1. Dr. Ashley J. Stevens President, Focus IP Group, LLC
WIPO’s Enabling Intellectual Property Environment Project Topic 3: Governance and Operation of a TTO Tehran, Iran December 9-10, 2017
Dr. Ashley J. Stevens
President, Focus IP Group, LLC

2. WIPO EIE Project -- Tehran
Governance

3. The Many Missions of Universities
EIE Project -- Institutional IP Policies
The Many Missions of Universities
To teach existing knowledge to the next generation
While helping them to transition from adolescents to adults
To discover new knowledge and disseminate it broadly
While training the next generation of researchers
To care for patients
While advancing medical care
To be a source of economic development
While not conflicting with the previous three elements of their Mission!
The newest of the missions

4. IP Policy Is critical to implementing the fourth of these missions
EIE Project -- Institutional IP Policies
IP Policy
Is critical to implementing the fourth of these missions
The IP policy should be drafted and enforced in a manner consistent with the mission
Will bring efficiency and clarity to IP management
All the components of IP management, including:
IP ownership
Patenting
Confidentiality
Disclosure
can be written into the policy.
IP will serve the mission in a way that strengthens the institution’s credibility, reputation, and public image

5. Importance of a Robust IP Policy
EIE Project -- Institutional IP Policies
Importance of a Robust IP Policy
Sets the rules
There’s real money involved
Can corrupt
E.g., Milton Harris, U. of Alabama Huntsville
Invented Pegylation
Extends serum half-life of protein drugs
Disclosed 1 invention to UAB
Licensed to start up Shearwater in 1992
Filed another 19 patents assigned to Shearwater
Some used material taken directly from a Ph.D. thesis
Nektar acquired Shearwater for $197 million in 2001
University sued in 2005
Settled for $25 million

6. You need three things The right policies The right people
EIE Project -- Institutional IP Policies
You need three things
The right policies
Relatively easy
Plenty of sources
The right people
Harder to find in a new ecosystem
The right culture
Takes time to create

7. IP Policy The IP Policy is specific to each institution
WIPO EIE Project -- Tehran
IP Policy
The IP Policy is specific to each institution
Reflects its own culture
Most U.S. universities post their IP / Patent Policies online
EIE Program has an entire course to help institutions generate their own IP Policy

8. Ownership of IP Only four options for ownership:
EIE Project -- Institutional IP Policies
Ownership of IP
Only four options for ownership:
The Professor (The “Professor’s Privilege”)
The Institution
The Sponsor of the research
Government
Company
Public domain
No one owns
US and UK moved to institutional ownership from government ownership in 1980’s
Has become the international norm
Most institutions have exemptions
Students (except if supported on grants)
If no significant use of institution’s funds, resources, facilities and personnel

9. Professors Privilege Drawbacks to the Professor’s Privilege
EIE Project -- Institutional IP Policies
Professors Privilege
Drawbacks to the Professor’s Privilege
Disenfranchises faculty who can’t afford to pay for patents
Professors generally aren’t good businessman
A TTO provides the business expertise
What happens when there are multiple inventors?
Do we want university laboratories to become private CRO’s for professors?
Current Professor’s Privilege countries:
Sweden
Canada
Depends on institution
~50% Professor’s Privilege
~50% Institutional Ownership

10. Professor’s Privilege
EIE Project -- Institutional IP Policies
Professor’s Privilege
Much more important in Copyright
Scholarly works
Publications
Books

11. Benefits of Institutional Ownership
EIE Project -- Institutional IP Policies
Benefits of Institutional Ownership
Establishes clear title to IP generated by the institution’s faculty
Essential for collaborative research with industry
Many international funding arrangements will require it too
Allows institution to create an IP management office
Develop expertise
Apply consistent policies and valuations
Provide funds for patenting

12. Culture The first question – Why are you doing technology transfer?
EIE Project -- Institutional IP Policies
Culture
The first question – Why are you doing technology transfer?
To make money?
To indulge faculty?
To disseminate the results of your research?
To benefit society?

13. A Tough Way To Make Money
EIE Project -- Institutional IP Policies
A Tough Way To Make Money
Financial Contribution
Number %
Loss making 68
52.3%
Gross profitable 27
20.8%
Net profitable 14
10.8%
Self sustaining 21
16.2%
Total
130
Source: How US Academic Licensing Offices are Tasked and Motivated – Is it all about the money?”, Irene Abrams, Grace Leung and Ashley Stevens, Research Management Review, 17.1, Fall/Winter 2009;

14. EIE Project -- Institutional IP Policies
Pitfalls
Indian Bayh-Dole Act has one of its purposes for universities to make money
They will be horribly disappointed
South African Bayh-Dole Act provided government funding for commercialization
Professor has to pay it back if project unsuccessful in generating a product
Not a great incentive to participate

