Scope of Advisory Group #7:
Strategic Assessment of the University Patent and Licensing Programs
Universities and industry increasingly engage with each other in a broad range of mutually beneficial research and technology transfer relationships. Given the variety of new and complex research relationships with industry, historical University policy guidance to faculty, students, and administrators concerning patent ownership and licensing arrangements is becoming less relevant and useful. Some have provided anecdotal evidence that current UC policies have actually inhibited industry-university partnerships and complicated the free exchange of ideas and researchers between UC and industry research laboratories. For UCindustry partnerships to flourish, both the mutual and divergent interests of the parties must be addressed in a clear and efficient manner for a broad range of research and technology transfer contractual arrangements, including: research collaborations and consortia among university, industry, and governmental participants; materials transfers both into and out of the University; technology licensing agreements "bridged" to follow-on research agreements; UC visitors working in industry laboratories and industry visitors working in UC laboratories; and other innovative arrangements with commercial partners.
Advisory Group #7 will review current UC intellectual property policy and guidelines and assess their relevance and appropriateness in the current environment.
Participants in Advisory Group #7:
Strategic Assessment of the University Patent and Licensing Programs
John E. Bowers (Chair)
Professor, Electrical and Computer Engineering
UCSB
Joe Acanfora (Specialist)
Associate Director, Office of Technology Transfer
UCOP
John L. Bishop
President and CEO, Vysis, Inc.
Downers Grove, IL
Don Carlson
Professor, Molecular and Cell Biology
UCD
Clifford M. Detz
Manager, Strategic and Collaborative Research
Chevron Research and Technology Co.
Richmond, CA
Norma Dunipace
Manager, Partnership Development
LLNL
Curt Gaines
Manager, Lassen Canyon Nursery Inc.
Redding, CA
Paul Gray
Dean, College of Engineering
UCB
Nora A. Hackett
Technology Liaison Officer
UCD
Dan Hutchinson
Director, Strategic Resources Initiatives
UCLA
Niels Christian Nielsen
Executive Vice President, Danish Technological
Institute
Tasstrup, Denmark
M. Lea Rudee
Professor/Coordinator, Material Science
UCSD
Stephen M. Sammut
Managing Director, Access Management Services, Inc.
Philadelphia, PA
Suzanne B. Sandmeyer
Professor, Microbiology and Molecular Genetics
UCI
Janna Tom
Campus Liaison Officer, Office of
Technology Transfer
UCOP
Candace Voelker
Associate Director, Office of Technology Transfer
UCOP
Frederic Wan
Vice Chancellor for Research
UCI
Report of Advisory Group #7:
Strategic Assessment of the University Patent and Licensing Programs
Overview:
In March, 1994 the University's Ad Hoc Technology Transfer Advisory Committee submitted its final report to President Atkinson. The President accepted that report, establishing the objectives of the University's technology transfer program as follows:
"... to transfer University-created technology to the private sector for the development of products and processes to benefit the public; to encourage and support research relationships with the private sector; and, as stated in the Patent Policy, ...'to assist in obtaining funds for research, to provide for the use of invention-related income for the further support of research and education.'"
This Advisory Group concurs with those objectives, but also reaffirms that the enhancement of the research and teaching missions of the University of California continues to be the overarching purpose of University technology transfer programs. The Group believes that the central Office of Technology Transfer (OTT) and campus-based technology transfer offices must continue to direct their priorities and activities towards these objectives by developing long term relationships with industry through sponsored research agreements, collaborative arrangements, licensing of intellectual property, and other appropriate technology transfer partnerships.
Many changes in technology transfer have taken place since the current technology transfer policies and practices were formulated. These policies and practices will have to be re-examined and revised to reflect these changes. It is particularly important that the new policies and practices be more flexible and accommodate faculty input in support of the broad objectives of the University' technology transfer program.
Recommendations:
1. Develop new and flexible intellectual property rights policy guidance.
In response to the evolving relationships with industry and the need for more campus flexibility, it is recommended that the University provide campus negotiators with new and more flexible policy guidance. This guidance should address those issues that arise during the negotiation of intellectual property rights with industry partners. The goal is to empower campus negotiators to develop, negotiate, and execute a broad range of patent rights arrangements which can be tailored to the individual circumstances of each industry supported project or program. This new approach might require revision to existing Guidelines on University-Industry Relations, the University Contract and Grant Manual, and the Schedule of Support and Patent Privileges.
