1 Portfolio Media. Inc. 860 Broadway, 6th Floor New York, NY Phone: Fax: Keys To IP Collaborations With Universities: Part 3 Law360, New York (March 09, 2015, 10:22 AM ET) -- This is the third installment of a three-part series on forming successful collaborative relationships between for-profit companies and academic institutions, such as universities, research institutions and federal laboratories. Attorneys and their clients often collaborate with institutions for various reasons. Understanding the unique perspectives and mechanisms of these institutions may decrease the potential for adverse outcomes to the client. The increasing presence of academic institutions in the innovation life cycle has provided unique opportunities for companies and entrepreneurs, in the form of access to intellectual property and expertise, often while supporting academic institutions and their alumni networks. For-profit companies realize that strong academic relationships provide access not only to research results and intellectual property, but also to increased brand awareness, Darrell Windham goodwill, and outstanding talent including students, faculty and alumni. If properly developed and managed, companies and entrepreneurs enjoy access to critical thought leaders in areas which are important to their business. Companies and entrepreneurs may also be in the position to shape the direction of many of these research programs in order to address areas of interest and gain competitive advantages. In return, academic programs are provided real-world problems and opportunities having a commercial impact. These experiences can be transformative for students, faculty and researchers while providing valuable research and development services to companies. As discussed in Part 1 and Part 2 of this series, attorneys representing for-profit companies in developing strategic alliances with universities, research institutions and other academic entities are often faced with unique issues in managing the disparate missions of the parties. Many of these issues begin with a lack of understanding about the structure, mission and goals of the academic institution. This third installment in our series will discuss examples of current models and deal frameworks that companies and entrepreneurs are using effectively to collaborate with academic institutions. Collaborations Collaborating with academic institutions, while nothing new, has transformed from the traditional sponsored projects, passive licensing activities, or faculty consulting engagement. In the past, for-profit
2 interests have utilized universities to provide research results and perhaps some subject matter expertise in helping the sponsoring company address aspects of its own products. These collaborations often involved a funding grant to the institution to direct a research project to the scope of work desired. Results were then provided to the company, or sponsor. In some instances, intellectual property developed from the project was then licensed out to the company, with ownership remaining with the institution. Royalties, and in some cases, equity positions or warrants, provided the institution with a position in the future success of the developments. Thus, most in the for-profit sector naturally think of the traditional "rights-taking" model applied to university technology transfer when considering collaborations. Over time, many academic institutions have realized that the traditional technology transfer model, absent a large success or breakthrough research accomplishment, either fails to achieve profitability or ineffectively pursues the opportunities and innovations developed. Further, mission clarity set forth in the federal agencies, as well as the increasingly aggressive entrepreneurial expectations and goals of students, faculty and institutional governing bodies, have allowed academic institutions to shift into a more active role in collaborating with for-profit entities. Expanding from the traditional competitive grant process, strategic collaborations by academic institutions may often involve aligning several institutions and for-profit companies to address a critical concern. These may take the form of major federal grants, congressional earmarks, or agency-directed Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) awards. Large collaborations may range from addressing a problem, such as cancer, to becoming a focus for a particular industry or industry cluster, such as renewable energy. Federal granting agencies are motivated to support opportunities that show commercial impact. Collaborations highlighting the strengths of academic teams along with the market presence, or potential, of the participating for-profit interests, have increased appeal due to the discernable impact to society in the form of a solution reaching the marketplace. In addition to seeking federal funding, for-profit companies and entrepreneurs may qualify for other state and local funding opportunities by forming collaborations with academic institutions. Several states have taken steps to implement various forms of funding vehicles for collaborations and commercialization activities involving the state s academic institutions. The funding sources may provide research matching, grants and awards, or investments into for-profit companies seeking to collaborate with the academic institutions of focus. One example is the Cancer Prevention and Research Institute of Texas (CPRIT), which authorized the state to issue bonds to fund groundbreaking cancer research and prevention programs and services in Texas. For many of these types of state-sponsored funding entities, opportunities range from basic research programs to product development programs involving for-profit companies. While not specifically tied to academic institutions, many state funding vehicles do have mechanisms tied to encouraging collaborations with state institutions. Beyond the states, some academic institutions themselves provide access to funding and support of collaborations and commercialization efforts. For example, in 2014 the University of California System announced the formation of UC Ventures, a $250 million fund created from the system endowment fund, to commercialize opportunities developed from the system s component institutions. Some institutions also provide for special granting opportunities dedicated to commercial collaborations, and companies may often benefit from these grants as matches to sponsored research grants for purposes of furthering the research objectives of the for-profit company. Corporate Strategic Initiatives
