Transcript Effects on Employees - FLC Mid

The Evolution of University Technology
Commercialization: Lessons for
Federal Laboratories
Brian Darmody
Assistant Vice President for Research and Economic Development
University of Maryland
Federal Lab Consortium Mid Atlantic Meeting
Rocky Gap, Maryland
September 14, 2005
When These Are Sold in Grocery Stores,
Which Federal Technology Statute Should
You Recall?
Answer: The ‘Buy-Dole’ Act
Tough Trivia
Name the only state whose capital city name
contains none of the letters of the state
Example:
Louisville, Kentucky
Louisville Isn’t the Capital, But the Capital
City Still Doesn’t Fit
Name the only state whose capital city name
contains none of the letters of the state
Example:
Frankfort, Kentucky
Technology Transfer: The Early Years
Shortly After Passage of the Bayh-Dole Act, and
Stevenson-Wydler Act, Universities and Federal
Labs Sat Around Waiting for the Money to Pour
In From Licensing Their Technology:
Many are still waiting
However, Emory University Struck $500M. Licensing Deal
This Summer for HIV Drug
Overview
Managing profit oriented projects, including technology
commercialization, within the legal and fiscal structure
universities and fed labs, is challenging
Universities, and public universities in particular, share
some of the legal and policy constraints that federal labs
exhibit in the commercializing technology
We will explore some of the public policy reforms at
universities, suggest some reforms and implementation
strategies for federal labs, and the panel will discuss
directions in technology transfer at universities
The Greater Washington Region: Academic
versus Federal Laboratory Expenditures
Academic Research and Development
Expenditures in DC, Virginia, and
Maryland: $1.95 billion
Intramural Federal Laboratory Research
and Development Expenditures in DC,
Virginia and Maryland: $6.63 billion
Source: NSF State Science and Engineering Profiles: 2001-03
Evolution of University Tech Transfer
• Most Universities Lose Money in Technology Commercialization Since
80% of licensing revenue comes from biological sciences (mostly drug
discoveries)
• Technology Transfer is a tough business
• Over time, universities reformed their approach moving from passive
licensing, to more active technology commercialization strategies to
venture based activities, to technology based economic development
(e.g., research parks, technology incubators, etc.)
• Public universities had to surmount public policy barriers and
broadened the metrics to include economic development
• Federal labs can emulate some of the evolution of technology
commercialization, but they face greater legal, fiscal and leadership
barriers than universities
Stages of Innovation: Traditional
Model
INTELLECTUAL
PROPERTY
IDEA
RESEARCH
TECHNOLOGY
DEVELOPMENT
LICENSE
OR
START-UP
PRODUCT
SERVICES
INCUBATION
RETURN
ON
INVESTMENT
COMMERCIALIZATION
The Innovation Continuum:
The Interventionist Approach
RETURN
ON
INVESTMENT
IDEA
INTELLECTUAL
PROPERTY
RESEARCH
TECHNOLOGY
DEVELOPMENT
LICENSE
OR
START-UP
PRODUCT
SERVICES
INCUBATION
COMMERCIALIZATION
Advantages of Universities:
• Support for Technology Commercialization from organization's
highest officials: University Presidents and Governors
• Administrative Flexibility: Autonomy Statutes or State
Constitutional Autonomy (U Maryland: statutory autonomy; U
California: constitutional autonomy)
• Special Purpose Business Entities: Research Foundations or
Tech Transfer Foundations (e.g.,: UVA Patents, Inc.; Wisconsin
Alumni Research Foundation)
• Technology Commercialization Offices are Part of Larger
Traditional Economic Development Mission, Especially of
Public Land Grant Universities
Barriers Public Universities Had to Confront
•
Ethics Laws: Reform State Ethics Laws to Allow Faculty
Entrepreneurs to Participate in Economic Development Programs
•
Equity: Revise State Constitutions and State Statues to Allow
Universities to Hold Equity in Start-Up Companies
•
New Financing Methods for Labs/Equipment/Incubators: Create New
Vehicles to Finance Technology Incubators and to Develop
•
New sources of technology office financing and venture financing;
endowments, state programs, and university programs
•
Create Alternative Technology Intermediary Organizations or
Affiliated Foundations to Facilitate the Business of Technology
Commercialization in a Public Arena:
Maryland Conflict of Interest Law: Faculty
Researchers
Public-Private Partnership Act
Article - State Government
§ 15-523.
(a)
(1)
In this section the following words have the meanings indicated.
(2) "Conflict of interest policies" means policies adopted by a governing board and
approved:
(i) by the Office of the Attorney General; and
(ii) as to conformity with this section, by the Ethics Commission.
