Transcript Demystifying Intellectual Property

Funding for Applied
Research
Mike Szarka
Manager of Technology
Transfer & Commercialization
Main Categories of Funding for
Applied Research
1.
2.
Funding for collaborative research
and consulting with industry
Funding for independent technology
development, technology transfer
and start-ups
Applied Research
Research directed at a specific
commercial application
 Requires awareness of market needs
 Requires consultation or collaboration
with the private sector
 Usually involves creation and transfer
of intellectual property
 Managing IP rights are critical drivers
of the funding process
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UOIT IP Policy
How does UOIT handle IP?
 IP policy determines IP rights when
you invent things with no contractual
obligation (Internal)
 In contract research the contract
supersedes the policy (External)
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UOIT IP Policy (Internal)
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Inventors own IP, but owe 25% of net
revenues to UOIT (not quite the Waterloo
model)
Inventors are responsible for 100% of
costs and risk and receive no advice or
support from UOIT
All inventors including students and postdocs have equal rights! Just because you
are the boss does not make you the boss
on IP matters!
UOIT IP Policy (Internal)
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Inventors can offer IP to UOIT. Revenue
sharing would be based on assessment of
risk (typically 50/50)
Assignment to university provides:
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Protection from COI and inventor disputes
Saves time
Reduces financial risk
Opens the door to grant funding from TT office
Expert advice on managing your IP – it is not
trivial and is easy to screw up
UOIT IP Policy (External)
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University receives no funding from
government to subsidize industry research
Correct pricing for contract research would
include overhead at 65-100%, support of
faculty salary, plus a profit margin
Companies often say “we are paying for
the research, we should own the IP” but in
reality they are only paying a fraction of
what they would pay anywhere else
The possibility of some rewards from IP
are only fair to the institution and the
inventors
UOIT IP Policy (External)
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If sponsor commercializes IP and makes
significant profit, some benefit should
return to the university and inventors
UOIT negotiates the terms of research
contracts; usually specify university
ownership of IP to simplify licensing
Granting programs will usually not accept
agreements with no benefit to U from IP
$1,000 minimum for statistical measures
IP rights can be waived in service
contracts
University-Industry
Collaborations

Service Agreements
• e.g. use of equipment

Consulting Agreements
• e.g. personal arrangements with professors

Research Contracts
• e.g. funding of student research with specific
deliverables

Research Grants
• e.g. funding of research in a general area
Service Agreements
Service contracts may include
charges for equipment, analysis
 Main benefit are to help support
costs of expensive infrastructure,
help attract partners
 Can involve a lot of work to manage
equipment time, can increase
downtime

Consulting Agreements
Literature reviews, calculations,
advisory services
 Usually done for cash, no university
involvement (negligible use of
university infrastructure)
 University does not sign off or review
the contract
 Usually give up control of IP

Research Service Contracts
Basically consulting deals that are
run through the university
 No use of students, usual university
IP terms may not apply
 University will charge overhead
 University facilities can be used
 University manages the contract

Research Grants (Industry)
Industry cash is provided with no
expectation of IP rights beyond a
“first look”
 May be to answer questions that are
pre-competitive, for PR purposes or
to interact with students
 Lower overhead charges (20%
instead of 40%)
 No PI stipend
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Research Contracts
Well-defined projects with industry
control over IP (although not
necessarily everything for free)
 Overhead will usually be 40% on
TDC
 May or may not include PI stipend

Leverage Opportunities
OCE
 NSERC
 IRAP
 SR&ED
 ORF
 CFI
 Name your acronym!

