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Implementation of IP Law & Compliance Practices

Moderator: Ersin Dereligil, Founding President & Board Member of LES Turkey, Managing Partner at Destek Patent Marc Sedam, TTO Director, University of New Hampshire & Board Member, AUTM Patrick Terroir, Patent and Technology Committee Chair at LESI

MARC SEDAM Associate Vice Provost of

Innovation and New Ventures and Managing Director of UNH Innovation,

Executive Director of the New Hampshire Innovation Research Center

PATRICK TERROIR Founder and Managing

Partner at Innovation Legal Patent and Technology

Committee Chair at LESI Teacher in macroeconomics

and IP economics in Sciences Po Paris.

ERSIN DERELIGIL Managing Partner at Destek Patent LES Turkey Board Member Turkish Patent Attorney European Patent Attorney Expert before the Istanbul IPR

Specialized Courts.

Member of the NH Governor’s “Live Free and Start” advisory council

PI of UNH’s National Science Foundation I-Corps Site Member of the Association of University Technology

Managers (AUTM) Board of Directors. Advisor to the boards of two non-profits founded at

UNH: Operation Hat Trick and PLAN (Post-Landfill Action Network).

PAST: Vice President for Professional Development at the

AUTM Board of Directors between 2015-2016 Chief Operating Officer of Qualyst, Inc., Board member and Vice-Cihair at NHICC/AlphaLoft. Associate Director for Life Sciences at the University

of North Carolina at Chapel Hill’s TTO, Founding director of the Peter T. Paul

Entrepreneurship Center Food enzymologist at National Starch and Chemical

Company Inventor of a patented product winning the “2003

Product of the Year” from the Institute for Food Technology.

Certified Lecturer at LES 100 course of «Commercializing Technology through the Power of IP Licensing»

Mentor for universities and techno-parks on the establishment of TTOs and technology transfer.

Member of AIPPI Turkey, EPI, JIPA and INTA

PAST: Research expert on thermodynamics at METU. Patent engineer, office manager at Destek

Patent Guest teacher in patents and industrial design

course at Uludag University Engineering Departments for six years.

Past and founding president of the LES Turkey Founding member of AIPPI Turkey National senior expert on Tehcnology Transfer

Manual for EU/TR Project Outside Patent counsel at three Turkish

universities

Lawyer

PAST Chief of the Bureau of International Financial

Affairs, then as chief of the Bureau of State Participation in the oil, steel, chemicals and raw materials sectors in the Treasury Department at the Ministry of Economy and Finance

Deputy director of the Office of the Minister of Employment.

Head of the social housing financing department at Caisse des Dépôts

Commercial manager of Caisse des Dépôts’s banking services branch.

Regional director for the Paris-Ile de France region.

Chairman of the Val de Marne Paris Development Agency.

Lounch of Caisse des Dépôts’s department on industrial innovative clusters/IP economy.

Managing director of CDC Intellectual Property (a full subsidiary of Caisse des Dépôts)

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Introduction: the Turkish (long awaited) IP reform

Ersin Dereligil, Founding President & Board Member of LES Turkey, Managing Partner at Destek Patent

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Actually determining ownership of invention is not so simple

Problem One: Incentivizing Invention Disclosure Despite a contractual duty to disclose and the possibility of monetary revenue, as many as 50% of patentable innovations are not disclosed by researchers to their university's TTO Social norms, lack of education, and a perception that time is better spent elsewhere all work together to offset the potential monetary incentive to disclose. Academic researchers do not instinctively understand when a patentable invention has been created Problem Two: Determining Inventorship Inventions often have multiple inventors, each responsible for a minor aspect of the final invention.

It is not always easy to determine if two researchers are joint inventors. Multiple researchers can be joint inventors on a patent even if "(1) they did not physically work together or at the same time, (2) each did not make the same type or amount of contribution, or (3) each did not make a contribution to the subject matter of every claim of the patent.“

Transparent and unambiguous regulations with respect to ownership titles and property rights are a decisive element.

2017 Law Parade for Turkish IP Reforms

10 January - The Industrial Property Law (#6769-Art. 121) 24 April - IP Regulations, 01 July - “Bag” bill (#7033) 2017, Art.18 (allows for TTO Inc.). 29 Sept. - Regulations For Employees’ Inventions, Inventions From Higher Education Institutes and Inventions From Publicly Supported Projects Awaited - IP Regulations For Higher Education Institutes (Draft) from YÖK (Council of Higher Education)

Disclosure

• promptly in writing

• to the unit appointed by the HEI

• full disclosure of invention, i.e. technical problems, solutions, details, drawings etc.

• inventors, right distribution ratio, any claim for free invention.

HEI’s Unit/TTO

• Prompt written acknowledgement

• Within «2» months: Request for deficiencies, if any, to be completed within one month.

• Within «4» months: Decision for request on right ownership

Patent

• Within «4» months from right ownership request, HEI unit should file patent application but can be delayed «2» months if parties agreed

• Within «1» month the inventor/s should be informed in writing if HEI renounces the right anytime anywhere.

Invention Disclosure Process in HEIs

REVENUE SHARING:

• At least one third of the income goes to the inventor/s.

• Contracts between all related parties are essential to identify the amount and payment terms.

