Welcome
P&P Topics for GFY 2002
Patent Awards
Tech Transfer Cycle: Part III
FOOD!!!!
PATENTS & PIZZAJune 4, 2001
PATENTS & PIZZAJune 4, 2001
Licensingand
Royalty & Development Income
Wayne E. SwannDirector of Technology Transfer
&Francis A. CoochPatent Counsel
Introduction
• APL Technology Transfer Cycle• Outline of Presentation
APL Technology Transfer Cycle
Introduction (cont.)
Introduction (cont.)
Outline of Presentation•License Agreements•IP Policy Income & Distribution•Examples of Deals•Statistics•Definitions!
Structure of Standard Agreement•Standard Income Clauses•Roles in Negotiations
License Agreements
License Agreements
Structure of Standard Agreement
•Definitions•Grant•Development/R&D Funding•Fees/Royalties/Equity•Milestones•Term and Termination•Miscellaneous
License Agreements (cont.)
Standard Income Clauses
• Development/R&D
1. R&D for Licensee under BOA2. Protect APL TDA role3. APL employees as consultants
License Agreements (cont.)
Standard Income Clauses (cont.)
• Fees/Royalties/Equity
1. Option/License Fees• Cash/Equity• Nonrefundable• Not credited against
royalties
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
License Agreements (cont.)
Roles in Negotiations
•Office of Technology Transfer•Office of Patent Counsel•Inventors/Creators
IP Policy Income &Distribution
Types•Restricted•Unrestricted
Development (Restricted) Income•Mechanics•Restrictions
IP Policy Income &Distribution
(cont.)
Distribution of Unrestricted Income• Initial Share
1. $5,0002. “Off the Top”
IP Policy Income &Distribution
(cont.)
Distribution of Unrestricted Income• Reimbursement of Expenses
1. Patenting (not reimbursed)2. Licensing3. Litigation4. Development Fund Grants
IP Policy Income &Distribution
(cont.)
Distribution of Unrestricted Income• Net Unrestricted Income
1. 30% - Inventor’s Personal2. 15% - Inventor’s Professional
• For R&D• Accumulation Cap - $300,000• Expended within 2 years
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
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
IP Policy Income &Distribution
(cont.)
•Multiple Inventors/Creators•Multiple Intellectual Property
Distribution of Unrestricted Income
Examples of Deals
•Option Agreement•Option & Tech Development•License (Straight License Agreement)•License and Tech Development•Spin-Off Company License Agreement
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
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
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
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
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
Statistics
•Option/License Agreements•Licensing Income•Equity•Technology Development Income
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
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
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
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
Summary
•License Agreements•IP Policy Income and Distribution•Examples of Deals•Statistics