15. Culture Commercialization often a new concept
EIE Project -- Institutional IP Policies
Culture
Commercialization often a new concept
Many in university will feel it isn’t the role of the academic
Teach
Research
Grants
Ph.D. students
Important that academic management be seen to support and endorse commercialization
Essential that participation be voluntary
Institution’s job is to facilitate the process for those who chose to do it

16. EIE Project -- Institutional IP Policies
Culture
Most faculty DON’T participate in the technology transfer process1
Career Disclosures %
Never
64.2
Once
14.8
Twice
7.6
Three to five
11.4
Six or more
2.0
1 Thursby, J. G. and M. C. Thursby (2003). Patterns of Research and Licensing Activity of Science and Engineering Faculty. Working Paper. Atlanta, GA, Georgia Institute of Technology., available at:

17. Culture On the other hand, most Nobel Prize winners do it1
EIE Project -- Institutional IP Policies
Culture
On the other hand, most Nobel Prize winners do it1
50% of Physics
79% of Physiology or Medicine
82% of Chemistry
Broadly accepted in life sciences in U.S.
The “Patent-Paper-Pair”
Fiona Murray, MIT
50% of papers in Nature Biotechnology had a corresponding patent2
33% of biotech papers in Science and Nature had a corresponding patent3
Prize winners Stevens et. al , Unpublished data,
Murray, F., Stern, S., Do Formal Intellectual Property Rights Hinder the Free Flow of Scientific Knowledge? An Empirical Test of the Anti-Commons Hypothesis, Journal of Economic Behavior and Organization (2007), doi: /j.jebo
Lebovitz, R. M. (2007). "The Duty to Disclose Patent Rights." Northwestern Journal of Technology and Intellectual Property 6 (Fall 2007):

18. What Drives Technology Transfer in the U.S.?
EIE Project -- Institutional IP Policies
What Drives Technology Transfer in the U.S.?
Driving Factor
Number of Institutions Ranking Factor First %
Faculty service 51
39.2%
Translating research results 45
34.6%
Revenue maximization 15
11.5%
Other
Research Support 4
3.1%
Risk Management
0.0%
Total
130
Source: How US Academic Licensing Offices are Tasked and Motivated – Is it all about the money?”, Irene Abrams, Grace Leung and Ashley Stevens, Research Management Review, 17.1, Fall/Winter 2009;

19. WIPO EIE Project -- Tehran
Governance
IP Policy usually governed and overseen by a Patent Committee
The TTO runs tech transfer
The Patent Committee oversees the TTO
IP is created by faculty, so faculty must have a major role in governance
Functions of the Committee
Normally required by Patent Policy
Appeal mechanism from TTO decisions
Other purposes
Communication mechanism with upper management
Through membership of the Committee
Communication mechanism with schools and colleges
A source of external input

20. Key Issues Fundamental question:
WIPO EIE Project -- Tehran
Key Issues
Fundamental question:
What is the role of the Patent Committee:
Executive, or
Advisory
What are the key issues in constructing the membership?

21. Three Models Boston University Charles River Campus
WIPO EIE Project -- Tehran
Three Models
Boston University Charles River Campus
Main undergraduate campus
Arts and Sciences, Engineering, Management, Law, Fine Arts, Allied Health Sciences
Engineering and Arts and Sciences main sources of disclosures
Role of Patent Committee: Advisory
Key governance issue: Faculty vs. Administration
Resolution:
Patent Policy specifies majority of members must be faculty
Anyone with “Dean” in title considered Administration
Chaired by Provost
Objectives of committee membership
Involve as many schools as possible
That person was OTT’s primary contact in the school

22. Three Models Boston University Medical Campus
WIPO EIE Project -- Tehran
Three Models
Boston University Medical Campus
Schools of Medicine, Dental Medicine, Public Health
Boston Medical Center
BU’s primary teaching hospital
Major research facilities
Medicine, Dental Medicine and BMC main sources of disclosures
BU’s OTT managed tech transfer for BMC
Role of Patent Committee : Advisory
Key governance issue: Balancing interests of BU and BMC
Resolution:
Patent Policy specifies equal representation of BU and BMC
Chaired by Medical Campus Provost
Objectives of committee membership
Involve key administrators of both organizations

23. Three Models Forsyth Dental Institute
EIE Project -- Institutional IP Policies
Three Models
Forsyth Dental Institute
Small, independent dental research institute
Affiliated with Harvard Medical School
Limited disclosure flow and hence can’t justify full time TTO
Role: Executive
Key governance issue: Eliminate internal politics
Resolution:
Heavy external membership Me
Two VC’s
Two product development entrepreneurs
Chaired by me
Objectives of other representatives
Involve senior scientists internally

24. WIPO EIE Project -- Tehran
TTO Operations

25. WIPO EIE Project -- Tehran

26. Operating Models for Technology Transfer
WIPO EIE Project -- Tehran
Operating Models for Technology Transfer
Faculty Service
Support the creative and entrepreneurial aspirations of faculty and graduate students
Revenue Maximization
Generate the maximum amount of license income
Knowledge Transfer
Licensing
Sponsored Research
Faculty Consulting
Economic Development
Maximize job creation/retention
Regionally
Nationally

