This material has been published in In Vitro Cellular and Developmental Biology - Plant, 36:10-12 January-February 2000, the only accredited archive of the content that has been certified and accepted after peer review. Copyright and all rights therein are retained by The Society for In Vitro Biology. This material may not be copied or reposted without explicit permission of the copyright owner.
In Vitro Cellular and Developmental Biology - Plant 36:10-12 January-February 2000 © 2000 Society for In Vitro Biology

WORKSHOP ON INTELLECTUAL PROPERTY RIGHTS
UNIVERSITY TECHNOLOGY TRANSFER: AN OVERVIEW FOR THE ACADEMIC SCIENTIST

SPENCER LEMONS

Technology Transfer and Industry Research, North Carolina State University, 1 Holladay Hall, Box 7003, Raleigh, NC 27695-7003.

(Received 21 June 1999; accepted 5 October 1999; editor M. Horn)

The current emphasis placed on the commercialization of new technologies and the desirability (and at times necessity) of seeking industry support to fund research have forced many academic scientists for the first time to deal with issues of confidentiality and intellectual property. This route may also require them for the first time to directly interact with their university's technology transfer office. This article provides a brief overview of the operation of university technology transfer offices and reviews how academic scientists, in concert with their technology transfer office, may better deal with issues of intellectual property and confidentiality.

Technology Transfer

University technology transfer, as broadly defined, occurs everyday through the publication and presentation of research results, the university's extension and outreach services, and the researchers' direct collaborations with industry and the community. For the purposes of this article, however, "technology transfer" refers to the transfer of protectable technologies primarily through the licensing of patents, copyrights, or tangible properties such as cell lines or viral isolates. It is important to remember that this type of technology transfer represents a relatively small portion of the overall technology transfer activity occurring on university and college campuses. Therefore, the inventor might wish to pursue the transfer of protectable technologies relative to the other goals and objectives of the university and to the extent it enhances the inventor's research and educational interests.

The transfer of protectable technologies encompasses both licensing to existing companies and licensing to new "start-up" companies. A license, in practical terms, is the permission to use a protected technology granted by the owner of the technology. It is similar in many respects to the lease on a car. Most, if not all, colleges and universities cannot or will not assign the ownership of new inventions to third parties, so a license is probably the most common way of transferring protected university technology. If the technology is not protectable in some way, it is often difficult for the university (and inventors) to receive a direct return on the investment of time and money required to protect and license the technology. Some technology transfer offices at larger universities operate in whole or in part on the revenues generated through licensing, so recouping investments in time and money is often essential.

Disclosing and Protecting New Discoveries

One of the most challenging issues for researchers who are new to technology transfer is deciding when and how to disclose or discuss new discoveries. When an academic scientist makes a new discovery which may have commercial potential, industry is often the most willing or most likely to fund the research. However, premature disclosure or discussion of the new discovery with industry may result in the loss of certain patent rights, thereby reducing the discovery's commercial value.

This dilemma represents a "Catch 22" of industry-funded research. A company will not fund the research until it is told of the new discovery, but discussing the new discovery may result in the loss of some of the commercial value of the discovery through the loss of available patent protection. Additionally, discussing a new discovery with industry without some form of protection covering the technology or the disclosure of information may result in the inventor losing control of the development of the technology. A company may be so impressed by the discovery that it may pursue the discovery "in-house" without the inventor's involvement. Therefore, working effectively with one's technology transfer office is important not only in the development and commercialization of new discoveries but in furthering one's own research objectives. To protect the initial disclosure of information, it may be possible to put a confidentiality agreement in place to preserve patent rights and restrict the use of unpublished research results by industry.

In deciding when to disclose a new invention or discovery to the university technology transfer office, the inventor may wish to consider the following questions:

1.      Is this a "definable" invention, discovery, improvement or idea which might have commercial potential? "Definable" implies "proof of concept" data, computer models, isolated genes and/or proteins, functional gene sequences, new formulations or compositions with unique or unexpected results, or transformed cells or plants.

2.      Is the inventor considering any of the following:

• submitting an abstract for a presentation or poster;
• submitting a manuscript for publication;
• discussing the idea/invention with industry or others outside the university;
• entering into a collaboration;
• submitting a grant proposal; or
• pursuing a sponsored research agreement?

