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FY96 Technology Transfer Activity

Invention Reporting
During the twelve-month period ending June 30, 1996, a total of 661 inventions were disclosed to OTT and the campus licensing offices. This represents a 26% increase when compared with the 525 new inventions reported in FY95 (Exhibit 1, below).

Exhibit 1
INVENTIONS REPORTED SYSTEMWIDE




Inventions in life science disciplines including medicine and biotechnology accounted for over 68% of the new inventions, while those from the physical sciences and engineering acounted for most of the balance. This pattern approximates the distribution of extramurally-sponsored research at the University. The distribution of newly reported inventions by campus is shown in Exhibit 2, below. Examples of recent disclosures from each campus appear in the attached figure.

Exhibit 2
FY96 INVENTIONS BY
INVENTOR CAMPUS*


Pie chart: Inventions by Inventor Campus

* Exhibit covers inventions disclosed to OTT and campus licensing offices. Inventions having inventors from more than one campus are counted multiple times, once for each campus with an inventor, thus the total number of inventions in this chart exceeds the 661 total inventions reported in the text. The category “other” includes inventions with a DOE Laboratory inventor reported to OTT.


As of June 30, 1996, OTT and campus offices were managing nearly 2900 active inventions at various stages of the technology transfer process (Exhibit 3, below). Responsibility for these inventions was divided among OTT and the campus offices, as indicated in Exhibit 4 (below).

Exhibit 3
PORTFOLIO ACTIVITY STATUS


*Includes primarily inventions with sponsor commitments and joint inventions managed by non-UC institutions.


Exhibit 4
ACTIVE INVENTION PORTFOLIO
Year Ended June 30, 1996


  OTT   UCB   UCLA   UCSD   TOTAL
Active Inventions         1994 278 420 165 2857


Patent Activity

One hundred fifty-nine (159) US and 250 foreign patents issued in FY96 on OTT and campus-managed inventions, which contributed to the 1132 US and 1183 foreign patents in the portfolio at fiscal year end. A patent is a form of intellectual property protection granted by the US or a foreign government that affords the patent holder the right to exclude others from making, using, or selling the patented invention for a defined period of time, generally for twenty years from the filing date of the patent. Both US and foreign patent rights often must be pursued for an invention in order to maximize the likelihood of successful technology transfer. In addition, there may need to be several distinct patent filings in order to assure adequate patent coverage for all aspects of a new technology. Such secondary filings frequently result in the issuance of multiple patents related to a single initial invention.


Exhibit 5 (below) presents patent activity at OTT and the campus offices in FY96, while Exhibit 6 (below) shows the trend in patent filings over the past five years. The dramatic increase in secondary filings in FY95 was directly related to the ratification of the General Agreement on Tariffs and Trade (GATT). By initiating selected patent filings prior to a June 8, 1995 deadline established in the GATT agreement, the University was able to assure the longest effective patent term for certain inventions in its portfolio.

Exhibit 5
PATENT ACTIVITY
Year Ended June 30, 1996


  OTT   UCB   UCLA   UCSD   TOTAL
US Applications Filed
    First Filings
    Second Filings
        Total

140
83
223

12
12
24

38
23
61

17
0
17

207
118
325
First Foreign Filings* 108 19 19 4 150
US Patents Issued
Foreign Patents Issued
122
246
18
2
16
2
3
0
159
250

* An invention is counted only one time in the first foreign filings category regardless of the total number of countries in which foreign patent protection is eventually sought. FY96 Technology Transfer Activity

Exhibit 6
TRENDS IN PATENT FILINGS



Licensing and Related Activity

When the University holds title to a patent, it can convey certain rights to other entities through a license agreement. A license agreement grants a licensee the right to practice a University invention in exchange for the licensee’s commitment to provide the resources required to further develop and commercialize the invention. Utility licenses generally cover useful processes, machines, manufactured items, or compositions of matter protected by utility patents. Most utility patents are licensed exclusively to a single company for a defined use, although non-exclusive licensing of utility patents sometimes occurs. In contrast, plant licenses cover asexually reproduced plant varieties that are licensed non-exclusively to multiple growers and distributors worldwide.

