1. Stanford University Office of Technology Licensing (OTL)

2. Overview Background and Policies OTL Facts and Figures
OTL Process – Invention to License

3. Stanford – Facts for 2004 7 Schools Students Faculty - 1,749 members
Business, Earth Sciences, Education, Engineering, Humanities and Sciences, Law, and Medicine
Students
- 6,654 undergraduate
- 7,800 graduate
Faculty - 1,749 members
$2.3B budget (FY 03-04)
$885M in sponsored research (88% by federal government)
additional $105 million in part through 40 industrial affiliate programs
$8.6B endowment

4. Bayh-Dole Law First right to title to universities
Royalty free license to government
Substantial manufacture in US
Preference for small business
Share royalties with inventors

5. OTL’s Mission
To promote the transfer of Stanford technology for society’s use and benefit while generating unrestricted income to support research and education.

6. OTL Facts and Figures Established in 1970 Staff of 25+
~250 cumulative years of experience
7 full-time Licensing Associates
Technical degrees / Marketing focus
Licensing Liaisons/Specialists with focused portfolios

7. Types of Technology Patents Copyrightable Material Software
Biological Material
Semiconductor Maskworks

8. Stanford’s Intellectual Property Policy
Patentable Technology University takes title to all inventions created with more than incidental use of University resources
Copyrighted Works University takes title to copyrightable works created with significant University resources.

9. Stanford Internal Royalty Sharing Policy
Cash Royalties: Issue, Minimums, Earneds
Deduct: 15% for administrative expenses, then out of pocket expenses
Net Royalties:
• 1/3 to Inventor(s)
• 1/3 to Department(s)
• 1/3 to School(s)
Surplus 15% goes to DOR for unrestricted grants

10. Notable Stanford Inventions
1970 – OTL Established
1971- FM Sound Synthesis ($22.9M)
1974 – Recombinant DNA ($255M)
1981 – Phycobiliproteins ($38.9M), Fiber Optic Amplifier ($26.5M), MINOS ($3.2M)
1982 – Amplification of Genes ($18.5M)
1984 – Functional Antibodies ($61M)
1986 – CHEF Electrophoresis ($2M)
– DSL ($17.9M)
1996 – Improved Hypertext Searching (GoogleTM)
2005 – the next big thing ???

11. Disclosure and Licensing History
Over 5600 cumulative disclosures
~ 2,400 currently active cases
Executed over 2,400 cumulative licenses
~ 1500 currently active licenses

12. Conversion Numbers Receive 6 to 7 disclosures per week
File patents on ~40%
License 20-25%

13. Licenses Executed 89 new licenses in FY04 53 non-exclusive licenses
9 option agreements

14. The Upside OTL has generated ~$643M in cumulative gross royalties
Over $511M stayed at Stanford/inventors
OTL has given over $35M to the Research Incentive Fund

15. Royalties 1970 - $50,000 in royalties FY2004 - $49.5M in royalties
~$643M cumulative

16. Royalties – Looking Closely
In FY03-04, $49.5 million from 436 disclosures
44 out of 436 disclosures generated over $100,000 each
6 out of 44 generated over $1 million each
From 1970 through 2004
48 inventions generated more than $1 million
2 out of 5300 is BIG WINNER

17. Equity at Stanford - Philosophy
Equity is only one component of a whole financial package.
Historically, most income is generated from earned royalties (~$620M vs. ~$22.5M).
Equity is liquidated soon after IPO.
We can’t hold equity if licensee conducts clinical trials here.

18. Equity at Stanford - History
Equity in ~140 companies (OTL lifetime)
Equity in about 85 companies currently
9 licenses with equity in FY04

19. Equity Cash-Out ~$21.8 million equity liquidated to date
Amati (Texas Instruments) $8.0 million
2000 Abrizio (PMC-Sierra) $9.7 million
2003 ~$24,000

20. OTL Expenses Operating budget of $3.2 million/year
Patent expenses of ~$6 million/year

21. Patent Expenses ~$6 million/year
US only patent usually costs $25K to $35K over the life of the patent
Broad foreign coverage usually$200K

22. Invention to License Disclosure Evaluation Licensing Strategy
File patent?
Market to potential licensees
The License
Maintaining the Relationship

23. Inventor’s Role in the Process
Disclose inventions
Identify potential licensing prospects
Participate in patent preparation and prosecution
Host visits and/or provide technical information to potential licensees
Provide input into the licensing strategy
Sometimes consultant to licensee(s)

24. Evaluation Discuss with inventors Discuss with others at OTL
Contact industry experts

25. The Main Question
Does it have the potential to create meaningful income for the University?

26. Licensing Strategy Exclusive vs. non-exclusive Field of use
Selecting exclusive licensee(s)
Prefer to license more than one company, if practical
Large company vs. Small/Start-up company
Field of use
Applications
Diagnostics vs. Therapeutics
Geographies - limited vs. worldwide

27. The Patenting Decision
Can we license as Tangible Research Property (TRP)?
Can we license it as copyright?
Is it patentable and enforceable?
Has it been publicly disclosed?

28. Marketing Strategy When do we start? Shotgun vs. Rifle? Portfolios?
-Waiting for publication
-Waiting for data
Shotgun vs. Rifle?
Portfolios?

29. Marketing Steps Create marketing content
Create list of potential licensees
Contact potential licensees
Follow-up

30. The Parameters of a License
Royalties
License Issue Royalty
Annual Minimum Royalty
Earned Royalty
Equity
Development Milestones
Diligence provisions
Reimbursement of Patent Costs

31. Web Page
otl.stanford.edu

32. “Inside Stanford’s OTL” DVD is available for purchase
For more information:
“Inside Stanford’s OTL” DVD is available for purchase