3 Collaborations may often reach beyond a specific project or research focus to become more strategic in nature. These engagements often include multiple facets of participation, ranging from providing educational curriculum to financing and building academic and infrastructure facilities in connection with the academic institution. These arrangements help provide the research institution with critical access and funding opportunities while positioning the for-profit company with unique perspectives with regard to students, faculty and the research initiatives of the institution. Such initiatives are considered long-term and may be tied to the philanthropic objectives of the institution. Strategic initiatives have been embraced by multiple industries, particularly within the life sciences. There are many examples of large alliances involving pharmaceutical companies and academic institutions. Prior to its purchase by Amgen for $9.7 billion in 2013, Onyx Pharmaceuticals entered into strategic alliances with both the University of California, San Francisco and the University of Texas, MD Anderson Cancer Center in Houston, Texas, to develop various opportunities in cancer therapies. These relationships, partially motivated by the need to build and maintain product pipelines, trigger multiple facets of the academic institutions to both leverage the intellectual property assets of the participants, but to secure the rights necessary to ensure effective commercialization of developments. Neither being strangers to such alliances, Amgen and MD Anderson have also recently announced their plans to expand beyond MD Anderson s Moon Shots program and to focus on specific immunotherapy constructs for certain cancers. These types of initiatives not only provide outlets for the academic research programs, but the companies involved provide faculty researchers with access to highly proprietary product platforms. Many academic institutions now have officers or other designated representatives for corporate engagement who may be involved with the institutions other economic development or commercialization offices. These points of contact can be critical in connecting the right institutional representatives in certain matters to enable more efficient interactions regarding the multifaceted comprehensive strategic partnership. Further still, larger university systems have designated centers and institutes to facilitate collaborations, including providing access to capital networks and investors, grantwriting, and providing training and awareness. Institutional Advancement Traditional opportunities for academic support still apply, with development officers within institutions continuing to promote the core campaigns presented to alumni and friends for general giving. That said, many institutions are aligning their general development and capital campaigns with new and innovative programs designed to place for-profit companies in the position to dramatically affect the undergraduate and graduate curriculum and student experience. The initial reaction by for-profit interests may stray far from the for-profit company s goal of securing research results and intellectual property rights. However, aligning strategic giving with academic departments often allows for close student interactions, such as internships, infiltration of a company s brand into the students and faculty by supporting endowments and scholarships, and even having company representatives participate as adjunct faculty members or lecturers. Similar to the trend of corporate universities, the traditional academic setting has come to embrace and welcome the influence of companies, particularly if they are known to hire graduating students on a regular basis. Considering how for-profit clients might engage at these levels may provide unique opportunities for companies to collaborate with academic institutions. Particularly, the company can influence the way
4 students are taught or the way researchers design their programs, all of which may directly affect the quality, and ultimately the competitive advantage, of the company in the marketplace in the form of access to graduates and researchers that truly understand the company and its products and vision. Entrepreneurship It seems logical, then, that many of the goals and objectives of academic institutions and for-profit companies would be enhanced by having programs within the institution directed to tapping into the entrepreneurial spirit of the faculty and student populations. In addition to providing students a framework for learning the elements of entrepreneurship venturing, these programs provide outlets for innovation within the institutions. Often, close coordination between the intellectual property management, research enterprise, and entrepreneurial groups helps provide a productive context for for-profit company participation. Several formats are available to, and often encourage, participation