(3) (i) "Research or development" means basic or applied research or
development.
(ii) "Research or development" includes:
1. the development or marketing of university-owned technology;
2. the acquisition of services of an official or employee, by an entity for
research and development purposes; or
3. participation in State economic development programs.
(b) (1) Each educational institution engaged in research or development shall develop
conflict of interest procedures based on:
(i) conflict of interest policies developed by its governing board; and
(ii) the purposes of this title specified in § 15-101 of this title.
University Resources for Technology
Commercialization
• Human Capital: Researchers
• University-owned Technology
• Land for Research Parks/Technology
Incubators/Research Partners
• Labs and Equipment
• Land Grant Tradition of Economic Development
• Endowments; Gifts for Venture Programs
• Local, State and Federal Programs
• Intermediary Organizations, such as TEDCO
(Maryland), Ben Franklin Partners (Pennsylvania)
and Center for Innovative Technology (Virginia)
Tech Transfer Visibility: State vs. Federal
Governors State of the State Addresses to State
Legislatures:
Well Over Half of Governors Mention Universities and
Technology Development during State of State Address
--------------
The President’s State of the Union Address:
No Presidential Mention of Technology Transfer from Federal
Labs During State of the Union Address
State University Technology
Commercialization Incentives: Oregon
July 12, 2005
Bill would give universities research boost
By Alex Paul
Albany Democrat-Herald
Strong support from both the House and Senate may give Oregon universities the boost they need to
become national leaders in the commercialization of research projects and promotion of entrepreneurial
development, the bill's sponsor, Sen. Frank Morse, said today.
The Oregon House of Representatives Monday passed SB 853 (University Venture Funds) 56-0,
complementing the Senate's previous 30-0 show of support for the bill, which legislators hope will lead to
the development of spin-off businesses throughout the state. Morse said he expects full support from Gov.
Ted Kulongoski since the governor had proposed an innovations economy development plan at the start
of the current legislative session.
"This is a significant piece of legislation for Oregon's innovation economy to provide funding for
entrepreneurial education and proof-of-concept efforts to commercialize university research," Morse said.
As expected, the bill carried strong support from Oregon's university presidents, Dave Frohnmayer, UO;
Daniel Bernstine, PSU, and Edward Ray, OSU.
Academic Study of University Technology
Commercialization
Academic Science and Entrepreneurship
Adam Jaffe, Joshua Lerner, Scott Stern and Marie Thursby,
Organizers
Conference held April 1-2, 2005
The Commercialization of University Inventions
Nash Game Theory And Licensing: A
Beautiful Mind is a Terrible Thing to Waste
Theorem 3: Licensing to a start-up firm, instead of an established firm,
is the equilibrium of this dynamic licensing and development game
if and only if either: PF (ek(R>, M;), M;)) < 0 or Pr(e&(Rk, M;),
E$(RF, M;)) <07 Ps(e: (R;, MZ), E;(R:, M;)) > 0, and Pr (e: (Rs, M;),
E; (R>, M;)) >0; or(ii)PT(ej* (Rj*, Mj*), Ej* (R:, Mj*)) > 0 and
Ps(ej* (Rj, Mj*), Ej* (Rj*, Mj*)) 2 0f o r j = F, S7 and PT(e:(Fs, MZ),
E$(R:, M;)) > Pr(ek(R$, M;), EF(R5, M;)).
Proof. This follows straightforwardly from the definition of the game
and the fact that the TTO and potential licensee payoff in these statements
are evaluated at the equilibrium values of effort that would prevail in the
development subgame if a license were executed.
Convergence of Technology
Commercialization Agenda:
The Most Recent Annual Convention of these Organizations All Discussed
Strategies to Leverage University Technology for Economic Development
Licensing Executive Society (LES)
Association of American Universities (AAU)
National Governors Association (NGA)
Biotechnology Industry Organization (BIO)
International Economic Development Council (IEDC)
National Association of College and University Attorneys (NACUA)
State Science and Technology Institute (SSTI)
National Business Incubation Association (NBIA)
Association of University Research Parks (AURP)
National Association of Seed and Venture Funds (NASVF)
University Technology Commercialization
Critique
Advancing Innovation
While university research has spun out many high-impact
companies, a great number of promising discoveries
consistently fail to be developed and brought to market for
practical use. Contributing to this problem is a series of
bottlenecks that result from the current closed and linear system
for moving innovations from university labs into the private
sector. The Kauffman Foundation is working to help unclog
what is a very complex system by exploring ways to create a
more open web with multiple links among university
researchers, entrepreneurs, and other key players who support
and can facilitate turning discoveries into products and services
that improve our lives.
