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Renowned TLO takes on the role of change agent

Not resting on its laurels, MIT beefs up tech transfer efforts

This article appeared in the March 2018 issue of Technology Transfer Tactics. Click here for a free sample issue or click here to subscribe.

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Based on averages for patents and licenses issued, licensing income generated, and start-ups created over the span of 2012-2015, the Massachusetts Institute of Technology (MIT) in Cambridge ranked as the eighth-best university for technology transfer in the United States, according to the April 2017 report “Concept to Commercialization: The Best Universities for Technology Transfer” from the Milken Institute in Los Angeles. In addition, last September, MIT came in second in the annual ranking The World’s Most Innovative Universities for the third straight year, according to Reuters. Neither accolade is surprising given that the public data posted by the MIT Technology Licensing Office (TLO) on invention disclosures, patents, options, and licenses shows a consistent record of growth and high performance since fiscal year (FY) 2008 despite occasional year-to-year variability.

By any measure, the MIT TLO was extraordinarily successful when Lesley Millar-Nicholson, MBA, CLP, took the helm as director in July 2016. “The TLO was flourishing under the leadership of founder and previous director Lita Nelsen, who is a legend in her own right,” says Millar-Nicholson. Upon Nelsen’s retirement, the TLO was primed to continue its growth trajectory under the new leadership of Millar-Nicholson.

However, the MIT leadership saw an opportunity to position the TLO to take advantage of the shifting tech transfer landscape and give university innovations even more opportunity to make an impact. The administration charged Millar-Nicholson with the following four clear mandates during the interview process:

  • Provide thought leadership and general strategic direction for MIT’s intellectual property (IP) activities and policies;
  • Expand IP activity across different disciplines and industry sectors, including an emphasis on software;
  • Assess current TLO practices in light of the rising volume of TLO activity, ranging from traditional invention disclosures to industry-sponsored research; and
  • Create and execute strategies to engage external partners.

TLO embraces change

To show leadership in these areas, for the past 19 months Millar-Nicholson, her management team, and the entire MIT TLO staff have embarked on a series of change activities tailored to MIT’s unique environment. (To learn how the MIT TLO laid the groundwork for change by building buy-in, see article below.) This change package includes the following key steps:

Add a communications officer: In Millar-Nicholson’s first budget, she obtained funding for an additional four staff members in very specific areas. As a result, this year the MIT TLO added a communications officer to the team. “This is the first time that there has been a formal communications/marketing person at the TLO,” she points out.

“Adding the communications position was very important for a number of reasons,” says Millar-Nicholson. “First was what I was hearing about the need for the TLO to be able to communicate clearly and concisely to our university community about who we are and what we do. In addition, we needed to improve our communications with people on the outside about the technologies we have. It’s true what people often say: ‘Our marketing is picking up the phone.’ However, marketing also involves more than individual conversations about specific technologies. It involves our brand and our reputation as a leader in tech transfer, and a communications professional can help give focus to that general information that we are sharing.”

Redesign the TLO website. Even in advance of bringing in the communications officer, the TLO hired a vendor to help completely revamp its website. “It was very important that, by the one-year mark [since being hired], I had made some sort of statement about the TLO and who we are that demonstrated change to everyone who had said to me, ‘Here are some ways in which we would like you to have an impact,’” says Millar-Nicholson.

The website redesign included building an embedded technology database, she notes. “The database lists our technologies, but we no longer have to rely on a third-party vendor to update it. The continual updating of the website now falls under the job descriptions of our communications officer and our IT website support person.”

Plan to replace the TLO’s IP database. The MIT TLO has the highest number of disclosures in the country and currently receives more than $50 million in total annual licensing revenue, says Millar-Nicholson — and it needs a database that matches its high performance. “Our 1990s IP database is powerful but doesn’t have the best user interface. We needed to think about a replacement. However, an off-the-shelf product isn’t going to work because we have such a complex system of interweaving processes, including background IP reviews and compliance.”

Knowing that some tech transfer offices have gotten into trouble by replacing their IP database too quickly or incorrectly presuming that off-the-shelf products will fit their needs, Millar-Nicholson put in a separate budget request to plan the IP database that the MIT TLO needs. “The result is that, over the last six months, our internal database working group, led by Dan Dardani (IT-focused technology licensing officer) and Jack Turner (senior associate director), has been working with external vendors to ascertain which of them can help us review our business processes, analyze our processes, revise our processes, and then build a specification for what we need in the future,” she says. “Building and potentially buying parts of the database will occur at some second phase, but this first phase to me was absolutely essential.”

Click-through licensing implemented

Launch ready-to-sign software licenses. To improve efficiency and transactional costs, the MIT TLO’s associate licensing officer (Nicole Snoeberger) spearheaded a project to make available ready-to-sign software end-user licenses, says Millar-Nicholson. “You can basically click through; download and complete the non-negotiable license agreement; send us your money; and, after verification, you’re done.”

These ready-to-sign software licenses resulted from the TLO’s effort to identify technologies where the costs are fairly modest and the nonexclusive license terms rarely change, she points out. “We wanted to address: How do we get these nonexclusive technologies out the door so that we can spend our time on what really matters, such as exclusive licenses with equity? Now that the ready-to-sign software licenses are available, we are working on doing the same for some material transfer agreements, tangible property, and all of our trademark agreements.” (Learn more about the MIT TLO’s ready-to-sign licenses here.)