by for-profit companies; these include: Incubators and Accelerators Attorneys with early stage clients may benefit from business incubator and accelerator programs offered or supported by many academic institutions. Incubators provide support to startups and companies by providing key infrastructure, business advice and counseling, and related services, typically at a reduced flat rate, for their participants. Accelerators are similarly focused but are typically shorter term and often invest in the participating companies with which they work. These programs address the needs of many of the institution s constituents students and faculty but often they allow access by any company having a collaboration or affinity to research programs or communities where the institution is based. Incubator and accelerator models have even been implemented or sponsored by large corporations, often providing a framework, such as an industry focus, to the nature of the business that is addressed. In addressing the entrepreneurial activities of an academic institution, incubators and accelerators offer for-profit companies and entrepreneurs efficient access to many of the promising new ventures associated with an academic institution or its community. Business Plan Competitions For-profit companies and entrepreneurs may discover a rich source of deal flow and investment opportunities by participating in or supporting business plan competitions held by many academic institutions. Often these competitions are tied to the business accelerator or incubator frameworks discussed above. These events will typically involve an invitation for submissions of business plans for student or alumni startup companies, faculty startups or even technology-specific companies looking for investment or relationships. Applicants, sponsors and judges offer tremendous access to networks for investment and collaboration. For example, the Rice University Business Plan Competition, among the largest graduate-level student startup competitions, attracts venture capitalists and other investors from around the country to volunteer their time to judge the competition and provide advice to the participants. Judges evaluate the teams as real-world entrepreneurs soliciting startup funds from early stage investors and venture capital firms. Regularly, these judges consider investing in a team that competes or referring a team to a third-party investor. Smaller business plan competitions at other academic institutions provide noteworthy insights into the institution s core strengths while highlighting the accomplishments of its students and alumni. Oberlin College, as a small liberal arts college in Ohio with a relatively small research enterprise and no
5 business school has recently concluded the third year of its accelerator and competition, LaunchU, providing a surprisingly high number of quality ventures from its students and alumni, including opportunities in social ventures, digital media, ed-tech and smart building technologies. Increased investor and corporate participation has ensured that these events are well-attended, providing invaluable access for students, faculty, alumni and companies alike. Mentorship One of the greatest benefits of these entrepreneurial activities takes the form of mentoring programs, often established alongside the competitions. For-profit companies, in considering levels of collaboration with academic programs, may have opportunities to deploy their leadership to help mentor and coach entrepreneurs and inventors. In addition to deal flow, these engagements help build relationships with the underwriting institutions, and also ensure that students receive critical, real-world experience deemed so important to the companies that hire them. Conclusion Maximizing a for-profit company s relationship with academic institutions can often reach far beyond a simple license agreement. The various forms of collaborations discussed above are building blocks for long-term and trusting relationships. The levels of participation are not always about donations or royalties. Rather, if properly aligned, collaborations with academic institutions can enhance the reputation of the for-profit company and provide critical access to future talent and subject matter. Patience in business dealings, coupled with a working knowledge of the mechanics of such institutions, will prevent (or significantly reduce) the frustrations that many for-profit interests experience in such collaborations. Academic institutions, whether motivated by the next generation of faculty research, the entrepreneurial student population, or the federal granting agencies embracing the fundamentals of an innovation-based economy, have begun to expand beyond the passive technology transfer exercise in favor of an integrated climate of directing their research and entrepreneurial programs to collaborate successfully with the for-profit companies that support them. By K. Lance Anderson, Ross Spencer Garsson and Darrell R. Windham, Greenberg Traurig LLP Lance Anderson is of counsel in Greenberg Traurig's Austin, Texas, office and previously technology commercialization director for the Texas Tech University System, after which he served as in-house counsel for a venture capital company focused on university-based ventures. Ross Garsson is a shareholder in the firm's Austin office. He has worked with the Richard E. Smalley Institute for Nanoscale Science and Technology at Rice University and the Alan G. MacDiarmid Nanotech Institute at the University of Texas at Dallas. Darrell Windham is co-managing shareholder of the firm's Austin office and chairman of its Texas corporate and securities practice. The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice. All Content , Portfolio Media, Inc.