Brandeis University

Brandeis Office of Technology Licensing

Seminar Series on Technology TransferSeptember 29, 2005

Larry R. Steranka, Ph.D.Executive Director

www.brandeis.edu/offices/otl

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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What Is Technology Transfer?

• Broadest sense: Academic technology transfer is the movement of knowledge to the general public.

• Our focus: Formal licensing of intellectual property to third parties by the OTL– where IP includes inventions, tangible

materials, software, class presentations, books, electronic or paper documents, multimedia or audiovisual materials, artistic works and photographs

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Why should investigators participate?

• Career and income extension

• Generate lab/departmental funding

• Attract research sponsors

• Create educational opportunities for students

• Link students to future job opportunities

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What are the benefits to Brandeis?

• Attract/retain key faculty• Attract industrial support of research• Generate discretionary income• Provide tangible benefits of taxpayers’

support for fundamental research

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Bayh-Dole Act

• Allows universities and small businesses to take title to inventions arising from federally funded research and to license such inventions and receive royalties

• Selected Provisions– Applies to patentable inventions funded in whole or in part by a

federal funding agency• Does not apply to copyrightable works• Does not apply to training grants

– University must • report each invention • elect to retain title • file a patent application• share income with the inventors• provide the gov’t a non-exclusive license• in exclusive licenses, ensure U.S. manufacture

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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Disclosure to OTL

• Disclosure of IP starts the process– Disclosure form on OTL website– Required if gov’t funded, probably required for

other sponsored projects, may be required under “cashless” collaboration agreements

• When?– Before public disclosure for patentable

inventions – When in doubt, contact OTL

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Information Sought

• Description – draft manuscript often attached

• Plans for additional work• Potential applications, advantages over existing and

other research-stage technologies, potential licensees• Contributors

– all, including non-Brandeis– for patents, all contributors may not be legal inventors

• Funding sponsors • Materials providers• Publication status/plans

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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Ownership of IP

• Brandeis Intellectual Property Policy defines ownership• Creator retains ownership unless

– Development was funded as part of a sponsored research agreement.

– A faculty member or student was assigned, directed, or specifically funded by the University to develop the intellectual property and the creator has agreed in writing that the intellectual property is to be owned by the University.

– The intellectual property was developed by an employee or employees other than faculty or students in the course of their employment duties.

– The intellectual property was developed with the use of University resources that substantially exceed or are qualitatively different from those that would normally be provided for the creator's employment duties.

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Waiver of University Rights

• If IP was not University supported, OTL will provide a written waiver.

• If there is ambiguity/disagreement, the creator can appeal the decision to the IP Review Committee

• If OTL chooses not to invest in protection or otherwise pursue commercial development, the University will waive any rights but may negotiate for a share of income

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IP Review Committee

• Described in the IP Policy• Current members

– Neil Simister, Chair– Liz Hedstrom– Marc Brettler– Li Deng– Jeff Solomon– Maria Pelligrini– Ex officio: Larry Steranka, Judy Sizer

• Responsibilities– oversee implementation of the Policy– respond to appeals of OTL decisions

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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What is a patent?

• An official document granted by the U.S. gov’t conveying specific rights to the recipient

• Describes an invention, and lists claims that specify precisely what is covered

• Patent rights: right to exclude others from making, using, selling, offering to sell or importing a product covered by a claim

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What subject matter is patentable?

• Compositions of matter – molecules, polymers

• Articles of Manufacture– transistors, nanowires

• Processes– chemical syntheses, manufacturing methods, methods of doing

business, methods of treating disease

• New and useful improvements of any of the above – if the improvement embodies an idea not covered by the patent on the

underlying technology

• Not patentable– pure ideas, theories, mathematical formulas, writings, naturally occurring articles

found in the wild

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What criteria must be met?

The claims must describe an invention that• has Utility – which means it has a practical use

• is Novel – not described in the prior art

• Is Non-Obvious – is not a trivial or obvious improvement over the prior art

• Is Enabled – the specification must describe how to make and use the invention so that one skilled in the art could make and use it without undue experimentation

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Patenting Process (U.S.)

• File an application with the U.S. PTO• PTO examines, issues Office Action• Applicant responds• Repeat until allowable claims determined• Can issue at any time but generally takes

2 or more years• Cost: Tens of thousands of dollars• Duration: 20 years from filing

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Copyrights

• Under the IP Policy, most copyrighted works are owned by the creator

• OTL doesn’t do a lot of copyright licensing

• Import requisite competencies– Karen Hersey, Senior IP Counsel, MIT

(retired), Visiting Professor of Law, Franklin Pierce Law Institute

– Alan Gordon, Sr. Licensing Associate, MIT

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What is copyrightable?• Copyright protection subsists, in accordance

with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device (17 USC § 102).

• Two basic criteria– Originality: independently created, not copied from

another work and not a trivial modification – Fixed in a tangible medium: any form can “fix” the

expression as long as it can be communicated for a period of more than transitory duration

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17 USC §102 continued

• Works of authorship include the following categories:– (1) literary works;– (2) musical works, including any accompanying words;– (3) dramatic works, including any accompanying music;– (4) pantomimes and choreographic works;– (5) pictorial, graphic, and sculptural works;– (6) motion pictures and other audiovisual works;– (7) sound recordings; and– (8) architectural works.

• Protection is limited to the expression, not the ideas and concepts imbedded in a work.

