Carnegie Mellon University

Transcription

1 Carnegie Mellon University U T E N Te c h n o l o g y Tr a n s f e r Wo r k s h o p C o i m b ra, Po r t u ga l N o v e m b e r 8-1 0,

2 Carnegie Mellon University DAY ONE

3 Center for Technology Transfer and Enterprise Creation UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

4 Center for Technology Transfer and Enterprise Creation ( CTTEC ) Presenter: Tara Branstad Associate Director Center for Technology Transfer and Enterprise Creation CTTEC Carnegie Mellon University Pittsburgh, PA branstad@cmu.edu

5 CTTEC What is Technology Transfer? The transfer of intellectual assets generated from research activities from inside the university to outside the university

6 CTTEC What are the intellectual assets generated from research activities? Inventions (may or may not be Patents) Software and other Copyrights Know-How Discoveries Data/ Results

7 CTTEC How are these intellectual assets transferred? Graduates (transfer of know-how) Publications (including Patents) Lectures/ Conferences Reports to Sponsors/ Donors Public Domain

8 CTTEC Material Transfers Sponsored Research Consortia Licenses Open Source How are these intellectual assets tranferred? Government (Bayh-Dole requirement) Research Internal Use Commercial Spin-off Companies

9 CTTEC Why technology transfer? Because we are obligated to by law or contract? For the good of society?

10 CTTEC Sources of Revenue 17% 8% 3% 36% Tuit ion Sponsored Projec ts Gifts Private Support Other 36%

11 CTTEC Sponsored Research Revenue Sources 8% 4% 3% 3% Federal State Industry Foundations/ NP Other 82%

12 CTTEC We are obligated to transfer the results of federally sponsored research for the good of society, since it is tax payer funded (Bayh-Dole). We sometimes agree to transfers of technology to other sponsors contractually. Okay, but is this the only answer?

13 CTTEC Why technology transfer? For economic development locally/ regionally/ nationally/ internationally?

14 CTTEC More than 5,000 new companies have formed around university research, the majority locating in close proximity to the university (72% most recent data). Such companies are vital to continued economic growth. In 2007, 686 new products and 555 new companies were introduced to the market based on university technology transfer activities. Is this the right answer?

15 CTTEC Why technology transfer? As a revenue generating activity for the university? Support additional research activities Provides incentives to faculty Possibility of the big one

16 CTTEC According to the 2007 AUTM Licensing Survey, university licensing activities generated over $2B in income for the universities For perspective Also, $48.8B in research funding And $3.4B in industrial sponsored research Only 1 in 4600 licenses a Big Winner 1 in 8 generates more than $100,000 (total) in revenues 50% produce less than $10,000 Cannot be the only reason!

17 CTTEC Why technology transfer? at Carnegie Mellon?

18 CTTEC Mission Statement of Carnegie Mellon University To create and disseminate knowledge and art through research and creative inquiry, teaching, and learning, and to transfer our intellectual and artistic products to enhance society in meaningful and sustainable ways It s who we are!

19 CTTEC The CMU Environment Culture of Innovation Focus on entrepreneurship across campus Blending/ elimination of traditional academic silos in favor of the creation of disruptive new fields of study Decentralized structure gives empowerment, flexibility Open innovation encouraged Focused, stated areas of expertise (robotics, gaming, entrepreneurship, drama, computer science)

20 CTTEC The Innovation Ecosystem at CMU FACULTY EIRs CTTEC DJC OLYMPUS PEER GROUPS INDUSTRY PARTNERS STUDENTS ENTREPRENEURS VCs/FUNDERS TBEDs

21 CTTEC Don Jones Center/ Tepper School of Business Cross-campus entrepreneurship programs MBA entrepreneurship track Business plan competitions Student clubs Project Olympus Based in Computer Science Department Outreach/ Education for faculty and students Incubation space for faculty and student based start-ups Early gap funding Networking/ Showcase Events

22 CTTEC EIRs Embedded entrepreneurs Connected to a large Research Center (ERC) Strong connections to industry Industry Partners Collaborative Innovation Center Houses Pittsburgh offices of Intel, Microsoft, and Google (Disney is down the street because it is full) in one building Consortia

23 CTTEC Peer Groups Loose affiliations of faculty entrepreneurs Often someone else in the department who has started a company and will make referrals Students Business students, engineers, design students, CS students Projects in courses Work on product/ business development Own projects/ faculty projects/ other students projects

24 CTTEC Entrepreneurs Part of the larger university network In the community, alumni, sometimes students/ faculty VCs/Funders Angel networks in the community VCs in the community and in the larger network TBEDs Local state-supported early stage funding agencies Some also provide interim management, services

25 CTTEC The Role of CTTEC Facilitate and accelerate the transfer of intellectual assets (in particular, those owned by the university) to the commercial marketplace. Negotiate and execute commercial agreements. Encourage faculty (and student) entrepreneurship and the creation of start-up companies. Manage the intellectual assets (patents and copyrights) of the university. Ensure CMU s compliance with relevant federal regulations and reporting requirements.

