Overview

An excellent overview of the technology transfer process is presented in the Technology Transfer Tutorial at http://www.cogr.edu

National and Regional Context for Technology Transfer

Universities are increasingly recognized and as playing an important role in driving economic growth, as being the "knowledge factories" at the center of "knowledge economies". The presence of a major research university is increasingly regarded as the single most important factor in the success of a high-tech region. The walls of the ivory tower are increasingly being replaced by a "core and cloud" paradigm. It is increasingly being understood that interaction with for profit entities can, properly managed, enrich a university's research and accelerate dissemination to the public of certain kinds of discoveries and inventions. Sources for overview and discussion are too numerous to list extensively but include:

Technology Transfer Tutorial at http://www.cogr.edu
Survey of the University: The Economist Oct 4th, 1997
The City of Chicago's views at http://chicagotechtoday.com

Federal Context for Technology Transfer (extracted from COGR Technology Transfer Tutorial)

The Bayh-Dole Act, passed by Congress in 1980 and named for its co-sponsors Senators Birch Bayh and Robert Dole, created a uniform patent policy among the U.S. federal agencies that fund research in the non-profit and small business sectors. The Act (Public Law 96-517 and subsequent amendment Public Law 98-620, implemented at 37 CFR Part 401) provided recipients of federal research and development funds with the right to retain ownership of their patents and charged them with the responsibility to ensure commercial use of inventions created with federal financial support.

Since a vast majority of university research (particularly in the sciences) is funded by the federal government, university policy regarding technology transfer must be consistent with federal law and policy as set forth in the Bayh-Dole Act. While it is possible for a university to have different policies regarding the patenting and licensing of inventions which were not federally funded, in general, the university's interest in maintaining the flexibility to draw research funds from multiple sources, including the federal government, and the desire to avoid applying conflicting policies, favor constructing a single policy that is consistent with the requirements of federal law and regulation. The underlying tenet of the Bayh-Dole Act is that federally funded inventions should be licensed for commercial development in the public interest. That principle is reflected in virtually all university policies whether or not the invention is federally funded.

University Context for Technology Transfer

Responsibilities of the University

to maintain policies and infrastructure
to report to sponsors and follow any other obligations
as the owner of inventions and discoveries made at the institution, a fiduciary duty to make sure
technology with potential is developed in a diligent fashion
as an office within the University with limited financial resources, to make rigorously market-based decisions on the commercial potential of a new invention or discovery
to inform, educate, and involve faculty and researchers to any extent (within reason) to which faculty and researchers would like to be educated, informed, and involved
to be approachable to faculty and researchers
to be relatively transparent to faculty and researchers
to ensure the process has the minimum burden on the normal course of faculty's work and publishing

The obligations of the University to sponsors of research are very specific and can expose the University significantly if not performed. By way of example, the obligations to the Federal Government with regard to inventions made using Federal research monies are listed in Section 3.C. at http://www.cogr.edu/docs/Tutorial.doc (MS Word).

Responsibilities of the Inventor

to disclose all inventions and discoveries
to make themselves available and in general assist with the processes of filing for intellectual property protection and the commercialization process. For a good overview about IP protection and commercialization, please see Stanford University's Office of Technology Licensing.
to disclose conflicts of interest promptly and openly and cooperate in the management of any conflicts
if one of an inventor team, to provide UChicagoTech with a revenue sharing agreement between the inventors in a timely fashion
in general to assist the University in meeting its obligations to sponsors of the inventor's research.

Ownership of Inventions

Statute 18 of the University of Chicago Statutes, 1996 include the statement: "Where research or other activities carried out at the University, or with the substantial aid of its facilities or funds administered by it result in inventions, discoveries, or device-like software, such products shall be disclosed to the University, shall be the property of the University and shall be assigned to the University or an organization designated by the University."

Relationship between UChicagoTech and ARCH Development Corporation

ARCH Development Corporation, a wholly owned 501(c)3 affiliate of the University of Chicago handled all of the University's intellectual property matters between 1986 and June 30th, 2001. UChicagoTech, a unit of the Provost's office, was created on July 1st, 2001. The University, acting through UChicagoTech, henceforth carries out all licensing and other actions required for the transfer of technology, either in the name of the University or of ARCH.

Invention Disclosures

If you think you may have an invention, please fill in a disclosure form and relay it to UChicagoTech. Our Disclosure Coordinator is Erica Burnett. If Erica is not available, anyone in the office or our staff can help you. If you think your work may lead to an invention, please contact UChicagoTech. Any member of our project management staff, or our Director or Assistant Director will be able to assist you.

If you disclose, you will receive a visit from a UChicagoTech project manager within 2 weeks of your disclosure date, subject to your availability. We will work with you to understand your invention, then put it through a number of screens. We will make a decision to whether UChicagoTech is willing to attempt commercialization of your invention within 90 days of the disclosure date, subject to occasionally longer periods when obtaining critical information is outside of our control. Your own wishes as to whether you would like UChicagoTech, as opposed to other parties (including yourself), to attempt commercialization are an important part of this decision process.