Such revised authority and guidance, however, should be carefully drawn to ensure that the University will continue to carry out its primary missions, to meet its legal obligations, and to protect itself from inappropriate risk or liability in the intellectual property area.
a) Such policy guidance should be based upon the following principles:
PRINCIPLE 1: University intellectual property should be managed to enhance the teaching and research programs of University faculty, researchers, students, and postdocs and move the results of such programs promptly to the public benefit.
PRINCIPLE 2: Decisions concerning the management of intellectual property shall give significant consideration to the interests of University faculty, researchers, students, and postdocs participating in the arrangement, consistent with the missions and policies of the University and mindful of legal considerations.
b) Policy guidance should address the broad spectrum of forms of UC - industry relationships, including sponsored research agreements, collaboration agreements, and material transfer agreements.
c) Policy should consider the commercial realities of different industrial sectors, such as biotechnology, engineering and agriculture, including their interest to have the University i) not file any patents, ii) negotiate a royalty-free license, iii) grant the first right to negotiate a royalty-bearing license, or d) accept other intellectual property arrangements.
Currently, some potential industry partners suggest that they do not support University research because they fear they may be prevented, by costly or unattractive licensing terms, from using the resulting technology. In many cases, particularly in engineering, the potential income to the University from sponsored research agreements could far exceed potential license income. The Advisory Group felt that in such cases, and with the concurrence of those involved, it could benefit the University and the researchers involved to accommodate a company's interest in royalty-free access to resulting technologies, possibly accepting equity in lieu of royalty.
d) Policy should support a "fluid" interface between industry visitors to UC laboratories and UC visitors to industry laboratories.
Current UC policy requires that all non-employees who use University research facilities and/or receive gift, grant, or contract funds through the University execute a University Patent Agreement assigning rights in inventions and patents to the University. Experience has shown that many visitors are uncomfortable with or refuse to sign the Patent Agreement because of fear of breaching their prior agreement with their employer. This policy tends to block industrial interactions, and is widely ignored and abused by faculty and visitors. UC employees and student encounter comparable dilemmas when they visit industry laboratories.
e) Policy should be revised to provide that if UC (and the federal government if the research is federally funded) decline to patent an invention, then the inventor can file and own a patent and continue research.
A common case is an invention resulting from ongoing research, quite often a Ph.D. thesis research project. If UC files or the federal government files, then there is no problem. However, if both decline to do so, the inventor has that option. If the inventor is a student, then he cannot work on his thesis. If the inventor is a faculty member, then he can only protect this idea if he terminates the student's research. This is a case where a rule designed to protect against possible abuse (namely the faculty member using UC resources for personal financial gain), actually causes much worse abuse, namely either loss of a potentially valuable invention or termination of a thesis.
2. Develop new intellectual property administrative systems necessary to support new, more flexible policies.
a) Develop administrative systems to ensure that all University faculty, researchers, students, postdocs and visitors participating in a technology transfer arrangement are appraised of intellectual property rights and obligations associated with that arrangement and provide their concurrence. The intellectual property rights and opportunities of those University faculty, researchers, students, and postdocs not participating in (and therefore not providing their concurrence with) a particular technology transfer arrangement must not be impaired.
b) Establish an intellectual property inventory system whereby the varying IP rights and obligations associated with each UC faculty member, researchers, student, or postdoc can be managed. This would allow case-specific intellectual property arrangements to be crafted for each technology transfer arrangement (rather than the current uniform, inflexible template), while guarding against entering into conflicting legal obligations.
c) Develop a system to disseminate to UCOP and campus officials information on the numerous intellectual property obligations of The Regents associated with sponsored research and other technology transfer arrangements in order to help preclude different UC sites from entering conflicting obligations on behalf of The Regents.
Even though we are one university system entering legally binding commitments in the name of The Regents, multiple campuses and Laboratories enter research and other intellectual property agreements concerning related technologies. Interferences between commitments made by the various and decentralized authorities can be minimized with better dissemination of intellectual property rights agreement information.
d) Develop model agreements for various forms of University/industry interactions where useful.
Negotiate framework agreements or model agreements between UC and particular companies that cover all sponsored research agreements with that company, unless either party opts for a different agreement. This would simplify and speed up the negotiation process. It is quite common for large companies to fund many projects at a given campus, or within UC, and they would like to reduce the negotiation costs. Such models might address sponsored research, collaborations, industrial visitors to UC, UC visitors to industry, and incoming material transfer agreements.
e) Develop a broader metric to measure the success of the University's technology transfer program that reflects the importance of industrial support of research, the role of industry partnerships in the education of students, revitalizing California industry, and job creation for UC graduates, as well as patenting and licensing.