27. Implications of Different Operating Models
WIPO EIE Project -- Tehran
Implications of Different Operating Models
Faculty Service
Support all invention disclosures received
High patent costs
Extensive marketing of inventions
High personnel costs
Don’t seek to maximize revenues from every invention
Lower income
 Profitability not a priority
Foster collaborative relationships with industry
Access unique industrial capabilities
Identify new research opportunities
Key Metric: Faculty satisfaction
Faculty recruitment

28. Implications of Different Operating Models
WIPO EIE Project -- Tehran
Implications of Different Operating Models
Revenue Maximization
Selectivity in inventions pursued
Try to “pick winners”
Reject / give back to inventors inventions with low income potential
Extensive marketing
Objective is to get multiple bidders for each technology
“A hot academic technology is one two companies are interested in”
Lita Nelsen, MIT
Bonus plan for TLO officers based on income
Key Metric: Profitability

29. Implications of Different Operating Models
WIPO EIE Project -- Tehran
Implications of Different Operating Models
Knowledge Transfer
Licensing not sole/primary focus
Sponsored research
Consulting
“Easy Access IP” may be an option
Give most IP away for free to start-ups
Promote economic development
Financial credit for bigger revenue base
Larger staff to handle additional agreements/more complex relationships
Key Metric: Technologies in development
Public benefit

30. Implications of Different Operating Models
WIPO EIE Project -- Tehran
Implications of Different Operating Models
Economic Development
Jobs, jobs, jobs
“It’s the economy, stupid.”
Less pressure for profitability
State/local funding for economic development
Incubators
Proof of concept
Research parks
Express Licensing a viable strategy
Additional activities
Creating funds to invest in start-ups
Key Metric: Jobs Created
Companies created
External investment raised

31. Potential Organizational Structures
WIPO EIE Project -- Tehran
Potential Organizational Structures
Operating unit of university
Independent wholly-owned subsidiary of university
Non-profit
Common with US public universities
Common with Australian universities
For-profit
Uncommon in US
BCMT
Partially-owned subsidiary of university
Imperial Innovations PLC
Tech transfer arm of Imperial College, London
Publicly traded company on London AIM
Imperial College is majority shareholder

32. Implications of Different Organizational Structures
WIPO EIE Project -- Tehran
Implications of Different Organizational Structures
Operating unit of university
Line item of university’s operating budget
Helpful in early days while revenue is low
Important to secure “freedom-to-operate”
Signature authority
Avoid OGC risk aversion
Will be subject to university pay scales
Incentive compensation may be difficult to implement
Helpful to have advisory board with outside (business, legal) representation

33. Implications of Different Organizational Structures
WIPO EIE Project -- Tehran
Implications of Different Organizational Structures
Independent wholly-owned subsidiary of university
Streamlined decision making
CEO will have signatory authority
Board will have external representation
Budgeting more difficult
Freedom from university pay scales
“Eat what you kill”
What happens if you don’t kill enough?
Recapitalization
Key patent runs out
Can accumulate a reserve from “big hit(s)”
Pre-seed fund
Seed fund
VC fund

34. Implications of Different Organizational Structures
WIPO EIE Project -- Tehran
Implications of Different Organizational Structures
Partially-owned subsidiary of university
Imperial Innovations PLC
Forces a short term focus on a long term business

35. First Step in Strategic Plan: Mission
WIPO EIE Project -- Tehran
First Step in Strategic Plan: Mission
University leadership needs to answer:
“Why are we doing this?”
Understand the budgetary and operational implications of the choice
Develop a Mission Statement
E.g.,
The role of technology transfer at U. of _______ is to enhance the university’s interactions with private industry Sri Lanka, Asia and beyond in order to:
Benefit the Sri Lankan economy
Ensure that the results of U. of _______ ‘s research benefit society;
Enrich U. of _______ ‘s research agenda;
Enhance the job prospects of U. of _______ graduates;
Become a leader in the Asian innovation ecosystem;

36. Second Step in Strategic Plan: Management
WIPO EIE Project -- Tehran
Second Step in Strategic Plan: Management
Where to report within the university
Depends on Model/Mission chosen
Faculty Service VP for Research
Revenue Maximization VP for Finance
Knowledge Transfer VP for Research
Economic Development VP for Economic Development

37. Distribution of Income
WIPO EIE Project -- Tehran
Distribution of Income
IP Policy should specify who shares in any income generated
In U.S., Bayh-Dole Act specifies
Inventors must share
Balance must be used for education and research
No guidance on how much
Ideal policy (IMHO) Partners Healthcare, Boston:
Inventors personally 25%
Inventors’ laboratory 25%
Inventors’ department 25%
Institution (to be used for research) 25%
May need greater share to inventors in early days
Many U.S. universities gave 50% to inventors in 1980’s and 1990’s
Chinese Law of October 2015 gives 70% to inventors

38. WIPO EIE Project -- Tehran
Questions?