KNOWLEDGE ECONOMY FORUM VI Supporting University Spin-Offs via

KNOWLEDGE ECONOMY FORUM VI Supporting University Spin-Offs via IPR policies: from Ideas to Profits Patrick Farrant

Why ideas matter… =?

Ideas are different “If you have an apple and I have an apple and we exchange apples, then you and I will still have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas. ” George Bernard Shaw

What is Intellectual Property? “The rights of the creator in the product of his or her creative intellect. These rights confer on the creator (or the owner) the exclusive right to use that product or to permit someone else to use it. ” …Intellectual Property protects ideas

IP Assets • Registered Rights – patents – trade marks – registered designs – domain names • Unregistered Rights – trade marks – know how/confidential information – design right – database rights – copyright

Why have IP? • Incentive function: rewards inventiveness (monopoly rights are granted) • Transactional function: allow intangibles to be exchanged • Disclosure function: an instrument for the dissemination of knowledge (for the public good) • Signalling function: indication of innovation so as to enable capital to be raised • Inherent trade off between the rights and the consequences of the monopoly: it is a balance • But not without controversy: – Ethics, freedom to research, TRIPS issues

IP in context Science IP Business Law The output of a synergistic interaction…

Increasing importance of IP “In today's knowledge economy , IP has never been more important for securing … prosperity. . . It is estimated that 70 per cent of a typical company’s value lies in its intangible assets…and the number of patent applications have more than doubled at the EPO in the last ten years” The Gowers Review of Intellectual Property, 2006

Universities as engine rooms • Universities and research institutes: – carry out basic research – educate – AND are engine rooms for great technology • DNA sequencing, computer memory, web search all came from universities • Challenge: how to turn great technology into successful business • Stanford spin-outs include Google and Sun Microsystems!

UK University Spin-outs 590 UK university spin-outs, representing 12% of UK venture capital finance

What if you get it wrong? • DNA structure, DNA sequencing, m. Ab production came from UK universities…but the economic benefits mainly generated in the US • Why: – Failure to recognise the potential? – Philanthropy? – No entrepreneurial culture? – No IP policy?

University Technology Transfer Offices

Models for technology transfer • You will hear about Cambridge and Imperial • Models typically fall into: – Publicly, or separately owned company – Joint venture – Wholly owned company – Department within a University – Team within a Department • Whatever the model, investment experience is critical - Library House analysis show a gain of over 50% in technology transfer efficiency if staff have investment experience

Investment experience uplift

Case Study: Babraham Institute • Injection of £ 1 million investment from Avlar Bio. Ventures Fund II LLP to form and fund new early-stage life sciences companies associated with the Babraham Research Campus • 10 -year pipeline agreement with the Babraham Institute giving it the right to form companies around intellectual property created at the Institute • Around 330 staff work at the Institute Babraham is ranked #4 in the UK by citation in its areas of research specialism • 41 companies have been associated with the Babraham Research Campus since 1998 and these companies have raised in excess of £ 150 m investment.

Making it happen: a lawyers view • Bring together: – The ideas (IP) – The people (founder scientists and managers) – The opportunity (the business plan) – The capital (the investors) • Put it all into a vehicle: the spin-out company • Documents: – IP assignment, tax structuring, employment contracts, shareholders agreement, share options, ….

IP ownership: a key issue • NO ONE will invest (or licence-in) unless: – There is IP – It is good IP (broad scope) – Clarity as to who owns the IP – Can be distinguished from competitors IP • Farrant’s law based on involvement in 20 plus spinouts over past 5 or so years! • Predicted that to get a new drug onto the market in 2010 will require $2 billion investment; justifying that investment requires certainty over the IP monopoly, so to ensure a proper return

To get from ideas to profit you need • Strong IP system (national) • Strong IP policies (university) • Culture of commercialisation • Experienced technology transfer professionals • Clear IP ownership …. and of course a world beating idea!

Thank you Taylor Vinters Merlin Place Milton Road Cambridge CB 4 0 DP patrick. farrant@taylorvinters. com +44 1223 225181