The Challenge of Academic Tech Transfer Today and Tomorrow 2016 X FORTEC Annual Meeting Cuiabá Mary Albertson President-elect, AUTM Senior Licensing Associate Stanford University
The following presenta1on reflects the personal views and thoughts of Mary Albertson and is not to be construed as represen1ng in any way the views or advice of Stanford University nor the views or advice of the Associa1on of University Technology Managers (AUTM). The content is solely for purposes of discussion and illustra1on, and is not to be considered legal advice. 2 2
Pre-1980 Federal government owned all inven1ons Bureaucratic procedures Each agency had its own IP policy Requirement for non-exclusive licensing Public no1ce bidding No one to manage process at university 3
Result Few technologies commercialized 4
Building a T echnology Transfer Infrastructure: 1980-1990 Bayh-Dole Act Universi1es get the opportunity to take 1tle of inven1ons Universities set up technology transfer offices and start on a learning curve False starts: spending too much or too little on patent protec1on Distrust on both sides - academia and industry 5
Starting to come to maturity: 1990-2000 Universities learn what kind of technology is easier to license Universities learn which industries are receptive Begin to evaluate what the actual product is, e.g., the drug in the bottle or diagnostic kit? Answer ques1ons like is it a small component of a complex, existing system, e.g., software to control an existing device? 6
Technology Transfer is Spreading But Changing: 2000-2010 In economic downturns, states in the US increasingly look to universities to expand economic development Due to decrease in federal research funding schools looking for another revenue source Many see startup companies as a means to local job creation Other countries enact policies like Bayh-Dole and engage in technology transfer using commercialization models suited to local needs 7
Challenges: 2010 - Present Attacks on Bayh-Dole and universities are commonplace: should they be taken seriously? Managing expecta1ons (always has been a problem) US technology transfer has become so established & successful that it can become a political target America Invents Act (AIA) 8
America Invents Act (AIA) First to file instead of first to invent Ability to challenge applica1on while it s pending Broader ability to challenge patent auer it issues Puts pressure on TTO to file before an inven1on is ready 9
Patent Reform Massively funded awack on the US patent system in the guise of elimina1ng Patent Trolls 10
Complaints Universities have tried to patent nature University 1es to industry are too close There is too much emphasis on faculty entrepreneurship Universities are too wealthy now 11
Unrealis1c Expecta1ons University Administrations, State Governments, Trustees have seen the occasional blockbuster and set their hopes on licensing revenues to rescue them from their budget problems 12
Managing Expecta1ons Timeframe from disclosure to revenue is long Revenue genera1on is unreliable Very few big winners Start-ups not always the answer 13
Raw Materials Research budgets vary Areas of research vary what is commercializable? Faculty popula1on different at different universi1es (2,100 at Stanford) Autonomy of TTO varies 14
University reality check Occasional big hits but unlikely university technology transfer will ever be a major source of income for universi1es Technology is too early, too risky and too expensive to develop for companies Startups are desirable, but do not make money in most cases and equity is not liquid for years, if ever 15
Balancing the Hopes and Hazards of Startups 16
Start-ups Universities want to share in the upside and help with economic development Conflict of interest issues are primary concern Many start-ups first take option agreements for 6-12 months Most work with local VC firms 17
Managing Inventor Rela1onships Balance service to inventors with what is best for inven1on Need to educate on technology transfer Manage expecta1ons Manage conflict of interest Determine priority for nurturing start-ups 18
More Challenges: 2010-present Federal funding cutbacks have reduced the number of research outcomes and inventions US Supreme Court rulings in Stanford v Roche, Mayo v Prometheus and Myriad v AMP have changed the system universities must work within US venture capital is investing in fewer early stage companies 19
Defending the Freedom to Innovate: Faculty Intellectual Property Rights arer Stanford v. Roche American Associa1on of University Professors, AAUP Strong support of Free Agency Philosophical differences Faculty are. Employees? Subject to employment agreements? Stanford v. Roche didn t really change that But we scrambled to change employment offer language.. Hereby and not Shall may be the key? 20
AUTM s Response High level of visibility in D.C. Senate, Congress Op-Ed Piece in Financial Times Partnering with other associa1ons Higher educa1on Small Businesses Medical Device Manufacturers Na1onal Venture Capital Associa1on BIO PhRMA Many others. 21
Where US technology transfer is headed now: More emphasis on university-industry rela1ons Funding the gap Entrepreneurship programs Globaliza1on 22
Emphasis on partnerships between academia and industry Reduced industry investments in basic research - looks to universi1es as a source of inven1ons Reduced state and federal government grants universi1es look to industry for more financial support Some new Sponsored Research Agreement models which give ownership of inven1ons to the company sponsor or offer pre-set royalty terms 23
