1. History, Status, and Trends for Technology Transfer in U.S. Universities & The Stanford Model Presentation by Jon Sandelin Stanford University Office of Technology Licensing jon.sandelin@stanford.edu http://otl.stanford.edu

2. Presentation Areas F Methods of Technology Transfer F Evolution of University T/T in the U.S. F Role of Bayh/Dole and AUTM F Current Status of University T/T in U.S. F Evolving Trends in the U.S. F Types of Industry-University Relationships at Stanford University

3. Methods of Technology Transfer F Graduated Students F Publications F Conferences F Visiting Scholars/Industry Visitor Programs F Industrial Affiliates Programs F Research Sponsorship and Faculty Consulting F Licensing to Established Companies and to Start-Up Companies

4. Stanford Office of Technology Licensing F Our mission: to promote the transfer of Stanford technology for society's use and benefit while generating unrestricted income to support research and education F Founded in 1970; $55k Royalties 1st Yr F To Date: 4,950 Invention Disclosures; 1,320 Issued Patents; 2200 Licenses; $552M in Royalties ($255M from C/B)

5. OTL FY2002 Results F 295 Invention Disclosures F $52.7M in Royalties –high of $61.2M in FY1998 –$0.4M from Sale of Equity F 111 Licenses Granted; 13 Start-Ups F Office Budget of $2.6M; Staff of 25 F $3M for Legal Fees ($1.5M reimbursed)

6. OTL Start-Ups F 115 to date; with 75% in last 5 years F 45% Medical; 35% Software/IT; 10% Sensors; 10% Other: Equity in 80% F 9 (so far) have failed F 15 (so far) Equity Sold for $22 Million –Abrizio (PMC-Sierra) = $9.7 Million –Amati (Texas Instruments) = $8 Million –Vxtreme (Microsoft) = $0.8 Million

7. Stanford Policies F Ownership of Intellectual Property –With University if: Part of University work responsibilities; or More than incidental use of University Resources F Income/Equity Sharing –Royalties: 15% to OTL, then 1/3 each to Inventors; Inventors Dept; Inventors School –Equity: 1/3 to Inventors; 2/3 to Special Fund

8. Start of Licensing Activity F 1920s: Wisconsin Alumni Res. Fdn. F 1930s: Iowa State Patents Foundation F 1940s: MIT; Kansas State Res. Fdn. F 1950s: University of Minnesota F 1960s: University of Utah; Salk Institute; F 1969: Stanford University F 1970s = 15; 1980s = 82; 1990s = 73

9. Historical Events F 1907: UC Berkeley; Cottrell Patent F 1912: Research Corporation founded by Frederick Cottrell F 1925: University of Wisconsin; Steenbock Patent; Formation of Wisconsin Alumni Research Foundation

10. More Historical Events F 1927/29: Harvard University; Minot and Murphy invention; Committee Study; Decision not to patent F 1951: MIT; Forrester Patent; RCA Interference; Royalties in 1960/70s F 1969: Reimers launches Stanford TLO under Marketing Model; Cohen/Boyer $

11. Evolution of Patenting & Licensing in U.S. F Before 1980 - few U. S. Universities were involved with Patenting & Licensing F 1980 - Bayh/Dole Law enacted F 1980 to 1990 - SUPA/AUTM facilitates convergence on Best Practices F 1990 to 1999 - AUTM Annual Surveys document Rapid Growth in University Licensing Results

12. Bayh/Dole Law of 1980 F Option to Ownership of Government Sponsored Inventions (2 Years or 90 Days before Patent Bar Date) F If Option Exercised, Must Patent and Diligently Seek a Licensee F Must Share a Portion of Royalty Income with Inventors F Non-Exclusive Royalty-Free License to Government F Government Retains March In Rights F Preference to Small Business (under 500 employees) F U.S. Manufacture if Exclusive License in U.S.