26 CTTEC CTTEC Process

27 CTTEC CTTEC General Information Reporting Structure: VP of Research Established: 1993 (TTO) Current Staff: Director Associate Director 2 Licensing Managers 1 Business manager 2 administrative assistants

28 CTTEC Points of Differentiation Innovation and Entrepreneurship central to mission and culture of the university Focus on simplification and transparency of deal-making Standard deal for spin-offs; reducing transactions costs Availability of early stage gap funding Current focus on building networks

29 CTTEC Gap Fund Program Local Foundation Support (Funding) State Funding Program Competitive Grants $10K - $35K per Company Pre-formation and Post-formation Funded ~$800,000 in gap funds since 2005

30 Filter A Filter B CTTEC Internal Outreach Strategy : Serving the Carnegie Mellon Community Tech Transfer Process and Social Media External Community Strategy : Commercialization Acceleration Physical Sciences Start-Up Information Technology Invention Disclosure Technology Assessment IP Protection and Develop Life Sciences License Sponsored Research and Entrepreneurial Activity Technology Transfer Process Marketplace

31 CTTEC CTTEC Performance Snapshot FY 2009 Total Number of Transfer Agreements Executed = 65 MTAs, IIAs, Research Use/ Internal Use/ Open Source Licenses Number of Commercial Licenses Executed = 18 Number of Spin-off Companies Total = 19 Number of Invention Disclosures = 111 Revenue from Licensing = $8.04M Number of Inventors Served = 321 Number of Patents Filed = 82 Number of Licensing Professionals = 4

32 Office of the General Counsel UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

33 Office of the General Counsel Presenter: Mary Beth Shaw Assistant General Counsel Office of the General Counsel Carnegie Mellon University Pittsburgh, PA

34 University Organizational Chart President of the University Executive Vice President and Provost Vice President of Finance and CFO Vice President for Research Vice President for Campus Affairs Vice President and General Counsel Vice President of University Advancement

35 CMU s Office of the General Counsel (OGC) OGC is responsible for handling/overseeing legal matters for the entire university (over 4,000 employees, etc.) Most matters are handled internally OGC also engages outside counsel: e.g., patent counsel (selected by Tech Transfer); litigation counsel; counsel for specific areas of expertise

36 CMU s OGC 6 Attorney s total including: 1 General Counsel 1 Deputy General Counsel 4 Assistant General Counsels All have varied backgrounds; 5 have significant/substantial business backgrounds/expertise

37 CMU s OGC Each attorney in OGC is responsible for all matters within his or her areas of expertise Mary Beth Shaw, Assistant General Counsel: Tax; Finance/Borrowing; Corporate Matters; Real Estate/Leasing/Purchase; Gifting; Housing and Dining; Miscellaneous Contracts; International Finance; International Initiatives; ETC (CMU division); Technology Transfer OGC legal representative for the CMU/Portugal program (including UMad/Madeira)

38 CMU s OGC Virtually all legal matters run through the OGC (for legal advice, analysis of legal risks, drafting/documenting, legal implications, etc.) like and interface/hub Helpful for information purposes or understanding the facts quickly/coordinating independent divisions/consistency

39 CMU s OGC OGC: Make it happen (unless illegal/contrary to law or presents an unreasonable risk or unfair) Think through problems/identify problems/solve problems Be creative OGC does not make business decisions Often involved in business issues (since legal issues are often intertwined) Working relationship with others within CMU Try to be helpful/help the process (not hinder it) Try to be responsive Friendly relationship Honest and to the point

40 CMU s OGC Working with CMU Technology Transfer Review/revise/draft documents Participate in conference calls with licensees/potential licensees Participate in finding solutions Be creative Whatever technology transfer tells me to do Good working relationship; known them for years. I understand their processes (difficult to give advice if there is no background). We understand each other s strengths and weaknesses

41 CMU s OGC For tech transfer, the type of legal counsel that may be appropriate to assist depends on what is wanted/needed: Patent counsel? General IP counsel? Corporate lawyer? Finance/business lawyer? Practical lawyer? Creative lawyer? Problem solver? Drafter? etc. Make business decisions? Is he/she supposed to make business decisions? Read the document for you? Help you understand it? State what he or she would do? Etc.