Ontario Centres of Excellence
Materials & Manufacturing, ICT,
Photonics, Earth & Environment,
Energy
 Interact program - $13.5k requires
industry cash + in-kind
 Collaborative program - >$100k
requires cash + in-kind, ratio
depends on size of company
 Get OCE personnel involved up front
 “Benefit to Ontario”
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NSERC CRD
Matches cash + in-kind (in-kind ≤
cash) (doesn’t match overhead)
 Very high success rate
 Can apply after the project has been
funded (short back-dating allowed)
 Can leverage against Ontario first
then against NSERC
 Similar CIHR programs
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IRAP
IRAP cash goes to the company
 Usually used to offset costs of
personnel in high-risk R&D
 Can help company place more
money into university, but must
respect stacking rules
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SR&ED
CCPC can get 35% of R&D spending
back from CRA even if the company
is not taxable (no profit)
 Public companies 20%
 University projects will almost always
qualify
 No effect on stacking
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ORF & CFI
Large-scale infrastructure proposals
beyond the scope of NSERC or OCE
 Usually > $1 million
 Require significant institutional
commitment
 Very time-intensive, usually multiinstitutional
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How to Get an Industry Partner
Usually personal relationships
 Talks at conferences, networking
events
 “Planned serendipity”
 Tech transfer office can help
occasionally but PI will generally
have more success on their own
 Companies will rarely discuss their
technology gaps until they trust you
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Rules for External Relationships
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Rule #1: Remember that all research
proposals MUST go through ORS.
Rule #2: Don’t present a draft project
budget to a partner without running it by
ORS
Rule #3: Don’t sign anything unless it is
already signed off by the AP Research
Rule #4: Refer discussions of any IP
matter to the Manager of Technology
Transfer and make no promises
Funding for IP Development
Governments want to see university
inventions commercialized
 UOIT has significant federal and
provincial grants to support this
function
 New programs provide lots of money
to cross the “valley of death”
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University Inventions
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Arrive as a result of organized searching
or as a stroke of luck
Typically at a very early stage
May or may not have any obvious receptor
Most universities patent fewer than 50%
of the inventions received and only a
fraction of these are ever licensed
About five years is a typical delay before
any revenues are received
Profits are usually only very large in life
sciences, occasionally IT
Why Bother With Tech Transfer
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Most inventions (and tech transfer offices)
don’t make money, so why bother?
Technology transfer:
• Increases research impact beyond journals
• Helps promote the value of university research
to the public and government
• Helps to capture the value of research for
economic growth
• Can reward researchers who put effort into
applied research
• Is being used as a metric by governments and
funding agencies
Tech Transfer Agenda at UOIT
Increase awareness of IP and
encourage disclosure of inventions
 Initiate program for IP management
 Protect IP in industrial collaborations
 Facilitate collaboration with industry
 Goal for UOIT to be the #1
performer in Ontario relative to our
research base
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Addressing the Pre-Commercialization Finance, Skills and Technology Gaps
Addressed via ORIC* Efforts
Financing Gap
Technology Gap
Ontario
Research
Fund
(Research
Institutions)
$31.4
Ontario
Research
Comm.
Program
(Tech
Transfer)
RIN /
OCN
Program
$29M
Investment Accelerator Fund
(pre-seed)
Angel/Seed
Stage
VC
$17M
Business Mentorship and
Entrepreneurship Program
$90M
Venture
Capital
(seed stage
$1-5 M)
Early Stage
Financing
($5 -15M)
Engineering
Manufacturing
Early
Production
Later Stage
Financing
($100 M +)
Global
Markets
Skills Gap
Fundamental
Research
Intellectual
Property
Market Needs
Analysis
R&D Project
Lab Prototype
Sales
Product Strategy/Early Management
*Ontario Research & Innovation Council
Types of IP
Copyright
 Patents
 Trade-marks
 Trade Secrets & Know-How
 Industrial Design
 IC topographies
 miscellaneous
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Copyright
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Protects an original written or artistic work
Copyright means the sole right to produce
or reproduce a work or a substantial part
of it (including computer programs)
Very inexpensive to register
Titles, names and short word
combinations are usually not protected by
copyright
Facts, ideas and news are all
considered part of the public domain
Patents
Patent system was created to
promote sharing of knowledge
 Confers a 20 year monopoly on the
right to practice an invention
 Technically not a right to practice,
but a right to exclude others
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Criteria for a Patent
New – not previously available to the
public
 Useful – not a theorem or a
discovery of a part of nature with no
application (e.g. genes)
 Unobvious – not an obvious
extension of knowledge to a
practitioner “skilled in the art”
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Patent Protection
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Patent claims denote intellectual territory
National patents denote market territory
US patent $10-$20k
Foreign patents require expensive
translations
Can easily exceed $50-$100k for
worldwide coverage
Wide protection usually only sought for
extremely valuable patents, e.g. drugs
Profiting from Patents
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Can be sold outright (rarely done by
universities)
Can be licensed
• Exclusive
• Non-exclusive
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Considerations can include:
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Royalty
Lump sum
Combination
Equity
Licenses
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Royalty negotiations are very
complex
• % of sales
• % of profits
• Per unit fee
• Annual fee
• Thresholds and ranges
Performance criteria
 Milestones
 Cross-licensing and standards
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Start-Ups
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Two types of start-up:
• Venture capital – high dilution, fast growth
• Bootstrap – low dilution, “organic” growth
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VC funding requires:
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Very large markets
Strong IP position
Stand-alone market opportunity
Viable management and business plan (rapid
growth)
Bootstrap start-up requires:
• Low cost of market entry
• Immediate revenue opportunities to generate
cash-flow
Opportunities for Funding
OPIC POP program
 OCE Market Readiness
 NSERC I2I, CIHR POP
 Accelerator funding
 Venture Capital
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OPIC POP Program
Phase 1 $15k, Phase 2 up to $50k
 Earliest stage – prove it works, prove
it has relevance to industry
 May include IP searches, market
research
 Usually an external review
 Outcome will be answers to
questions that can lead to more
funding
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OCE Market Readiness
$50k - $70k
 Basic principles should be
demonstrated, need to answer
critical technical questions
 Usually some IP protected
 Outcome will usually be to position
for more funding
 Need to show relevance to an
Ontario company
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NSERC I2I/CIHR POP
Phase 1 $125,000 for one year
 Usually need significant background
IP (patent application)
 Need industry support – “we will
invest if PI can demonstrate XYZ”
 Phase 2 bigger money but requires
industry match
 Desired outcome of Phase 1 is Phase
2
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Accelerator
$250,000 seed funding for start-ups
 Start-ups may be “Plan B” if no
company is willing to take a risk on
the technology
 Require strong IP position,
reasonable business plan
 Desired outcome is to position for VC
financing
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VC funding
Require bulletproof IP position
 Require REAL management
 Require huge market opportunity
(>$100 million)
 Most will want a controlling share in
company
 Most will want to see rapid
development of cash flow and an exit
in 2-3 years
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Who to Call?
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For discussions of:
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Inventions
Student rights to inventions
Industrial collaborations
Non-disclosure agreements
Entrepreneurship
Educating students on IP issues (lectures, seminars)
Anything else that involves IP
Mike Szarka
Ext. 2523
[email protected]