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Legal disputes with university start-ups often traced to poor contracts


By Jesse Schwartz
Published: December 12th, 2018

Tech transfer offices focus so much on encouraging faculty entrepreneurs and fostering their start-ups that the need for carefully constructed legal agreements can be seen as just a necessary formality among friends.

Big mistake. That can lead to legal disputes down the road that will turn the convivial relations you hope for between the university and its faculty start-ups into an adversarial ordeal.

Legal disputes for TTOs have mostly focused on patent infringement, but with more of their work now involving start-ups and equity investments, universities are increasingly finding themselves pitted against their own faculty own spinouts.

Case in point: the University of Waterloo in Ontario, Canada, is facing off with a start-up staffed by alumni and students, funded by the school, and housed on the campus. Salient Energy is focused on commercializing a clean-energy technology invented on campus, but the university is suing it in Ontario Superior Court, saying it is the sole owner of the relevant IP.

The university wants the rights to the IP so it can license the technology to the U.S. Department of Energy’s Argonne National Laboratory, which it says funded the research that led to the start-up. The school says Salient misappropriated the school’s business opportunities and engaged in “malicious and high-handed conduct” that showed reckless disregard for the university’s interest in the IP.

The lawsuit calls for $600,000 in damages, an amount that would likely bankrupt the six-person company, not to mention the loss of the IP on which it depends. Salient’s response to the lawsuit called its allegations baseless and noted that the University of Waterloo encouraged the start-up it is now trying to undercut.

The lawsuits can go in both directions. In California, Stanford University is being sued by MedWhat, a company providing a medical and health assistant that can automatically provide a contextual answer to questions posed in natural language.

MedWhat’s lawsuit against Stanford and its StartX fund claims fraudulent use and abuse of convertible notes by venture capital investors in Silicon Valley. The company alleges that a minority group of its investors used in bad faith a convertible note to gain access to the startup’s private information, including technology, business model, customer information, market strategy, and the product and technology roadmap. Then, when MedWhat achieved a financing milestone that would trigger conversion of the note, the investors refused to comply.

The start-up alleges that the investors were actually backing a competing company, Sense.ly, and used that information for those competing interests, while claiming all along that they were only interested in owning equity in MedWhat and assuring its financial success, according to the lawsuit.

These and other disputes like them beg the question: How can TTOs and their legal teams prevent this kind of trouble? Much of the potential for legal disputes comes from the fact that universities, by necessity, employ in-house legal counsel that often use boilerplate agreements with start-up companies, says K. Lance Anderson, JD, an attorney and chair of the pharmaceuticals and biotechnology practice group with the Dickinson Wright law firm in Austin, TX. He represents companies involved in such disputes.

Universities standardize their agreements for consistency and efficiency in managing large portfolios. Start-ups, on the other hand, often are limited in the quality and quantity of legal services they can afford. That can be a bad combination.

Both parties might accept those limitations more readily because they see each other as collaborators rather than adversaries, he explains.

“I represent these companies when the dispute arises, and when I look at the agreements I see bad decisions that were made just because the company didn’t know how it could or should be done,” Anderson says. “The two parties have this mentality that they’re on the same team so they go bounding down the road hand in hand, and it’s only later they realize certain things were not addressed.”

A detailed article on preventing legal disputes between universities and their start-ups appears in the November issue of Technology Transfer Tactics. To subscribe and get the full article, plus access to the publication’s 11-year archive of best practices and success strategies for TTOs, CLICK HERE.

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Accelerator uses blind selection process to boost diversity of backed founders


By Jesse Schwartz
Published: December 12th, 2018

A start-up accelerator in Philadelphia is using a blinded selection process for deciding on companies to back in a bid to enhance diversity among its start-ups. continue reading »

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Preparing University Start-Ups for Angel Investments: A Best Practice Webinar


By Jesse Schwartz
Published: December 12th, 2018

A typical angel investor is approached by hundreds of companies seeking funding, and even the best ideas can get overlooked without a well-crafted pitch and the right preparation. University start-ups can jump to the head of the pack if they understand and leverage their advantages over other new ventures, while also preparing effectively for the due diligence process. And tech transfer professionals can play a pivotal role in helping their start-up teams secure critical early-stage cash while avoiding common mistakes during due diligence that can cause once-eager investors to put away their checkbooks.