When in doubt about the effect these actions might have on the commercial value of a discovery or the available patent protection, it is important that the inventor, at a minimum, formally establish a record of invention. In the U.S.A., if a dispute arises over the inventorship of a patent, the party that can demonstrate by written, dated, and witnessed documents that it (i) was the first to invent the invention, and (ii) diligently pursued the invention's development, will likely be named the inventors. Therefore, when in doubt, the researcher should at least make a formal record of the invention by detailing the invention in ink in a bound laboratory notebook and have it signed, dated and witnessed (2).

However, if the inventor is unsure of what steps to take, he/she should call their technology transfer professional who can explain the available options. It is important to remember that establishing a formal record of invention does not protect the inventor from a loss of patent rights due to disclosure or publication. It is an internal document only. Only the filing of a patent application in the U.S.A. (or foreign) Patent Office preserves one's patent rights.

Invention Triage

The invention disclosure form submitted by the inventor to the technology transfer office may first and foremost be the inventor's earliest record of invention. Therefore, the details contained in the disclosure form are scrutinized, for proper signatures, witnesses, conception date, etc. Additionally, the university must review the funding history of the invention to assure that any contractual obligations it may have to any research sponsors are met, whether the sponsors are federal, state, non-profit or for-profit entities.

Publication and presentation of the invention directly affects the available patent protection. Therefore, a full review of not only when presentations or publications may have occurred, but also of what was said, to whom, in how much detail, and how the information was presented, becomes critical. An "enabling" disclosure, whether oral or in writing, may result in the loss of foreign patent rights. It may also initiate the one-year clock for the filing of a U.S. patent application.

Finally, the technology transfer office reviews the disclosure to determine the potential for commercializing the invention. What is known ( by experimentation) about the invention versus what is suspected by the inventor? How is the technology better than or different from existing technologies? Is protection available (patent or copyright, primarily)? How broad might the available protection be in this case? What is known in or been published in this field or in related fields? What are the potential commercial applications? What are the inventor's interests? How large is the potential market for this technology? Are there any competitors? Are there any potential barriers to commercializing this new technology?

Barriers to commercialization come in many forms and it is critical to identify any barriers during the initial evaluation of the invention. If there are any barriers which are deemed to be insurmountable, then the ultimate success of the commercialization effort is highly doubtful. Early-stage technologies are highly risky, so a fatal flaw identified in the commercial potential of the technology may make it impossible to license.

One often under-appreciated point particular to university technology transfer is that some type of patent or copyright protection for the discovery may be essential. In most cases, for the university (and the inventor) to receive any return from the commercialization of a new invention, it must be protectable. Additionally, because the university will not be directly selling or manufacturing the finished product, the available protection must also be broad enough to prevent the licensee and others from easily "designing around" or otherwise producing similar products not covered by the university's patent or copyright. Therefore, at a university, greater emphasis is likely to be placed on how broad the available protection is for the new invention. If the available protection is too narrow, it may be difficult or impossible to license the invention out of the university.

Invention Marketing and Management

Most technology transfer offices operate on a "case management" basis, assigning one person within the office to manage each new invention. A few of the larger offices use a more decentralized approach, assigning a management team to handle specialized tasks related to a single invention, such as market analysis, technical analysis, agreement negotiation, etc. The case manager/management team generally relies heavily on the inventor's expertise in the technical area to understand and assess the invention. Further, the inventor's insights concerning the marketplace, potential licensees, etc. are often essential.

In most cases, the technology transfer office will market the invention to industry on a non-confidential basis prior to pursuing a patent application. As one can appreciate, most technology transfer offices are relatively small compared to the numbers of different academic departments on a university campus. Therefore, it is unlikely that each case manager will have sufficient experience in each field to determine with any certainty whether each new technology will be of interest to industry. Industry feedback in these early-stage efforts is therefore important in helping to determine the commercial potential of the invention. The scope of the marketing will vary from university to university, technology to technology, and industry to industry. In certain fields, identifying even one potential licensee may be difficult. On certain occasions, the new technology is attractive enough that the university may file a patent application on the invention in advance of marketing. Larger technology transfer offices with greater available market expertise and larger patent budgets are more likely to pursue speculative filings on new technologies than their smaller counterparts.

