Intellectual Property Issues in Research

1. Intellectual Property Issues in Research Jim Baker Director Office of Technology and Economic Development jrbaker@mtu.edu 7-2228

2. Objectives • Inform researchers on issues related to intellectual property in research. • Relevant laws, policies, and rationale for University approach to IP rights. • Basics of patenting, commercialization, and patent licensing. • Relationship of IP rights to general progress and advancement of academic research programs. • Breadth versus depth – follow up for details.

3. Outline • Background • Terminology • University Policies • Federal Rules • Federal Contracting Issues • Industrial Contracting Issues • Patent Commercialization and Licensing Basics • Using IP to grow your Research Program

4. Terminology • Ownership • Sole control of an asset (Intellectual Property (IP) in this context). • Subject to any legal encumbrances. • License • The right to use an asset/IP. • Exclusive License • A license under which the licensor agrees to not provide licenses to any third party. • Non-Exclusive License • A license under which the licensor reserves the right to provide licenses to third parties.

5. University Policy - Objectives Board Of Control Policy 18.1.1: “The research objectives of Michigan Technological University are: • To encourage scholarship and to assist and improve education. • To discover and disclose new knowledge. • To promote the utilization of new discoveries for the public benefit. • To aid, encourage, and support industry, particularly within Michigan. • To support the research objectives of State and Federal agencies. The University supports research for these stated objectives and not merely because the ideas involved may be potentially profitable.”

6. University Policy Highlights – IP Protection and License Revenue • “The University may claim patent and/or proprietary rights where a concept is reduced to practice with the use of University facilities or in the course of employment.” (18.1.4.b) • “The University will seek a patent when it is judged to be an appropriate and effective means of disseminating knowledge or of promoting the utilization of new discoveries for the public benefit.” (18.1.2.b) • “If the University receives any royalty and/or other income from the sale or licensing of any patent or other proprietary rights, it will provide, consistent with the other provisions of this policy, a share of any royalties and/or other income received by the University for the inventor or inventors,” (18.1.2.c)

7. University Policy HighlightsContract Requirements and Exemptions • Contract Requirements • “The University will state the terms and conditions of proprietary rights in every research contract that is negotiated” (18.1.4.a) • Exemptions • “The University may claim no equity in inventions developed without the use of its funds, facilities, or equipment.“ (“funds” includes grant funds) (18.1.4.b) • “Books, articles, manuscripts, and works of art (except to the extent that they contain proprietary information related to inventions or computer software) are not included in this policy.” (Operating Procedure 11.1)

8. Relevant Federal Rules • 37 CFR 401 (Bayh-Dole Act) • Universities own inventions created from work sponsored by the federal government • IRS Revenue Procedure 2007-47 (Tax Free Bond Act) • Prohibits use of tax-exempt financed buildings for “private use” • Private use includes transferring IP ownership to sponsors at less than market value

9. Federal Contracting Issues • Bayh-Dole provides the University with ownership of inventions • Simplifies contracting but comes with conditions • Legal and contractual obligations to disclose inventions to the funding agency. • Obligation to pursue commercialization • in the United States • with a preference for small businesses if possible.

10. Industrial Contracting Issues • University owns project generated IP • University grants sponsors: • A royalty-free right non-exclusive license. • The first option to a royalty bearing exclusive license. • Tax-free bond act generally prohibits transfer of ownership and up-front designation of license terms. • Research rights/Freedom to operate

11. Technology Commercialization Process Commercialization Stage Invention Patent License Idea Commercialization Steps Development Demonstration Probability of Success Enablement Invention Disclosure Effort/Time

12. Starting the Process • Invention Disclosure • Form at www.ted.mtu.edu/forms • …but we will take draft publications, proposals, theses/dissertations, etc. • Describe as many technical details as possible – enable someone to reproduce the invention. • Identify applications and potential partners if possible.

14. Technology Assessment • Technical maturity • What needs to be done to reach the market • What are the related research needs/opportunities • Patentability • Is the invention ‘enabled’ – can it be reproduced • Will a patent impact our ability to attract research funding and commercial partners. • Market • Is there sufficient probability and magnitude value of revenue (research or royalty) to justify the investment.

15. Leveraging IP for Research • Technology commercialization produces funding opportunities: • Corporate partner research sponsorship • Federal Small Business Innovation and Technology Transfer Research (SBIR/STTR) • Private Investment • Specialized technology gap funds • Business plan competitions

16. Example of Research and Commercialization Alignment • Discovery from federal research that has potentially significant public benefit and commercial potential. • $20k proof of concept study • Michigan Universities Commercialization Initiative (MUCI). • $60k next stage proof of concept • Funded by MUCI • Support letter from private sector partner. • $230k validation study • $70k MUCI • $160k from private sector partner with an option to license technology • $230k development/further research • NIH STTR Phase I • $110k subcontract to Michigan Tech • Currently preparing ~$1M NIH STTR Phase II • $370k subcontract to Michigan Tech

17. Example Outcomes to-date • ~ $420,000 in sponsored research • 3 years Ph.D. student funding • 2 years lab tech funding • 2 publications in preparation • 4 published conference proceedings • $20,000 in royalties • Equity in startup company (indeterminate value)

18. Funding Opportunities • Early stage technologies • Funding available through traditional research funding programs • Mid-stage technologies • Technology gap funds • SBIR/STTR – need corporate partner • You can create that partner or we can seek one out • Startup company with private investment • Demonstrated Technology • Corporate sponsored research and development

19. Michigan Tech Experience Base • Michigan Tech is a national leader in: • Proportion of research sponsored by industry • Number of license agreements per dollar of research • Number of invention disclosures per dollar of research • As a result we have staff experienced in: • Appropriate contract term negotiation • Managing conflicts of interest • Startup business development • Commercialization planning and implementation

20. Questions

21. Contact Information Jim Baker Director, Technology and Economic Development jrbaker@mtu.edu 487-2228 www.ted.mtu.edu