An Example

Posted on October 21, 2008 by Gerald Barnett

Here’s an example of a points of engagement analysis. This is something that I worked up some time ago. Consider a university as a set of nested administrative units:

Central — Senior Administrators
Colleges — Deans
Departments — Chairs
Labs– Principal Investigators, Directors
Individuals — Faculty, Staff, Students

Each of these various levels can have points of engagement–and the further down in the organization, the more there are. Now let’s look at how a university policy directs the flow of IP assets in this nested set of units. If ownership is asserted by the university, then individuals are asked to report and assign IP up in the organization. Typically, these assignments are made to the university and put under the control of a central administrative level office such as an Office of Technology Licensing, with support from an Office of General Counsel for legal and contracting matters. It is the mandate of this office to seek license contracts on behalf of the inventors (as individuals benefiting with a share of royalties) and the university broadly (with central administration retaining a significant share of proceeds to pay the budget of the TLO and for discretionary spending).

The flow of ownership and control then appears to move up the organization:

nestfig1

We call this shift of ownership a venue jump. A premise of IP management is that venue jumps signal changes in IP valuation, since IP value, like other intangible assets, is a function of the capability and operating interests of the entity controlling it. Books like Negotiating Rationally (a really super book) explore how a sense of ownership shapes perceptions of value–simply thinking as an owner may result in a significant increase in expectations of value.

A simple question is, does an IP right acquire value by moving from individuals to the TLO? From the individuals’ perspective, the answer may be no–it has less value to the individuals because they no longer own or control it. On the other hand, it may have more value if the TLO spends $15K on patent work, and the individuals hope this increases the value of the IP right. From the TLO perspective, value may work similarly–by perfecting ownership rights in the IP, the TLO perceives the IP as having more value than in the hands of individuals.

But how might a company that has an interest in IP see the situation? Would they rather deal with individuals or with the TLO? Given that value captured is a function of consideration paid less transaction costs and acquired liability, individuals and the TLO present with rather different value opportunities. Individuals might be able to do a simple license arrangement as part of a consulting deal and be happy with a few thousands of dollars and some stock options, while the TLO may have a strong regulatory set of requirements for contracting and require diligence, significant up front fees, a sales model and running royalties on those sales.

So a follow on question is, will any given company perceive IP as having greater value with the individuals or the TLO? Or with some other unit of the university, such as the lab or college? This second question sounds similar to the first, but actually it’s very different. The first question asks what the value appears to be to the various units within the university–how much might be obtained in exchange for the right in their possession? The second has to do with how desirable a right may be in the hands of individuals or in the TLO or some other point of engagement.

Let’s build out the other side of the transaction to complete this picture. A company can be thought of as layers as well. There’s plenty of variation, but generally the layers look like this:

Corporate — Executive Officers
Divisions — Vice Presidents
Groups — Managing Directors
Teams — Team leaders
Individuals — Employees, contractors

If the company is a start up or small business concern, then these layers may collapse to Corporate and Teams, or Corporate and Individuals. We can ask, how does IP come into a company organization? Or, what is the most effective insertion point for new IP so that it is used as a tool? adopted for use in products? desired for an exclusive competitive position? These questions again have a range of answers. Generally, however, to propose an exclusive position, one moves up the company layers toward Divisions and Corporate, while providing technology as a tool may involve acquisitions that a Team Leader is able to negotiate, depending on the terms of the transaction.

Developing things this way leads to rather different possible points of engagement within organizations and pathways between them. A typical one is as above, with IP moving from individuals to the TLO to a Company Division, and from there down to a work group. Another might be from individuals, assigned directly to a Company on behalf of a work group (or another way, a work group collaborates with university individuals to create a joint ownership position in resulting IP). In this second scenario, IP moves to the Company without engaging the TLO, the Lab, or any other units.

nestfig2

One area we have spent time exploring is peer to peer exchanges between labs and company teams and groups. In this approach, IP moves from individuals to a Lab–so there is group ownership of assets–and from there assets are acquired by Groups and Teams. Open source distributions can look this way. While technically the copyright may be with the university, the attributes of ownership are with the Lab. The software is on the lab’s web site, or is placed by the lab on a web site like Sourceforge. A company acquires via an arrangement set up on behalf of the lab, such as a consortium or affiliates program, where joining the program triggers access to the available IP (that is, the licensing is embedded in a broader relationship that carries the value, and the broader relationship is available to purchase).