More emphasis on partnerships between academia and industry Many efforts to find bewer ways to work with industry such as the University-Industry Demonstra1on Partnership (UIDP); educate faculty on working with industry Increasing physical presence on campus by company partners Push to change US tax laws to make it easier to partner with industry Race to the BoWom? Some universi1es are giving away IP; delaying publica1ons; giving indirect cost deals 24
Filling the development gap for early stage university technology More internal technology development funds More partnerships with states and federal programs set up by NSF (icorps), NIH (SBIR/STTR) and other agencies Founda1ons and companies have venture investment divisions to support early stage university startups which match their goals 25
Entrepreneurship programs Both faculty and students are involved Wider range of support for startups Money from business plan compe11ons Mentoring, entrepreneur-in-residence programs, on-campus business incubators, access to management talent and early stage investment 26
Globaliza1on Countries around the world have developed a strong interest in technology transfer Bayh-Dole approach is a benchmark but countries set up systems that fit their unique needs, laws and culture Technology transfer will be a key part of the global knowledge economy and secure IP is the key Universi1es are transferring the technology of Technology Transfer and sharing ideas and best prac1ces Companies are sourcing technology globally 27
Threats and hindering factors for US Slow economic recovery and widespread sovereign debt Nega1ve effects of new legisla1on and court rulings Vulnerability of digital data and internet to hacking Immigra1on and export controls restric1ons/issues 28
Reality.revenues remain skewed to top 10 universi1es 29
FY2014 Licensing Ac1vity Survey AUTM s survey data show impressive gains: Record number of U.S. Patents issued Con1nuing increase in startups launched Growth in new commercials products Overall impact on the economy
About the Survey 191 responded (63% response rate) 163 universi1es 27 hospitals and research ins1tu1ons 1 third-party investment firm
Boos1ng Economy with University and Nonprofit Patent Licensing Economic impact from 1996 to 2013: Up to $518 billion on US gross domes1c product Up to $1.18 trillion on US gross industrial output Crea1ng as many as 3.8 million jobs
Jump in Startups 914 startup companies formed (up 11%) 4,688 startups opera1ng by end of FY2013 (up 11.4%) 702 startups stayed in ins1tu1on s state (up 14.8%) 77% of startups operate in home state where research conducted While only half of all new businesses formed in the United States survive more than five years, companies grounded in federally funded university research appear to do bewer.
Growth in New Commercial Products 965 new commercial products created (up 34%) $28 billion net product sales (up 27.2%) Nearly 10,000 patented products being sold that originated in academic research labs Remicade, developed by researchers at New York University, reduces symptoms of Crohn s disease for 1.3 million adult and teen pa1ents worldwide
Declining Federal Research Funding $62.8 billion total research expenditures (down 3.6%) $37.9 billion federally funded research expenditures (down 5%) Na1onal Ins1tutes of Health (NIH) grants declined every year since 2004 $57.5 billion reduc1on in federal funding if sequestra1on remains through 2017
Increased Partnership Ac1vity Between Academia and Industry $4.6 billion industry-sponsored expenditures (up 1%) 549 executed licenses containing equity (up 17%) 5,435 licenses executed (up 4.5%) 1,461 op1ons executed (up 7.7%) 42,015 ac1ve licenses and op1ons (down 2.9%)
Record Number of U.S. Patents Issued 6,363 U.S. patents issued (up 11% ) 23,526 total US patent applica1ons filed (up 0.10% ) 13,907 new patent applica1ons filed (down 7.26% ) 1,107 non-us new patent applica1ons filed (down 24.8% ) More than 80,000 patents have been issued to research ins1tu1ons over past 20 years
Communica1ng Impact of Technology Transfer Infographic Society Benefits and Economic Impact Postcard Human Side of Technology Transfer
University Disenchantment & Disinvestment Appe1te for con1nued investment (par1cularly in life science intensive porqolios) is weakening; big hits are scarce Technology Transfer is an unfunded mandate Limited capacity to maintain a porqolio to a maturity level that will awract licensees Some universi1es are close to abandoning tradi1onal IP porqolio modes 39
How to Respond? Industry has changed Open-( ish ) Innova1on models Technology Transfer needs to engage external partners on a holis9c rather than simply transac1onal basis: Corporate Philanthropy / founda1on Human resources (they hire our students ) Sponsored programs coordinated, consistent terms Collabora1ve basic & targeted research; co-loca1on of inves1gators Joint funding proposals to available government programs TT outreach & partnering officers are increasingly important to iden1fy &n nurture connec1ons 40
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In Summary Legisla1ve patent issues Ownership, if no Bayh-Dole regula1on Expecta1ons Industry rela1ons Faculty rela1ons Role of start-ups 42