UPEI Intellectual Property Commercialization Process

The following information is provided as a supplement to the UPEI Intellectual Property Commercialization Process Flowchart.

The initial step in any technology transfer/ commercialization process is the “idea” stage. This is when an Inventor comes up with an idea to create something novel which she or he then works to reduce to practice, using funds which are obtained from a variety of sources (1).

 

INITIATING RESEARCH CONTRACTS

 

The Office of Research Development (ORD) works with all third parties to negotiate contracts and reviews all awards for research funding. Researchers should be aware however, that many funding agreements, especially industry-sponsored research awards, may impose conditions on the funding. These conditions vary, but often revolve around the ownership and commercialization of the Intellectual Property which results from the research. While UPEI will work with funders to negotiate the best agreement for all parties involved, that is for the Researcher, the University, and the Funder, ultimately the Researcher must decide if he or she can accept the conditions of the funding. For faculty who are members of the Faculty Association, the Association may offer advice with respect to the IP aspects of this decision. If the Researcher does not find the conditions acceptable, the University will not sign the funding agreement (2) (see Contract Policy)

If the Researcher accepts the terms of the Funder, the University will execute the funding agreement and the Researcher will have these funds available to conduct his or her research. ORD can also assist the Researcher when the outcome of the research conducted is the generation of an “invention” (3).

 

DISCUSSING YOUR INVENTION WITH THE ORD

When a researcher generates results which he or she believes constitute an invention [or Intellectual Property (IP)], those results should be discussed with the Technology Transfer Officer in ORD (4). During this meeting the Technology Transfer Officer will gain an understanding of the invention by asking questions to determine what the invention does, how it works, what it can be used for, what the inventor feels is “novel” about the invention, and what future development of the invention the Inventor plans to pursue. From this meeting, and after some preliminary evaluation of the potential IP, the University is able to make an initial assessment, from a commercialization perspective, as to whether the invention is at a stage to move forward or whether further research is required before the invention can hold any commercial value (5).

The initial discussion/disclosure of an invention with ORD, coupled with a positive preliminary assessment of its IP potential by the University, does not necessarily mean that the Inventor wants to commercialize her or his invention. According to University policy, for the process to continue the Inventor must want to pursue commercialization.(6) If he or she does, then the technology transfer process proceeds. Otherwise, the process stops here (7). However, if the Researcher decides at a later time that she or he would like to pursue commercialization of this invention, or any other, the process will begin again, starting at the disclosure stage.

 

INVENTION DISCLOSURE

 

When an Inventor decides they would like to pursue commercialization of the invention, he or she must fully disclose that invention to the University. The disclosure process (8) involves a more formal meeting with the Technology Transfer Officer from ORD, and completing the confidential documentation that sufficiently describes all of the details of the invention, including:

  • Names of all Inventors and Contributors to the invention, both from UPEI and external (if applicable);
  • A practical description of the invention and the research done to create it, as well as identifying what the Inventor thinks makes the invention unique, its applications, its target market, its stage of development, any alternative products on the market which do the same job, and the advantages of this invention over any current solutions which may exist;
  • Any relevant background literature or other publications (including patents) identified by the Inventor; and
  • A list of all funding sources which were used to complete the research which lead to the generation of the IP.

 

TECHNOLOGY ASSESSMENT

 

Upon receiving this disclosure, the University, through ORD, will conduct an evaluation of the commercial potential of the technology, assessing the risks and benefits to the University in lending its support to the commercialization process (9). This evaluation involves asking the following questions:

  • “Is it possible to sufficiently protect the IP so that it is attractive to a potential licensee?” This is done through patent and literature searching;
  • “Is the target market of a sufficient size and value to justify the financial and time investment which will be required to bring the invention to market?” This is done through a market study;
  • “What is the stage of development of the technology and what might be required to make it ‘market-ready’”; and
  • “Is the Inventor a champion for the commercialization process and does she or he want to work with ORD throughout the technology transfer process?”

Based on this Technology Evaluation, the University will decide if it will accept the risks and pursue commercialization of the IP (10). Factors which could prevent the University’s involvement are, for example, the identification of issues around patentability or other suitable forms of IP protection, and/or the inability to identify a significant market.

If, after the formal technology assessment, the University determines that the technology is not sufficiently developed to seek IP protection or otherwise pursue commercialization, but feels that, with further development, the technology may have commercial potential, the University will advise the Inventors of this, including providing an explanation of what they feel it lacks as presented. It will be suggested to the Inventors that they re-disclose the technology to the University after generating additional supporting data (4). Further development of the technology by the Inventors may lead the University to complete a new evaluation, at which time the University may elect involvement in the invention’s commercialization.

However, if after the formal technology assessment the University has decided that the disclosed technology meets the IP and market assessment criteria required for UPEI to participate in the commercialization of the invention, and that therefore the University is willing to accept the risks associated with commercialization of the invention, and if the Inventor’s answer is “yes” to wanting to work with UPEI (11), then UPEI and the Inventor will work together through the technology transfer process to commercialize the invention (13). On the other hand, if the University declines the technology, or if the Inventor does not wish to work UPEI, the Inventor may independently pursue negotiation of ownership rights and commercialization of the invention (12). In this case, the ORD may be able to provide some assistance to the process in a consultative capacity, but all financial resources will need to be supplied by the Inventors.