In this arrangement, IP moves from individual to lab, and from lab to work group, and from work group can move up and out in an organization, if one handles the IP conditions in the exchange transaction well.

nestfig31

In this approach, companies obtain easy access at a lower level with opportunities to move the IP up rather than down in their organization. This creates altogether different dynamics for adoption, as it meets a number of the Rogers tests for innovation, including triability, whereas a TLO administered arrangement to senior company executives will depend much more on scientific findings, inspection of prototypes, and the like.

These notes show how different points of engagement in both the university and in companies can change the dynamics of venue shifts for IP. Since it is these venue shifts that carry significant value change, and transform opportunities for value capture, IP policy and practice should focus on which of these points of engagement and pathways are resourced to promote highly productive research-community interfaces. While the conventional move from individuals to TLO to company has a lot to recommend, it’s also clear that doing so cuts out involvement by labs, by chairs, and deans–who also may have tremendous connections into industry–and typically forces acquisition decisions to be made at senior levels in companies and then pushed down to work groups, rather than forming as arguments for adoption at the work group level and migrating up.

If one is looking to assess the resources available to a university in promoting innovation, one key place to look will be the diversity of points of engagement to transact deals that move technology to new venues where it will be evaluated, used, and invested. Having only one policy pipe–from individuals to TLO to company–looks both overly restrictive and tremendously difficult!

Posted in Projects, Technology Transfer | Comments Off on An Example

Points of Engagement

Posted on October 20, 2008 by Gerald Barnett

In Culture and Prosperity, John Kay observes that “we work in organizations, earn as individuals, and consume as households.” A similar observation can be made of university research–faculty work in a university context, as principal investigators take on research with an expectation of personal performance, and generally build and consume resources as teams in the form of labs or centers.

University policy and practice takes a relatively dim view of this situation, however. Which is strange, since when it comes to intellectual property and industry collaboration, the program–lab, center, research project, training project–is more important than the individual or the corporate entity. It is the project that defines a research goal, generates assets, provides capstone training, becomes a going research concern. Comparatively speaking, other university units–department, college, central administrative offices like a spo or tto–are relatively dull places. Yet university policies generally interpose the spo or tto between an interested company and the lab. The contract or right is seen as more important to policy than the lab that generates it or the outcomes intended by the research.

It’s more than just a broker relationship, too. A spo or tto imposes a contractual and financial model on the form of relationship. For the spo, it’s an Industry Sponsored Research Agreement (ISRA). For the tto, it’s a patent license (#@#$). To get there, the technical contractual problem for both the spo and the tto is to push the relationship into the contractual forms that policy requires. “Training” and “compliance” become primary internal tools of control. In external interactions this push shows up as “negotiation.” It is really not negotiation. It’s more like pushing an interested company toward the policy’s preferred point of engagement. From a company perspective, this is consternating, because the exchange often looks like it should be negotiation, but it turns out to be a form of “correction” in what a spo or tto takes to be an otherwise malformed situation.

As we consider effective approaches to university-industry collaboration, we need to look at how these and other points of engagement operate. We need to ask as well how these various points of engagement inter-relate. Most importantly, we need to ask how these approaches advance projects–the “household” or going concern of university research–relative to individual and corporate activities. This all sounds like bother–complicated, political, far from the demands of today’s deals, counterintuitive and irritating to folks who want something simple.

Who wants more questions? Developing new approaches means more than constructing a census of what is and asking what looks best. This is the fallacy of “best practices” in a changing environment. The best practices that can be documented are often the established practices one is actually working against! The practices one needs may not even exist, but can be designed, or may be drawn from unexpected areas and applied in university-industry collaborations.