That’s why Technology Transfer Tactics is sponsoring this critical program designed to help TTOs and their early-stage start-ups prepare themselves for fundraising from angel investors: Preparing University Start Ups for Angel Investments: A Best Practice Webinar.

Join Michael D. Stein, a seasoned angel investor/advisor and IP attorney with Baker Hostetler LLP, when he discusses the key factors angels typically consider when screening start-up opportunities, how to identify and address their sweet spots, and how to ace the due diligence process and get the funding needed to and plot a course for growth.

For complete details and to register, CLICK HERE.

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LA BioMed launches first-ever comprehensive doctoral program in translational research


By Jesse Schwartz
Published: December 12th, 2018

LA BioMed has launched a doctoral program in translational research, the first comprehensive degree of its kind. The program will be co-located with LA BioMed’s research facilities and biotech incubator in Torrance, CA, alongside a future bioscience tech park, level one trauma center, and academic teaching hospital. continue reading »

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Northwestern start-up teams with Japanese company to commercialize battery technology


By Jesse Schwartz
Published: December 12th, 2018

A Northwestern University start-up is partnering with a large Japanese chemical manufacturer to commercialize a new battery technology. continue reading »

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U of Queensland start-up lands $63M to advance drug for inflammatory disease


By Jesse Schwartz
Published: December 12th, 2018

A University of Queensland startup has raised $63 million in funding to advance a treatment that slows the progress of inflammatory diseases such as Alzheimer’s and Parkinson’s. continue reading »

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U of Ottawa launches student start-up accelerator


By Jesse Schwartz
Published: December 12th, 2018

The University of Ottawa (uOttawa) is launching a new nine-month program to help students create their own start-ups. continue reading »

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Impact and Performance of University-Linked Business Incubators and Accelerators: World Benchmark 17/18 Report


By Jesse Schwartz
Published: December 12th, 2018

The UBI Global 17/18 World Benchmark Report is the most comprehensive benchmark study of university-linked business incubators and accelerators. The vast amount of data collected and the insights derived will help you identify which qualities make a top incubation program successful. With data from 259 business incubators and accelerators in 53 countries, this report is the most comprehensive comparative study of university-linked incubation programs worldwide.

This 72-page report measures incubation programs using the updated UBI Global framework with 21 key performance indicators in three areas:

  • Value for Ecosystem – measures economy enhancement and talent retention.
  • Value for Client Startups – measures competence development, access to funds, and access to network.
  • Value for incubation program – measures program attractiveness and post-incubation performance.

For more details, CLICK HERE.

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Purdue researchers develop treatment for autoimmune disease with fewer side effects


By Jesse Schwartz
Published: December 12th, 2018

A team of researchers at Purdue University has developed a series of molecules that may provide a safer, more reliable treatment for autoimmune diseases. continue reading »

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Northern Kentucky U program recognized as one of top five entrepreneurship centers


By Jesse Schwartz
Published: December 12th, 2018

Northern Kentucky University (NKU) has been recognized as having one of the world’s top entrepreneurship hubs. continue reading »

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Comings and goings


By Jesse Schwartz
Published: December 12th, 2018

•  International commercialization expert Scott Henderson has been hired by the Purdue Research Foundation (PRF) to serve as its new chief entrepreneurial officer. Henderson will lead the Purdue Foundry, an entrepreneurship and commercialization accelerator, and Purdue Ventures, a capital and talent hub. He also will work closely with the Purdue Office of Technology Commercialization and Purdue University to guide the award-winning Purdue commercialization ecosystem.

“Purdue already has a highly successful entrepreneurial system, but it is ready to take the next giant leap,” said PRF President Brian Edelman. “Scott will move this program to that goal by connecting C-level suite executives to entrepreneurs to project and office managers and help us further develop an extraordinary space where people connect and develop ideas and collaborate on solutions.”