Selling Drug Secrets
Special Projects Index
Selling Drug Secrets
A special report by Luke Timmerman and David Heath · August 7, 2005
A special report by Drug researchers leak secrets to Wall St.
By Luke Timmerman and David Heath
Seattle Times staff reporters
Doctors testing new drugs are sworn to keep their research secret until drug companies
announce the final results. But elite Wall Street firms — looking to make quick profits —
have found a way to harvest these secrets:
They pay doctors to divulge the details early.
A Seattle Times investigation found at least 26 cases in which doctors have leaked
confidential and critical details of their ongoing drug research to Wall Street firms.
The practice involves doctors at top research universities from UCLA to the University of
Pennsylvania, and powerful financial firms including Citigroup Smith Barney, UBS and
Wachovia Securities.
In 24 of the 26 cases, the firms issued reports to select clients with detailed information
obtained from doctors involved in confidential studies. The reports advised clients whether
to buy or sell a drug stock.
Governors Policy Position
07/20/2005
National Research, Development, and Technology Policy
4.7 Improve the Technology Transfer Performance of Federal
Laboratories
Governors recognize that small businesses and the related
investment capital industry have been the source of most
technological innovation and all of the job growth during the past
25 years. Federal laboratories spend $25 billion annually in
research and development but under perform in terms of technology
transfer. State-sponsored technology transfer programs have
successfully transferred research and development into
commercial activity.
Going to a Go-Gos: Aldridge NASA
Commission Alternative Structures
Aldridge NASA Commission
Recommendation 3-3:
The Commission recommends that NASA Centers be
reconfigured as Federally Funded Research and Development
Centers to enable innovation, to work effectively with the
private sector, and to stimulate economic development. The
Commission recognizes that certain specific functions should
remain under federal management within a reconfigured
Center.
August 8, 2005 Print Issue
In-Q-Tel: The CIA’s Silicon Valley Bridge
The CIA’s venture capital investment arm is regarded as a
success, but it remains largely unstudied. Other government
agencies looking to start their own VC wings should learn
from the accomplishments—and shortcomings—of In-Q-Tel.
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Is a ‘spin-in’ technology firm a good model for spinning out
technology? And which fed labs have legal authority to create
an In-Q-Tel model?
Fed Labs Missing an Opportunity: Science
Park Administration Act of 2005
109th CONGRESS
1st Session
S. 1581
To facilitate the development of science parks, and for other purposes.
IN THE SENATE OF THE UNITED STATES
July 29, 2005
Mr. BINGAMAN (for himself and Mr. BUNNING) introduced the following bill; which was
read twice and referred to the Committee on Finance
A BILL
To facilitate the development of science parks, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Science Park Administration Act of 2005'.
Recommendations for Fed Labs and
Technology Commercialization
1. Give legal and administrative tools to federal technology transfer
offices to act more ‘business-like’ and less ‘government-like’ manner
2. Extend the flexibility of DOD entities to engage in ‘other transactions’
procurements to civilian R and D agencies
3. Measure technology commercialization broadly
4. Allow federal researchers to work with private sector companies as
official duties, as long as relationship is disclosed and approved
5. Create more federal research parks; create HUB Zone Enterprises
around federal laboratories; Extend Enhanced Use Lease (EUL)
Authority to Civilian Labs
6. Develop more FFRDC’s, UARCs, and federal foundations (e.g.
Jackson Foundation at USUHS)
7. Anticipate next DOD BRAC round and a ‘civilian’ BRAC
8. Reform Intergovernmental Personnel Act (IPA) to encourage bilateral
exchanges between university and federal researchers and have
universities serve as host for fed lab international researchers
9. Designate federal lab property and surrounding area as HUB zones.
10. Create by federal statute and fund an independent ‘Fed-Ted-Co’ or a
FLC (Fed Lab Corporation) authorized to commercialize technology,
fund prototypes and IP protection, and work with fed tech transfer
offices
FLC: Fed Lab Corporation
Federal Lab Consortium Possible Roles: legal and financial
•
•
•
•
•
•
•
Empower by federal statute to serve as a ‘intellectual property
foundation’ for any federal lab desiring its services
Assist TTOs in forming start-ups and finding venture and management
capital, similar to Go-co’s or In-Q-Tel like organizations
Assume transactional risk
Accept technology commercialization federal appropriations since
FLC would not be competing with parent agency for funding
Hold equity on behalf of parent agency
Report to Congress on technology transfer activities
Broker individual federal researcher services to private companies on
a disclosed and transparent process to increase US innovation capacity
and discourage ‘brain drain’ from federal laboratories
Nation’s Most Active Venture Organization:
Maryland Technology Development
Corporation
The 10 companies that received funding from TEDCO are:
–
–
–
–
–
–
–
–
–
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• Rockville-based Imagilin Technology LLC, which has three employees, received
$75,000 to work with the U.S. Drug Administration.
