© R. Pozner, 2010
Robert Pozner, Ph.D.
Beamish Development rijsba@gmail.com
At TUC: contact through Prof. A. Dollas (37228)
13 October 2010

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NIH research support at U.S. universities, medical schools, research institutions, independent hospitals and nonprofits:
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$21.48B; 50,033 awards
Additional $4.82B in funding for 12,786 awards through
American Recovery and Reinvestment Act of 2009 http://report.nih.gov/award/organizations.cfm?ot=&fy=2009&state=US&ic=&fm=&orgid=
NSF U.S. university research support
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$5.67B; 21,512 awards http://dellweb.bfa.nsf.gov/AwdLst2/default.asp
Total funding: $31.97B
Total awards: 84,331

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648 new commercial products introduced
5,039 total license and options executed
595 new companies formed about 72 percent of new companies formed with the primary place of business in the institution’s home state
3,381 startup companies still operating as of the end of FY2008
$51.47 billion total sponsored research expenditures
(U.S Government plus other sources)
Source: Association of University Technology Managers (AUTM) Survey (2008)

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University objectives
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Create and disseminate knowledge
Contribute to improving quality of life and economic growth
Development and commercialization can support mission for some research outcomes (5-10%)
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Alternate distribution channel for knowledge created
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Other channels include: teaching, publications, open source,
Creative Commons ( http:/creativecommons.org
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Knowledge has commercial (financial) potential
Potential for intellectual property (IP) protection
Significant investment required to develop and bring to market (for public benefit)
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Software - exception
Opportunity to attract research funding

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Inventors
University (owns IP)
Corporate partners and investors
Government
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As funding source
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As driver for economic development
Social benefit

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Professors
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$
Fame & fortune
Opportunity to move early research forward
Entrepreneurial interest
COI
Students
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Jobs
$
Entrepreneurial interest

2. University
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Distribute knowledge
Social benefit (improve quality of life)
New source of research funds (incl. overhead)
Economic development – new company formation (local), job creation
Attract and retain faculty
Generate discretionary income if successful commercialization ( <10% )
Recognition/reputation

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Companies and investors
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Increase revenue and profits
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Access to new technologies
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Strengthen existing market positions
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Develop new market opportunities
Lower production costs
Limit competition
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Reduced development risk, cost
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Specialized equipment, facilities
Relationships with university, professors
New breed of “Social Investors”
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Green Tech

4. Government
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Value for taxpayer investment in basic research at universities
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New technologies for improving quality of life
Economic development
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Job creation
Taxes – corporate, individual
Reduce unemployment burden

Infrastructure Supporting University
Technology Transfer (1)
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Non-profit research organizations and small businesses own IP created under U.S. Government funding
Must make effort to commercialize
Inventors share in any income from commercialization
U.S. Government rights

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University attitudes, policies and resources
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Own (almost) all inventions (undergraduate … except …)
Investment in IP and reduction to practice
Acceptable activity – with research and teaching
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Consistent with institutional objective: creation and dissemination of knowledge
COI
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Publication
Use of University facilities and resources, incl. students

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Investment
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All stages
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Pre-seed/proof-of-concept, seed (“Valley of Death”), angel, VC
Business expertise and experience
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Entrepreneurs
IP management and business development
Trained workers
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“Knowledge Economy” - Product development, production, business, legal
Mentoring, networking

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Contractually obligated
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Facilities use agreement, Consulting agreements,
MTA
Made on own time without (significant) use of
University resources or funding
Undergraduates
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Mosaic  Netscape
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Marc Andressen – Univ. of Illinois National Center for
Supercomputing Applications
Browser graphical interface, inclusion of images, hyperlinks
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PC and Mac versions (vs. UNIX)

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Ownership
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You can’t transfer what you don’t own
Disclosure forms
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Inventors
Funding
Invention description and applications
Prior art
Invention reporting to sponsors
COI

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Triage
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Informed decisions for investment (IP, T2 resources)
Inventor relationships
INVEST OR RELEASE
Attorney selection
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Technical expertise
Billing rate/cost management
Project management
Income distribution

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Public domain
 publications, open source, Creative
Commons, GNU GPL
Sponsored research agreement/option
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Single company
Multiple companies (research centers)
License to existing company
Start-up
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IP transferred through license agreement

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Research results and ideas generated by university technical staff are nascent
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Science vs. technology
Very high risks
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Technology
Financial
Market
Often stepped development and investment
Driven by market opportunity, technology and business development requirements, resource requirements and availability