Research enterprise is complicated by competing issues. In drawing these out, the point is not to be surprised, but rather to emphasize how policy requirements affect in unintended ways broader contexts of interaction. The narrower the silos in which specific units work and create policy and practice, the worse their potential impact beyond their own operations. A spo that considers financial compliance as a primary charter will invariably suck energy out of creativity, opportunity, and exceptional efforts. Not that it intends to. It will look to consistency, compliance, and mitigation of risk. That’s because these are way more important to a spo than a peculiar outcome or discovery in the research. It’s a mindset that’s totally reasonable, totally defensible. That’s why it persists, is stable, and a challenge for research collaborations centered on other things altogether. Again, consistency, compliance, and mitigation of risk are not bad things–but they are also not the only things. The moment the other things are “someone else’s problem” that’s when the overall environment for research collaboration begins to break down.

What are other points of university-industry engagement? Gift funding, membership, extension, subscription, alumni, web/open, events, and job placement, undocumented collaboration, personal consulting. One may also include new ventures (for profit and non-profit). For research enterprise, we ask: how do these, along with ISRAs and #@#$s, advantage individuals, programs, and the university’s “corporate” units? If everyone in their own unit tries to get as much done as possible in their own silos, we don’t necessarily end up with coherence in an overall portfolio, nor any smarts with regard to the development of sustaining collaborations with industry (new ventures/investment, small and mid sized companies, industry leaders, industry-wide training and technology needs). We get confused noise, more like the game of Pit, with everyone shouting out their needs, claiming whatever they can harvest.

More so, we have to consider not just how each unit counts its beans–the true gruel of administrative metrics–and not just how each lab benefits by this, but also, and more importantly how each lab makes contributions that matter to a broader community, such as:

Place students in positions of industry responsibility
Refer opportunity on behalf of industry associates
Support efforts of community partners
Develop entrepreneurial opportunities
Create technology with innovation potential
Support uptake of new technology (not necessarily one’s own)
Provide research tools, data, and platforms
Stimulate the popular imagination
Teach research findings to capable audiences

It is altogether easy to say: these are nice things but not the core of university research. Which means, essentially: we are doing fine as it is, making incremental improvements as need be, no need to rock the boat or get in a panic about things, these other nice things happen if we stay focused on what we do really well, which is do research, publish, and teach. This is a decent thing to say, and it may be true. But even so (and I don’t think it is true, just to make that clear), we still haven’t got at whether current research endeavors are primarily carried by individual interests (the legacy of faculty freedoms and personal reputations) or corporate ones (the overlay of contracting policies relative to funding and rights) or something else–say, the academic freedoms and relationships established by teams, groups, projects, labs, centers, and other forms of initiative that establish an identity and forms of their own control?

While these kinds of activities can be done by individuals and by “departments”, the sweet spot may very well be the lab or project. This runs against how universities are set up for technology transfer and sponsored research, which favor the individual when it comes to inventions and research, and corporate units when it comes to money and contracts. If we were aiming to develop university industry collaboration for any of these kinds of goals, focused on projects and their outcomes, what points of engagement would be the ones to develop and use? What university research projects would respond well to the opportunity, and what ones would see any of this as distraction or worse? What point of engagement in a company would be on the other side of the collaboration? HR, research, marketing, sales, product development, senior management, dedicated university liaison, CSR?

Here, we describe the outlines of a map, acknowledge competing interests before building pathways among them. We build this map out of points of engagement, the transactions available, and the connections between transactions and benefits realized beyond the university (first); benefits realized in the lab as going concern (second); benefits realized by university as public asset (third) and benefits realized by individuals involved (also third). Putting things in this order changes where the metrics interest is, where the accountability is, and where the conflict of interest shows up (as between individual and corporate benefits).

Two questions that matter:

Should we tolerate a fight between individuals and university administration over who gets more if we’ve totally dumped on the benefits that directly advance community and the research endeavor? How much money a university makes on research or licensing means next to nothing in assessing collaboration. A big hit deal fifteen years ago. Enough funding to hire technology transfer officers without making a budget justification. A robust indirect cost pool to carry the spo. Says nothing about continuing practices, structure of the portfolio of relationships, efforts and vulnerabilities to achieve community-focused goals. How the university or individuals or labs allocate what they receive, however, says a lot about what matters in a given organization. “How have you spent?” may be more important than “How much did you receive?”