42 OPEN SOURCE LICENSING UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

43 Open Source What is Open Source? Freely available software in which the distribution requirements (License) conform to the following: Free redistribution Source code included Creation of derivatives allowed No restriction of field of use Rights follow redistribution No restriction on bundled software; no royalty requirement on same

44 Open Source What is Open Source? Definition of Free Software : The freedom to run the program, for any purpose The freedom to study and change it (access to source code) The freedom to redistribute copies The freedom to improve the program and release improvements and modifications in general Creators of the GNU Operating System/ GPL Licenses

45 Open Source Summary Access to Source Code Ability to use and redistribute Ability to create derivatives Consistent terms for all users Some philosophical differences between OSI/ FSF

46 Open Source NOT Public Domain What is Open Source NOT? Requires dedication to the public Author does not give up Copyright Transmission of rights (License) required NOT necessarily Free (No cost) Depends on License used In some cases, the Source Code itself, or derivatives can be sold alone or bundled with other software NOT necessarily unpatented

47 Open Source Permissive General Categories of OS Licenses Modified BSD X1 or MIT Copyleft (L)GPL All versions Apache Grant of Patent Rights (L)GPL 3.0 Eclipse

48 Open Source General Construction of an OS License 1.0 Grant of Rights 2.0 Inclusion of Disclaimer in Redistribution Requirement 3.0 Inclusion of Copyright Notice Requirement 4.0 Limitation on Use of Name 5.0 No Warranties 6.0 Requirements for Distribution of Derivatives 7.0 Obligation to Convey Source Code 8.0 Rights to Patents

49 Open Source Open Source License Issues Permissive O/S Licenses Conveys protections for the licensor No Harm No commercial restrictions on licensees Copyleft Licenses Copyleft structure results in restrictions on commercial activities Opportunity for dual licensing strategy Derivatives must be licensed under same O/S license Patent license Grant is broad = CAUTION

50 Open Source You need to know Software is often downloadable from faculty web sites Use of an appropriate O/S license is preferable to no license Open Source software is used in most software research projects Often the PI does not know what O/S software has been used

51 Open Source Impact on Technology Transfer Need to ask what O/S software has been used in creation of invention Need to ask students and research staff What was used? Under what licenses? Were derivatives made? What is the dissemination plan of the resulting product?

52 Open Source Navigating Open Source Issues Beware compatibility issues between different O/S Licenses: READ EVERY LICENSE Watch for mismatch between O/S License requirements and commercialization plan Beware incompatibility issues with other university agreements Understand consequence on commercial licensing of resulting product CAUTION: ECLIPSE and other patent right granting O/S Licenses (Industry loves these, for good reason)

53 Open Source Managing Issues in Open Source Often software is available under more than one license (i.e. a commercial version is available) Often substitutes are available under more favorable terms Look for loopholes (i.e. LGPL has a library file exception) Unbundle O/S software in commercial licenses, if possible Take advantage of GPL 2.0 dual licensing strategy Impress your researchers!

54 Intellectual Property Policy UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

55 CMU s IP Policy One of CMU s main and most referenced policies published on CMU s website at Starting point in responding to all research contracts/licenses/contractual commitments, questions, etc. i.e., step #1: who owns to work that is the subject of the contract, request, etc.? e.g., permission to use questions All CMU employees (staff and faculty) and students are bound by it

56 Explanation of IP Policy Overly simplified:

57 Basic Principles of IP Policy Academic freedom is a higher priority than potential financial rewards e.g., freedom to disseminate; academic freedom; open source Traditional rights retained by faculty Students retain ownership of intellectual property produced from their coursework (unless sponsored or voluntarily participate in a project) Faculty and student (essentially phd and grad) creators of intellectual property owned by CMU are entitled to share in financial rewards

