Transcript Intellectual Property Issues and the Academy Ted Hagelin

EXPRESS LICENSE
AGREEMENTS
Ted Hagelin
Crandall Melvin Professor of Law
Kauffman Professor of Entrepreneurship and Innovation
Director, NY Science & Technology Law Center
Syracuse University College of Law
Technology Transfer Tactics Webinar
January 19, 2011
Views Expressed Do Not Represent
Those of the New York State
Foundation for Science, Technology
and Innovation
Or Those of the New York State
Science & Technology Law Center
• Introduction
– Two technology transfer business
models
– Express license agreements within
these business models
– The Carolina Express License
Agreement (CELA)
– Comments on CELA
• Two TT Business Models
– Volume Model
• Maximize number of licenses
• Minimize license complexity
• Accelerate commercial handoff
– Home Run Model
• Maximize return on licenses
• Minimize risk of license underpayment
• Decelerate commercial handoff
• Express License Agreements
Within TT Business Models
– Express license agreements:
• Prioritize actual revenue over potential
revenue
• Prioritize economic development over
licensing revenue
• Prioritize fair return on research investment
over whatever the market will bear
• Carolina Express License
Agreement (CELA)
– Only available to UNC faculty, staff and
student company founders
– CELA execution procedures
• Detailed business plan
• Conflict of interest review
• Acknowledgement of UNC’s IP rights
• Acceptance of license fees, patent costs
and royalty rates
• Inventor statement regarding student
employment, research and publication
• Detailed Business Plan
– Type of organization and management
• Advisors and management team
• Already in place and needed in future
– Market opportunity
• Market needs; barriers to entry;
development status; business model
– Risk assessment and milestones
• Technical; competition; contingency plans
– Development timetable & financial plan
• Budgets and cash flow
• Sources and timing of funding
• Conflict of Interest Review
– Applies to all UNC inventors receiving
equity
• Differentiate between duties to UNC and
duties to licensee/company
• Anticipate conflict of commitment in
licensee sponsored research
• Provide for disclosure, monitoring and
management procedures
• Goal to review and complete license
process within 2 weeks
– Single UNC OTD point of contact
• Collect documents for due diligence
• Interface between UNC and company
• Manage IP matters related to company
sponsored research
• Verify company is in compliance with license
– Single company point of contact
• Not UNC founder/faculty member
• Monetary terms
– Patent costs paid by company beginning 1 year
after license agreement
– License fee
• .075% of company fair market value at time of company
first Liquidation Event
• IPO, merger, acquisition, etc.
– Royalties
• 1% net sales for clinically approved product
• 2% net sales for other products
– Annual maintenance fees
• 3rd year - $15,000 or $5,000
• 6th year and thereafter - $30,000 or $10,000
• Comments on CELA
– Clearly prioritizes economic development over
licensing revenue
– CELA expressly intended to:
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Promote deal flow
Help start-up companies secure financing and management
Encourage entrepreneurship on UNC campus
Recruit faculty to UNC interested in entrepreneurship activities
Make UNC spin-outs attractive to venture investors
Amplify impact of UNC on regional economic development,
and improvement of health and well being of society
– CELA expedites licensing process by having all forms
and documents prepared beforehand and having one
single point of OTD contact
• Comments on CELA – Continued
– Required business plan especially important
• For UNC, it provides some assurance of company success
• For faculty/founder it provides some idea of challenges ahead
– A few reservations
• Will UNC faculty have right of first refusal if a larger,
established company is interested in licensing technology?
• Can start-up companies afford to pay patent costs even after a
1 year grace period?
• Will other universities be willing to wait for a liquidation event
to receive license fees?
• Will other universities be willing to accept royalties in the 1% 2% range?
Thank You!
Questions?