Henderson comes to the foundation from Sandbox Communities, an Atlanta-based company he formed four years ago where he created social environments in commercial and university research parks and innovation districts.

He will be doing similar work for Purdue, focusing particularly on the Discovery Park District, a 400-acre, $1 billion project that will include laboratories, advanced manufacturing facilities, offices, retail shops, restaurants, housing, green space, trails and an airport.

Greg Deason, the foundation’s senior vice president for entrepreneurship and place making, said Henderson’s extensive experience in identifying and attracting entrepreneurs and startups was a key factor in hiring him. “Scott has shown through his work at Sandbox Communities, Georgia Tech and elsewhere that he is a world-class connector of people,” Deason said. “He is an entrepreneur, a marketer and has created dynamic social environments that blend corporate and university environments.”

Henderson will join Purdue on Jan. 7. He succeeds Dan Hasler, who in September was named Purdue’s executive vice president for communication.

Source: Purdue Research Foundation News

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•  The University of Wyoming (UW) has chosen seasoned patent attorney Henry Nowak to serve as director of technology transfer and business resources. In his new role, Nowak will lead UW’s efforts to provide faculty, staff, students and regional entrepreneurs with the guidance and resources necessary to identify, promote and protect intellectual property with high commercial potential.

Nowak most recently served as a tech transfer manager at North Dakota State University, where he was responsible for intellectual property evaluation, marketing, licensing and other activities related to the university’s technology portfolio. He has filled similar roles at the University of North Carolina at Chapel Hill, Utah State University and Colorado State University.

“He has a depth and range of experience that will serve UW and Wyoming well as the university works with the state and ENDOW (Economically Needed Diversity Options for Wyoming) to stimulate entrepreneurial activities and the shepherding of ideas with market potential into the business world,” says Ed Synakowski, UW vice president for research and economic development.

Source: UW News

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Express license used by DoD gets deals done at breakneck speed


By Jesse Schwartz
Published: December 4th, 2018

The only difference between the express license built by TechLink for the Department of Defense (DoD) and the form they previously used for licensing is that it is faster — much faster. “We are able to have fully executed licenses in 13 working days,” reports Austin Leach, PhD, CLP, TechLink’s associate director for defense programs.

And yet, Leach says, “the agreement itself is no different from the standard patent license agreement the Army or Navy uses. [It includes] all of the standard clauses of a conventional license agreement; it is not shortened or unsophisticated.” (TechLink, a center within Montana State University’s Office of Research and Economic Development, is a DoD partnership intermediary that specializes in marketing and licensing DoD technology to the commercial industry.)

Joseph Gordon, the Air Force’s tech transfer & transition director, confirms that deals are getting done without sacrificing a fully fleshed out agreement. “All terms from a standard Air Force patent license agreement are included,” he says. “We use common royalty terms, but the government never takes an equity position.”

So where does the speed come from? “Some express licenses are no-cost, some are simplified,” Leach observes. “For DoD, [the speed comes from] moving the process online.”

The application process is also online, and once completed it is used to populate the license agreement, he explains. “The system itself auto-populates the agreements,” he says.

The U.S. government requires that applicants submit a commercialization plan, he continues. “The questions asked online are the components, so once applicants submit a formal application document – a PDF — we can be sure the applicant meets the requirements necessary for a lab to grant a license.”

“The TechLink system allows online application, document review, and facilitates communication with the applicant,” adds Gordon. “All the information we need to make a license grant determination is contained in one easily accessible, shared location.”

The other difference with the TechLink model, Leach says, is that DoD can offer more than just non-exclusive licenses. “They could be partially exclusive field of use or exclusive,” he says. “There are previously decided costs based on level.”

A detailed article on the TechLink express license appears in the November issue of Technology Transfer Tactics. To subscribe and access the full article, along with the publication’s entire 11-year archive of best practices and success strategies for TTOs, CLICK HERE.

The Streamline Your Agreements distance learning collection provides detailed guidance on “express” and “ready-to-sign” licensing programs that you can adapt for your own TTO. For complete details, CLICK HERE >>

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