Commercialization of University Technology Innovation Technology Transfer and

Commercialization of University Technology Innovation, Technology Transfer and Licensing Jack Turner, Associate Director M. I. T. Technology Licensing Office jht@mit. edu

M. I. T. Licensing Office Mission w Foster commercial investment in development of inventions and discoveries w Through these investments – and the economic development and products that follow – provide direct benefit to public w Generate goodwill: faculty, sponsors, licensees w Financial benefit to M. I. T. and inventors

Myths w Royalties are a significant source of revenue for the University w Expect a quick return of technology transfer investment w Companies are eager to accept new technology from universities w You should broadcast availability of technology for licensing w The technology transfer office finds the licensee

Reality w With the exception of the occasional "blockbuster", licensing revenue is small. w Don't expect product royalties for 8 -10 years w Most companies want quick time-to-market w Publishing lists of available technology is not effective w The inventor is the best source for leads

M. I. T. Approach w Primary objective is technology transfer, not to maximize income w Leverage intellectual property w License exclusively w Don’t let greed obstruct license agreement w Modest royalties geared to product success

Success Factors w Quality technology w Enthusiastic and cooperative inventors w Experienced, technically trained, business-oriented staff with industrial experience w Clear policy, straightforward procedures – rapid and efficient w Flexible terms w Willingness to adapt to changing circumstances

Environmental Factors w Financial – seed, angel, venture capital w Contract services – design, prototype, manufacture w Supportive culture – entrepreneur network, venture capital network, start-up clinics w Legal services – low cost, mentoring

Marketing Factors w Targeted marketing n n Focus on very few companies Build relationships with inventors, licensees, entrepreneurs, venture capitalists Follow-up inquiries Answer the telephone

License Agreement Factors w Given a potential licensee, tailor terms to fit n n n Shared risk Low initial fees Equity in partial-lieu of royalty Modest royalty rates Diligence provisions l Investment, personnel, milestones (development and sales), sublicensing requirements

University Factors w Strong support for technology transfer office n n Ability to hire experienced staff Financial support for office infrastructure Long-term investment in patents Willingness to stand behind aggressive enforcement of patent rights

Incentives for University w w Follow-on technology development Institutional recognition Additional sponsored research Royalty income n n Recover patent costs License issue fees Royalty income Equity w Employment for graduates w Local economic development w Political support: local, regional, national

Incentives for Inventors w Invention becomes product w Opportunity to consult w Equity position in start-up n Inventor wants company to succeed w Royalty income n Inventor wants product to succeed

Incentives for Companies w Source of new technology w Lower cost product development w Patent position – exclusivity w Easier to raise investment capital w Shorter time-to-market w Low-cost access to technical expert

MIT Policy w MIT owns the patent or copyright l l Federally funded research – Bayh-Dole Act Industrially sponsored research w Industrial sponsor license rights l l Non-exclusive, royalty-free for $3 K/year Royalty-bearing, limited term exclusive w Royalty Distribution (after expenses) l l l 1/3 inventors 1/3 inventor’s department 1/3 University General Fund

Bayh-Dole Act w Basic “Technology Transfer” Legislation n n University takes title to inventions made through federally funded research May issue exclusive licenses w University is obligated to commercialize n n n Small business preference Job creation & economic development focus Revenue received l l Share portion with inventors Remainder goes into research

Typical Terms w Exclusive w Field of Use: Limited w License Issue Fee: $25 - $100 K w Royalty: 3 -5% w Minimum annual royalty: escalates over time w Equity: 5% after significant funding w Patent expense reimbursement

Sample Companies w w w w w Omni. Guide – optical waveguide Luminous Devices – high power LEDs Elesys – smart sensor for airbag deployment Alnylum Pharma - Si. RNA Sony, Moto, Panasonic, Samsung, LG, etc. - DTV Carl Zeiss Meditec – Optical Coherence Tomography Zimmer - protheses Neurometrix – neural monitors Cytec – water purification polymers Momenta Pharma – heparin products

MIT Licensing Office 2007 w Staff l l w w 32 Licensing Professionals Finance & Support Invention Disclosures Patents filed Patent issued Licenses and Options l l Licenses (start-ups) Options w Active agreements 17 15 487 314 1149 85 (24) 32 650

MIT Licensing Office 2007 w Royalty income $68. 2 million (Equity cash-in = $0. 7 in 2006) w Operating expense w Patent expense w Inventors w Other institutions w MIT departments $ 4. 2 million $12. 8 million $16. 5 million $10. 6 million $25. 6 million

Conclusions w Technology transfer is a service w Targeted marketing of inventions w Favorable license terms to induce investment w Powerful engine for economic development