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Technology Licensing at Stanford University Overview Background and Policies OTL Facts and Figures OTL Process: Invention to License University-Industry Technology Transfer Mechanisms Graduated students Publications Seminars, conferences, etc. Faculty consulting

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Presentation Transcript
  • Background and Policies
  • OTL Facts and Figures
  • OTL Process: Invention to License
university industry technology transfer
University-Industry Technology Transfer


Graduated students


Seminars, conferences, etc.

Faculty consulting

Industry sponsored research

Industrial affiliate programs

Intellectual property licensing

Start-up companies and

large corporations

Research results

from lab

New products

in marketplace

Intellectual Property Licensing

university government interactions
University-Government Interactions

Bayh-Dole Act

Created uniform patent policy regarding inventions made under federally-funded research programs

Encouraged universities to participate in technology transfer activities



bayh dole act u s public law 96 517
Bayh-Dole Act (U.S. Public Law 96-517)
  • University may elect to retain title to inventions developed under federally-funded research programs
  • University grants royalty-free nonexclusive license to government
  • Any company holding an exclusive license must substantially manufacture the product in the U.S.
  • In marketing of an invention, University must give preference to small business firms (< 500 employees)
  • University must share with the inventor(s) a portion of any revenue received from licensing

(Sources: COGR Publication “The Bayh-Dole Act: A Guide to the Law and Implementing Regulations”,37 CFR Part 401, 35 USC 200-212)

stanford facts for 2008
Stanford Facts for 2008
  • 7 Schools
    • Business, Earth Sciences, Education, Engineering, Humanities and Sciences, Law, and Medicine
  • 1,829 Faculty members
  • Students (6,759 undergraduate and 8,186 graduate)
  • Finances (FY 2007-2008)
    • $3.4 billion budget
      • $1.06 billion in sponsored research, including SLAC (87% by federal government sponsors)
      • additional $132.1 million in part through 55 industrial affiliate programs
    • $17.2 billion endowment


office of technology licensing otl
Office of Technology Licensing (OTL)


To promote the transfer of Stanford technology

for society’s use and benefit

while generating unrestricted income to support research and education.

Technology Transfer Portfolio


Copyrightable Material


Biological Material

Semiconductor Maskworks

licensing inventions to new products
Licensing: Inventions to New Products

OTL decides IP protection for invention and

markets invention broadly

Federal & industry

research money

OTL licenses invention

to Company


research funding

Company pays royalties

to University

stanford s intellectual property policy
Stanford’s Intellectual Property Policy
  • Patentable TechnologyUniversity takes title to all inventions created with more than incidental use of University resources
  • Copyrighted WorksUniversity takes title to copyrightable works created with significant University
  • SU-18 Patent and Copyright
stanford s royalty distribution policy
Stanford’s Royalty Distribution Policy
  • Cash Royalties from Issue, Minimums, Earneds
  • Net Royalties = Cash Royalties

minus 15% for administrative expenses

minus out-of-pocket expenses (e.g. patent costs)

otl notable stanford inventions
OTL: Notable Stanford Inventions

1970 – OTL Established

1971 – FM Sound Synthesis ($22.9M)

1974 – Recombinant DNA ($255M)

1981 – Phycobiliproteins ($46.4M), Fiber Optic Amplifier ($40M), MINOS ($3.8M)

1982 – Amplification of Genes ($30M)

1984 – Functional Antibodies ($191M)

1986 – CHEF Electrophoresis ($2.25M)

1990-1992 – Discrete Multi-tone technologies for DSL ($29M)

1996 – Improved Hypertext Searching - GoogleTM ($337M)

2009 – the next big thing ???

otl disclosure and licensing history
OTL: Disclosure and Licensing History









$1.2 B



Royalty Income


* Majority of disclosures are never licensed; many disclosures have one license; some disclosures have multiple licenses




$62.5 M





otl the upside
OTL: The Upside
  • In FY07-08, $62.5 million in royalties
  • From 1970 through 2008, ~$1.2 billion cumulative royalties
  • Typically, 10 to 15 years may elapse between initial invention disclosure and any significant royalties
otl looking closely at royalties
OTL: Looking Closely at Royalties
  • In FY07-08, $62.5 million from 546 disclosures
    • 33 out of 546 disclosures generated over $100,000 each
    • 3 out of 33 generated over $1 million each
  • From 1970 through 2008
    • 58 inventions generated $1 million or more
    • 3 out of 7500 is BIG WINNER
  • Royalties from large portfolio of inventions
otl conversion numbers
OTL: Conversion Numbers