13. Association of University Technology Managers F Formed in 1974 with 20 Members; Over 3000 Today F Becoming an International Association F Publications: Directory; Newsletter; Technology Transfer Manuel (3 Volumes); Journal; Educational Series; Annual Survey F Meetings: Regional; National (Orlando in Feb, 2003); International F Courses: Fundamentals of Licensing; Advanced Topics; Start-Up Business Formation; MultiMedia F Information at: www.autm.net

14. 2000 AUTM Survey F $1,260 Million in Royalties F $60 Billion in Licensed Products Sales F 400,000 new Jobs F 13,032 new Invention Disclosures F 6,375 new Patent filings F 4,362 new Licenses (12% to Start-Up Companies)

15. Invention Disclosures

16. Patents Filed

17. Licenses Granted

18. Royalty Income

19. University Spin-Out Facilitation F 2002 - Not a Promoted Activity at many U.S. Universities, but starting to change F Where “actively” done, typically by off- campus group e.g., ARCH; WRF; BCM Technologies, C2C -- but changing F No Generally Accepted Model as yet, but AUTM reacting: Courses; Publications F More Prevalent in Europe & Canada

20. Why Not Spin-Outs? F Fears of Institutional Conflict of Interest –Harvard Incident/1983 Pajaro Dunes Mtg F Labor Intensive Activity; Success in “Licensing-Friendly” Industries –Biotech; Pharmaceutical; Medical Devices F Limited Invention Disclosures with Start- Up Company Potential (but changing)  Few “Success” Stories (also changing)

21. Trends in the U. S.: Federal Government F Promotion of University/Industry Collaboration –1980 Bayh/Dole, Etc. –Advanced Technology Program (ATP) –STTR (SBIR extension to include Universities) F Promotion of Federal Labs/Industry Collaboration –1986 Federal Lab Technology Transfer Act F Tax Incentives to Entrepreneurs

22. Trends in the U.S.: Industry F Away from Basic Research and to Product-Connected Research F Downsizing of R&D Depts; PhD Graduates to Small Companies and Start- Ups F Acquisition as a Sourcing for New Products F Growing Acceptance of Licensing

23. Trends in the U.S.: Universities F Industry-Influenced Research –Affiliates/Super-Affiliates Programs –Inter (or Cross) Disciplinary Research Centers – Multi-Company Research Collaborations F PhD Graduates to SME’s and Start-Ups F Alliances with Overseas Universities –MIT/Cambridge; Stanford/Edinburgh; UC/Germany

24. Trends in the U.S.: TLOs F Licensing of Spin-Out/Start-Up Companies –“Qualifying” Inventions for Start-Up –Networking of Angel Investors –Concept2Company and Others F Invention Enhancement Funds F Licensing in the Physical Sciences –Portfolio Licensing with Very Low or No Earned Royalties

25. Trends in the U.S.: TLOs (2) F Industry Donation of Patents to TLOs F Marketing over InterNet F New Forms of License Agreements –Ready-to-Sign License Agreements –Hybrid Agreements (Patent/Copyright/Trademark) –“Package” Deals (Research/License/Consulting) –Equity only License Agreements

26. Trends in the U.S.: TLOs (3) F More Option Agreements F More Licensing of Tangible Research Products F Use of “Plain Language” in Writing Agreements F Loss of Staff to Industry/Training of New Hires F Time Spent on Conflict of Interest/Commitment Issues

27. Types of Industry-University Relationships F Sponsorship of Research F Donations and Gift Funding F Interdisciplinary Centers & Collaborations F Industrial Affiliate Programs F Licensing of University Intellectual Property F Classes for Company Employees F Visiting Scholars from Industry and Company Employees teaching at University F University-managed Science Parks/Incubators F Faculty Consulting

28. FY2002 Income from Industry F Sponsorship of Research: $42.5 Million F Donations and Gifts: $34.7 Million F Industrial Affiliates Programs: $17.2 Million F Licensing of University I/P: $52.7 Million F Classes for Company Employees: $10.4 Million F Total for FY2002 is $157.5 Million

29. Industry Funding by Category

30. Different T/T Models F Legal Model –Viewed as a Legal process –Based in the University Legal Office F Administrative Model –Viewed as an Administrative process –Based in existing administrative office F Business/Marketing Model –Viewed as a business within University –Independent organization within University

31. Evolution of T/T Models F 1991 –Legal Model: only a few –Administrative Model: Almost all –Business/Marketing Model: very few F 2003 –Legal Model: None –Administrative Model: Minority –Business/ Marketing Model: Majority

32. Business/Marketing Model F Independent Self-Funded Unit F Policies to encourage invention disclosure and inventor involvement F Hire people with entrepreneurial instincts and business experience F Empower people to make all decisions; Cradle to Grave involvement

33. THE END F Thank You for your Attention!