The provisions of the license define the rights and responsibilities of the two parties. In the typical license agreement, the licensee is granted the right to “practice” an early stage invention that is protected by a University patent. The University, in turn, receives the company’s commitment to commercialize the invention and pay the University agreed-upon fees, reimbursement of expenses and royalty payments. The specific terms of the agreement are determined through a complex negotiation process. During the negotiation period, a shorter-term letter or option agreement is sometimes used to confirm a company’s intent to negotiate a license, to outline each party’s rights and responsibilities, and/or establish a company’s commitment to pay certain fees or patent costs incurred while the negotiation is underway. In FY96, OTT and campus offices entered into 195 licenses and related revenue-generating agreements. As indicated in Exhibit 7 (below), these included 98 utility license agreements, 10 plant license agreements, 38 option agreements, and 49 letter agreements. In addition, OTT and campus offices executed 971 secrecy agreements that enabled companies to receive confidential information necessary to evaluate technologies for commercial potential.

Exhibit 7
LICENSING ACTIVITY
Year Ended June 30, 1996


  OTT   UCB   UCLA   UCSD   TOTAL
Agreements Issued
    Secrecy (Marketing)
    Letter
    Option
    Utility Licenses
    Plant Licenses

687
38
16
53
10

108
10
11
18
n/a

92
1
10
22
n/a

84
0
1
5
n/a

971
49
38
98
10
Total Active Licenses
    Utility Licenses
    Plant Licenses

307
352

42
n/a

46
n/a

8
n/a

403
352

Note: Plant licensing for all campuses is managed by OTT.



At the close of the fiscal year, OTT and the campus offices were overseeing a portfolio of 403 utility and 352 plant licenses. In managing these agreements, the University must collect monies when due and monitor progress to ensure that the licensees exercise due diligence in developing inventions toward commercial application. Exhibit 8 (below) shows the five year trend in the size of the portfolio of active utility and plant licenses. Each year, some agreements expire or are terminated based on licensees’ failure to fulfill agreement obligations. In general, the total number of active utility agreements has continued to rise, while the number of plant licenses has remained stable or decreased somewhat from year to year due to the expiration of several plant patents.

Exhibit 8
ACTIVE UTILITY LICENSES



ACTIVE PLANT LICENSES



Technology Transfer and Sponsored Research

Most inventions are the result of sponsored research activities. Government grants and contracts contain a standard intellectual property clause that enables the University to “elect” rights to inventions that may result from the research. In contrast, research agreements with industry or nonprofit sponsors do not contain this standard clause. Instead, each party’s rights to any new inventions resulting from the research must be agreed to for each award. There were over 3,600 such awards in FY96 and hundreds of them involved complex negotiations related to the intellectual property clause.

In general, industry sponsors have a primary interest in obtaining rights to any technologies resulting from the research they sponsor. Because it is often difficult to balance industry interests with those of the University, contract and grant officers must often negotiate complex intellectual property provisions. These negotiations have become increasingly important to the technology transfer program as the amount of industry-sponsored research has grown (Exhibit 9, below) and the nature of research collaborations and consortia with industry has become more complex. OTT and the campus offices are increasingly called upon to assist in these sponsored research negotiations.

In addition, licensing professionals are becoming increasingly involved in the negotiation of arrangements whereby agreements for research funding are related to license agreements for existing technologies. In FY96, over $32.7 million of industry support for sponsored research was committed to the University in conjunction with the execution of license and option agreements.

Exhibit 9
INDUSTRY SUPPORT OF UC RESEARCH*
(Millions)




*FY96 UC direct cost expenditures of industry dollars. Figure does not include industry funding of indirect costs.

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