, Must Patent and Diligently Seek a Licensee

Must Share a Portion of Royalty Income with Inventors Non-Exclusive Royalty-Free License to Government Government Retains March In Rights Preference to Small Business (under 500 employees) U.S. Manufacture if Exclusive License in U.S.

Association of University Technology Managers

Formed in 1974 with 20 Members; Over 3000 Today Becoming an International Association Publications: Directory; Newsletter; Technology

Transfer Manuel (3 Volumes); Journal; Educational Series; Annual Survey

Meetings: Regional; National (Orlando in Feb, 2003); International

Courses: Fundamentals of Licensing; Advanced Topics; Start-Up Business Formation; MultiMedia

Information at: www.autm.net

2000 AUTM Survey

$1,260 Million in Royalties $60 Billion in Licensed Products Sales 400,000 new Jobs 13,032 new Invention Disclosures 6,375 new Patent filings 4,362 new Licenses (12% to Start-Up

Companies)

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University Spin-Out Facilitation

2002 - Not a Promoted Activity at many U.S. Universities, but starting to change

Where “actively” done, typically by off-campus group e.g., ARCH; WRF; BCM Technologies, C2C -- but changing

No Generally Accepted Model as yet, but AUTM reacting: Courses; Publications

More Prevalent in Europe & Canada

Why Not Spin-Outs?

Fears of Institutional Conflict of Interest– Harvard Incident/1983 Pajaro Dunes Mtg

Labor Intensive Activity; Success in “Licensing-Friendly” Industries– Biotech; Pharmaceutical; Medical Devices

Limited Invention Disclosures with Start-Up Company Potential (but changing)

Few “Success” Stories (also changing)

Trends in the U. S.: Federal Government

Promotion of University/Industry Collaboration– 1980 Bayh/Dole, Etc.– Advanced Technology Program (ATP)– STTR (SBIR extension to include Universities)

Promotion of Federal Labs/Industry Collaboration– 1986 Federal Lab Technology Transfer Act

Tax Incentives to Entrepreneurs

Trends in the U.S.: Industry

Away from Basic Research and to Product-Connected Research

Downsizing of R&D Depts; PhD Graduates to Small Companies and Start-Ups

Acquisition as a Sourcing for New Products Growing Acceptance of Licensing

Trends in the U.S.: Universities

Industry-Influenced Research– Affiliates/Super-Affiliates Programs– Inter (or Cross) Disciplinary Research Centers– Multi-Company Research Collaborations

PhD Graduates to SME’s and Start-Ups Alliances with Overseas Universities

– MIT/Cambridge; Stanford/Edinburgh; UC/Germany

Trends in the U.S.: TLOs

Licensing of Spin-Out/Start-Up Companies– “Qualifying” Inventions for Start-Up– Networking of Angel Investors– Concept2Company and Others

Invention Enhancement Funds Licensing in the Physical Sciences

– Portfolio Licensing with Very Low or No Earned Royalties

Trends in the U.S.: TLOs (2)

Industry Donation of Patents to TLOs Marketing over InterNet New Forms of License Agreements

– Ready-to-Sign License Agreements– Hybrid Agreements

(Patent/Copyright/Trademark)– “Package” Deals (Research/License/Consulting)– Equity only License Agreements

Trends in the U.S.: TLOs (3)

More Option Agreements More Licensing of Tangible Research Products Use of “Plain Language” in Writing

Agreements Loss of Staff to Industry/Training of New Hires Time Spent on Conflict of Interest/Commitment

Issues

Types of Industry-University Relationships

Sponsorship of Research Donations and Gift Funding Interdisciplinary Centers & Collaborations Industrial Affiliate Programs Licensing of University Intellectual Property Classes for Company Employees Visiting Scholars from Industry and Company Employees

teaching at University University-managed Science Parks/Incubators Faculty Consulting

FY2002 Income from Industry

Sponsorship of Research: $42.5 Million Donations and Gifts: $34.7 Million Industrial Affiliates Programs: $17.2 Million Licensing of University I/P: $52.7 Million Classes for Company Employees: $10.4 Million Total for FY2002 is $157.5 Million

Industry Funding by Category

020406080

100120140160180200

Ind ClassesAffiliatesLicensingInd Res SponGifts

Different T/T Models

Legal Model

– Viewed as a Legal process

– Based in the University Legal Office Administrative Model

– Viewed as an Administrative process

– Based in existing administrative office Business/Marketing Model

– Viewed as a business within University

– Independent organization within University

Evolution of T/T Models

1991– Legal Model: only a few– Administrative Model: Almost all– Business/Marketing Model: very few

2003– Legal Model: None– Administrative Model: Minority– Business/ Marketing Model: Majority

Business/Marketing Model

Independent Self-Funded Unit Policies to encourage invention

disclosure and inventor involvement Hire people with entrepreneurial instincts

and business experience Empower people to make all decisions;

Cradle to Grave involvement

THE END

Thank You for your Attention!