Office of Technology Transfer and Economic Development

1. Office of Technology Transfer and Economic Development University of Hawai`i January 26, 2006

2. Office of Technology Transfer and Economic Development (OTTED) • Revenue-oriented service center • Help UH personnel identify, protect, and commercialize their inventions/creations • Help build UH research enterprise • Generate licensing income • Support State economic development initiatives

3. UH Business Plan Competition • OTTED offering up to $20,000 in additional prize money • Recipients must base their business plan on a UH technology available for licensing through OTTED • Recipient(s) must be 1st, 2nd, or 3rd place winner(s) • Money must be used to help commercialize the technology • generally means that winning team becomes a licensee • Award goes to highest placing winner

4. Technology Licensing

5. Evolution of the relative value of tangible and intangible assets to total value 100 years ago, tangible assets generally accounted for 90+% of a company’s value . . . 90% 10% 100 years ago Today Today, the value of many companies is derived from their intangible assets.

6. University technologies are valuable . . . . . . and will become more valuable as companies continue to leverage their R&D budgets through the acquisition of outside technologies

7. Stage 1 Technology Transfer Process TLG activities Solicit, accept, administer invention disclosures Invention Disclosure UH ownership ? No Stage 2 Yes TLG activities Evaluate, market, protect technologies Legal protection available? Marketing & Protecting No Yes Stage 3 TLG activities Negotiate, formalize, audit licenses Commercial interest ? Licensing Yes Return to inventor No Note: This chart is necessarily brief - it represents only the most basic functions of the technology transfer process. Please contact the Technology Licensing Group (539-3817) with questions or for further information about your invention and the technology transfer process.

8. Licensing as a Business Model • Licensor – Inventor/owner of technology • Licensee – User • License – contract not to sue • Consideration – usually financial • but may include other consideration, such as cross license

9. Why license university technologies? • Technologies – early stage, high risk • Technological risk – it may not work • Market risk – unknown demand • Licensee – reduces risk • Reduces R&D expenses • Proves concept, may provide working model • Permits end users to “kick the tires”, lowers market uncertainty • Establishes relationship with University • Licensor – expands income potential • Reduces/eliminates mfg., mktg., dist’n costs • May help identify new income opportunities • Establishes relationship with company(ies)

10. Possible Deal Structures • Traditional licensing w/fees, royalties • Equity participation • Spin-offs/start ups • Sublicensing • Options • Sponsored research agreements • With/without option to acquire license

11. Compensation, Diligence, Patents, and Liability

12. Compensation Structures and Alternatives • Up-front fees • Royalty arrangements • Milestone payments • Patent registration costs • Liability/indemnification

13. Up-front fees • Good for University • Reduce University’s financial risk • Offset University’s previous out-of-pocket expenses (research costs, patents, etc.) • Generally not refundable nor creditable against future royalties • BUT … • Increase licensee’s financial risk • May reduce licensee’s research sponsorship commitment • May “lock in” licensing rights

14. Royalty arrangements • Permits University to share in the success of commercialization • University’s increasingly willing to be flexible in their approach and royalty requirements • Equity can be exchanged for royalties

15. Milestone payments • Milestones should follow natural development of the technology • Often tied to diligence provisions • Levels revenue flow to University in early years • Equity can be exchanged for cash payments.

16. Payment of Patent Expenses • Licensed patent = licensee pays • Business expense • Cost sharing for multiple licensees • each licensee pays 1/n of patent expenses • licensor may limit licensee’s liability, cap or set n>1

17. Liability Issues and Disclaimers • Licensee takes all the blame and the responsibility and the cost • University takes all the credit and none of the responsibility …and wants to be paid for it

18. Liability Issues • Licensee assumes fitness for use • Licensee assumes product liability • and names university as additional insured • Licensee/university each assumes liability for its own employees

19. Success Stories and Exemplary Technologies

20. Past Business Plan Participants/Winners • Pipeline Communications and Technology, Inc. • telecommunications and antenna technologies • company has 7 employees, is in pre-production phase • Hawaii Environmental BioSolutions • dairy waste processing • company has 0 employees, is in start-up phase • Research Analytical Labs • diagnose and treat pre-term labor • status of company unknown

21. Examples of UH technologies available for licensing • Hydrogen storage materials • Biodegradable biopolymers • Hydrogen/oxygen production from water • Acoustic wave micromixer • Wastewater treatment with zero valent iron • Ventilating roofing system

22. Contacting OTTED • Website • http://www.otted.hawaii.edu • Email/Phone • Richard Cox, rcox@hawaii.edu, 539-3818 • Gaylene Anderson, gaylenea@hawaii.edu, 539-3836 • Lisa Matsunaga, matsunag@hawaii.edu, 539-3826 • Ann Park, apark@hawaii.edu, 539-3829 • Jonathan Roberts, robertsj@hawaii.edu, 539-3828 • Andrea Yuen, ayuen@hawaii.edu, 539-3823