Actualizing Innovation
Using Corporate R&D
Thomas Rockwell Mackie
Professor
University of Wisconsin
Chairman of the Board
TomoTherapy Inc.
Why Would You Want to Set Up a
Research Contract with Industry?
• Federal grants are hard to get, especially
for applied projects.
• You may need some specialized
equipment to conduct your research.
• Your research is best used with the
equipment of one vendor.
• You have an invention or software that
you want to license to a company and/or
want the company’s help to reduce it to
practice.
Corporate Sponsored Research
(Including Faculty Spin-Offs)
• Corporate research is a better source
of funding than the federal
government.
• If you cannot get a corporation
interested in your idea then you can
start your own company.
• Both types of activity requires an
appreciation of practices of
business.
Why Do Corporations Want to
Place Research Contracts?
• Corporations place research contracts for
a variety of reasons:
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As an incentive to buy their product.
To test their products in the field.
To enter into a partnership relationship.
Because R&D at corporations is expensive.
To gain rights to intellectual property.
• It is important to understand the
relationship from the business’s
perspective.
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Tomotherapy Was A UW Research Project
Funded by GE Medical From 1994-1997
Rock Mackie with
Per Johnson, Manager
Of GE Global Radiotherapy
At the Night Out at
Disneyland During the 1994
Anaheim AAPM Meeting.
Elements of a NonDisclosure Agreement
• Both parties agree to not disclose the
contents of documents marked
confidential.
• Protects both parties.
• Limit on length of time: e.g., 3 to 5 years.
• Agree that damage can result from
disclosure of information.
• May stipulate where litigation can occur.
• Usually covers parties that signed and
representatives of the parties.
Steps to Set Up a Corporate
Research Contract
• If you have one, consult your tech transfer or
business office and do the contract through
them.
• If you go it alone make sure that you get
business and legal advice before signing
anything.
• Before you disclose your research, software
or invention get a non-disclosure agreement
in place.
• Have an R&D contract in place from the
beginning.
Elements of a Research and
Development Contract
• Both parties agree on a scope of work to be done.
• Term of contract (i.e., start and completion dates).
• Terms of payments: milestones and payment
schedule.
• Exclusivity or non-exclusivity: e.g., non-compete
agreement.
• Publication restrictions: e.g., right to preview
publications.
• Should never have the right to restrict
publications indefinitely.
• Ownership or licensing of intellectual property.
• Remedy for non-compliance or non-completion.
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Radiology, Radiotherapy and
Stereotactic Radiosurgery Markets
Licensing of Intellectual
Property (IP)
There is enough money in the medical device
market related to medical physics to fairly pay
inventors and copyright holders for their ideas.
• Every year scientists are legally robbed of their
IP.
• Company X will give you a good deal in
equipment in return for rights to your IP.
• Company X will send you to meetings to talk
about the project you and the company
developed “together”.
• Often like trading land for blankets and beads.
• A tech transfer office can defend and protect
inventors and programmers.
• If your IP is good, a company will pay a fair price
for it.
Sector
To Spin or Not to Spin-Off a
Company
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What is your motivation?
How will you get the equity needed?
Who owns the intellectual property?
Do you have the time?
Will you enjoy doing it?
Do you have business experience?
Is there an easier way to accomplish
your ends?
Approximate
Annual Revenue
Radiology
$20 B
Radiotherapy
$2 B
Stereotactic
Radiosurgery
$200 M
Faculty Entrepreneurship:
Is it Just?
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Why should faculty be allowed to create businesses?
Rhetorical answer: Why should faculty be allowed to
write textbooks?
Faculty and staff must create their business outside
of their institution or reimburse the institution like any
other business that would use their resources.
Faculty founded businesses should not be favored by
the faculty’s institution.
Neither should faculty businesses be discriminated
against by their institution.
Entrepreneurial faculty and staff must be managed by
the institution to prevent conflict.
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Founding of TomoTherapy
• Using our proceeds from the sale of Geometrics, I
and Paul Reckwerdt invested equally into the
formation of TomoTherapy Inc.
• We gave more than 1/3 of stock to the staff in my
UW research group who joined the company.
• Wisconsin’s tomotherapy patents were licensed.
• WARF, the UW tech transfer agent, was the first
investor in company.
• WARF and a local VC helped find other investors.
• Low interest loan from the State of Wisconsin.
• SBIR grant from Federal government.
• Money raised was used to finish the UW prototype.
• $250,000 gift to Wisconsin Foundation.
• First sales to Canadian radiotherapy clinics.
UW Clinical Helical Tomotherapy Unit
May 2000 at UW Physical Sciences Laboratory, Stoughton WI
VC Quotes Before First Round
of Funding
• “We like your idea, but you will have to move out to
California to make this a success.”
• You cannot attract good management to
Wisconsin.”
• “Your company does not obey the one-flight rule.”
• “Is there any way that you can structure yourself
for e-commerce?”
• “I can invest in a $4B/yr web-based meat brokering
business, why should we invest in you?”
• “The health industry is going to crash.”
• “You are part of the old economy.”
• “Manufacturing is dead in the US.”
• “In the new economy you need to concentrate on
company valuation not generating profits.”
Current Tomotherapy Unit
Dr. Minesh Mehta, Chairman of Human Oncology, UW-Madison
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Conclusions
• Understand the motivation of your corporate
partner before entering into a research
agreement.
• Get business and legal advice.
• Be protected by contracts.
• Starting a business is an efficient way to
have your ideas actualized.
• VC capital is not easy to find.
• Governmental programs and resources are
important to start high-tech companies.
• Faculty have to deal with conflict of interest
and conflict of commitment issues when
engaged in corporate R&D.
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