OTL Overview

8/21/2019 OTL Overview

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Life of a StanfordLife of a StanfordInventionInvention


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Notable Stanford Inventions


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Timeline of Stanford InventionsTimeline of Stanford Inventions

1970 OTL Established1970 OTL Established

1971 FM Sound Synthesis ($22.9M)1971 FM Sound Synthesis ($22.9M)

1974 Recombinant DNA ($255M)1974 Recombinant DNA ($255M)

1981 Phycobiliproteins ($46.4M), Fiber Optic Amplifier1981 Phycobiliproteins ($46.4M), Fiber Optic Amplifier($48.4M), MINOS ($4.2M)($48.4M), MINOS ($4.2M)

1984 Functional Antibodies ($425.7M)1984 Functional Antibodies ($425.7M)

1987 Selective Amplification of Polynucleotides ($28.1M)1987 Selective Amplification of Polynucleotides ($28.1M)

1990-1992 Discrete Multi-tone technologies for DSL ($29.7M)1990-1992 Discrete Multi-tone technologies for DSL ($29.7M)

1993 Microarrays ($2.1M), MIMO for Wireless Broadcast1993 Microarrays ($2.1M), MIMO for Wireless Broadcast

($1.6M)($1.6M) 1994 In vivo Bioluminescent Imaging ($9.4M)1994 In vivo Bioluminescent Imaging ($9.4M)

1996 Improved Hypertext Searching - Google1996 Improved Hypertext Searching - GoogleTMTM($339.2M)($339.2M)

2001-2003 Data Visualization Software2001-2003 Data Visualization Software

2004 Refocus Photography ($324.6K)2004 Refocus Photography ($324.6K)

2014 the next big thing ???2014 the next big thing ???


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Stanford inventions begin as nascent ideasStanford inventions begin as nascent ideas

supported by oversupported by over$1 billion per year$1 billion per yearof fundingof funding

for researchfor researchacross 7across 7schools and SLAC.schools and SLAC.


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Big PictureBig Picture

Stanford Budget FY13-14:

$4.8B Total

$1.35B for research

$931.6Mof gifts (FY13)

$18.7BEndowment

OTL $87.0M income in FY13


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Stanford has over15,000 studentsand over2,000

facultymembersthat teach andconduct research.


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How are Stanford innovations transferred to

others to develop into new products and

companies?


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Background:Stanford Intellectual Property Policies

SU18SU18 Stanford University Patent and Stanford University Patent andCopyright AgreementCopyright Agreement

Patent policyPatent policy--University takes title to allUniversity takes title to allinventions created withinventions created withmore than incidentalmore than incidentaluse of university resourcesuse of university resources

Copyright policyCopyright policy--University takes title toUniversity takes title tocopyrightable works created withcopyrightable works created withsignificantsignificantuniversity resourcesuniversity resources


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The Office ofTechnology

Licensing OTL! isresponsible for"

the formal transfer ofpatents, copyrights and

other technology through

license agreements.


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OTL#s $ission:OTL#s $ission:

To promote the transferTo promote the transfer

of Stanford technologyof Stanford technology

for societyfor societys use ands use and

benefitbenefit

while generatingwhile generating

unrestricted income tounrestricted income to

support research andsupport research and

education.education.


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$ost Inventions are$ost Inventions areNever LicensedNever Licensed

9-10 invention

disclosures/week

50% have patent

applications filed

20-25% are licensed*

*some inventions such as software

and biological materials are licensed

without patent protection


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%isclosures%isclosures

Then. . .

28 in 1970

Now. . .

502 in 2013

9,897 cumulative


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&o' %oes OTL %ecide(

Licensing teams try to decide which inventions can make animpact.


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)uestions

Is the invention evolutionary or revolutionary?

What is the stage of development?

Is it patentable and could a patent be enforced?

What is the potential market size?

What is the inventors track record?


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Licensing Teams* %ecide Patent andLicensing Teams* %ecide Patent andLicensing StrategyLicensing Strategy

*

Licensing Associate and Liaison teams have technicaldegrees and are market focused.


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+,radle to -rave.

Evaluate overall potential

Develop intellectual property strategy and managepatent prosecution

Determine when and how to market and license theinvention

Negotiate contracts

Maintain and amend agreements

Monitor development and commercialization andtrack royalty payments


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OTL $arkets Broadly to /ind the Best /itfor the Technology


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0ecombinant %N1:$any ,ompanies of 1ll Si2es


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/$ Sound:One Big ,ompany


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/unctional 1ntibodies:One $id3Si2ed ,ompany


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-oogle:One Start34p ,ompany


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567 Ne' License1greements in /857

66 non-exclusive

20 exclusive

17 option agreements


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Licenses

Then. . .

