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PATENTS & PIZZA June 4, 2001

PATENTS & PIZZA June 4, 2001. Welcome P&P Topics for GFY 2002 Patent Awards Tech Transfer Cycle: Part III FOOD!!!!. PATENTS & PIZZA June 4, 2001. Licensing and Royalty & Development Income. Wayne E. Swann Director of Technology Transfer & Francis A. Cooch Patent Counsel.

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PATENTS & PIZZA June 4, 2001

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  1. PATENTS & PIZZAJune 4, 2001 Welcome P&P Topics for GFY 2002 Patent Awards Tech Transfer Cycle: Part III FOOD!!!!

  2. PATENTS & PIZZA June 4, 2001 Licensing and Royalty & Development Income Wayne E. Swann Director of Technology Transfer & Francis A. Cooch Patent Counsel

  3. Introduction • APL Technology Transfer Cycle • Outline of Presentation

  4. Introduction (cont.) APL Technology Transfer Cycle

  5. Introduction (cont.) • Outline of Presentation • License Agreements • IP Policy Income & Distribution • Examples of Deals • Statistics • Definitions!

  6. License Agreements • Structure of Standard Agreement • Standard Income Clauses • Roles in Negotiations

  7. License Agreements • Structure of Standard Agreement • Definitions • Grant • Development/R&D Funding • Fees/Royalties/Equity • Milestones • Term and Termination • Miscellaneous

  8. License Agreements (cont.) • Standard Income Clauses • Development/R&D • R&D for Licensee under BOA • Protect APL TDA role • APL employees as consultants

  9. License Agreements (cont.) • Standard Income Clauses (cont.) • Fees/Royalties/Equity • Option/License Fees • Cash/Equity • Nonrefundable • Not credited against royalties

  10. License Agreements (cont.) • Standard Income Clauses (cont.) • Fees/Royalties/Equity (cont.) • 2. Running Royalties • Percent of Net Sales • Unit Royalty • 3. Annual Minimum Royalties • Credited against royalties • 4. Milestone Payments

  11. License Agreements (cont.) • Roles in Negotiations • Office of Technology Transfer • Office of Patent Counsel • Inventors/Creators

  12. IP Policy Income & Distribution • Types • Restricted • Unrestricted • Development (Restricted) Income • Mechanics • Restrictions

  13. IP Policy Income & Distribution (cont.) • Distribution of Unrestricted Income • Initial Share • $5,000 • “Off the Top”

  14. IP Policy Income & Distribution (cont.) • Distribution of Unrestricted Income • Reimbursement of Expenses • Patenting (not reimbursed) • Licensing • Litigation • Development Fund Grants

  15. IP Policy Income & Distribution (cont.) • Distribution of Unrestricted Income • Net Unrestricted Income • 1. 30% - Inventor’s Personal • 2. 15% - Inventor’s Professional • For R&D • Accumulation Cap - $300,000 • Expended within 2 years

  16. IP Policy Income & Distribution (cont.) • Distribution of Unrestricted Income • Net Unrestricted Income (cont.) • 3. 15% - Department Share • Use for R&D, disclosure/ • application preparation, • support general Tech • Transfer activities • No cap

  17. IP Policy Income & Distribution (cont.) • Distribution of Unrestricted Income • Net Unrestricted Income (cont.) • 4. 30% - Development Fund • Prototype Grants • Small Tech Transfer Grants • Business Plans • Partial Funding OTT/OPC • Patent costs • 5. 10% - JHU

  18. IP Policy Income & Distribution (cont.) Distribution of Unrestricted Income • Multiple Inventors/Creators • Multiple Intellectual Property

  19. Examples of Deals • Option Agreement • Option & Tech Development • License (Straight License Agreement) • License and Tech Development • Spin-Off Company License Agreement

  20. Option Agreement With Lakeshore Cryotronics • Magnetometer – RTDC • Mature technology - requires a test and evaluation period by company • Short term option reserves right to a license in a specific field of use during evaluation • Small monthly option fee during a test and evaluation period • Negotiate license terms during the option but after valuation

  21. Option & Technology Development Agreement with B.F. Goodrich • Micro DSAD - Space Department • Mature but specific work was needed by company for a business assessment • 6 Month Option - assess license interest • Option Fee and Tech Development (R&D) during the evaluation period • Negotiate the terms for the license after valuation • Evaluate other technology of interest

  22. Straight License Agreement with Akorn • Exclusive license for APL Technology for treatment of Age-related Macular Degeneration • Mature technology and IP rights (US/world) • Further technology development - Human trials done at/by company – not APL • Diligence by company to develop/sell products • Large License Fee split into payments • Royalty, Share of sublicensing fees, milestone payments, reimbursement of IP costs • Company estimates market at $400 Million/yr

  23. License and Technology Development with FutureHealth • IT Solution - Risk Management for Healthcare Technology early stage - RTDC • Exclusive license to joint technology being developed with company – APL’s share of IP • License Fee (cash and stock), significant multi-year Technology Development agreement, royalty on sales of product/service • Market potential being defined by company • Economic development impact – working with a regional company

  24. Spin-Off Company License Agreement with Syntonics • Oscillators - Space Dept – mature technology • Exclusive license for space applications • License Fee (cash and significant equity in LLC), multi-year two-way Technology Development agreement, milestones, royalty on sales of products, share of LLC earnings • Market estimated at over $30 Million/year • Resident of NeoTech incubator – local economic development impact

  25. Statistics • Option/License Agreements • Licensing Income • Equity • Technology Development Income

  26. Option/License Agreements • GFY 2000 – 12 separate agreements (35 invention disclosures - bundling) • AUTM Statistics • Average = 24 agreements • Comparative Placement FY 1999 = 59th/137 Note: Invention Disclosures • APL 143 vs AUTM Average = 73 • Comparative Placement FY 1999 = 20th/137

  27. Licensing Income • GFY 2000 - $2,046,615 • 16 license agreements generating income • AUTM Statistics • Average Income = $4,930,431 • Comparative Placement FY 1999 = 46th/137

  28. Technology Development Income • GFY 2000 - $1,886,005 • 5 different Projects • AUTM Statistics • Average = $1,087,000 • Comparative Placement FY 1999 = 23rd/137 Note: New Patent Applications • APL 84 vs AUTM Average = 36 • Comparative Placement FY 1999 = 12nd/137

  29. Equity • Equity is held in 6 Companies (1-30%) • Option for an equity stake in an S Corporation • Stock as shares in C Corporations • Options for Stock in C Corporations • “Partnership” in an LLC • GFY 2000 - Equity in 4 start-up companies and equity through license agreements • AUTM Statistics • Average for start-ups = 2 • Comparative Placement FY 1999 = 16th/137 NOTE: Agreements with Equity 6th

  30. Summary • License Agreements • IP Policy Income and Distribution • Examples of Deals • Statistics

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