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University of Hawai`i Office of Technology Transfer and Economic Development January 26, 2006 Office of Technology Transfer and Economic Development (OTTED) Revenue-oriented service center Help UH personnel identify, protect, and commercialize their inventions/creations Help build UH research enterprise Generate licensing income Support State economic development initiatives UH Business Plan Competition OTTED offering up to $20,000 in additional prize money Recipients must base their business plan on a UH technology available for licensing through OTTED Recipient(s) must be 1st, 2nd, or 3rd place winner(s) Money must be used to help commercialize the technology generally means that winning team becomes a licensee Award goes to highest placing winner Technology Licensing Evolution of the relative value of tangible and intangible assets to total value 100 years ago, tangible assets generally accounted for 90+% of a company’s value . . . 90% 10% 100 years ago Today Today, the value of many companies is derived from their intangible assets. University technologies are valuable . . . . . . and will become more valuable as companies continue to leverage their R&D budgets through the acquisition of outside technologies Stage 1 Technology Transfer Process TLG activities Solicit, accept, administer invention disclosures Invention Disclosure UH ownership ? No Stage 2 Yes Legal protection available? No Yes Marketing & Protecting TLG activities Evaluate, market, protect technologies Stage 3 Commercial interest ? Yes Return to inventor Licensing No Note: This chart is necessarily brief - it represents only the most basic functions of the technology transfer process. Please contact the Technology Licensing Group (539-3817) with questions or for further information about your invention and the technology transfer process. TLG activities Negotiate, formalize, audit licenses Licensing as a Business Model Licensor – Inventor/owner of technology Licensee – User License – contract not to sue Consideration – usually financial but may include other consideration, such as cross license Why license university technologies? Technologies – early stage, high risk Technological risk – it may not work Market risk – unknown demand Licensee – reduces risk Reduces R&D expenses Proves concept, may provide working model Permits end users to “kick the tires”, lowers market uncertainty Establishes relationship with University Licensor – expands income potential Reduces/eliminates mfg., mktg., dist’n costs May help identify new income opportunities Establishes relationship with company(ies) Possible Deal Structures Traditional licensing w/fees, royalties Equity participation Spin-offs/start ups Sublicensing Options Sponsored research agreements With/without option to acquire license Compensation, Diligence, Patents, and Liability Compensation Structures and Alternatives Up-front fees Royalty arrangements Milestone payments Patent registration costs Liability/indemnification Up-front fees Good for University Reduce University’s financial risk Offset University’s previous out-of-pocket expenses (research costs, patents, etc.) Generally not refundable nor creditable against future royalties BUT … Increase licensee’s financial risk May reduce licensee’s research sponsorship commitment May “lock in” licensing rights Royalty arrangements Permits University to share in the success of commercialization University’s increasingly willing to be flexible in their approach and royalty requirements Equity can be exchanged for royalties Milestone payments Milestones should follow natural development of the technology Often tied to diligence provisions Levels revenue flow to University in early years Equity can be exchanged for cash payments. Payment of Patent Expenses Licensed patent = licensee pays Business expense Cost sharing for multiple licensees each licensee pays 1/n of patent expenses licensor may limit licensee’s liability, cap or set n>1 Liability Issues and Disclaimers Licensee takes all the blame and the responsibility and the cost University takes all the credit and none of the responsibility …and wants to be paid for it Liability Issues Licensee assumes fitness for use Licensee assumes product liability and names university as additional insured Licensee/university each assumes liability for its own employees Success Stories and Exemplary Technologies Past Business Plan Participants/Winners Pipeline Communications and Technology, Inc. Hawaii Environmental BioSolutions telecommunications and antenna technologies company has 7 employees, is in pre-production phase dairy waste processing company has 0 employees, is in start-up phase Research Analytical Labs diagnose and treat pre-term labor status of company unknown Examples of UH technologies available for licensing Hydrogen storage materials Biodegradable biopolymers Hydrogen/oxygen production from water Acoustic wave micromixer Wastewater treatment with zero valent iron Ventilating roofing system Contacting OTTED Website http://www.otted.hawaii.edu Email/Phone Richard Cox, [email protected], 539-3818 Gaylene Anderson, [email protected], 539-3836 Lisa Matsunaga, [email protected], 539-3826 Ann Park, [email protected], 539-3829 Jonathan Roberts, [email protected], 539-3828 Andrea Yuen, [email protected], 539-3823