Should we tolerate a fixation on improving narrowly defined programs based on volume research and (attempted) licensing transactions at a time when many voices are calling for innovation in collaborative interfaces to reflect new realities of research, transaction, and opportunity? The genres of industry sponsored research agreement and patent license have become so well established that policy has installed these as dominant points of engagement, making it difficult to innovate in research enterprise just when we may need to most. It would be hard enough to create new protocols for engagement in a changing research landscape–it’s even worse when doing so is seen as against policy.

Posted in Metrics, Projects, Sponsored Research, Technology Transfer | Comments Off on Points of Engagement

Heresy

Posted on October 17, 2008 by Gerald Barnett

Let’s dive in and ask a heretical question: Are contracts for research or technology access necessary?

Here’s the thing. Companies all the time provide gift funding for research at universities–huge amounts come in, and research gets done without a contract to do it. Technology gets developed and published and people read about it, implement it, and live good lives, without taking a license, without signing a contract. More to it, licenses can be granted without forming a contract, just as I can agree to meet you for lunch and not make it a contractual commitment. Even though we may feel committed to the date, and determined to get there, it’s nothing that will be enforced in a court as a binding promise–offer, acceptance, and consideration, in writing to last more than a year, signed off by authorized parties.

So what is the case for sponsored research contracts with industry, and license contracts to industry? What is really on the line with these instruments, if collaboration can readily take place without them? Who wants them and why? If we come at it from this direction, we have a chance of seeing where improvements in *collaboration* can be made without getting caught up in thinking that improving negotiations on a given kind of *contract* will get us very far. I’ve been thinking about how less contracting might serve collaboration better–thinking about what the sweet spots are for such work. My premise is that sweet spots are actually hard to achieve–they aren’t the normal snap to grid stuff that is easy or defaults–they are often unstable, maybe not even replicable, but are the peculiar transactions that make the rush of everyday stuff worth it.

Consider, in addition to imagining there are no contracts (it’s easy if you try), that we have a class of quasi contracts, of lightly papered transactions. Then what are the control points? Clearly, in a research collaboration, the control points are primarily with the interaction of the technical lead personnel. Those arrangements, like agreeing on where to meet for lunch, can be stable, iterative by way of exchanges, and highly productive. Research personnel are adept at setting ground rules for their collaboration, monitoring exchange conditions to be sure to be getting what is expected, and adjusting things as stuff works out or doesn’t. Sure there can be bad behavior–laziness, mean-spiritedness, co-opting, exclusion, error-ridden, indifferent, spotlight hogging, malspending nastiness. There are remedies for these things, too–being careful to choose partners, having more in common than an arm’s length transaction brokered by folks you never want to see socially, being able to break things off or reposition if things are not working out. And since those involved all have these options, there’s a positive dynamic to find ways to work things out once common ground has been established.

If a contract diminishes this research governance, then the contract increasingly has to take up more and more of the relationship. Not to wander too far, but this is analogous to Milton’s argument in Aereopagitica regarding morality –if a choice is forced, then making the choice is no reflection of the morality of the chooser. Similarly, if the contract stipulates a behavior, it actually can disenfranchise the goodwill of the participants. Sure, there’s an implied “good faith” obligation in a contract–but if the good faith is shifted from individuals to a corporate entity with the power to command and control its personnel, the contract has done a heck of job in diminishing the importance of personal commitment. In fact, by seeking to displace personal commitment in favor of enforceable certainties, a contract could as easily end up delivering only what it demands, and not necessarily anything else that otherwise might be freely offered.

This sense of personnel goodwill binding creative relationships should not be underestimated. The “four corners” approach to contracting–the contract displaces all other understandings and communications and represents the “entire agreement” has a huge effect on a proposed research collaboration. Why on earth would anyone think that a contract should do this? Well, there are rationales for it. But from a heretical point of view, which is what this post is all about, there’s huge damage in disabling the personal engagement of one’s research folks with a four corners approach. Once one has done this–then one has to pile in clause after clause to substitute for the life that was drained out of the deal formally by imposing a contract.