58 Ownership of IP If the work was sponsored internally or externally, CMU owns the resulting IP (e.g., federal funding, or a corporate sponsor) With certain exceptions, if the work is not sponsored, CMU does not own the resulting IP (it will be owned by the creator) e.g., exception: IP created by staff (but not faculty) in the course and scope of their employment is owned by CMU Ownership of IP can be varied by contract (rare due to tax and other considerations generally applies where CMU takes ownership of the IP and not vice versa due to tax and other considerations) Except as limited above (e.g., sponsor has potential licensing rights), creators wishing to place their intellectual property in the public domain can do so Faculty authors always retain ownership of intellectual property rights from textbooks, courseware, publications, works of art, compositions, etc. and similar (i.e., traditional retained rights)

59 Sharing in Profits Profits are split with the faculty creators of IP owned by CMU and subsequently licensed Profits are gross amounts received, less costs of commercialization, such as IP costs, direct administrative costs (e.g., value of tech transfer time), etc. CMU is entitled to receive 15% of the profits above $50,000 (varies based on CPI) from IP owned by faculty creators (because it wasn t sponsored), if the creators substantially used CMU s facilities when creating the IP personnel, resources, etc., and did not reimburse CMU for the use (at the time of use) Substantial use is valued at about $10,000 (varies based on CPI) IP that is traditional retained rights (e.g., courseware, compositions, etc.) is excepted CMU also retains the right to use the IP

60 Assignment to Creators/CMU If the creators own and don t want to commercialize (or make it available to the public), then at CMU s request, CMU may acquire ownership in the IP (profits are then split) If CMU owns and doesn t want to commercialize (or make it available to the public), then at the creator s request, the creators may acquire ownership in the IP (CMU then receives 15% of the profits and retains a right to use the IP)

61 Required to be disclosed All IP that may be owned by CMU or that may be subject to the IP policy is required to be disclosed by the creator (through tech transfer) Analysis is then performed

62 Enterprise Creation UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

63 Enterprise Creation Why create spin-offs? University research results are often either too early in product cycle or far ahead of the market for corporations Large company often focus on sales and marketing to established customer base not disruptive technologies Regional economic growth & job creation; Growth of entrepreneurial faculty; retention of same Potential to share in upside via equity arrangements (CMU $30M in exits over 15 years)

64 Enterprise Creation Spin-off Guidelines Philosophy What can the university do to maximize the opportunity for the success of the Carnegie Mellon inventor/entrepreneur and his/her startup for our mutual, long term benefit?

65 Enterprise Creation Purpose of the Guidelines To facilitate the successful dissemination of technology created at CMU for the benefit of: Society Creators Pittsburgh Region Participants in Enterprise Creation CMU

66 Enterprise Creation Purpose of the Guidelines To make CMU an attractive environment for highly talented, entrepreneurial faculty and students To assist Pittsburgh s regional economic development To generate revenues directly from CMU s technology transfer projects To generate future CMU revenues in the form of gifts from entrepreneurs who have succeeded with technology generated at CMU

67 Enterprise Creation Objectives of the Guidelines To clarify and simplify the process by which new companies are created by CMU faculty To establish clear, fair and consistent practices and standards for the formation of spin-off companies To make these practices and standards widely known and understood by the CMU community and other related parties (funders, entrepreneurs, etc.)

68 Enterprise Creation CMU Experience CMU has had a standard spin-off deal in one form since 1998 Current guidelines were developed in 2004; with minor adjustments over the past 5 years Over 50 companies spun-off using the 2004 guidelines Positive vetting through multiple rounds of downstream investments and acquisitions

69 Enterprise Creation Required Conditions At least one of the Creator-Founders must be a member of CMU covered by the IP Policy Creator-Founders who wish to be active participants in the start-up must waive their share of proceeds under the IP Policy Creator-Founders must submit an acceptable Business Plan Circumstances of the proposed spin-off and technology must not be exceptional

70 Enterprise Creation Structure of the Standard Deal 1% Royalty for non-exclusive License (2% for exclusive) Waiver of royalty for 3 years 5% Equity for non-exclusive License (6% for exclusive) Warrant up to $2M in cumulative capital raised (antidilution) Standard common shareholder rights Pre-emptive right Co-sale right Piggyback registration right

71 Enterprise Creation No Board seat Alignment with founders Structure of the Standard Deal Equity based on $1M pre-money valuation assumption Royalty based on half-price license Royalty waiver preserves cash in company for 1st 3 years (university is not losing much, if anything, but gains much in good will) Performance requirements (Milestones)

