Oxford University Innovation Licensing workshop at UNICO
14th September 2009
Oxford University Innovation Ltd’s Managing Director, Tom Hockaday, ran a workshop at the June 2008 UNICO Conference on “Licensing to Industry – Issues & Impacts”. The Workshop was organised and chaired by Tom Hockaday, Managing Director of Oxford University Innovation Ltd in Oxford (www.innovation.ox.ac.uk), and included presentations from Dr Jacqui Shea of Emergent Biosolutions (www.emergentbiosolutions.com) and Dr Tim Fell of Cellcentric Ltd (www.cellcentric.com).
The 55 attendees at the Workshop took part in a group exercise looking at various aspects involved in university-industry licensing; this article describes the exercise and its outcomes.
The audience divided into six Groups of eight to 11 people. The audience was primarily from the university technology transfer sector, with some from technology businesses and some from professional services firms.
Oxford University Innovation Licensing workshop
The exercise involved the groups ranking a list of 15 aspects of university-industry licensing.
The 15 aspects were selected based upon experience of negotiating and concluding licensing transactions. They included issues generally known to be challenging and some that were expected to be considered more straightforward. The list is obviously not exhaustive nor representative of the top 15, or most important 15 etc.
Each group was asked to ranks these aspects in terms of which you think are the hardest to tackle (high) and which you experience usually get resolved quite swiftly (low).
The scenario was that the University TTO has filed patent applications and is marketing the technology; the TTO and the company are getting on fine and are each interested in entering into a licensing deal.
The 15 aspects that were included in the exercise were as follows:
1 Improvements/Pipelines (access to technology improvements made by either party)
2 Audit (licensors right to audit)
3 Exclusivity (of access to the technology)
4 Warranties, Liabilities & Indemnities
5 Publication Rights
6 Confidentiality (of terms of agreement; existence of agreement; agreeing press statements; use of each other’s names)
7 Licence back to University for non commercial use
8 Ongoing sponsored research as part of licence agreement
9 Assignment of agreement if the company is bought
10 Financial terms considerations (fees, milestones and running royalties etc)
11 Diligence/exploitation requirements
12 Field and territory definitions
13 Sub-licensing
14 Patent prosecution and maintenance (who is responsible, who pays)
15 Termination clauses
The Response
As usual, there was lively debate in the Groups on what the instructions actually meant, whether hardest actually meant most important (well no it doesn’t really) and whether ranking something high meant it was 1st or 15th. Also, as has come to be expected from UNICO audiences, there were plenty of pointers as how to do the exercise better next time (thanks for that). Some groups managed the exercise according to the instructions, others preferred ranking a few of the aspects, and others grouped the aspects into a simple hard, medium, straightforward.
The summary data are shown in the table. The Table shows the ranking of the 15 aspects (1 = hardest).
SUMMARY OF RESPONSES COMBINED
Financial terms considerations – 1
Improvements/Pipelines – 2
Warranties, Liabilities & Indemnities – 3 joint
Diligence/exploitation requirements – 3 joint
Exclusivity (of access to the technology) – 5
Assignment of agreement if the company is bought – 6
Sub-licensing – 7
Field and territory definitions – 8
Termination clauses – 9
Ongoing sponsored research as part of licence agreement – 10
Publication Rights – 11
Patent prosecution and maintenance – 12
Confidentiality – 13
Audit (licensors right to audit) – 14
Licence back to University for non commercial use – 15
The data have been collected and analysed in a simple way. Groups reported back their rankings or groups or highlighted items and these have been averaged.
There are of course some shortcomings and observations to be made on the outcomes of the exercise: the number of people involved, mainly from the university sector: not enough time to complete the task; inconsistency of responses; the list of aspects is selective; there are others not on the list.
Observations
There are a number of very clear observations from the response data.
Financial Terms and Considerations and Improvements/Pipelines were clearly identified as the hardest aspects.
On Financial Terms, this highlights one of the great challenges in university technology transfer, how to value early stage technology and structure deals in a way to reflect the role of the licensed technology in the marketplace. The issue also highlights the twin objectives of technology transfer: first to transfer technology and second to generate money for universities to support their core activities. University Vice-Chancellors have learned to say that the money comes second, but it is also clear that technology transfer should not become a cost to an institution. The comment was made that it is not so much the numbers that are hard, but identifying the right deal structure, value inflexion points for milestones etc.
Improvements and Pipelines are complex issues. Discussion highlighted the need for tight definitions of what is and is not included in definitions of improvements which pass down the pie from licensor to licensee. Sensitivities over the University’s access to licensee company improvements were also discussed, especially on termination.
Warranties, liabilities, and indemnities and ‘Diligence Exploitation requirements’ were also identified as difficult to agree.
Issues around warranties etc. highlight most clearly the differing objectives and purposes of universities and business. Universities are not commercial organisations and are quite understandably risk averse. They are also open communities and promises about who did what when are difficult to make with sufficient levels of certainty.
Universities place great importance on seeing their technologies getting through to market, for the benefit of people and society. Requirements for exploitation and the licensee’s obligations to develop the technology diligently can be best managed when described in a Development Plan as a schedule to the licence. Defining the Development Plan is an important and challenging aspect of a technology licence; leaving it at best or reasonable endeavours is rarely adequate or helpful should the parties want to disagree later on.
Licence back and Audit were identified as those resolved most quickly.
In discussion, research use by the University was identified as a fundamental requirement for universities and therefore easy to resolve as it is a show-stopper. There was also discussion over the need to address the point in an agreement given the research freedoms, although these do differ geographically and the issue has attracted attention in the US technology transfer community.
The right to audit the licensee is a given, although there can be devil in the detail. Whilst considered easy to agree, the clause needs teeth.
Conclusion
In this exercise two aspects of university-industry licensing were clearly identified as being harder to tackle than the others. These are the financial terms and considerations and improvements/pipelines issues. Licence back to the University for research use and licensors right to audit were identified as the most straightforward. These are useful conclusions in terms of preparing and conducting licensing discussions between universities and industry.