If UChicagoTech chooses not to pursue, and/or you wish UChicagoTech not to pursue, your invention, the invention will be released (non-elected) by UChicagoTech. There is a proviso that any federal sponsors of the work that led to your invention have a limited-term option (rarely exercised) to elect title and pursue commercialization if UChicagoTech non- elects it. Then the invention will then be returned to you.

Patents and Other Intellectual Property

If UChicagoTech elects to commercialize for the University, we will most likely file for some statutory form of intellectual property (e.g. patent, copyright, trademark). Most often this is a patent:
http://www.uspto.gov
http://www.uspto.gov/web/offices/com/iip/index.htm
http://www.autm.net Patent/Copyright/Trademark Section
http://web.mit.edu/invent/h-main.html Handbook for Inventors

This will mean your involvement working with a patent attorney for usually about 10-20 hours over a 2-4 week period. Once a US patent is applied for, it usually takes 2-4 years to obtain. This process typically costs $10-15 thousand dollars. Foreign patent coverage can take longer and, depending on geographic coverage, may cost an order of magnitude more.

NOTE: if your invention is published prior to the filing of a patent, under patent law you lose the right to patent outside the U.S. Depending on the importance of your invention, this may constitute a serious loss of value. Within the U.S., you have 1 year to file for a patent after publication. Publication in this context means any public disclosure that would enable one skilled in the art to reproduce your invention. This can be via your web page, web publication of an abstract, presentation at a conference, or even to a meeting of your colleagues whose attendance is not restricted.

MORAL: please talk to UChicagoTech prior (ideally well prior) to publicly disclosing an invention. Our goal is to assist with intellectual property protection without delay to your publication schedule. The more notice you give us, the better a job we can do.

Licensing

Money can start to flow in, rather than out, in technology commercialization through the mechanism of licensing. A license is a complex agreement between UChicagoTech and a company with a strong interest in pursuing commercialization of the invention. Companies are given rights to pursue (traditionally make, use, and sell) the invention under the patent or patents covering it, in exchange for various lump sum payments and running royalties. These agreements are negotiated by licensing specialists at UChicagoTech. At this stage we will keep the inventor(s) informed and involved, as a highly interested party and as a "client". However, of necessity, the burden of decision-making moves to the specialist and UChicagoTech as the office handling the intellectual property for the legal owner: the University of Chicago. Licenses can be to large or small companies, or to companies started by faculty or faculty and UChicagoTech. Sometimes equity can be taken in lieu of cash for lump sum payments.

Revenue Sharing with Inventors, Departments, and Laboratories

Under University of Chicago policy, inventors receive 25% of gross proceeds that UChicagoTech realizes from commercialization of their inventions. Starting in FY 2003, an additional 10% of gross flow back to academic laboratories, an additional 5% of gross flows back to academic departments, and an additional 5% of gross flows back to academic divisions.

If there is more than one inventor (lab, or department) for an invention, UChicagoTech is not able to distribute proceeds until the recipients have agreed a split among themselves. The inventor group can share proceeds with contributors, i.e. investigators who may have provided important support to the invention, but may not qualify as "inventors" under the strict definitions of U.S. and international patent law. UChicagoTech attempts to pay inventors within 60 days of receipt of payments from licensees. Exceptions arise in the cases of missing inventor split agreements, or on occasion in some complicated situations (and this is an area where complicated situations can arise). UChicagoTech will pay laboratories, departments and divisions at the end of every financial year, starting in FY 2003.

Conflicts of Interest

Can technology commercialization be pursued without compromising academic commitments, integrity and independence (or the perception of such), and educational mission for students, or is such compromise necessary? These are complex issues and the answer depends on how well they are managed. It is possible to manage conflicts so that none of the above issues arise. Keys to success include full disclosure, and openness to discussion and counsel among all the interested parties. The University publishes conflict of interest guidelines at http://researchadmin.uchicago.edu/guidelines/200/205.shtml.

Conflict of Interest Disclosure and Compliance forms can be downloaded at http://researchadmin.uchicago.edu/guidelines/200/200.shtml (205A and 205B).

The University Research Administration, the Provost's Office, the Dean's Offices, and UChicagoTech all have a degree of experience in managing these issues. The primary contact within the University is Mary Ellen Sheridan in University Research Administration.

Chances of Commercial Success

Inventors should be aware that the chances of making substantial amounts of money from technology commercialization are slim, and the chances that UChicagoTech will even break even are not much better. Since the inception of technology commercialization at the University of Chicago in 1986, some 1600 invention disclosures have been handled, of which approximately half have been elected. Some 250 licenses have been executed. Of these about 50 have ever returned any money. About 10 continue to pay substantial (> $25k) annual royalties. UChicagoTech's royalty income is currently running at about $2m/yr and growing at about 15%.

These numbers are not atypical of university tech transfer, and more generally, tech transfer as a whole. Universities with substantial royalty income almost always earn the vast majority of their money from one or two "big hits". This is thus a cumulative business where the chances of a "big hit" increase as more licenses are executed.

In the face of these statistics, reasons to pursue intellectual property protection still include:

establishing the option of disseminating your technology through commercial mechanisms
enrichment of your research through interaction with the private sector
enrichment of your personal perspective through the multi-disciplinary exercise of commercialization
a chance of personal financial gain
a chance to bring financial resources back to your laboratory(ies), through sponsored research or license income.