One can also take this another way. We can imagine partially contracted positions–the contract does not represent the entire arrangement, but only a portion of it, such as how money contributed will be handled, without address a number of other issues that easily can come up–lead personnel, publication, risk, and the like. Making it all over simple: “Since we’ve decided to collaborate, this bit of contract covers the provision of funds to the university. We’ll pay this amount quarterly, and you invoice us to get our finance people to cut the check, and if at some point we decide to end this arrangement, we will let you know. If there is money left over in your accounts at the end of it, you send it back to us unless we indicate otherwise.” I know, hopeless plain. But ignore for the moment that legalese may not add any meaningful “precision” and may indeed force creating a comprehensive, disenfranchising contract. If the core of the relationship is the mutual agreement (but not enforceable promise) to work together for a time, then why not have a contract that handles only that portion that involves exchange of funds and stays entirely out of the overall project governance?

The big kick against all this thinking will be the three virtues of regulatory thinking: compliance, consistency, and avoidance of risk. These are not the virtues of top end research collaborations, but they show up and it’s hard to say they don’t matter. You can’t contract with companies for sponsored research using accounting methods that differ from the federal rules governing research awards. That would be inconsistent. Circular A-21 to rule us all! Once you’ve set up for volume work, it’s just uninteresting to explain to an auditor why industry arrangements might be different–so rather than making industry arrangements different–you force industry arrangements into the federal mold. This isn’t so much negotiation as it is putting pants on an octopus.

Going at it along the lines of heresy, however, it should be obvious that there’s a lot of room in building research collaborations for no contracts at all, for quasi contracts that touch only lightly on certain elements, and for partial contracts that do not aim to fully specify the relationship, but to be adjunct to it. If one sets up one’s contracting to maximize collaboration, innovation, and the entrepreneurial energy often needed to move ideas from lab to application (even if in another lab, as a tool), then it’s these sorts of strategies that should come to the fore. If, however, contracting is about maximizing the income to the institution with the minimal work necessary to meet the technical requirements for the money, then these broader outcomes simply cannot matter–the contract has to be a certain way, and whatever collaboration is going to happen has to take place within those bounds. At best, we are reduced to arguing over ownership, rights, publication, and risk–which while also important aren’t nearly so as whether creative talent will organize around a line of investigation with sufficient smarts to find something out that matters.

Posted in Commons, Sponsored Research | Comments Off on Heresy

Lambert Agreements

Posted on October 16, 2008 by Gerald Barnett

The UK Department for Innovation, Universities & Skills has updated its Lambert Tool Kit for Collaborative Research. You can find the documents here:

http://www.innovation.gov.uk/lambertagreements/index.asp

The Toolkit provides template agreements that are intended to “maximize innovation” and to “encourage university and industry collaboration and sharing of knowledge”. Under the heading “Innovation and Compromise” the Toolkit header acknowledges that the templates are not “an ideal position” but instead are a “workable and reasonable compromise”. Really. I’ve worked through the “Research Collaboration Agreements” and made an extensive annotated mark up. I agree–these templates are not ideal.

But further, they are rather badly conceived and constructed. Which is very disappointing. We can take them apart on three fronts. At the most concrete, they are inconsistent, badly handle key definitions, leave out really important stuff while belaboring odd details. This happens all the time, of course, and is a bane of good drafting. But for templates this long in the works, it suggests things haven’t been reviewed carefully. At a second level, the templates take a strange approach to compromise in sponsored research, showing little insight into key issues for either side, and leaving clauses that can be exploited in truly adverse ways. I can’t imagine many alert company-side officers being satisfied with how things are handled. Finally, at a top level, the templates do not live up to their billing in terms of maximizing innovation or sharing knowledge.