72 Enterprise Creation Additional Options Patent expense deferral - 3 years; 1% additional equity for US prosecution PCT (additional.4%) Incubation - 1% additional equity per year (max. 2 years) Additional equity added in for inventors who do not waive (at least one must)

73 Enterprise Creation

74 Enterprise Creation Research Rank 2007 Start-up Rank 2007 Institution Total Research Expenditures ( ) Start-ups ( ) Research $/ Start-up ( ) Carnegie Mellon Univ. $ 699,712, $ 24,989, California Inst. of Technology $1,262,279, $32,366, Massachusetts Inst. of Technology (MIT) $3,562,600, $53,173, Georgia Inst. of Technology $1,377,743, $52,990, Stanford Univ. $2,078,133, $76,967, Univ. of Pittsburgh $1,824,279, $86,870, Univ. of Pennsylvania $1,971,007, $131,400, Penn State Univ. $1,959,676, $195,967,600

75 Enterprise Creation Direct and Indirect Spin-offs Direct Technologies owned by CMU Indirect Technologies developed but not owned by CMU 19 Total Spin-offs in Direct in Indirect identified in 2009

76 Enterprise Creation Gap Fund Program Local Foundation Support (Funding) State Funding Program Competitive Grants $10K - $35K per Company Pre-formation and Post-formation Funded ~$800,000 in gap funds since 2005

77 Patenting Software in the US UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

78 Patenting Software United States Constitution Article I, Section 8: Congress has the power "To promote the Progress of Science and Useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

79 Patenting Software What is Patentable? US Code 35, Part II, Ch. 10, S101 Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

80 Patentable Software What is Patentable? Novel inventions Have not been disclosed in the prior art; offered for sale; in the public domain; any other public disclosure Non-obvious Over what is in the prior art Useful Practical use or application

81 Patenting Software What is not Patentable? Non-statutory subject matter: Abstract Ideas Laws of Nature Natural Phenomena

82 Patenting Software What is software? Composition of matter? Machine? Article of Manufacture? Process? Abstract Idea? Law of Nature? Is software patentable?

83 Patenting Software Historically: Is software patentable? 1960s and 1970s: Invention not patentable if it uses a calculation made by a computer (US PTO) 1980s: Supreme Court - some computerized inventions are patentable (Diamond v. Diehr); contradictory rulings; dependent on claims drafting 1990s: Federal Courts greatly expanded patentability of software - software or other processes that yield a useful, concrete and tangible result should be considered patentable. (State Street Bank & Trust v. Signature Financial Group) 2000s: Processes (generally) are patentable if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. (In re Bilski)

84 Patenting Software Is software patentable? Algorithm is not patentable on its own Mathematical formulas Natural phenomena Abstract Idea Process or Method Patentable Use for practical purpose Produces an inventive step Results in the creation of a product/ service/ new business model

85 Patenting Software Should you Patent Software? Patent Strength: Composition of Matter Article of Manufacture Machine Process or Method Improvement

86 Patenting Software Patent (+) vs. Copyright (-) Protect idea ; Doctrine of Equivalents Protect more than one embodiment Build fences for spin-off company Create an easily identifiable barrier to entry (can be useful in fundraising)

87 Patenting Software Patent (-) vs. Copyright (+) Financial investment Size of market Novelty Non-obviousness Ability to detect infringement Role of tacit knowledge/ cost of re-creation Value of trade secret approach

88 Patenting Software The significance of a new idea usually cannot be known when it is first developed, because much of that significance depends on subsequent developments, both technological and economic. The upshot is that many good ideas are patented that never actually turn out to be worth anything. Adam Jaffe & Josh Lerner IEEE Spectrum 12/04

89 Patenting Software 25 REASONS NOT TO PATENT 1. WHY CREATE A ROADMAP OF THE PRODUCT? 2. EXCLUSION IS NOT CONSISTENT WITH THE UNIVERSITY S MISSION 3. PATENTS ARE EXPENSIVE TO FILE, PROSECUTE, AND MAINTAIN 4. BUDGETS ARE CONSTRAINED 5. OPEN SOURCE PROVIDES THE OPPORTUNITY TO BUILD A PRODUCT WITHIN A UNIVERSITY 6. A COMPANY CAN BE ACQUIRED WITHOUT HAVING ANY PATENTS 7. THEY AREN T REQUIRED FOR AN IPO 8. VC S DON T REALLY UNDERSTAND THEM ANYWAY