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The Copyright Rights (17 USC § 106)

• Subject to certain exemptions, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:– (1) to reproduce the copyrighted work in copies or phonorecords;– (2) to prepare derivative works based upon the copyrighted work;– (3) to distribute copies or phonorecords of the copyrighted work to the

public by sale or other transfer of ownership, or by rental, lease, or lending;

– (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

– (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

– (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

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When is a work copyrighted?

• Unlike a patent, it is not necessary to do anything to obtain a copyright on a work and assert exclusive rights of ownership

• Once an original work can be tangibly communicated, it is copyrighted.

• It is not necessary to provide an official notice of copyright ownership on the published copies of a work.

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Use of copyright notice

• Notice is recommended in order to help deter infringement, avoid a possible defense of innocent infringement, and protect the work in many countries in which it may be required.

• The notice should include:– Copyright © (insert year here)– Name of the copyright owner

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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What is a license agreement?

• A license agreement is a contract that describes the rights and responsibilities related to the use and exploitation of IP

• In our license agreements, the University grants its rights in a technology to a third party for a period of time, and sometimes for a particular field of use and/or region of the world.

• A license is not a transfer of property ownership - just the right to use it in a specified way under defined conditions.

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Elements of a license agreement

• Grant of rights• Due diligence provisions• Financial terms

– License fees• issue fee in cash and/or stock• maintenance fees/minimum royalty payments• milestone payments

– Running royalty payments• Sublicensing rights and payment terms• Warranty and indemnification• Termination

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Exclusive vs. Non-exclusive

• Exclusive• IP will be basis of competitive advantage. • Companies will be incentivized to license early, important

with patent licenses because prosecution is expense.• Reimbursement of patent expenses will be a line-item,

separate from royalty income (which may be years in coming)

• Non-exclusive• Company just needs access in order to avoid infringement

liability• Companies will not need to take a license until the patent

issues • Reimbursement of patent expenses is not part of the

agreement and, so, will have to await royalty income

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Financial terms

• University technology – is typically licensed at a very early stage in the product

development cycle– comes with no warranties– in the license agreement, includes only very restricted rights to

future related technology

• Running royalty rate– low-to-mid single digit percentage in most instances– can be low double digit percentage for something close to

product, e.g., a research reagent

• Initiation fee and milestone payments– think in terms of an advance of the first year’s royalty payment

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Identifying potential licensees

• Inventors (60%)– Interact with industry through SRA's and consulting– Graduate students take industry positions– Investigators publish and company scientists track

• Licensing staff (20%)– Many have industry experience or extensive academic licensing

experience in a sector– Web search to identify companies active in the field, followed up

by contacting the companies, which may provide additional leads

• Company contacts (10%)– In response to a patent search or in the course of systematic

trolling

• Industrial research sponsors (10%)

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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Assessment / Decisions

• Does it need to be patented?– if “no”, little out-of-pocket expense, OTL will endeavor to license– if “yes”, go the next question

• What claims are likely to be obtained? – answered in consultation with patent attorney and inventor– if there is a good chance of getting reasonably broad claims, continue

• Why will licensees want the technology, for competitive advantage or just to have access (will it be licensed exclusively or non-exclusively)?

– answered by contacting prospective licensees or based on knowledge of the area

– if exclusively, are target companies likely to license soon?• If yes, file• If later rather than sooner, file but take steps to delay expenses

– if non-exclusively, is it likely that claims will cover a large market?• if yes, file and plan to prosecute to issuance before licensing• if no, don’t file

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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Start-ups: A few thoughts

• Factors– the technology may provide competitive advantage in a large market– there is the potential for multiple products from the same technology– there is an interested and “investable” scientific founder and/or CEO– if professional investment will be required, there is a clear exit

mechanism• OTL’s role:

– facilitatory, not active (won’t write business plans, incorporate the company, help raise capital, etc.)

– if a fundable business plan appears to be feasible, then OTL will• try to help identify qualified investors and entrepreneurs• accept stock of the company in partial lieu of cash as consideration for the

license agreement in order to help the company conserve cash

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Start-ups: A few thoughts cont’d

• Founding scientist’s role– Advisory (e.g., Chairman of the SAB)– Writing the technical components of the

business plan and marketing documents – Giving talks to potential investors– Defining applications of the technology and

making it work inside the company– Time consuming

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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Distribution of Net Revenue(after deduction of all out-of-pocket expenses)

Old Policy New Policy

Creators 40% 40%

Departments, programs, centers 20% 15%

Provost’s Fund 20% 15%

General Fund 20% 15%

OTL 0% 15%

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Agenda

• Overview of technology transfer• Disclosure of IP• Ownership of IP• Patents and copyrights• Licensing • Assessment and decisions about investment• Start-up companies• Revenue distribution• Brandeis activity

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OTL Activity FY04/05

FY05 FY04

Invention Disclosures 14 6

New Patent Applications 6 1

Deals (licenses/options) 10 4

Legal fees expended $296,500 $115,500

Legal fees reimbursed $257,700 $ 94,300

License Income $631,100 $454,400

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Collateral Activities in FY05

• Material Transfer Agreements– Non-profit

• In 11• Out 9

– For-profit • In 5• Out 5

• Invention Administration Agreements 1• Sponsored Research Agreements 6• Collaboration Agreements 6• Confidentiality Agreements several

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Future Seminars

• Patents and Patenting– Robert Benson, Harvard University

• Copyright Protection– Karen Hersey, MIT (retired), Franklin Pierce

• License Agreements– Larry Steranka

• Key Issues in Collaborations with Industry– Larry Steranka and Paul O’Keefe

• Start-ups I: Introduction to Business Law– Karin Rivard, MIT

• Start-ups II: Case Study

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www.brandeis.edu/offices/otl