The Lambert templates are basically conventional research services procurement documents that throw a gesture toward typical university expectations of management–a PI, a scope of work, funding. The gestures toward innovation are paltry and expected, the sharing of knowledge is marginalized in favor of rights and confidentiality, and the role of the university as a steward for independent commentators on an area of science or technology goes unrecognized. Worse, the concepts behind collaboration are starkly undeveloped. It would appear “collaboration” means “send money and take rights”. This is a deep fixation on money and ownership that might take more than a few bits of discussion to undo. Certainly it’s not so much a matter of negotiation as it is epiphany. We may have differences on what a collaboration can be, but surely it’s more than money and ownership.

If the templates represent a compromise, it is of the shot-gun sort of varying degrees of master-slave relationship, with the sponsor as master. If the templates aim to maximize innovation, it must be because any sponsor who shows up with however small sums is given heart to buy out any line of university research, with no diligence to speak of, and somehow this maximizes innovation. What happens to open innovation? What happens to tools, platforms, standards, infrastructure–whether for community, the research community, or an industry segment? What happens to entrepreneurship, economic development, start up ventures, new business clusters, and attraction of private investment? All that is missing from the Lambert Tool Kit. Which is too bad, because we really do need examples of strategies, and contracts where necessary to enable them, that do contribute to a push for innovation in a given area, with competitive opportunities, with returns for participants.

There is a huge amount of stuff underlying how things work here. I’ll try to get at some of the issues in later posts. For now, I wish the Lambert Tool Kit folks the best, and encourage them to rework their templates to take into account 1) the creative asset represented by an unfettered university research program; 2) the impact on the broader research effort of “kept university” contracting as proposed by the Lambert Tool Kit; and 3) the various forms by which research assets are deployed–for good value–quite apart from ownership claims by either the university or any sponsor. I can understand that the drafters of the Lambert documents were trying to be anything but innovative in the development of their compromise documents. What we really need, however, is a new class of documents enabling the (often new) relationships that typify a knowledge economy rather than a manufacturing one.

Posted in Sponsored Research | 1 Comment

University IP Functions

Posted on September 9, 2008 by Gerald Barnett

University intellectual property management involves five related areas. Each has a distinct operating model and value points. I summarize these here. Many variations possible.

Information Assets

Generally: Split private/open/university–subscription, membership, site license, open–early relationships, light footprint, transaction time <2hrs, repeat business, into labs early by years, across campus in many depts, front end for conventional patent transactions, added value includes visibility, market channels, referral networks. STUFF EVERYWHERE Key tech transfer question: Should this asset be taught to industry? Value: Value is in relationship with lab, utility of asset, updates and support. Shift copyright to trademark, copyright to patent, copyright to workshop or services. Core asset is the project that holds the university-side assets and relationships. Tools--2nd generation approaches, open source, publication protocols. Challenge—organizing projects, spinning up systematic distribution, managing multiple forms of IP, transitions as various assets rise in prominence. Classic Patent Commercialization

Generally: Patentable inventions with “commercial” value–primarily university–relationship starts with disclosure–filing and compliance overhead, significant footprint, usually one-off exclusive license, limited to biosciences, engineering, some chemistry and hardware, focus is on product development in exchange for royalties on sales. UP TO A FEW HUNDRED PER YEAR TO REVIEW, 1 in 2000 A BIG HIT.

Key tech transfer question: Does this invention have commercial value?

Value: Value is in patent license, copyrights are often flushed, especially in research agreement IP clauses with industry sponsors. Asset is product in market for success story.

Tools—marketing platforms, trade shows, technology databases, industry experienced agents.

Challenge: Finding commercialization partners, especially outside biotech, knowing industry product roadmap details, assessing early stage technologies for viable economic product lives.

Start up Commercialization

Generally: Split university IP/business concepts–relationship starts with business idea–university assets split between those useful to raise money via diligence and those that can support company business. Very significant footprint– IP plus multiple clearances in university–COI, academic/business supervision, improvements, sponsored research back to lab, equity, personal consulting arrangements, line management positions, involvement in business end of launch–broader reach than classic patent commercialization–can involve services-based businesses as well–economic development visibility. TENS TO TWENTIES PER YEAR.