90 Patenting Software 25 REASONS NOT TO PATENT 9. PUBLICATION IS FREE AND ALSO CREATES A BAR 10. LARGE COMPANIES CAN STEP ON YOU EITHER WITH OR WITHOUT THEM 11. NATIONALIZING IS EVEN MORE EXPENSIVE 12. PROVIDES A FALSE SENSE OF SECURITY 13. FORCES THE SCIENTISTS TO CONSORT WITH BUSINESS PEOPLE AND LAWYERS 14. INFRINGEMENT: HOW MUCH JUSTICE CAN YOU AFFORD? MEDIAN COST OF A PATENT LITIGATION IS $4 MILLION

91 Patenting Software 25 REASONS NOT TO PATENT 15. CAN ALMOST ALWAYS BE WORKED AROUND BY CREATIVE PEOPLE 16. DOESN T COUNT TOWARDS TENURE (WHILE PUBLICATION DOES) 17. SOFTWARE PATENTS ARE NOTORIOUSLY WEAK 18. DISTRACTS START-UPS FROM THE MORE IMPORTANT THINGS SUCH AS PRODUCT DEVELOPMENT AND SALES 19. ALMOST IMPOSSIBLE TO POLICE 20. THREE YEARS TO ISSUE WILL THE SOFTWARE BE OBSOLETE? 21. MOST PATENTS ARE ULTIMATELY WORTHLESS

92 Patenting Software 25 REASONS NOT TO PATENT 22. IT WON T BE A JURY OF PEERS IF THE CASE EVER GOES TO COURT 23. COPYRIGHTS COST SIGNIFICANTLY LESS AND LAST UP TO 5X LONGER 24. MOST OF THE VALUE IS IN THE TACIT KNOWLEDGE 25. COUNTING # OF PATENTS EITHER UNDER OR OVERSTATES THE CENTER S PERFORMANCE AND/OR ECONOMIC IMPACT NOT A USEFUL METRIC

93 TTO Models and Metrics UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

94 TTO Models and Metrics Structure: What is the best fit given institutional structure and limitations? Operational: What are the priorities of the institution? Metrics: What are the expectations of the stakeholders?

95 TTO Models and Metrics Alternative Models The Outsourcing Model Texas Tech (LGE Execs) UNC-Charlotte (Southeast Techinventures For Profit Tech Transfer Matchmakers Creation of a Tech Transfer Network -South Dakota Network -Big 10 Committee on Institutional Cooperation Establishment of a Community ecosystem to aid Tech Transfer LaunchCyte LLC Pennsylvania Keystone Innovation Zones

96 TTO Models and Metrics Structural Models Internal University Office Subsidiary of University Externally Managed Managed as a Cost Center Managed as a Profit Center Managed as a separate Business Unit Most TTO s Small/ Med/ Large Private/ Semi-Public Foundation Wholly owned Subsidiary Separate company Large TTOs Land grant/ Public Incubators Technology Parks Third party consultants TT Company Public/ Private Partnerships University Consortiums Small/ new TTOs Incubators Technology Parks Venture Development Organizations

97 TTO Models and Metrics Structural Models Compare Internal University Office Allows a wider range of operational models/ metrics Less overhead Integrated into other university functions Faculty perception as us not them Mismatch of financial model Disadvantages in recruiting Disadvantages in deal flexibility Land grant universities Unable to accept equity

98 TTO Models and Metrics Structural Models Compare Subsidiary/ Foundation Deal Flexibility Ability to accept equity Flexibility in recruiting Independent economic model Can be run like a business Disconnected from research base/ faculty Disconnected from other university functions

99 TTO Models and Metrics Structural Models Compare Third Party Management Conserve resources before activity reaches critical mass Pool resources of multiple entities Amenable to alternate funding strategies Issues in ownership/ assignment Completely disconnected from research base/ faculty Completely disconnected from other university functions Loss of control of IP/ deal structures

100 TTO Models and Metrics Structural Model CMU Internal university Center Revenue Center/ Business Unit Revenue Neutral (no cost/ no profit ) No university budget Revenues distributed to inventors (50%) Revenues returned to university central/ departments Some mismatch in financial reporting when compared to other units

101 TTO Models and Metrics Operational Service Emphasizes service to the faculty Generation of income less important All cases receive equal attention Economic Development Emphasis on establishment of companies Big hits through equity Good publicity/ good neighbor Models Income Emphasis on generation of income Necessity of industry experts on team Attempts to pick winners

