Technology Transfer – Methodology

(Cont'd from benefits-of-technology-transfer.html​)

​Here is an outline of the methodology for the development and functioning of an Office of Technology Transfer at a research university or a lab.

Note that the choice of the name “Office of Technology Transfer” (OTT) is deliberate.  One could propose to use “Office of Technology Licensing” used in some universities. The fact is that many institutions have an ethos in which researchers believe their work should be freely available to all. As I write in a previous blog, technology transfer has many important benefits other than financial returns.

One of the central thrust of the OTT is that it needs to be entrepreneurial, collaborative, respectful of the lab or university’s ethos, and marketing-oriented. This means:

• Enterprising marketing people and analytical scientists and engineers should run the effort. Lawyers are there to support.
• Premium on collaboration between OTT, the inventors, and potential licensees or other beneficiaries.
• Vanity patents should not be allowed: only marketable inventions justify filing costs.
• Licensing is not the only one way to leverage intellectual capital. Other forms of TT should always be contemplated.

 
Buy-in from the labs and their staff is critical

• Lab/university statesmen need to be involved to support the OTT mission. They can help with conflict of interest issues between licensees and the obligations of the inventor to the institution.
• A strong internal PR campaign and communications are essential.

 
Methodology for assessing and developing an invention towards a marketable patent:

• OTT confidentiality agreements are offered to potential inventors so OTT can discuss emerging/potential inventions, estimate merits and filing costs, and encourage marketable ideas.
• A simple one page disclosure form (with attachments for details) to provide the essence of the invention.
• As soon as received, OTT must go back to the lab to discuss the disclosure with the inventor (and possibly colleagues) to
  • Get their own take on marketability/usefulness to the lab’s mission
  • Ask them who is doing research in similar areas and get good leads on potential licensees (the people working on an invention are often the best experts to know who is doing what and whom this might interest)
  • An assessment is done within OTT (and possibly with an internal board of experts) to determine marketability and have a first bead on potential revenue levels
  • Cost analysis is performed to determine filing, marketing and potential maturation costs: Most lab inventions may not be market-ready. Either royalty levels may not be as high since licensee need to invest to further develop product/method or funds must be invested for maturation
  • Evaluation is critical: Out of 100 inventions, 25 are filed, 12 licensed, and 2-3 create revenues! (Probably less for fundamental research/basic science organizations.)
• An initial measure of returns is made for
  • Up-front payments
  • Royalty rates
  • Minimums
  • Potential for sublicensing shares
  • Exclusive vs non-exclusive (sometimes mixed, for international applications)
  • Non-financial benefits to the lab (see above)
• Once approved, the provisional application is written and filed (given the "first to file" doctrine, time is of the essence)
• Writing the claims is an art: narrow claims invite going-around copy-cats; too broad, they may bump against prior art
• OTT gets on the phone and contacts licensors/licensees in comparable fields and revises, as needed, the initial revenue level estimates. Ask what is a reasonable royalty level for something similar
• Application is finalized within one year of the provisional (careful to stay within disclosure)
• Begin marketing, starting with the potential targets identified by the inventor and colleagues
• Once an agreement is reached, allow the inventor to enter into a separate, bilateral, consulting agreement with the licensee ("show-how" consulting). Should contain a clause that if a conflict arises, obligations of the inventor to the institution shall govern. These consulting agreements are, however, not done by OTT which  should not act as the inventor's representative in that respect. That said, OTT must maintain a collaborative stance with the licensee: good for business

 
A possible breakdown of the proceeds of license agreements:

• 15% of gross is taken off the top to pay OTT
• Out-of-pocket expenses are reimbursed to OTT
• Of the net remainder: 1/3 to the inventor, 1/3 to the department/lab, 1/3 to general fund

 
OTT should consider allowing equity participation instead of cash when dealing with start-ups (where cash is precious).

In addition to the internal outreach mentioned above, a concerted external PR effort should prepare the field. It is critical to the success of the operation that the lab’s unique assets be leveraged for strong OTT returns and maximize the other benefits of successful technology transfer activities.

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