University Intellectual Property Transfer Mechanisms: Adaptation

and Learning

Maryann P. Feldman

Johns Hopkins University

The Technology Transfer Landscape

• University Motivations• Key Mechanisms

– Licenses– Sponsored Research Agreements– University Spin-Offs– Equity Licenses

• Evolution Over Time• Unanswered questions and concerns

Motivations Findings: All Universities

Criteria Ranked Most Important Percentage

Service to Faculty 36%

Knowledge Dissemination 35%

Revenue Generation 18%

Service to Industry 9%

Economic Growth 9%

Licenses• University Gains

– Up-front Fee and Milestone Payments– On-Going Royalties– Knowledge Dissemination– Prestige

• Company Gains– Right to Use Intellectual Property

• Reactive Right

• Exclusive or Non-Exclusive

Sponsored Research Agreements• University Gains

– Research Funding and Faculty Support– Access to Industry Resources

• Knowledge• Instrumentation

• Company Gains– Place at the Table

• Proactive Problem Definition• Access to Tacit Knowledge• Right of First Refusal• Contacts

University Based Spin-offs

• University– Means to put licenses into play– Universities are seen as engines of local

economic development

• Companies can further technology development– New sources of funding– Move closer to commercial value

University Equity Licenses• University Gains

– License in Play– Up-Side Revenue Potential– Provides Service to Faculty– Entrepreneurial Kudos

• Company Gains– Right to Use Intellectual Property– Conservation of Cash– Legitimacy– Aligned Interests

Diversity in Entry in Technology Transfer:

Year of Establishment of Office

0

20

40

60

80

100

120

140

160

Pre-

1980

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

Existing Current Years

Source: AUTM Licensing Annual SurveysN = 139 Universities

Licensing Revenues

050000

100000150000200000250000300000350000400000450000500000

1991 1992 1993 1994 19950

20

40

60

80

100

120

Licensing Income Average Income per Income Generating Licenses

Source: AUTM Annual Surveys

Licensing Reconsidered

• A Few Big Hits. . .– Only Subset of Invention Disclosures Generate

any Licensing Interest– And of Those That Do, Very Few Generate

Returns

• Significant Lag Time Between License and Revenue Realization

Industry Sponsored Research

0

200

400

600

800

1000

1200

1400

1600

1800

1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997

Industry Sponsered Research Expenditures

Millions of Current 1992 Dollars

Source: NSF Science and Engineering Indicators

Sponsored Research Revisited

• As Compared to Licenses– Immediate, Certain Income– Mechanism to Move Early Technology Forward

(Thus increase potential IP Value)– Valued by Faculty

• But. . .– Limited Direct Up-Side Revenue Potential– Institutional Barriers to Leveraging

Increases in the Number of Spin-offs:

Companies Formed around a University License

0

50

100

150

200

250

300

Pre-1993 1994 1995 1996 1997 1998 1999

0

0.5

1

1.5

2

2.5

Number of Start-ups Average Annual

Increases in the Number of Spin-offs:

Constant Set of AUTM Respondents (N=76)

Source: AUTM Annual Licensing Survey

0

50

100

150

200

250

Pre-1993

1994 1995 1996 1997 1998 1999

00.511.522.53

Number of Start-ups Average

Year of First University Equity Deal

05

101520253035404550

Pre-

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Previous Years Current Year

Source: Research University TTO SurveyN = 67 Universities

Equity Deals Per University

0

2

4

6

8

10

12

14

16

18

Equity DealsSource: Research University TTO SurveyN = 67 Universities

Status of Equity DealsSource: Survey of Research Universities

Active Bankrupt Cashed-Out

486 (74%)

81 (12%)

93 (14%)

Source: Research University TTO SurveyN = 67 Universities

Equity Revisited• Now longer for start-ups• Perceived as between Licensing and

Sponsored Research in terms of:– Upside Revenue Potential – Alignment of Interests– Certification Effect

• Two-Thirds of our Survey Respondents Expect their University’s Involvement in Equity Deals will increase in the next 5 years

Reflective Conclusions

• The Cat is out of the Bag…..– More universities participate in tech transfer

– More mechanisms are used and more creatively

– Greater emphasis placed on universities’ role in economic development

• Tech Transfer Benchmarking has become important – Universities who lag their cohort made greater use of

equity licensing agreements

Reflective Conclusions 2

• Less about Material Transfer Agreements – Between universities– Between universities and corporate partners

• The numbers are only part of the story– mask great diversity in the

• organizational motives

• strategies and

• incentives at the various institutions

From Minds to Minefields: Negotiating the

Demilitarized Zone Between Industry and Academia “Patent protection takes a lot of work. And time. And money.

The dirty secret is that for many universities – perhaps most – they are not yet breaking even, much less making money on the proposition. And in some instances and some industries, patent protection may in fact be an oxymoron

“Universities are designed to operate not-for-profit and usually do quite well at it. On the other hand, it is expected that they should benefit the public. What is that thin line between their benefit and our benefit, and how do we keep sight of it?”

William Brody, President, Johns Hopkins University 1999