This Advisory Group noted that the Annual Report -- University of California Technology Transfer Program, Fiscal Year 1996 focussed on patents, licensing and net income from licenses as the primary metric used to evaluate success.
f) Decentralize authority to campuses to implement the new more flexible intellectual property policies. Restructure central UCOP and campus organizational structures and staff responsibilities to merge the sponsored research agreements, technology transfer agreements, and licensing functions.
These changes would recognize that from the faculty and industry perspectives, these are not distinct or separate functions, but are perceived as artificial organizational barriers that must be integrated for effective and efficient technology transfer. They would provide "one-stop shopping" for industries wishing to work with UC for research and technology transfer purposes.
3. Provide adequate staff resources and appropriate training programs to administrators, faculty, researchers, and postdocs on intellectual property issues necessary to support the more flexible policy positions and decentralized authorities.
In conjunction with providing campuses greater authority and more flexible policy guidance in their negotiations with industry, a critical need exists to properly staff the University's expanding research interactions with industry. Both University administrative employees authorized to develop case-specific relationships with industry, and faculty whose interests must be considered within UC policy and legal parameters, must possess a package of traits, experiences, and capabilities if the University is to be successful in expanding its relationships with industry. UC administrative employees and faculty must be able to meet with industry representatives to understand their individual and mutual interests, be familiar with the various statutes, regulations and internal policy parameters under which University-industry relationships are established, and negotiate appropriate contractual arrangements in a timely manner to establish the relationship. Administrative staff and faculty generally must understand intellectual property issues, appreciate the interests, principles, and organization of the University, as well as have a strong scientific background and be experienced in negotiating with industry. Such a combination of attributes currently is not common in either faculty nor in those University administrative staff charged with establishing partnerships with industry, though certainly exceptions exist.
It is recommended that the University be proactive in rapidly hiring or developing current administrative personnel with such capabilities; and in providing technology transfer training to faculty, researchers, students, and postdocs.
4) Establish industrial sector (engineering, biotechnology, etc.) advisory groups to President Atkinson and the Office of Technology Transfer.
Consider faculty participation on such advisory groups.
Comments on the Report of Advisory Group #7:
Strategic Assessment of the University Patent and Licensing Programs
The following analysis was submitted by
~ Nora A. Hackett
Technology Liaison Officer
Davis Campus
The March 1994 report of the University's Ad Hoc Technology Transfer Advisory Committee established objectives for the University's technology transfer program which directed more integration of the University-created technology into activities which would benefit and enhance the teaching and research missions of the University. While the Committee called for integration of these activities at both the central Office of Technology Transfer and the local campus offices, they did not designate a mechanism, nor time schedule, for integration of these administrative activities.
Much internal and external complaint about the University's inability to handle complex issues regarding private industry research funding and technology development derive from the inadequate staff placed to handle these complex issues. More staff of immensely greater sophistication is required to analyze and resolve issues of overlapping rights, desires, restrictions, financial benefits and possible liabilities related to private industry support. Specialized analytical staff is required to examine the confining and confusing policies of several sources including federal incentive support programs, state and federal conflict of interest requirements and consulting commitments. The University has placed inadequate resources at the campus and centrally, to provide administrators with the combination of skills needed to interpret and find resolution to these exceeding complex issues.
The relationships and potential outcomes of private industry support of research are often very different from those expected from funding from a governmental or non-profit source. Federal contracting policy regarding research funding requirements and obligations was defined, if complex, but could be interpreted at a local site with moderately skilled staff. A research project or collaboration with a non-profit, educational institution could be placed, without concern about what to do if the funding agency did not pay, went bankrupt, attempted to manipulate the researcher's project, terminated the project prematurely or sued for damages. A more experienced negotiator is essential for research projects supported by private industry.
It is essential to appreciate that the objectives and the requirements of a relationship with a private industry partner may be significantly different than university personnel have dealt with in the past. It is naïve to expect that contracts negotiators and development personnel can adequately, and effectively address these new requests without sufficient resources and guidance.
Recommendations:
1. Develop new and flexible intellectual property rights Policy.
a. UC should develop a Policy on University-Industry Relations which reflects the practical realities of the University's current relations with industry. The current relationships reflect the increased reliance of University faculty on the research support dollars from industry, and the companies establishment of corporate research expenditures within the University research programs in order to reduce costs, increase the breadth of the project and to limit the term of research commitments. Successful University participation in these newer relationships requires greater recognition of the company's perspective on intellectual property rights.