Key tech transfer question: Is there a viable company here?

Value: Focus is on company development for equity value–often slips off of licensed university tech when first round comes in—making tighter diligence to prevent restricts company and lowers IP value and relationship to company by shifting risk–equity may go to university treasurer where it can be lost in shuffle. May require exit schedule to disable timing market/insider information issues. Assets are management, relationship with venture backers, company visibility, and jobs. Value is in equity + royalties hedge, sometimes in related research agreement.

Tools: Incubators, business acceleration, business parks, “Connect”-like programs, working referral lists, aligned seed funds, business school partnerships.

Challenge: Connecting up new business with university IP, adding value before capturing it.

Industry Research Contracting

Generally: University typically claims rights—industry and increasingly foundation sponsors aim to gain control or force no control–default is usually first right to negotiate exclusive or non-exclusive royalty free (NERF)—relationship starts with IP clause in research contract unless part of start up or research tied to license–footprint in negotiation, generally license is pro forma–rarely value in industry sponsored research agreement (ISRA) licenses–procurement folks often play to win across finance, risk, control so takes diligence on details or compliance and contract surprises become later contract problems—includes SBIR/STTR/State research stimulus programs—can involve federal funds through industry prime—material transfer agreements (MTAs) can act as ISRAS—focus is on technology extension, research goals, student training. SCORES PER YEAR—POTENTIALLY HUNDREDS OF MTA TRANSACTIONS.

Key tech transfer question: Can we obligate IP upfront this way?

Value: Value is in indirect cost charge and visibility of association.

Challenge–obligations cross all licensing operations but usually tracked in different unit and databases, high value relationships with low value IP lead to low priority pressure.

Industry Gifts

University generally holds rights in resulting IP–donors may have undocumented interests—may be nudge to release IP openly or work collaboratively with donor to create joint property—can be charitable or basic research tax credit based—relationship usually starts with Development Office—tech transfer may never see IP—reach especially in engineering and sciences—may take form of major contributions for buildings and endowed positions; affiliates programs; fellowships; targeted research—often mediated by deans and chairs—can be workaround to indirect costs, especially when concurrent gift and contract target same lab—can be in-kind and involve donor proprietary assets (rights, equipment, materials, information)–focus is on visibility of association, strategic relationships–TENS PER YEAR—AFFILIATES MAY ADD MANY MORE.

Key tech transfer question: Does this relationship affect how we manage IP and relationships?

Value: Association with donor, potential future business relationship.

Challenge: University IP claim may be seen as block to gift culture, gift may appear to pre-empt broader licensing efforts, managed with databases and units that generally do not coordinate with IP.

Notes

These five areas of activity are related financially and operationally. Information dissemination projects are front end for patent licensing and company starts, especially ones that don’t require patents and promote IP management across campus. Patent commercialization licensing holds the core expertise in deep patent controls in key areas like biotech (and should be in energy, nano, transportation….) and can contribute to both information and start up transactions. Start ups can form without university IP and again work more broadly across campus, but venture capital moves its sweet spots for investment so university programs have to be tuned not only for areas of research productivity but also for changing market conditions.

Strategically, emphasizing venture backed start ups implicitly pits venture against strategic industry partners. Industry gift emphasis implicitly pits large company relationships against licensing efforts. Some bigs respond well and others see start ups as a threat.

Venture backed starts tend to slip outside the UW IP portfolio and draw on research/technology expertise to build new outboard IP. Particularly true of the business-plan competitions and technology challenges. Perhaps half or more of IT-based starts shift away from licensed assets for first products. May leave university with patent portfolio that is highly related but politically can’t be put in play or else reads: “greedy university blocks innovation at new start up over license”. So comes down to how much investment in patenting is one going to walk away from in the start up portfolio?

Metrics

A good overall first-order financial metric is the number of relationships and associated value coming to the university from the sum of these interactions–licensing, services, industry sponsored research agreements, industry gifts. The sophistication is to recognize the interplay between the various value propositions and shifting IP to the best area for each project/department/industry/finance model while navigating the expectations of the royalty sharing and compliance policies that naively expect consistency and due process for all regardless of differential merit.