• Rockville-based BioFactura Inc., which has four employees, received $75,000 to
collaborate with the U.S. Army Medical Research Institute for Infectious Disease.
• Rockville-based VorCat Inc., which has three employees, received $75,000 to work
with the University of Maryland College Park.
• Silver Spring-based SETECS, which has four employees, received $74,949 to work
with the Information Security Institute at Johns Hopkins University.
• Silver Spring-based Data and Information Solutions Corporation, which has four
employees, received $50,000 to work with the University of Maryland College Park.
• Gaithersburg-based Institute of Medical Cybernautics (IMC), Inc., which has one
employee, received $50,000 to collaborate with the Naval Air Warfare Center,
Aircraft Division.
• Annapolis-based RealInterface Expert Systems, Inc., which has seven employees,
received $50,000 to work with the Upper Aerodigestive Medical Oncology
Department at Johns Hopkins University.
• Havre de Grace-based CCL Biomedical, which has one employee, received
$20,000 to collaborate with the U.S. Army Edgewood Chemical Biological Center.
• Bethesda-based BCG Wireless, which has three employees, received $19,600.20 to
work with the NASA Goddard Space Flight Center.
• Germantown-based TruGamerz, which has one employee, received $9,000 to work
with U.S. Army Aberdeen Proving Ground, Edgewood.
Implementation Strategy
• Government-owned; government-operated labs (Go-Gos) are in
the most inflexible position, which predominate in the midAtlantic Region
• Intermediary groups, such as TEDCO, and Center for
Innovative Technology (CIT) can be invaluable
• Individual Federal Lab support groups, such as the NASA
Goddard Alliance, or the PAX River Alliance, are important.
• Lab support group working with the business community and
the regional Congressional delegations: including: Greater
Washington Board of Trade/ Potomac Conference, Greater
Baltimore committee, etc. to implement public policy reforms
Hint on State Capital
And Now for the Rest of the Story (and
the rest of the panel) . . .
Tech Commercialization at University of
Maryland 25 Years After Bayh-Dole
Once the state laws, university policies and culture were reformed:
•
Emphasis on expanding business and venture services in our
technology incubator;
•
Greater interest in start-ups, as opposed to licensing, in the technology
transfer office, and integration of resources university-wide;
•
Creation of technology ventures office in Clark School of
Engineering; involvement of Business School and Law School, and
•
Similar evolution in rest of higher education, including Johns Hopkins
University and University of Pittsburg
VentureAccelerator is an MTECH program open to University of Maryland faculty and
graduate students. VentureAccelerator guides the commercialization of intellectual
property created at the University of Maryland through new venture creation.
VentureAccelerator is a selective program designed to assist faculty and graduate
students truly committed to the hard work of creating new companies based on
innovative intellectual property. Once accepted, VentureAccelerator companies
receive intense, hands-on assistance with a range of new business processes,
including market validation, business planning, staffing and initial funding through
grants or equity investment.
Located in Silicon Valley that helps professors, researchers, staff, or graduate students who wish to
start commercial ventures without leaving their present jobs. C2C helps these researchers build
their ideas and prototypes into successful businesses.
For faculty, researchers and staff, starting companies is an often random process of seeking advice and
figuring out whom they can trust. As a trusted partner of their institution, C2C brings specific expertise in
the process of venture formation “from concept to company.”
C2C looks for opportunities to help professors, researchers, staff, or graduate students who don't want to
leave a full-time academic position to found a venture-backed company based on their research. C2C
helps these researchers to evaluate their inventions as the basis of a scalable business:
C2C analyzes relevant technologies in the labs and in the marketplace Uncovers potential customer
partners Identifies qualified advisors, directors and management team members
Once the principal researchers and C2C determine to move forward:
C2C arranges selective meetings with qualified entrepreneurs and potential investors Evaluates related
business opportunities and performs a competitive analysis Supervises the organization of the company
and the licensing of the inventions from the university Develops and refines the product plan Prepares the
presentation and raises initial financing Attracts qualified management and outside directors
C2C's compensation is an equity position in these companies. C2C focuses on leading universities and
research institutions in the Western U.S. Partners include Stanford and UCLA.
Thank You!
Fear the Turtle!
Contact:
Brian Darmody
2133 Leee Building
University of Maryland
College Park, Maryland 20742
301-405-1990
[email protected]
www.onestopshop.umd.edu