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Technology Transfer Expenses

Operating Expenses

Operating expenses for OTT and campus licensing offices, consisting largely of employee salaries, benefits, and expenses for equipment and supplies, rose to $6.5 million in FY96 (Exhibits 13 - 14, below). As indicated in Exhibit 15 (below), operating expenses as a percentage of licensing revenues decreased between FY92 and FY93, stabilized for the next two years, and dropped again in FY96.

Exhibit 13
Year Ended June 30, 1996
(Thousands)


OTT UCB UCLA UCSD TOTAL
Operating Expenses   $4,839* $464 $702 $519 $6,524

* Includes a $551,000 “common fund” UCOP budgetary assessment equal to 1% of OTT adjusted gross income.

Exhibit 14
OPERATING EXPENSES
(Millions)


Exhibit 15
OPERATING EXPENSES AS A
PERCENTAGE OF LICENSING REVENUES


Legal Expenses

Legal expenses incurred by OTT and campus offices totaled $18.0 million in FY96. Reimbursements from licensees totaled $7.1 million, reducing net expenses in this category to $10.9 million (Exhibit 16, below). Approximately 35% of net legal expenses involved payments to outside counsel for patent prosecution and maintenance. Forty-eight percent (48%) of net legal expenses derived from two major patent infringement cases, one involving Human Insulin and the other involving Human Growth Hormone. The remaining 17% of net expenses were incurred in connection with a number of smaller legal actions and disputes.

Exhibit 16
Year Ended June 30, 1996
(Thousands)


 OTT UCB UCLA UCSD TOTAL
Legal and Other Direct
Expenses
   Less: Reimbursements
   Net Legal Expenses

$15,982
(6,246)
$9,736

$723
(505)
$218

$1,016
(339)
$677

$247
0
$247

$17,968
(7,090)
$10,878

Exhibit 17 (below) shows the growth in gross and net legal expenses over the past five years. Although University licensing personnel continue to experience a high degree of success in negotiating reimbursement of patent costs, it is expected that legal expenses associated with litigation will continue to mount as the technology transfer program grows, patent activities continue to accelerate, and relationships with inventors, sponsors and licensees become increasingly complex.

Exhibit 17
LEGAL EXPENSES
(Millions)


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