The insightful IP manager—and university administrator—is also able to identify second-order metrics—where productive point relationships generate other opportunities that matter later. Thus, an open source distribution with a visible leadership position may attract a major strategic partner. This is a tremendous second-order outcome, even though the software distribution generates no licensing revenue and the new partner may not even benefit the software development team. Similarly, a successful start up slipping university IP can attract additional start up candidates anchored in university IP. Second order metrics are assigned, not tracked mechanically. This is a vital role for chairs and deans who are able to recognize and support second order outcomes. No policy schedule will replace exceptional awareness of who is contributing to the overall program and a readiness to shift resources and opportunity towards these first order relationship point folks.

Posted in Technology Transfer | Comments Off on University IP Functions

Research Foundation or TEI?

Posted on September 9, 2008 by Gerald Barnett

So, why an institute rather than a good old research foundation? University affiliated research foundations have been around for nearly 100 years–many date from the 1920s and 30s. These were set up originally to manage inventions for faculty (before anyone was required to disclose or assign). Later, some research foundations also took contracting roles for research grants, and some also run research parks.

We wanted something that moved beyond the research foundation. The analogy we worked with was a specialized university medical clinic, which combines top-rate practicing professionals with advanced research and training. We didn’t see this in technology transfer offices, nor in research foundations.

The TEI concept was built on the recognition that we have plenty to learn and communicate about the role of university research in driving technology (and community) roadmaps for innovation. The thought is, best research into technology administration is also grounded in practice. We figured the combination of research and practice builds a solid foundation for training in research management. An institute frames the activities much better than a service-based foundation. The supervisory boards are different, the points of connection to the university are different, the workload is different, as are the outcomes and measures of success. The TEI was intended to complement rather than supplant the existing research, transfer, and entrepreneurial services at and around the university.

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Start

Posted on September 4, 2008 by Gerald Barnett

Welcome. I have been working in the area of research innovation management since 1991, mostly with universities on the US west coast. I am taking the next two years to focus on developing programs and concepts that connect university research with community. The Kauffman Foundation has provided funding for me to do this, and Matt O’Donnell, the Dean of Engineering at the University of Washington has chipped in some additional funding. Hank Levy and Ed Lazowska have graciously provided me with office space in Computer Science & Engineering. What I write here is my own stuff and doesn’t represent any position of the University of Washington or the Kauffman Foundation or anyone else I mention. If there are mistakes or slights in these postings, let me know and I’ll do my best to correct or explain.

I call the effort the Research Technology Enterprise Initiative or RTEI. In 1999, Bob Miller and a few of us created a concept called the Technology Enterprise Institute. There’s still a press release about it up at http://uwnews.org/article.asp?articleID=1733

The idea was to build an independent but linked non-profit to handle complex transactions in IP management, including startups, foreign collaborations, and high value transactions. We wanted to create a simple transaction space between the university and the institute. This way, deals that would normally pressure the existing university review and contracting systems could move “offshore”, where the personnel, the risk, and the obligations could be shouldered by a private organization with specialized tools. Even something as simple as holding equity in a start up venture is fraught with challenges for a public university–everything from public disclosure law to how to handle royalty sharing (distribute shares? sell immediately? time the market?) to conflict of interest.

If you don’t have something like this, then either you force transactions into maladjusted university systems, where they break apart and become something else, or you ask for exceptions to policy that trigger reviews and concerns that delay and burden the transaction with more layers of complexity. Of course, once you have an organization outside the university, then there are problems in how it conducts its affairs–is it looking out for the university? and if so, which part? and how well?

The TEI got as far as articles of incorporation and by-laws, with approvals everywhere except from the top. So Bob Miller left for UC Santa Cruz, where he led the $330m 10 year research relationship with NASA Ames, and I followed the next year to start a new tech transfer and research admin organization for UC Santa Cruz. Now, years later, I’m back with a new, lighter version of the TEI relabeled RTEI just to keep things separate. Perhaps as things develop, the TEI concept will become important again, if not at UW then at other institutions.

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