1. UK University and Technology
Transfer
Michael Blakeney
Queen Mary, University of London
EC-ASEAN Intellectual Property Rights Co-operation Programme (ECAP II)
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2. 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
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3. 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
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4. 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
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5. 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:
Invention Disclosure Negotiation and drafting License
agreements
Evaluation and Marketing Establishing spin-out company
Patent Prosecution Royalty/Milestone Management
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6. 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
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7. 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
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8. 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
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9. 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?
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10. 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
EC-ASEAN Intellectual Property Rights Co-operation Programme (ECAP II)
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11. Licensing vs. Spin-out
Pros Cons Inventor
Benefit
Licensing •Avoid initial high R&D •Could be one-off Percentage of
costs (exclusive) the licensing
•Spread risks (royalty) •Under-performed incomes
•High short-term incentive licensee
Spin-out •Product development •Inherent risks Shareholding
•Involving more •Medium-long return of the spin-out
people/energy/money •Hard slog with no company
•Really add value return
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12. 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
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13. 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%)
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14. Licensing (3)
• Improvements
– Joint ownership?
• Warranties and liabilities
– Condition of patent, the results, compliance
– Disclaimer
• Performance Management
– Best endeavour
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15. 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
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16. 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!
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17. 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
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18. Comparison of UK and US
technology transfer
Per $1bn research UK universities US universities UK as % US
Invention disclosure 440 399 110%
Licenses signed in year 206 120 172%
Licenses yielding income 202 280 72%
Licensing income $12.1m $31.4m 39%
Spin-outs created 50 15 333%
• Wright, Binks, Vahora and Lockett, University Commercialisation Survey, 2002, Nottingham
Business School, Unico and AURIL
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