3 in 1970

Now. . .103 in FY13

~1200 active licenses from ~3500 active

inventions~3300 cumulative licenses

some inventions have many licensees


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9hat is in a License(*9hat is in a License(*

Financial terms canFinancial terms caninclude:include:

License issue feeLicense issue fee

Annual minimumAnnual minimumpaymentspayments

Earned royaltiesEarned royalties

Equity (if appropriate)Equity (if appropriate)

Reimbursement of patentReimbursement of patentcostscosts

Non-financial terms canNon-financial terms caninclude:include:

Field of UseField of Use

Non-exclusive orNon-exclusive orexclusive rightsexclusive rights

Development milestonesDevelopment milestonesand diligence provisionsand diligence provisions

*Sample Agreement:

http://otl.stanford.edu/industry/resources/industry_res.html?headerbar=2


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;uity ,an be One ,omponent of the/inancial Package

About10-15%of OTLs licenses have an equity term.


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License 1greements 'ith ;uityLicense 1greements 'ith ;uity

OTL first took equity in 1991

11 licenses with equity in FY13

Stanford holds equity in 161 companies as aresult of license agreements (as of Aug. 31, 2013)

Managed by Stanford Management Company

Liquidated soon after IPO or at merger/acquisitionStanford may divest equity if a licensee conducts aclinical trial at the university


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;uity ,ash3Out at Stanford

$1.0M in FY13

$370M cumulative from equityvs. $1.6B in total income

$34M cumulative from non-Google equityvs. $1.2B in cumulative cash royalties


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Licensed Inventions ,an %evelop into ProductsLicensed Inventions ,an %evelop into Products

that generate incomethat generate incomefor the companyfor the company

and royalty returns toand royalty returns to

Stanford.Stanford.


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IncomeIncome

Then

$50K in 1970

Now

$87.0M in FY13

~$1.6B cumulative

Big Winners

Cohen-Boyer Recombinant DNA ($255M)

Google ($339M)

Functional Antibodies ($426M)


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Since 5 Stanford inventions have generated?@5A Billion in licensing income> BUT

only 3 out of 10,000inventions was a big winner

andonly 75have generated over $1 million.


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$ost Income ,omes from a /e' %ockets


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Licensing Takes TimeLicensing Takes Time

10 to 15 years can elapse between initialinvention disclosure and significant royalties


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OTL Shares theOTL Shares the0oyalties0oyalties

After deductions for overheadAfter deductions for overhead

(15%) and expenses, the net(15%) and expenses, the net

cash royalties are divided:cash royalties are divided:

1/3 to inventors1/3 to inventors

1/3 to inventors departments1/3 to inventors departments

1/3 to inventors school1/3 to inventors school


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0oyalty Sharing for ;uity*

In license agreements with equity, OTL typicallynegotiates 5% or less of the company, dependingon the other financial terms.

That equity is then distributed:15% earmarked for OTL, with the rest divided

1/3 to the inventors(issued directly to them)

2/3 to Stanford(designated for the OTL Research Fund and the

VPGE/OTL Graduate Education Fund)

*In order to mitigate potential institutional conflicts of interest, equity is distributeddifferently than cash and Stanford Management Company handles equity designated


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OTL Supports Operations> Patent,osts and 0esearch

OTLs$6.7 million/year operating budgetis self-funded through the 15%

overhead deduction from royalties.

In FY13patent expenses were$9.3 million, this was partly offset bylicensing income.

OTL hascontributed $65.9 millioncollectively tothe OTL Research Incentive

Fund, the OTL Research Fund, and the Vice Provost of GraduateEducation/OTL Graduate Fellowship Fund.

Sh d 0 lti S t th N t


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Shared 0oyalties Support the NeCt-eneration of Innovation


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OTL &elps /ind a &ome for Stanford Inventions"

to grow, develop and provide opportunitiesfor the future.


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Background:OTL and the Bayh3%ole 1ct

~83% of research at Stanford is funded by the U.S.

government

Bayh-Dole Act: Federal law that created uniformBayh-Dole Act: Federal law that created uniformpatent policy regarding inventions made underpatent policy regarding inventions made under

federally-funded research program.federally-funded research program.((Council on Governmental RelationsCouncil on Governmental Relationspublicationspublicationsononintellectual property)intellectual property)


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$ore Information on OTL 9ebsite$ore Information on OTL 9ebsite

The path fromdiscovery to inventionto marketplace is

rarely a straight line,but more like apuzzle, with dozens ofpieces that must cometogether in just theright configuration forsuccess, OTL AnnualReport 2013.

Search for newSearch for newtechnologies ontechnologies onTechfinderTechfinder

http://otl.stanford.edu/

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OTL Overview

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