To Tame the Perilous Skies of IP

Flight School• What is intellectual property?

• Why does IP exist?

• What is patentable?

• When should inventions be disclosed?

• How can info and materials be protected pre-patent?

• What is a license agreement?

• Who benefits if things are done right?

• Cases 1-4

What is intellectual property?• Products of the mind with commercial value-

Includes patents, copyrights, trademarks and trade secrets

• Involves property which has no physical existence; but similar to physical property in that it can be bought, sold, mortgaged, rented or given away

• Property is simply a bundle of rights to own, use and prevent others from using something. IP rights give inventors certain exclusive rights over the knowledge and information they create

Why does IP exist?

In theory, IP serves four principal functions:

– To incentivize the creation of knowledge and innovation (and hence wealth)

– To develop public knowledge

– To lower R&D investment risk through the granting of a temporary monopoly

– To encourage inventors to design around and improve upon earlier patents

In reality….?

Where’s the free money?

• Uncle Sam has decided that he has a right to practice your invention without paying you royalties if you used his money to develop it (i.e. the taxpayers don’t want to pay twice)

• The University has decided that it should retain some of the income generated by your invention if you used its resources (i.e. the infrastructure provided by your employer helped in the development of your invention)

RulesProxies for the actual behavior we seek to encourage

• If the invention arose from federally funded research, the inventors are required to tell the University (OTD) about its existence so that the University can inform the government and comply with the Bayh-Dole Act

• http://www.cogr.edu/docs/Bayh_Dole.pdf (pp. 4-6)

• If significant University resources were used to develop an invention, the inventors are required to tell the University (OTD) about its existence and assign ownership of the invention to the University in order to comply with Board of Regents policy

• http://www.nebraska.edu/board/RegentPolicies.pdf (pp. 107-108)

• The Government’s or University’s legitimate rights to background or future IP should not be compromised or superseded by: consulting agreements, private deals with corporate sponsors/investors, or inventor-based start-up ventures (University IP shouldn’t be taken out the back door)

What is patentable?I. Inventions of Utility

– ProcessesIncluding conventional processes and software processes

– MachinesIncluding conventional machines, those with moving parts

– Manufactured ProductsInventions with nonmoving parts (ex. books)

– Compositions of MatterExamples include chemicals, alloys, and pharmaceuticals

– New Uses of Any of the Above

• Second, the invention must be useful, even if that use is only amusement.

• Third, the invention must also satisfy the novelty requirement. In other words, it must be original or something that has never been seen before.

• Finally, the invention must not be obvious to people skilled in the area of the invention.

II. Inventions of Design (ex. iPhone)

III. Plant Variety Protection (Utility Patent, Plant Patent, or PVP)

When should an invention be disclosed?• Ideally, an invention should be disclosed to the OTD after

reduction to practice and prior to any enabling public disclosure so that, if desired, a patent application can be prepared and filed with the USPTO

– Reduction to practice—occurs when the invention is physically implemented, the article is manufactured, machine is built and tested, the method is performed and confirmed, or the composition of matter has been synthesized or produced

– Enabling public disclosure—occurs when you provide others who are skilled in the art (not UNL employees) with information that enables them to recreate your discovery and they are not bound by an agreement to keep the communication confidential (foreign and US rights)

How are inventions disclosed to the OTD?

• By completing an online Invention Disclosure Form: http://otd.unl.edu/DisclosureForm.doc

• And emailing it to me (naliano2@unl.edu), Marv (mjaques2@unl.edu), Jane Garrity (jgarrity2@unl.edu), or phone the Office of Technology Development (402-472-1879) and ask to speak with a Licensing Manager

• The OTD is located at 1320 Q St. (between Nebraska Bookstore and Wendy’s)

Protecting info & materials before patent filing

• A Confidential Disclosure Agreement (CDA) allows the discloser to retain his or her proprietary interest in the information (disclosure of the information under CDA does not create a "bar date" against patent protection)

• The purpose of a Material Transfer Agreement (MTA) is to protect and clarify the intellectual property ownership rights, obligations and address liability issues for both parties

How is IP licensed (rented)?