The Policy Guidelines adopted in May 1989 do not appear to have the focus appropriate for the current post-Cold War government positions and the economy. The federal government has removed itself from broad research support and further support of applications development work through its sub-contracts to major industrial military suppliers. Divestiture of government, military-related, research programs through effective privatization of the National Labs has initiated the process of replacing the federal research support sponsor with a competitive private industry partner. Programs developed to encourage these relationships provide greater access to intellectual property rights for the private company partner (sponsor). The principles of reward for the creator or maintenance of academic control over the creator's research activity has been minimized.
b. The apparent flexibility of the implementation guidelines for management of University intellectual property is based on the inability of UC contract negotiators to fully appreciate which issues should be strongly supported and which issues are of lesser concern and may be traded off. There are no guidelines as to what is usual and customary in consideration of the proposed tradeoffs. There should be direct information to point out inappropriate legal risk or liability related to intellectual property. The policy guidance should be applied to all levels of agreements. The intellectual property language should reflect the role of the total relationship of the faculty and the company.
c. Without guidelines, the inability to prioritize key issues, results in compromises, at one campus, which are not suitable for another contract relationship at another campus. Mixed funding sources (inadvertent or otherwise) add to the complications of interpretations about possible multiple commitments.
d. The Office of Technology Transfer initiated a detailed effort to clearly state the University's position on various issues by drafting the first several chapters of the Intellectual Property Negotiator's Handbook in 1993. The limited portions of the handbook were quite helpful, but the Handbook was never completed.
e. The PRINCIPLES which define the policy guidance can be the basis for ultimate rationalization of any activity which might enhance the teaching and research programs of the University. These define the primary allegiance to be the financial support of the faculty.
f. The University should recognize that there are specific technical areas where the University should examine, and use, alternative arrangements to the conventional patent/licensing route to develop technology.
g. We have a serious need for a realistic policy on management of property issues related to laboratory "visitors". This first route for establishment of a collaboration is often jeopardized by UC's inadequate approach to this issue. This should include an advantageous policy for industrial co-operative students, who will bring corporate resources (tuition and equipment and possible faculty research support).
2. Develop new intellectual property administrative systems necessary to support new, more flexible policies and provide adequate training for their use.
a. The current system for collection and documentation of intellectual property agreements and property disclosures is a task which is assigned to administrative personnel, but is not backed by strong academic directives. As more research support is coming from private industry, faculty and students, must understand, that they can no longer deal with intellectual property matters so casually. Use academic imperatives to convince faculty to recognize obligations to their employer.
b. Management of the intellectual properties on the basis of the whole project, will require administrative contracting personnel with a much higher level of understanding of the technical nature of the project, and the expected outcomes. This is essential in order to prepare documents which adequately capture all property related issues of the collaboration. Do not decentralize authority for exceptional situations of collaboration and licensing functions without adequate support and reference base for interpretations of complex interactions.
c. As campuses are permitted to establish greater independence of contracting and property management authority, there is an even greater need for adequate documentation and database oversight to prevent campus officers from entering into conflicting obligations on behalf of the Regents. Recognize that there will be multi-campus projects in the system.
d. Model documents should be provided with detailed interpretation of their applicability and changeable parts. Examine the possibility of model formats which are suitable for valuable materials and projects, not just documents suitable for peripheral technology.
e. Expand the interpretation of "technology transfer" to include all university -industrial interactions. Calibrate the effectiveness of interactions and resource exchange rather than licensed properties and income dollars. Consider development of long term relationships and student placement.
3. Recognize that adequate staffing for dealing with complex relationships with private companies will have expensive requirements in specialized skills and time.
a. Develop a triage system to evaluate the collaborative arrangements, the technology and the personnel requirements to determine whether the use of extensive personnel commitments to implement the arrangement is economically justified. (Valuation could be by the Dean or campus research authority).
b. Provide adequate technical, business and legal expertise to thoroughly explore the extent of the relationship and formulate documents which capture that intent, within the time window of interest. Designate an assigned implementation team to negotiate the final deal.
c. Provide institutional authority that the academic proposals will comply with all necessary legal and policy requirements. Develop intellectual property in areas which are faculty-driven. Culture the entrepreneurial faculty but encourage them to work within the rules of the institution.
4. Establish industrial sector advisory groups to identify specific requirements of contracting and technology development. Specific areas are electronics, engineering and agriculture.
