Tech transfer professionals with technologies they have not been able to license can strengthen their hand by bundling several related research products, IP experts suggest.

“Individual components of the IP bundle typically have a low value,” notes Richard Sheehan, president of The Technology Resource of the Southeast, a Johnson City, TN-based service provider of third-party analysis and valuation of new products and early stage technologies. “However, the value increases when combined with other like items that have a synergistic effect on the bundle.”

“The missions of universities do not match up with those of businesses,” adds Michael J. Martin of TechTransfer Associates, Inc., a Blacksburg, VA-based consulting firm. “The mission of business is to maximize return to shareholders, while universities create and disseminate knowledge. Universities are organized by disciplines, while businesses are organized by products — but you can identify clusters of research activity that match a company’s product organization.”

Several years ago, Martin successfully made just such a proposal to DuPont that resulted in a development grant for Virginia Tech, where he previously served as executive VP for intellectual property.

In seeking to help the university become more efficient for an approach to DuPont, Martin and his staff identified clusters of researchers — electrical engineers, the chemistry department, and chemical engineers — who were working on nonlinear optics for an electronic optical modulator. “The three groups were not aware of each other,” he notes. “We brought the faculty together over coffee, and the university got three new research proposals. It also got them thinking about invention disclosures, and we got six new ones. That was the value of just having one meeting.”

Once the three departments pooled their disclosures, Martin was able to approach DuPont with a platform — what he calls ‘a total solution.’ “I could also say to them I had a cross-disciplinary team that was very interested in further development; I had in essence a product development team they had not seen from a university,” he adds. The technology is now in further development.

“We see [bundling] as a very valuable approach,” Martin says. “You can look inside your campus, enhance [your efficiency] to approach an existing corporation or a new business, or seek out other universities to help solve market-driven problems you have identified.”

Untapped potential

Sheehan points out that bundling can unlock a significant amount of potential licensing dollars that are currently untapped. “According to the USPTO, at least 70% of university patents go unlicensed, and of the 30% that are licensed, only 10% exceed in revenues the initial investment in patent costs,” he notes. While some clearly should never have been patented, some are patented for political reasons, and some are only incremental improvements to an existing process or technology.

However, “there is a whole category — an entire band of technologies — that are good ideas but on their own simply cannot sustain a business model or have sufficient importance to be attractive to the investment community.”

One example dealt with genetic contamination in the rice industry, springing from a concept initially developed by Monsanto. The concept involved conferring disease resistance to insects and making plants immune to weed-killing chemicals. “The bad news is that some of the genes have spread to weeds, making them tough to control; biotech crops approved for animal feed have found their way into the human supply chain and plants engineered to make medicines in their tissues have escaped their test plots,” Sheehan says. RNA silencing, he continues, has been investigated for several years and has been pioneered by Applied Biosystems and Invitrogen. “Several research universities have independently developed a number of techniques that, when combined, may allow plants to become self-regulating and force the genes that control pollination to cease function if there is a mismatch in the DNA through cross-pollination,” he notes. “This project represents a market opportunity that could exceed $1 billion.”

In a bundling model, revenue distribution is the key to success, says Sheehan, whose firm is compensated with a flat fee rather than a percentage of the deal. “We value each item [in the bundle] as a separate and independent contribution; the sum total of the individual values is used as the benchmark to determine the ratio or percent contribution that each item made to the sum total,” he explains. “Next, we value all of the contributing items as a whole or complete package. Finally, we apply the percentages from the first step to establish the amount of revenue distribution to be expected from each contribution.”

Contact Martin at (540) 953-1712 or mike@techtransferassociates.com, and Sheehan at (423) 929-0380 or rsheehan@technologyresourceSE.com.

Posted July 27th, 2011 under eNews Platinum

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