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Excerpts from the OTL FY08 Annual Report
An Overview of IP Management & Commercialization Activities & Results
The Office of Technology Licensing (OTL) is the UC Berkeley organization for all things related to the intellectual property (IP) from innovations developed on the campus. This is a broad role that includes (a) working with companies on the IP terms of sponsored research agreements, and (b) providing guidance to the Berkeley community on IP policies and laws, in addition to the OTL's most traditional role of (c) licensing the University's IP rights to companies.
In all of the OTL's activities, the office has spearheaded an approach that has come to be recognized among some universities and many companies as progressive and enlightened. Under this progressive, enlightened approach, the OTL has been sensitive to establishing long-term, multifaceted, robust relationships with companies.
The OTL is a service organization that is part of the UC Berkeley Office of Intellectual Property and Industry Research Alliances (IPIRA) – which is under the Vice Chancellor for Research Office (VCRO). Under the auspices of the VCRO and IPIRA, the OTL pursues goals and metrics that go beyond the conventional metrics of licensing revenue and patents issued.
The following information for the 2008 fiscal year (2007 July 1 through 2008 June 30) presents the OTL's activities, metrics, trends and analysis in the context of the organization's progressive, enlightened IP practices and correspondingly broader goals and metrics.
The OTL's volume of activities in pursuit of the University's mission continues to grow. These activities can be segmented into three areas:
- Leveraging the IP rights of UC Berkeley innovations in ways that help catalyze the fast, broad commercialization of those innovations – this includes judiciously licensing and patenting select innovations.
- Establishing IP terms in research agreements that reconcile the needs of research sponsors with the UC policies that uphold the education, research and service mission of UC.
- Providing education and guidance to the campus and public regarding University IP policies such that the Berkeley community and its constituents both understand these policies, and equally important, appreciate the rationale and success of our IP practices.
2.1 Catalyzing the Commercialization of Berkeley Innovations
In the area of leveraging IP for broad, fast commercialization, a fundamental performance metric is the number of new innovation disclosures (for both patentable inventions and copyrightable software) submitted to the OTL. In general, when Berkeley researchers have confidence in the OTL's management of new IP, those researchers take the time to submit innovation disclosures; and conversely when researchers don't value the OTL's management of their IP, then researchers are less inclined to bother to submit disclosures (and thereby either ignore the IP potential or pursue the IP via different channels – even though that conflicts with UC policy, and sometimes the agreement that funded their research). In FY08, the number of new disclosures submitted to the OTL grew to 159, which is a 14% increase from the previous fiscal period – and an all-time high.
The number of IP rights agreements that the OTL establishes with start-up companies is another measure of the OTL's success in leveraging IP to help catalyze the commercialization of Berkeley innovations. Providing IP rights to start-ups helps these companies improve their business plans, which in turn helps them raise the risk capital required to try to successfully commercialize Berkeley innovations. In FY08, the OTL established IP rights agreements with 27 companies of which 14 were start-ups – which is a 55% increase over the number of IP agreements with start-ups (9) in FY07. The 14 early stage licensees are: Adura Tech (lighting energy efficiency), Aptility / MicroClimates (residential energy control and demand response), Cooler (carbon usage calculators), Euclid Media (web video tools), Harmonic Devices (RF components for wireless devices), HFTA (biofuel production), International Energy (biofuel production), nPrint (nano-scale fabrication), Redwood Bioscience (protein pharmaceuticals), Solexel (photovoltaics), Stressmarq Biosciences (bioreagents), Taoit/Goodguide (product sustainability ratings), Wireless Industrial Technologies (wireless sensor networks for industrial processes), and XL Tech / Ecoprene (isoprene biofuel production). For a highlight of OTL licensing success stories, go to Selected Success Stories.
In addition to IP rights agreements, the OTL is also responsible for other types of agreements including (a) confidentiality agreements with companies for the disclosure of pre-published and pre-patented innovations, (b) inter-institutional agreements with other institutions that jointly own IP with UC Berkeley, and (c) material transfer agreements (from UC Berkeley to other researchers). Material transfer agreements (MTAs) enable research materials to be transferred to other institutions for research purposes such that IP rights that might emerge from the materials are protected and the University is protected against liabilities that might arise from use of the materials. MTAs are a good example of service that the OTL performs without remuneration. The number of MTA's that the OTL completed has grown over the past five years and surpassed 100 in FY08.