To initiate the marketing of the new invention, the case manager often generates a non-confidential summary of the invention which describes the features and benefits of the invention without disclosing essential details concerning how the invention works. In broad-based "shotgun" marketing, the case manager broadly disseminates this summary, perhaps through an internet listing, mass mailing, etc. Some more focused work may be done to target the marketing in specific areas, but generally the information is made available to anyone. In "rifle shot" marketing, the case manager more actively attempts to identify four to eight specific companies which might be the most likely candidates to commercialize the invention. The case manager contacts the appropriate person within the company and discusses it directly with them, followed by a direct mailing. The relative interest of the first handful of companies contacted may help to determine whether it is worthwhile to approach others.

If a company expresses interest in the invention, a confidentiality agreement is generally put into place so that the company may learn more detailed information about the invention and perhaps talk in depth with the inventor. Should further interest be expressed, the company and the university may enter into an agreement granting the company an option to certain rights in the invention. Since most university inventions are at a very early stage of development, the initial option period is generally an evaluation period of relatively short duration (one to three years) during which further development of the technology takes place, often through funded research in the inventor's laboratory.

New Business Development

Certain new inventions may be suitable to support the creation of new companies. Generally, these new technologies are more broad-based "platform" technologies, with multiple applications and multiple commercial markets of reasonably large size. Developing early-stage technologies often requires significant amounts of capital. To support a new company, the potential return must be great enough to compensate the founders and investors, not only for the substantial time and money invested, but also for the significant risk inherent in starting a new high-tech company. Only a relatively small percentage of the protectable early-stage, high-tech technologies coming out of an individual university are likely to be suitable as the basis of a start-up company.

The development of a new company requires a slightly different focus on the part of the technology transfer office and the inventor. Often, early-stage, "pre-seed" money is required to perform crucial proof-of-concept experiments. Additionally, to help assure the success of the venture, patents must often be filed and prosecuted long before the technology's potential commercial value can be meaningfully assessed. Detailed market research and analysis may be necessary and a business plan may need to be developed. Universities have varying amounts of time, expertise, and funds available to support these activities and have varying thresholds in risking these assets to promote new business development. Although the development of new businesses is often a key component of the technology transfer office's mission, suitable platform technologies, qualified management, and sufficient early-stage capital are sometimes lacking.

Goals and Objectives

The mission of most , if not all, university technology transfer offices has many facets. It includes promoting the diligent development of new technologies for the public benefit, enhancing the establishment of collaborations with industry, and furthering the outreach and extension efforts on campus. Generating licensing revenue is likely only a small component of the overall mission, but since more and more such offices rely on licensing revenue to cover their expenses, return on investment is important to help maintain the operation. Balancing all of these objectives as well as the interests of the inventors and the desire to stimulate local or regional business development is an often daunting and difficult task. Combine these various objectives with the inherent difficulty of developing and commercializing early-stage new technologies, and one can begin to understand the challenges inherent in the process.

However, even with all of the challenges, technology transfer successes occur daily and the subsequent benefits flow to the university, the inventor, the licensee, and the public as a whole through the creation of new products, new jobs, and higher tax revenues generated by the sales of new products. According to 1996 statistics published by the Association of University Technology Managers (AUTM), sales resulting from technologies licensed by academic institutions were estimated at roughly $20.6 billion (1). Pre-market investment in the development and marketing of these new technologies was estimated at approximately $4.2 billion, resulting in a total economic impact of about $24.8 billion. Further, according to AUTM, academic technology transfer in 1996 supported over 212,000 jobs annually. The commercialization of new technologies through academic technology transfer is not only beneficial to the research and educational objectives of universities and researchers, but it is a strong positive force in the economy.

References

Association of University Technology Managers (AUTM) Licensing Survey, Fiscal Year 1996; Association of University Technology Managers (AUTM) internet website http://autm.rice.edu/autm/

Haile, L.A., Inventorship and the significance of record keeping., In Vitro Cell. Dev. Biol. - Plant 36(1)7-9:2000.