Distribution of Income

Payments to Joint Holders

When an invention results from a collaboration between UC and non-UC researchers, multiple entities may become joint holders of the patent. When this occurs, interinstitutional agreements are negotiated to establish which entity will be responsible for the management of patent prosecution and licensing of the invention, including the collection and distribution of invention income; such collaborations are relatively common. In FY97, 84 of 716 new disclosures (12%) included non-UC inventors and 26 new interinstitutional agreements were issued.

In FY97, OTT and campus offices redistributed $6.0 million in income to other entities for inventions covered by interinstitutional agreements (Exhibit 18). These payments were deducted from royalties and fees to arrive at adjusted gross income. The largest payment to a joint holder in FY97 was $5.7 million to the University of Washington for the Hepatitis-B Vaccine. Over the past five years this invention has accounted for most of the UC payments to joint holders reflected in Exhibit 19.

Inventor Shares

The University Patent Policy grants inventors the right to receive a portion of net income accruing to individual inventions. In FY97, 570 inventors received a total of $22.0 million in inventor share distributions based on the financial activity of their inventions through June 1996 (Exhibit 20). This represented a 16% increase in monies distributed to inventors over the prior year and continued the five-year upward trend evidenced in Exhibit 21.

State Share

The State of California portion of University technology transfer income totaled $7.4 million in FY97 (Exhibit 22). The State share is equal to 25% of the amount remaining after deducting net direct expenses for all cases and total inventor share payments from adjusted gross income.

    Exhibit 23 depicts the growth in the State share over the past five years.

Campus Distributions

The portion of technology transfer program income that is available to be redistributed to campuses to support ongoing research and education programs is net income. It is computed as total income less the sum of program expenses, payments to inventors, and the State share distribution. Net income for OTT and campus offices totaled $15.1 million in FY97. Exhibit 24 shows the contribution each licensing office made to systemwide net income in FY97. Exhibit 25 shows how net income has fluctuated over the past five years.

Net income generated by the campus licensing offices remains with the campus. At OTT, where inventions are managed for multiple sites, the amount of net income for each campus or Laboratory is determined by carrying out a separate income and expense analysis for each campus or Laboratory’s invention portfolio that includes assessing a pro rata share of OTT operating costs. At the end of each fiscal year, each site either receives its share of net income or pays for any net loss generated by its invention portfolio.

In FY97, five campuses and one Laboratory received net income from OTT, while the other four campuses and two Laboratories incurred net losses.

Exhibit 26 shows a summary of the financial performance of campus invention portfolios managed by OTT.

Campus Interest Distributions

Starting in FY97, a portion of Short-Term Investment Pool (STIP) interest earnings on patent income was distributed to the campuses and DOE Laboratories whose portfolios yielded a net income for the fiscal year. The allocations were calculated by adding all individual Campus/Lab net income amounts and determining each site’s proportion of the total.

As indicated in Exhibit 27, five campuses and one DOE Lab were eligible for a portion of the $356,842 of distributed earnings.

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