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U of Ulster’s evaluation license allows a trial period to “test drive” technologies

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OpenUlster, a new service recently launched by The University of Ulster, is an approach to the open innovation model that includes an “evaluation license.” Operating under a unique trial period arrangement, for the minimal investment of one Pound the evaluation license allows companies to “test drive” technologies for a period of three months to a year before determining whether to proceed with a more formal license.

Timothy Brundle, executive director of Innovation Ulster Ltd., says the service represents the university’s latest effort to get more technology into the hands of entrepreneurs.

“Our basic methods include contracts, research, knowledge transfer, spinouts, and IP licensing, but what we find is that many technologies sit in our portfolio and are not commercialized because of limitations the university structure places around them,” Brundle explains. “We wanted to take the technology in its rawest form and put it in the hands of an entrepreneur who could undertake the commercialization process outside the university.” The entrepreneurs, he continues, are “incentivized” to undertake the role of tech transfer and translation, but to do it outside the university. “This way, we extend the capacity of our tech transfer team with seasoned entrepreneurs,” Brundle explains. “They have access to our [seed] funds and tools.”

How the service works

The OpenUlster website, launched in the fall of 2011, is populated with new technologies on an ongoing basis. Entrepreneurs, companies and other interested parties can see which technologies are currently under evaluation and which ones are available. To take out an evaluation license, they click on the link to download the necessary documents, fill out two forms and return them both to the university. When the license is countersigned by a member of the commercialization team, the firm has an exclusive period to evaluate the technology. They receive additional information about the technology that includes any published patents, experimental data, and prototypes or software.

“We give the entrepreneur a license for one Pound and charge them to take the technology, generally for six months. They go away, and we give them access to our funds, tools, and whatever resources they might need,” says Brundle. The university, he explains, has its own VC firm and internal innovation funds. “In the same way our tech transfer executives have the opportunity to pitch to those funds, we give [outside parties with an evaluation license] the opportunity to pitch to those funds as well,” Brundle reports. “In the six months they work up plans on how to commercialize the technology, which is what we look for from them.” In the first few months, he adds, 12 technologies have been put up on the site and five have been licensed on an evaluation basis.

How are the technologies selected? “From an internal perspective we have a technology review team that meets every four weeks,” says Brundle. “What we look for is to categorize the technologies and evaluate the ones that have commercial potential. We test our own team to prove they can add value to the technologies. If we can’t show we have the time, money, expertise and ability to commercialize them ourselves, then that’s the test; those technologies are made available to OpenUlster.”

If the entrepreneur or company decides to proceed with a formal license, the OpenUlter technologies are generally priced much lower than other university IP, according to Brundle. “We don’t look for many of the conditions and payments we would in a normal license agreement — it’s much, much cheaper,” he notes. “We have one example, for instance, where there are two similar pieces of technology, one that licensed out for 8% royalty with minimum royalty payments plus payments for administration and IP. That’s a normal arrangement for that particular technology type. However, the other is also available through OpenUlster for less than 5% with no minimum payments, and no IP costs. The ongoing financial contribution is nil. We want the royalty risk to be as negligible as it can be; we do not want people to think about that as a big consideration.”

Advantages cited

One benefit of this approach, Brundle asserts, is that it gets a greater number of technologies out into the world. “We’re very keen to create as much opportunity for business and entrepreneurial activity as possible,” he declares.

It also overcomes typical barriers to licensing in a number of ways, he continues. “One is that it actually makes the market aware that there are technologies sitting in the university,” he says. “Number two, universities make this process far too complicated, and businesspeople do not want to get involved in protracted and complex and sometimes archaic negotiations. We wanted to take all that away and make it as simple as possible.”

The third barrier that is removed, Brundle continues, is cash. “Universities do attract investors, and seed funders; universities are actually magnets for early stage capital,” he asserts. “Given that we know who those people are, we offer the people who are handling the commercialization efforts access to capital.”

In terms of IP protection, he notes, “we’ll take on the obligation to protect it for as long as we need to. We’ll give them the opportunity to buy it off if they have to, but it’s part of our free service that we keep and look after it for them.”

“Basically this removes the risk and gives the company a chance to use the technology on a trial basis for very little money,” notes Melba Kurman, president of Triple Helix Innovation. Evaluation licenses, she continues, are “very widespread” in the U.S., although every TTO has different nuances, such as whether or not they are exclusive, how long they last, and so on. “I am a fan of tire-kicking; ideally you would not take any money,” she says. “I also commend them for their transparency — how clear it is. Where they differ is that things are written out, and resources are made available. A lot times you have to know what to ask for, and at other places these evaluation licenses are not offered upfront and as clearly.”

Too burdensome?

Kenneth G. Preston, PE, JD, associate vice president for research and director of technology at the University of Akron, is not totally sold on the OpenUlster model. “The Ulster approach is time and money intensive up-front, in-house,” he notes. “In our model, we prefer to put our technology into start-ups and assist the startups to provide the evaluations, business plans, prototypes, and so on. That shifts the burdens from our small in-house staff to a larger network of outside dedicated entrepreneurs at a much earlier stage. We then use an expanding network of angel and VC investors along with SBIR and state funding to continue forward.”

Kurman also see some potential limitations. “The tire-kicking license is tricky; for example, is it right for the university to give an exclusive evaluation license?” she poses. “If two companies want to tinker with something that’s pretty early stage, is it fair that one lays claim to an exclusive evaluation license? I notice Ulster is exclusive and I’m always skeptical of exclusivity; it should be handled very carefully and should be a last resort.”

 “The license goes to the first person there,” Brundle responds. “But within that period they still need to demonstrate they are the best people to take the technology to market. What we look for is a plan that we can all get behind.”

Another potential weakness Kurman sees is that Ulster provides the licensee with supporting documentation. “Why wouldn’t a company decide at some point that they no longer wanted an evaluation license, and just go and talk to the inventor?” she wonders. “The tendency for most university inventions is the technology is incredibly raw, and the inventor’s involvement often key. At what point might the company feel the need to speak to the inventor and decide that’s who they want to hire?”

There is a clear danger in “giving away too much” with the evaluation license, perhaps enabling the licensee to do their own workaround, she continues. “Some patent applications have a lot of details, while others do not,” she notes. “If a company gets incredibly descriptive and well-patterned definitions, it’s possible that if that company came in with bad intentions and was just prowling around they would absolutely get access. It all depends on good will, and at a certain point you have to resort to that.”

Brundle doesn’t disagree, but adds: “I’d prefer to take that risk than have the technology languishing on the shelf. We have a very successful tech transfer office and they do what they do, and they keep putting technologies out into the market, but there’s still a wealth of innovation there and they’ll never be able to do everything. So we said, let’s get it out there and see what other people can make of it.”

There will always be upsides and downsides, he continues, “but they’re very difficult to quantify. The world of unanticipated consequences cannot be factored in yet, but I still believe it will be better to go this route.”

Kurman concedes that even the current tech transfer model is ultimately dependent on good will. “Universities do not want to sue companies, and this is where the revenue-oriented model at its heart is impossible to enforce,” she observes. “So at the end of the day I see this as positive move; Ulster did a good job.”

Contact Brundle at +44 (0)28 9036 6702 or tim@ulster.ac.uk; Kurman at 607-227-2876 or melbak@triplehelixinnovation.com; and Preston at 330-972-7840 or presto1@uakron.edu.


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