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No interest from “market” (potential licensees and/or investors)
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Feedback
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Does not reduce scientific value or legitimacy
May provide direction for future research
Increase understanding of what is commercially interesting
Interest
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SRA/option/consulting
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License to existing company (with/without SRA)
Form new company

(win-win transactions)
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Parties get their needs met
Critical issues identified
“Satisfice” rather than maximize
 multiple objectives
Communication
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Before the deal
During negotiations
After the deal is done
Good faith

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License vs. assignment
“In the Public Interest: Nine Points to Consider in Licensing
University Technology” (2007)
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1. Universities should reserve the right to practice licensed inventions and to allow other non-profit and governmental organizations to do so
2. Exclusive licenses should be structured in a manner that encourages technology development and use
4. Universities should anticipate and help to manage technology transfer related conflicts of interest
9. Consider including provisions that address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world

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Better World Project (2006 -2009+)
 http://www.betterworldproject.org/reports.cfm
University of Florida: Gatorade
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Know-how license (no patents) to existing company
Wake Forest University: vacuum assisted wound closure
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Patent portfolio – license to existing company
UNC Chapel Hill: gene therapy vectors
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Patent portfolio – Asklepios BioPharmaceutical (start-up company, non-traditional funding )
NC State University: SiC/GaN devices and process technology
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Patent portfolio – Cree Research ( start-up company)

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®
University of Florida (“Gators”) Sports Physiology
Football players suffering heat-related injuries and problems
Fluids and electrolytes the lost through sweat , and carbohydrates used for energy were not being replaced
Scientifically formulated a new, precisely balanced carbohydrate-electrolyte beverage – Gatorade ®
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Players were better able to deal with heat during practice and games; started winning more games
Inventors deal with Stokley-Van Kamp – eventually acquired by Pepsico
Ownership dispute – lawsuit
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University gets 20% of sales - $100MM from 1972 until 2004
U.S. Government required publication of formula to foster competition
Gatorade ® is currently available in 80 countries; more than 30 flavors available in the U.S.; more than 50 flavors available internationally.

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Wake Forest University School of Medicine
Negative pressure and sealed bandage
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Wounds heal 50% faster
Licensed to Kinetic Concepts, Inc. (KCI) in 1993
Commercial launch of VAC Therapy System in 2005
2008 market size: ~$4.5B; KCI 9month revenue: $1.4B
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Wake Forest received between $70MM and $90MM in royalties
5 patent infringement lawsuits, validity challenges in U.S.
Germany

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Correction of single gene defect (mutation)
Delivery of payload without disruption of cell membrane
Viral vectors
Some genes too large to insert in viruses
UNC Gene Therapy Center developed hybrid (“chimeric”) viruses capable of carrying larger payloads
Asklepios BioPharmaceutical spun out of university ~2004
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Targeted Duchenne Muscular Dystrophy – mutation of gene on X chromosome (males)
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Symptoms (due to death of muscle fibers) < age 5
Average life expectancy: late teens to mid twenties
Treatment consists of managing symptoms
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Funded by MDA (non-profit organization)
Currently in clinical trials
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Facilities use agreement with UNC

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Formed in 1987 as Cree Research by grad students from the laboratory of Dr. Robert Davis at NCSU
Wide bandgap semiconductor materials (SiC), processes and structures
Application in semiconductor devices for high RF, high temp, high voltage applications
U.S. Government funded research  IP owned by
NCSU

IP and Technology Transfer
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Patent applications
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Owned and filed by NCSU
Cost reimbursed by Cree under license agreement
License agreement
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Exclusive rights – worldwide, all fields of use
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Right to sublicense
Equity (shares of company)
Royalties on sales of products
Other U&C terms, including development and commercialization milestones

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F&F seed funding
Develop process technology to produce 3” boules of defectfree SiC
Sold wafers for research to universities and corporate research labs
R&D to increase boule diameter (economics) and develop devices for U.S. Government customers (funded by U.S.
Government)
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Reduced risk for private investment
Raise first round of funding

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LEDs
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SiC as substrate for GaN LEDs
Low energy consumption, long life
Tailor color of emitted light by doping and epitaxial coatings
Displays (cellphones, arenas)
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Blue, green
***Consumer and commercial lighting***
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White!
Approximately 2% of worldwide lighting market now LED

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www.cree.com
FY 2010 revenue: $867.3MM US (+53% year-to-year)
FY 2010 net income: $152MM (+402%)
4Q 2010 revenue: $264MM (+79%)
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LED products: $240MM
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RF products: $24MM
4Q 2010 net income: $52.8MM (+445%)
Market capitalization: $5.7B
Operations in USA (NC and CA), China, Hong Kong
Total employees worldwide: 4,300
Source: Cree 2010 Annual Report