2.2 Reconciling Sponsors' IP Needs While Staying Consistent with UC's Mission
The amount of funding that UC Berkeley derives for corporate sponsored research is far greater than the amount of revenue derived from the licensing of IP rights; and the OTL keeps this perspective foremost in mind when working with corporate sponsors and faculty to establish the terms for IP that might result from research agreements. This mindset has strengthened the partnership between the OTL and the two UC Berkeley groups that lead the negotiation of sponsored research agreements: the Sponsored Projects Office (SPO), and the Industry Alliances Office (IAO). Accordingly, the number of research agreements with which the OTL has been asked to get involved has become a substantial part of the office's workload, and this role is growing.
In FY08 (the first year in which the OTL tracked this activity-level), the OTL helped complete 77 research agreements, and for FY09 to-date, the OTL is on a run-rate to help complete over 100 research agreements. The OTL's work on 77 sponsored research agreements in FY08 included agreements with SMEs as well as well known companies such as: BP, Dow, Hitachi, HP, Google, IBM, Intel, GE, GM, Microsoft, Nokia, Siemens, Toyota, Pixar, and Walmart.
2.3 Educating The Community About UC IP Policies & Practices including Their Rationale & Success
Over the past several years, the OTL has endeavored to build stronger relationships with academic units, student groups, venture capital firms, entrepreneurs, companies and industry organizations. This outreach and the resulting stronger relationships enable the OTL to more readily market opportunities for (a) commercializing Berkeley innovations, (b) licensing University IP, and (c) sponsoring campus research. It also enables the OTL to spread an appreciation for the rationale of UC policies, and an awareness of the success of OTL practices.
FY08 was a banner year for the OTL's involvement with on- and off-campus groups and events. These activities ranged from panel participation (e.g. National Academies of Sciences, AUTM, BERC annual energy symposium, IUCRP Fellows, California Clean Tech Open, L&S Entrepreneurship Roundtable), to IP seminars for research groups (e.g. BSAC, BMAD) to course presentations for classes (e.g. MCB 17, ME/BioE/IB C217-Biomimetic Technologies).
Revenues for FY08 from IP licensees were $7.7 M comprised of $5.2 M from royalties and fees, and $2.4 M from patenting reimbursements. This IP revenue doesn't include revenue from UC Berkeley IP that is managed by LBNL. Over the past 5 years, OTL royalty and fee revenues have fluctuated between $4.1 M (FY06) and $6.4 M (FY04). Accordingly, while the FY08 royalty and fee revenues are $0.8 M less than FY07 royalty and fee revenues, the FY08 revenues are well within the norm of the past five years. It's noteworthy that IP revenue productivity reached a three-year high in FY08 of $1.33 M per OTL IP professional.
Distribution of IP revenue to campus departments is transacted in the year following the year in which the distribution is established. Accordingly, FY07 distributions that were transacted in FY08 amounted to about $1 M, and were distributed to 16 departments with the most material distributions going to EECS ($0.38 M), Chemistry ($0.30 M), and MCB ($0.19 M).
The two material expenses for the OTL are operating costs (mostly salaries) and patenting costs (that are expected to be eventually reimbursed by current or future licensees). Operating expenses in FY08 were $1.2 M, a decline from FY07 of about $0.2 M – largely due to a delay in replacing two employees who left the office in late FY07.
Patenting expenses have been steadily rising over the past five years with FY08 patent expenses increasing 2% to $3.5 M. However, the FY08 increase in patent reimbursements was greater than the FY08 increase in patent expenses – and as a result, net patent cash flows for FY08 were the most favorable of the past five years.
3.3 Net Financials
In FY08, the OTL had an operating profit of $0.73 M – but this is before outflows for (a) a campus administrative assessment (i.e. 3% tax on revenue, not income), (b) the 100% allocation of the "department share" of IP revenue, and (c) nominal extraordinary income.