Upgrade patent management. Historically, the MIT TLO’s patent management team had been very administratively focused, says Millar-Nicholson. “So last year I brought in an IP attorney with experience in industry, as well as experience managing IP portfolios, to lead the team.”

Upgrading the IP officer role allowed the TLO to conduct a significant review of its patent management process. This review was grounded in a study that Millar-Nicholson commissioned to benchmark MIT’s process against comparable institutions.

“We file over 400 U.S. patent filings a year, spending over $21 million. We recover about $12.5 million, so we have a really good cost recovery rate on the order of 55% to 60%. That tops the charts in comparison to many tech transfer organizations, but $21 million is still a lot of money,” she stresses. “So we need to be very purposeful in our patent filing strategies. Come the end of the year, I believe we will have seen an improvement not only in how we are managing our patents but in our bottom line. However, it’s not all about spending less. It’s about spending wisely and being able to justify the spending that we’re doing.”

Standardized start-up terms

Streamline start-up licensing. In the process of setting priorities for change, Millar-Nicholson received a request for the TLO to streamline start-up licensing so that start-up companies can launch faster. “However, saying ‘Let’s make licensing easier and non-negotiable’ isn’t always the right approach,” she points out. “These are legal documents that people have to pay attention to, and in some cases, a license will take as long as it takes.”

Instead, Millar-Nicholson focused on the fact that many start-ups aren’t ready for a license. “They don’t have legal counsel, they don’t understand some legal aspects of the agreement, and you spend most of your time educating them about the terms,” she explains.

To address this, the TLO developed a start-up option template that standardizes terms for virtually any start-up (with a few exceptions depending on the technology area). (See a summary of the standard terms in Figure 1.) “This ready-to-sign short-term option agreement helps start-ups participating in MIT’s The Engine, a combination start-up accelerator/investment fund for hard technologies (e.g., robotics, manufacturing, energy),” says Karen Gleason, PhD, SB, SM, professor of chemical engineering and the associate provost for industrial relationships. “Companies that want to participate can move really quickly to sign the option upfront, and even if they want to do some negotiations for the license, they have a clear view of what the starting point is.”

This start-up option template effectively brings down the option fee to about $3,000 and gives start-ups some certainty about patent costs, says Millar-Nicholson. “They have to repay their patent costs — I think waiving or letting start-ups wait to repay patent costs makes them feel free to spend far too much money. However, we have worked out the average patent costs for a start-up company in a one-year option to be on the order of $19,000. So if a start-up begins to exceed $20,000, we will discuss putting it on a payment plan. This way, if there are exceptional costs, the start-up won’t feel slammed by them.”

Install a contract coordinator and create templates. The MIT TLO created a position called contract coordinator, says Millar-Nicholson. “This person, who is basically a contracts officer, has been building a library of templates and agreements for over a year and provides advice and guidance on use of language, alternate terms, and the like. While it’s impossible to have a template for everything, our management team felt it would be fairly efficient to begin to log our alternative language and to standardize commonly used agreements. The goal is to encourage staff to use those templates and agreements as opposed to working off of the last agreement that they had for a completely different organization or technology.”

Stepping out of its comfort zone

Aim for flexibility with corporate-sponsored research. “We have been truly tested in our ability to become more flexible and creative in negotiating IP terms by some of the engagements we have done in the last year, and that speaks to MIT’s willingness to step out of its comfort zone with regard to how it engages with corporations,” says Millar-Nicholson. “As a result, approximately 15% of our spend on campus, not including Lincoln Lab, is coming from corporate engagement.”

The $240 million MIT-IBM Watson AI Lab, announced in September 2017, is a great example of this new flexibility, she says. “Five years ago, I don’t think MIT would have been as willing to think creatively about how to meet the needs and risk profiles of both MIT and IBM. The deal is a real testament to everyone involved in that engagement.”

“To get any industrial sponsorship, there has to be a good relationship between the TLO and the Office of Sponsored Programs (OSP), and here at MIT, we also have an Industrial Liaison Program (ILP) that deals with building corporate relationships,” adds Gleason. “So we had to figure out how to get the structure and the communications aligned in order to streamline some of the industrial sponsorships. It takes a lot of work and communication to be able to implement flexibility in a robust and equitable way.”

That process started with meetings to bring together the TLO, the OSP, and the ILP with the Office of General Counsel, says Gleason. “In those meetings, we identified a lot of low-hanging fruit to help information flow more readily. For example, we talked about whether a database that already existed in one office could be shared with another office to avoid duplicate efforts.”

These meetings also worked to build relationships so that people could see problems through the lens of the other offices, says Gleason. “This helped us establish a common goal: Whatever is possible to do should be done as long as it benefits the faculty and students and makes it easier to bring sponsored research to campus. We’re trying to make the possibilities clearer at the beginning so that people can move faster.”

For example, one key change was developing a new aggregation model for licensing background IP for the MIT-led Advanced Functional Fabrics of America (AFFOA) Institute, a $317 million public-private partnership, says Gleason. “This institute has nearly 100 member entities. The aggregation model shows what portfolio of patents is available in the space that is of technological interest to the sponsor. It makes crystal clear that, if someone is interested in licensing a particular patent, ‘This is the amount and what it takes.’ Building that portfolio meant we needed to check in with faculty to determine whether they wanted to reserve their IP for other reasons (e.g., a start-up or follow-on funding from a given sponsor), but we were able to make available a specific aggregation.”

Contact Millar-Nicholson at 617-253-6966 or lesleymn@mit.edu; contact Gleason at 617-253-5066 or kkg@mit.edu.


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