102 TTO Models and Metrics Service Model Operational Models Compare Significant income earning opportunities may be lost because of the lack of urgency to work on them Because an emphasis is not placed on income, it is likely that higher budget subsidies will be needed Measures of customer satisfaction are likely to be high

103 TTO Models and Metrics Operational Models Compare Income Model Rigorous triage of inventions early in the review process Pressure to concentrate on the big hit Measures of overall faculty satisfaction will likely be lower

104 TTO Models and Metrics Operational Models Compare Economic Development Model Licensing of inventions to established companies is secondary Company starts require a different set of skills that technology licensing May take longer to generate income Higher risk Only a small number of inventions make sense as a start up Measures of satisfaction are likely to be low

105 TTO Models and Metrics CMU Operational Model 50% Service 30% Economic Development 20% Income No TTO is purely one model, although some may come close Service model + Economic Development model does not mean TTO will be a Cost Center (-$$), although it may take more time CMU is revenue neutral, most revenues from running royalties, not large exits Service and Economic Development support each other

106 TTO Models and Metrics Service Model Metrics Number of invention disclosures Faculty satisfaction Number of technologies transferred Income Model Revenue generated Achievement of the big one ROI - how well are we identifying winners Econ Dev Model Revenue generated through exit events Number of spin-offs Number of jobs created/ investment leveraged

107 TTO Models and Metrics CMU Priorities Transfer of innovation outside the university Satisfaction of Faculty Support of Innovation/ Entrepreneurship Mission/ Position of university Economic development of region Reputation of CTTEC among stakeholders Financial Incentives for Faculty and Departments Revenues for Central Revenue neutrality for CTTEC (no cost to university)

108 TTO Models and Metrics Staffing the TTO Office Institutional priorities and environment drive structure and operational model of TTO Staffing must follow structure/ model/ priorities Use of technology experts? Use of market sector experts? Use of attorneys Patent? Corporate? Use of business/ finance experts? Use of entrepreneurs?

109 CTTEC Performance Metrics UTEN Technology Transfer Workshop Coimbra, Portugal November 8-10, 2009

110 CTTEC External Reporting CMU Metrics Technologies transferred/ Licenses New direct spin-off companies created New total spin-off companies created (direct & indirect) Inventors served Disclosures Revenues Gap funds awarded (Funders) Jobs created (State) Funding attracted by start-ups (State) Patents filed and awarded

111 CTTEC CMU Metrics Internal Faculty happiness Number of spin-offs direct and indirect Success of spin-offs Reputation Number of technology transfer agreements Number of inventors served Number of invention disclosures Amounts distributed to faculty/ departments/ central Net neutral cost to university (after expenses and distributions)

112 CTTEC CTTEC Performance Snapshot FY 2009 Total Number of Transfer Agreements Executed = 65 MTAs, IIAs, Research Use/ Internal Use/ Open Source Licenses Number of Commercial Licenses Executed = 18 Number of Spin-off Companies Total = 19 Number of Invention Disclosures = 111 Revenue from Licensing = $8.04M Number of Inventors Served = 321 Number of Patents Filed = 82 Number of Licensing Professionals = 4

113 CTTEC Licenses and other Agreements FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009

114 CTTEC Invention Disclosures FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009

115 CTTEC FY 2006 Disclosures by school 40% School of Computer Science 36% Carnegie Institute of Technology 20% Mellon College of Science

116 CTTEC Revenues from Licensing FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009

117 CTTEC Spin-off companies

118 CTTEC Key Markets of Spin-off Companies 4% 6% 9% 4% 56% 8% 13% Biotech Med Device Biz Services Env./ Mfg. Tech. Robotics IT Materials

119 CTTEC Research funding (in $M) FY2003 FY2004 FY2005 FY2006 FY2007 FY2008

120 CTTEC Research $48.8 billion Discovery 19,827 disclosures 1 per $2.5 million 2007 AUTM Data Licenses and Options 5,109 Licenses and Option 1 per $9.6 million Start-up Companies 555 company start-ups 1 per $88 million

121 CTTEC Research $227.8 million Discovery 122 disclosures 1 per $1.87 million 2008 CMU Data Licenses and Options 23 Licenses and Option 1 per $9.9 million Start-up Companies 10 company start-ups 1 per $22.8 million

122 CTTEC Cummulative Jobs Created Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09

123 CTTEC Cummulative Funding Leveraged 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09