~8 disclosures

received per week

~ 50% of disclosures are filed as patent applications

some disclosures potentially licensable as copyright or biological materials

20 - 25% of disclosures, including those patented, are licensed

otl revenue vs expenses
OTL: Revenue vs. Expenses
  • OTL is self-supporting
    • 15% of revenue > operating expenses
  • Operating budget of ~$4.8 million/year
  • Patent expenses of ~$8.1 million/year
  • OTL has given ~$43.5 million to Research Incentive Fund administered by Dean of Research
otl equity from licenses
OTL: Equity from Licenses
  • Stanford’s philosophy
    • Equity is one component of a whole financial package
    • Historically, most income is generated from earned royalties (~$836 M vs. ~$364 M)
    • Equity is liquidated soon after IPO
    • We can’t hold equity if licensee conducts clinical trials here
  • Equity from licenses
    • ~171 companies cumulative
    • ~90 companies currently
    • Equity liquidated to date ~$364 million
equity cash out at stanford
Equity Cash-Out at Stanford*
  • Equity distribution
    • 15% to OTL
    • 1/3 of net equity to inventors
    • 2/3 of net equity to OTL Research and Fellowship Fund
  • Equity liquidated to date ~$364 million
    • Amati (Texas Instruments) $8.0 million
    • Abrizio (PMC-Sierra) $9.7 million
    • Google™ $336 million

*Graph does not include liquidation of GoogleTM equity in FY04-05

otl invention to license
OTL: Invention to License
  • Steps
    • Disclosure
    • Evaluation
    • Licensing Strategy
      • File patent?
      • Market to potential licensees
    • The License
    • Maintaining the Relationship
  • 7 “Licensing Associate & Licensing Liaison” teams
    • Technical degrees and marketing focus
    • Responsibility for inventions from cradle-to-grave

Discuss with inventors

Inventor provides technical expertise

Inventor may also provide industry contacts

Discuss with others at OTL

Contact industry experts

Typical criteria

Invention development status

Inventor profile

Intellectual property position

Commercial potential

Licensing potential

The Main Question

Does it have the potential

to create meaningful income for the University?

licensing strategy
Licensing Strategy
  • A license is a legal document regarding intellectual property rights in exchange for good and valuable consideration.
  • Different inventions require different licensing strategies
    • “ basic new scientific tool” vs. “invention requiring extensive development”
    • electronics industry vs. biotech industry

IP rights




patenting decision
Patenting Decision
  • Can we license as tangible research property (TRP)?
  • Can we license as it as copyright?
  • Is it patentable and enforceable?
  • Has it been publicly disclosed?
patent prosecution
Patent Prosecution
  • Licensing professional manages outside counsel
    • Technology expertise
    • Patent agent vs. Patent attorney
  • Patent costs
    • Typically $25,000 to $35,000 over life of U.S. patent
      • USPTO fees
        • if invention is not licensed, pay small entity fees
      • Patent attorney/agent costs
    • Higher patent costs for foreign coverage
      • PCT application preserves foreign rights while delaying costs
      • National phase entry if licensee reimburses costs
marketing strategy
Marketing Strategy
  • When do we start?
    • Waiting for publication
    • Waiting for data
  • Individual vs. Portfolio
  • Contact companies and provide information
    • Shotgun vs. Rifle approach
    • Sources of leads
  • Steps
    • Create marketing content
    • Create list of potential licensees
    • Contact potential licensees
    • Follow-up
types of license agreements
Types of License Agreements
  • Option agreement
  • Non-exclusive agreement
  • Exclusive agreement
    • Limited by Field of Use
    • Limited Period of Time (e.g. earlier of 8 years from Effective Date or 5 years from first commercial sale)
key license terms
Key License Terms

Financial terms

License issue fee

Annual minimum payments

Earned royalties

% of Net Sales

$ per product sold

Reimbursement of patent costs

Equity in start-up companies

Non-financial terms



Development milestones & diligence provisions


First Commercial Sale

Warranties and indemnities

Infringement actions

Dispute resolution

licensing inventions to new products27
Licensing: Inventions to New Products

OTL decides IP protection for invention and

markets invention broadly

Federal & industry

research money

OTL licenses invention

to Company


research funding

Company pays royalties

to University