• The University partners with entities in industry to pursue commercialization. Suitable partners may include investors, entrepreneurs, and small to large companies, depending on the technology

• Technology moves from the University into the marketplace through patent or technology license agreements, which are constructed to meet the needs of the commercialization partner, inventors and the University

What’s a license agreement?• Contract between the owner of a patent and an

independent party who wishes to make, use or sell the invention claimed in the patent

• In essence, a promise by the patent owner that s/he will not sue the independent party, called the licensee, for patent infringement, provided that s/he complies with the terms of the contract

• Typically, the licensee agrees to pay the patent owner a percentage of the revenue the licensee receives from sale of the invention and/or other license fees

Who benefits if things are done right?

• The inventors

• Their departments

• The Office of Technology Development

• The University

• Students and postdocs

• The State of Nebraska

• The public

Financial incentives for inventing

• University compensation can take various forms, but is usually some combination of an upfront cash fee, patent expense reimbursement, royalty payments and equity

• In accordance with the Board of Regents' policies, inventors share in this compensation

UNL revenue sharing policy

“Net Proceeds” (after deduction of expenses for patent prosecution) are distributed as follows:

• 1/3 to the inventors (split between inventors according to their own agreement, or split equally in the absence of a sharing agreement)

• 10% to the inventors’ colleges, divisions or departments (until UNL reaches $2 million in annual cumulative proceeds, thereafter 20% to the inventors’ colleges, divisions or departments

• 15% to the UNL Technology Corporation

• Remainder to the Office of Research (OTD)

Case 1• A faculty member (Dr. S) is having a difficult time getting enough

grants funded to support all the graduate students and postdocs currently working in her lab. After a scientific presentation, she is approached by an industrial scientist who asks her how much money she needs to complete the project she spoke about. He offers to fund the work, but insists that the company will need to own all of the IP that arises from the project. The company is also looking to avoid the 47.5% F&A cost, perhaps by using a consulting contract instead of going through the Office of Sponsored Programs. Dr. S doesn’t want to risk losing this funding opportunity and she certainly doesn’t want the hard working people in her lab to lose their jobs.

• What would you advise her to do?

• What would you do?

Case 2• Two summers ago, one of the undergraduates in your

lab came up with a critical idea that led to the production of a working prototype. You now realize that the patented invention will have enormous commercial potential and you disclose it to the OTD as required by BoR polices. The undergraduate student did not come back to the lab last summer. As a matter of fact, you’re not even sure how to get in touch with him.

• What goes through your mind?

• What should you do?

Case 3• You’ve been bootstrapping an in vitro cancer biomarker project for

two years using whatever compounds, money and students you could find. Just last week, all the hard work paid off as one of your grad students identified a possible biomarker for ovarian cancer. You know that it would be relatively easy to set up your own startup and raise VC money to finance it. The last thing you need now is to involve the University and spend months and months trying to negotiate an license agreement. You know 10 colleagues who are also searching for these biomarkers. By the time you finish negotiating with the OTD, your discovery may be superseded.

• What can you do?

• What should you do?

Case 4• A collaborator at Iowa State University has developed and patented

a new mass spectrometry method for detecting biomarkers. As a matter of fact, she is the PI on the grant that you used to discover your biomarker for ovarian cancer. After you tell her about your exciting discovery, she says that she would like to see if she can detect your biomarker using her method. She suggests that you send her an ovarian tissue sample for analysis. When you suggest that an MTA be used, she says that her tech transfer office will spasticate over that agreement for 6 months. She asks you to “just put the sample on dry ice and ship it to my lab…” You have known her for 10 years and you trust her completely.

• What do you do?

Thank you

• A university exists because of its faculty and its students, who come together because they share a common quest for knowledge and respect for the truth

• Thank you for giving of your precious time and for contributing to today’s discussions

• We would ask that you work with us at the OTD to develop an organization that serves the collective needs of the UNL in commercializing technology for the benefit of society