RESEARCHER AND UPEI WORKING TOGETHER TOWARDS COMMERCIALIZATION

 

Where the Inventor and UPEI will work together to commercialize the invention (13), UPEI will first secure the ownership rights to the technology. This will involve the Inventor(s) assigning their rights to the technology to the University (14). By this contract of assignment, ownership of the Intellectual Property is transferred from the Inventors to the University. However, the Inventor continues to retain his or her “inventorship” as well as the right to share in any financial rewards earned by the University from the commercialization of the invention, as per University policy (25). In exchange for this assignment, the University will assist the Inventors by managing the commercialization process, in consultation with the Inventors, and by bearing costs and financial risks associated with obtaining IP protection and marketing the technology (15). The University and the Inventor will share any net financial benefits realized by the commercialization process (24).

 

Financing

 

As the University actively commercializes the technology, financing must be considered at every stage (16). Traditional research funding sources support the invention until it reaches the point of disclosure (8). However, once commercialization is pursued, significant capital is required to finance the ongoing aspects of the commercialization process, and additional sources must be sought, typically from a combination of many sources including:

  • government programs, grants and/or loans (provincial and federal, such as CIHR I2I, NSERC POP, AIF, TechPEI, Springboard POC and Patent Fund, and IRAP);
  • partners, who takes a direct stake in the IP as well as an active role in its commercialization;
  • licensees, who have been targeted as a market for the IP and who may be attracted to invest in the IP in exchange for having some specified rights over its use;
  • angels, who are willing to invest passively and speculatively in the IP while leaving the management of the commercialization largely in the hands of others;
  • venture capital, who invest substantially in IP that is fairly well developed in exchange for substantial control, restrictions and reporting requirements over further development and commercialization;
  • the inventor’s own resources; and
  • UPEI and other proprietary owners of the technology, if there are any.

Initially, capital may be required to further develop the invention so that sufficient IP protection can be sought (17). This may include prototype development, field-testing, and other proof of concept and prop of principle work, all which ultimately may increase the value of the IP.

IP Protection

IP protection will be pursued (18), again adding value to the technology. This is most commonly done through patenting, but other methods, such as copyright, trademark, plant breeder rights, industrial design, or integrated circuit topography, that may be suitable in some instances. In certain situations, traditional IP protection means may not be required, and the technology can be suitably marketed by trade secret. ORD will be able to provide an IP protection strategy.

While pursuing patent protection, Inventors may be asked to temporarily refrain from publishing or otherwise presenting research results. Novelty is a requirement for patentability, which means that the invention must not have been disclosed to the public prior to the filing of a patent application. Once the application is filed, and the IP protected, Inventors may be free to publish and discuss their methods and results. Again, ORD will provide guidance to Inventors on this process to ensure that there are no unnecessary delays.

Marketing and Licensing the Technology

Once the IP is protected, the University can actively market the technology (19) and potentially generate revenue. The technology could be marketed to:

  • license the IP to a third party (20), which may be a spin-off company; and/or
  • create a spin-off company to exploit the IP (21); or
  • sell the IP outright to a third party (22).

Licensing

When licensing the IP (20), multiple license types may be negotiated. These range from a single, world-wide, exclusive license, where one entity has the exclusive right to make and use the technology, to a more limited non-exclusive license, which may be valid only for a specific geographical region or field of use. If the license negotiated is non-exclusive, the University may license to multiple companies. In return for the license, the University will obtain revenues through licensing fees, royalties and/or milestone payments. Regardless of the type of license, the University will ensure that the Inventors and the University are granted a non-exclusive, royalty-free, irrevocable, non-transferable right to use the IP for research and teaching purposes.

Depending on how entrepreneurial the Inventor is, he or she may want to form a spin-off company to exploit the IP (21). This would be a company in which the Inventor would typically have a large stake. The University would assist with the formation of this company. A license to use the technology would be negotiated with the University, as would be done with any third party (20). Both licensing of the technology to a third party and licensing it to a newly created start-up would require ongoing business management and support, which would be provided through the University and with the Inventor.

Even after the initial patenting or licensing of a technology, the technology may be further developed (17). This development may be an improvement of the current invention, or may lead to a completely independent invention. This could lead to the application for additional patents, which the University in turn may be able to commercialize, either alone or as part of an expanded IP portfolio, to a current licensee.

Ongoing Business Management

The filing of patents and other IP protection, marketing of the technology, licensing of the technology, and/or the formation of a spin-off company which will exploit the technology, all require ongoing business management (23). Such expertise will be made available to the University Inventors as a part of their benefit of assigning the rights to the technology to the University (14).

Alternatively, the technology may be sold outright. In this case, in exchange for a lump sum payment, the technology and all rights would be sold and assigned to another party (22). Here, the same as if the IP were licensed, the University will ensure that the Inventors and the University are granted a non-exclusive, royalty-free, irrevocable, non-transferable right to use the IP for research and teaching purposes and that net revenues are distributed.

REVENUE SHARING

Ultimately, the goal of commercialization is to generate revenue through the exploitation of the invention. The amount of time for this revenue to be realized will depend on the stage of development of the invention, and the marketing and commercialization strategies employed. Once revenues are generated, the University will need to distribute them (24). University policy states that any net revenues realized by the University from the commercialization of an invention will be split between the Inventor(s)(25) and the University (26) at a 50/50 ratio. Net revenues are the income to the University from the commercialization, after the deduction of all costs paid by the University for obtaining patents or any other form of protection of the IP, including maintenance fees, as well as any costs associated with the marketing and licensing of the IP, independent of the regular operating costs of ORD. In the case of an invention with multiple Inventors, the Inventors must decide how their portion of the net revenue will be divided among them. Inventors may also elect to include other “Contributors” to the technology, who may not be actual “Inventors”, yet who played a significant role in the development of the technology, in benefiting from the Inventors’ portion of the net revenues realized (25). This split should be determined at the point of assignment (14) of the technology to the University, and may be done with the assistance of ORD.