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U Manitoba unveils liberal IP policy in bid to speed negotiations, attract companies

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The University of Manitoba (UM) has a tantalizing new proposition to offer companies interested in research at the Winnipeg-based institution. They can make use of the research with no financial strings at all until such time as any resulting products or services begin generating revenue. At that point, companies will be expected to fork over somewhere between 1% and 2% of sales.

What prompted this change in IP policy? A number of factors, but Digvir Jayas, vice president of research at UM, was particularly interested in putting an end to the endless haggling that often takes place over yet-to-be-realized IP. “We were spending too much time on negotiating research contracts … and most of that time was usually spent on IP-related matters,” he explains. “If we just let industry manage [the IP from the start], it solves a lot of problems.”

UM’s decision to alter its policy in favor of a new approach, which is being branded as Transformational Partnerships, is designed in part to position the school as more of a partner to the community, as well as a participant in the community’s economic well-being. “We realized that the university was a bit of an island in the community, and really needed to be a far more active participant, rather than just training students and doing research,” observes Darren Fast, director of the technology transfer office at UM. “We also realized that there was an opportunity for the entire community to benefit if local companies and other companies as well were finding the university more relevant.”

If companies are having increased profitability through improved products or services, and the university has a role in that, the thinking is that this will create a “virtuous circle” that will pay for itself over and over many times into the future, adds Fast.

Clear away early obstacles

From industry’s point of view, the university is going to be a lot easier to work with under the new policy, says Fast. “We are not going to look for up-fronts and royalties. We are just going to license,” he says. “That is not a radical shift from any other technology transfer office. Where we see a more radical shift is when we are doing collaborative research.”

In these cases, the university will sign an agreement up front that assigns any resulting IP to the company. “Not every collaborative research agreement will lead to new IP being created, but if IP happens to be created in the project, the company will have control over that,” says Fast. “The company will decide which countries the patents get filed in, and how broad the protection needs to be. The company will manage that patent protection process.”

Fast adds that this approach will enable companies to use any IP that is created as an asset. “Especially for small companies, if there is any IP they need to leverage for loans or for VC financing to securitize something, they will be able to do that without constraints from the university,” he says.

The university will assign the IP to the company in exchange for a royalty that only kicks in once the IP is actually on the market and selling, so the university will get paid once products or services begin to generate revenues. “This is an ongoing payment. It will be a percentage,” says Fast. “We will agree on the percentage up front. There may be some tweaking if there are other patents that are acquired.”

In cases where university innovations don’t produce products, but rather improve processes or services for companies, UM will rely on the companies to place a value on the university IP. “If they grossly underestimate the value, then we will put the matter to arbitration,” says Jayas, noting that the university has a clause in place in its agreements covering this aspect. “We will both identify someone who is familiar with the [particular field involved], we will both present a case, and then there will be binding arbitration so that we don’t have to spend a lot of time negotiating.”

Jayas does not anticipate that there will be much need for the arbitration mechanism. In his experience, companies are typically fair when they see a value in something to their organization. However, there could be other complications. For instance, Jayas says, companies could take advantage of the policy merely to keep innovations away from competitors. He will be monitoring the policy closely for this and any other unintended consequences. “When we looked at this from different angles, I did not see any major issues,” he says. “In a year’s time we will have a better idea of what kinds of complications could arise.”

Engage researchers

Under the policy, researchers will retain the right to use IP for research purposes, and they will retain the right to publish their findings. “There will be projects we have to pass on because the company will want to keep [an innovation] a trade secret,” says Fast.

Also, researchers at UM have a clause in their contracts stipulating that they own 50% of any IP that they create unless they assign it, so they can opt to negotiate under the university’s traditional model if they choose. “This is optional. A researcher can say that he [or she] doesn’t want to work under the new model, so the first decision is made by the researcher,” stresses Jayas.

However, when the idea was first discussed with faculty during an internal town hall meeting at the university, they saw considerable upside to the new model, Jayas reports. “The researchers who want to develop their collaborative programs with industry were very supportive of the idea,” he says.

There is a compelling case for putting IP in the hands of companies, stresses Fast. “Who is in a better position to actually move product development forward than a company that has invested in the IP?” he says. “We think if we can give these companies every chance of success, at the end of the day we will have far greater benefits for the university and researchers than we would if we have protracted negotiations and make it difficult for people.”

Expand options for moving technology

The general thinking behind the new approach is that companies won’t have to worry about any financial obligations to the university until they’ve got products or services on the market, but there may be instances where there are exceptions, says Fast. A lot will depend on the nature of the IP — whether it is exclusive or non-exclusive, how far away it is from the market, and whether there are demonstrable value points created along the way, he says.

Despite such caveats, Jayas believes the approach will lure in more industries interested in partnering with the university to solve problems and develop new innovations. Indeed, just a month or two into the new policy there is some evidence that this is already starting to happen.

“We are talking about putting projects together with people who have never worked with the university before, so we are interacting with new companies, and that is a big bonus,” observes Fast. “Also, one of the side benefits of having a bit of press about the new policy is that we have seen a short-term uptick in the number of invention disclosures from our faculty.”

Companies that are interested in the new policy span the gamut from very traditional manufacturers and IT companies to new media firms, says Fast. “We have also had a couple of big pharmaceutical companies come through who are incredibly excited about the approach because one of the things they want is control over their IP so that they’ve got some leverage with what happens to it,” he says.

Anthony Boccanfuso, executive director of the University-Industry Demonstration Partnership, a Washington DC-based group that works to promote strategies that facilitate mutually beneficial collaborations between industries and universities, says the UM model is attractive because it formally expands the options for moving technologies out of academic labs and into corporate settings. “Anything that increases the number of approaches that can be deployed is positive,” he says.

The early interest is encouraging. However Jayas says it will take time to determine how well the new policy works. “We are going to do assessments on a quarterly basis, but this also requires our technology managers to start working in a different mode,” he says. “We are expecting them to spend more time with industries, particularly in Manitoba, and to try to better understand their needs, so this is not something where you can see results in a very short period of time.”

Contact Boccanfuso at 803-413-5646 or tony@uidp.net; Fast at 204-474-6930 or darren.fast@ad.umanitoba.ca; and Jayas at 204-474-9404 or digvir_jayas@umanitoba.ca.


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