• HEI’s share should be used primarily for financing the expenditures related to the research, development, (patent) application, registration and commercialization activities of the inventions.

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First debate ownership of inventions and TT The argument: ownership is key but it raises many questions

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European Parliament Report on knowledge transfer, nov 2012

The ownership of patent:

university or TTO? 3 models :

- TTO is only an intermediary

- TTO is licensed with a right

to sublicense

- Isis : assignment to the TTO

with a license back to

university

The ways to assign ownership could be different

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Debate 2: revenue sharing between University/researcher/TTO Argument: revenue sharing is important but transparency is more important

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1- Inventors’ shares of the revenues are positively related to license Incomes 2- Lower shares to inventors may create an incentive to have patents assigned to start-ups and/or reduce the disclosure of inventions to the university. 3- Not only revenues to the inventors themselves, but also to their departments and institutes have been found to be effective for raising license income 4- But the sharing systems and proportions are actually very diverse: an European study on 242 TTO respondents, 16

(6.6%) answered that inventor(s) usually do not receive a share of the revenues generated from the IP; 88 (36.4%) stated

that institutional units don’t receive a share and 48 (20%) answered that the PRO is not entitled to revenues.

The knowledge transfer office does not receive any direct revenues in the large majority of PROs (70%).

5- In 41% of the institutions all expenses, and in 30% some expenses (e.g. out of pocket costs for external services) are deducted from gross revenue before this is shared.

Knowledge transfer study, EC, 2012

What do we know about revenue sharing?

Conclusion: Established clear principles for the sharing of knowledge transfer revenues among the organisation and inventors is essential

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ISIS (Oxford) experience

REVENUE SHARING FROM LICENSING

For each piece of intellectual property, the revenue from

successful exploitation by Isis is:

*first subject to repayment of external project costs (inc.

patenting, exploitation, legal);

*Isis then retains 30% as a contribution towards its ongoing

costs on this and other patents;

*the remainder, i.e. 70% of the net licence income, is then

passed on to the University for distribution to the

researchers, General Fund and Department, in accordance

with University Council Regulation 7 of 2002.

KU Leuven

A clear factor in the success of LRD is the strong

incentive KU Leuven created for researchers to engage

in technology transfer.

83% of the revenues generated by licensing, patents,

collaborations or spin-outs flows back to KU Leuven’s

academics to invest as they see fit in research-related

expenses, including lab equipment, lab technicians or a

new computer.

“You need to have an incentive for researchers to

engage in technology transfer” says Van Dun. In the

case of KU Leuven, the funds are held in accounts

owned by the university but the professor holds the

authority for investment. “That is a very, very

motivating factor,” he adds.

KU Leuven itself receives 17 percent of technology

transfer revenues to cover overheads, half of which are

channeled back to fund LRD’s operations.

Some examples

Revenue Sharing in the US

• Revenue sharing policies vary widely among US universities

• Most common concept: • 33% to inventor(s) • 33% to college/department • 33% to university/TTO

• Costs are recovered prior to income distribution

• Inventor shares are split evenly unless listed in the disclosure

• Uncommon to provide income share to non-inventors

• Older study of 102 US universities correlated higher distribution to faculty with higher overall licensing income

(Journal of the European Economic Association 2(2-3):252-264 · February 2004)

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Debate 3: financial self-sustainability of the TTO? Argument: so difficult but inevitable

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The revenue model of the TTO

Revenue

Operating costs

Cumulative cash flow

Net result

10 years to reach financial autonomy; 20 to be profitable

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Public research monetization remains an exception

US Financial Sustainability of TTOs

• Linked directly to royalty sharing policy

• Higher inventor distribution leads to less money for cost recovery and sustainability of TTOs

• Potential for sustainability closely linked to existence of medical schools

• Valuation of early stage life science discoveries is higher than other fields

• Very few US university TTOs are profitable

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Invention valorization is not only monetization (AUTM) There is

nothing in economic theory to suggest that TTOs should maximize license revenue. Social welfare might be better served by TTOs facilitating local economic development or helping with the translation of academic research into products.

My View

• Do not start a TTO to make money

• TTOs will not make money

• If a TTO makes money it will be a combination of skill and luck

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But shortage of resources threaten R&D and TTO – thus financial autonomy is the key to survival

Typical orders of magnitude of university revenues

Research budget

+..30..50% from Tech Transfer!

June 18th 2016

“A study by the American Association

for the Advancement of Science found

that, at the current rate of

disinvestment, overall federal

research and development funding

could be reduced by $57.5 billion or

8.4 percent by 2017.

In the face of this growing

challenge, research institutions are

pursuing additional means to

combat the decreased investment in

research by finding alternative

operational revenue sources. One

method being pursued by technology

transfer professionals lies in retaining

equity in the companies that license

the institutions’ technology. In 2014,

the number of licenses executed that

included equity acquired by the

research institution was up 17

percent, from 469 in 2013 to

549.(AUTM licensing activity survey 2014)

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Research monetization channels are multiple

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Global reflection for the future (my view) innovation is at the core of economic growth and private profit University and public research lab are more and more at the source of radical innovation - as firm research has to become closer to the market So the capacity to invent and transfer the inventions to the market should find its economic model