Table of Contents. Technology Transfer Advisory Committee 2 Message from the Executive Director 3

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3 Table of Contents Technology Transfer Advisory Committee 2 Message from the Executive Director 3 Technology Transfer Activity and Financial Information Introduction 4 Technology Transfer Activity 5 Invention Reporting 5 Patent Activity 6 Licensing and Related Activity 8 Start-Up Company Formation 11 Technology Transfer Income 12 Total Income from Licensing 12 Royalty and Fee Income 13 Payments to Joint Holders 14 Income Associated with Patent/Legal Expenses 14 Technology Transfer Expenses 15 Legal and Other Direct Expenses 15 Income Distributions 16 Inventor Shares 16 General Fund Share 16 Research Allocation Share 17 Income After Mandatory Distributions 17 UC Technology Transfer on the Web 24 1

4 2009 Technology Transfer Advisory Committee General oversight of the UC Technology Transfer Program is under the purview of the Technology Transfer Advisory Committee (TTAC). This standing committee is chaired by the Executive Vice President for Academic Affairs, and meets periodically to advise the UC President on technology transfer policy and guide the direction of the overall program. Kathryn A. Atchison Steven V.W. Beckwith Alan B. Bennett Arthur B. Ellis Sherylle Mills Englander Cheryl A. Fragiadakis Warren M. Gold Theodore Groves Charles F. Louis Bruce H. Margon Richard Miller Norman J. Oppenheimer Lawrence H. Pitts Michael Reese Hans Schöllhammer Vice Provost, Intellectual Property and Industry Relations, and Associate Vice Chancellor for Research, UCLA Vice President for Research and Graduate Studies, UCOP Professor, Plant Sciences, UCD Vice Chancellor for Research, UCSD Director, Office of Technology & Industry Alliances, UCSB Department Head, Technology Transfer and Intellectual Property Management, LBNL Professor, Medicine, UCSF Professor, Economics, UCSD Vice Chancellor for Research, UCR Vice Chancellor for Research, UCSC Associate Vice Chancellor for Research, UCM Professor, Pharmaceutical Chemistry, UCSF Interim Provost and Executive Vice President for Academic Affairs, UCOP Associate Vice President - Business Strategies, UCOP Professor, Global Economics & Management, UCLA P. Martin Simpson University Counsel, UCOP Richard B. Standiford Julie M. Stein William T. Tucker Mark W. Warner Associate Vice President for Agriculture & Natural Resources, UCOP Executive Director, Industry-University Cooperative Research Program, UCOP Executive Director, Innovation Alliances & Services, UCOP Associate Vice Chancellor for Administration, UCI A. Eugene Washington Executive Vice Chancellor & Provost, UCSF Fiscal Year 2009 Office of the President Executive Vice President, Academic Affairs Innovation Alliances and Services 1111 Franklin Street, 5th Floor Oakland, CA

5 Message from the Director In fiscal year 2009, despite the most severe global economic downturn of the past 75 years UC s technology transfer program continued to grow, highlighting the quality and commercial relevance of the inventions created by our researchers. UC s portfolio of active inventions increased by 4.4% to 9,343, while the portfolio of US patents owned by UC increased by 2.0% to 3,617. The total number of active license agreements increased 1.0% to 1,932; the number of inventions covered by a utility license or option agreement increased by 5.1% to 2,226. These statistics show that our decentralized campus-based licensing operations supported by services from the Office of Research and Graduate Studies (ORGS) are serving UC well and helping to create the public benefit that is an integral part of our land-grant mission. In response to a Technology Transfer Advisory Committee (TTAC) subcommittee report on metrics for technology transfer operations, in this Annual Report we are including two statistics for the first time. The first is the total number of inventions licensed or optioned (mentioned above). Rather than the number of executed licenses or options, the number of inventions licensed or optioned better measures the flow of inventions from the university to industry (the fundamental goal of technology transfer), as it accounts for new inventions added to existing license agreements. The second is the number of start-up companies formed. Start-up companies based on UC inventions can create local economic development and strengthen California s overall leadership in technology-centric industries. Over the past three decades, start-ups based on UC innovations have helped create and grow California into the global biotech leader; in the future, start-up companies founded on UC inventions may create and grow industry-leading clusters in field such as clean energy and nanotechnology. In FY09, Innovation Alliances and Services (IAS) organized our sixth System-Wide Technology Transfer Forum focused on stem cells and regenerative medicine which attracted almost 300 attendees. This meeting was organized in conjunction with the local Canadian and United Kingdom Consulates with 40 speakers and panelists from UC, Canada, and the UK. FY09 also marked the completion of restructuring efforts within ORGS to better support UC s research enterprise by, among other things, integrating technology transfer with other university-industry interactions, creating greater accountability, and more effectively communicating the vital role innovation transfer to the private sector plays in creating and sustaining California s technology-based economy. Consistent with this vision, the Office of Technology Transfer changed its name to Innovation Alliances and Services (IAS) to reflect an expanded charter to support the broad spectrum of interactions that comprise industry-university relationships. IAS will continue to support transactional elements of systemwide technology transfer operations, with the policy support and legislative analysis functions related to intellectual property matters being managed by ORGS new Research Policy Analysis & Coordination (RPAC) unit. Sincerely, William Tucker Executive Director, Innovation Alliances and Services 3

6 Technology Transfer Activity and Financial Information Introduction This document reports technology transfer activity and associated financial results arising under the University of California s Patent Policy for Fiscal Year UC s technology transfer program, administered by the offices listed on the right, operates under a model of distributed responsibilities and authorities that balances activities carried out by the central UC Office of the President (UCOP) with activities carried out by offices at the individual UC campuses and at the Lawrence Berkeley National Laboratory (LBNL), a US Department of Energy (DOE) Laboratory managed by the University. Under this distributed approach, the campuses and LBNL develop and shape technology licensing programs to fit their unique needs as put forth in memoranda of understanding negotiated with UCOP. In all instances, UCOP retains responsibility for certain functions, such as policy development and guidance, legal oversight, legislative analysis, information management, and a variety of other services in support of the overall program. UCOP s activities are coordinated by the Innovation Alliances and Services (IAS) unit within UCOP s Office of Research and Graduate Studies. Although LBNL manages most of its own inventions, IAS oversees a small portfolio of older inventions from LBNL and another DOE Laboratory historically associated with UC, the Lawrence Livermore National Laboratory. Most of these cases have co-inventors from the UC campuses. Also, IAS manages a portfolio of inventions for UC Merced. This Annual Report covers two distinct technology portfolios: the UC campus portfolio and the LBNL portfolio. Information relating to these two portfolios is reported separately because certain aspects of technology transfer are different at LBNL as compared to the rest of the University. These differences include a reporting period for LBNL which covers a fiscal year ending September 30, 2009, as compared to June 30, 2009, for the rest of the University. Also, while LBNL manages intellectual property in a way that is generally consistent with the principles and practices of the rest of UC, there are some important operational differences, such as LBNL s greater reliance on in-house patent attorneys. University of California Technology Transfer Offices UC Office of the President (UCOP) Innovation Alliances and Services (IAS) UC Berkeley (UCB) Office of Intellectual Property & Industry Research Alliances (IPIRA) UC Davis (UCD) UC Davis InnovationAccess UC Irvine (UCI) Office of Technology Alliances (OTA) UC Los Angeles (UCLA) Office of Intellectual Property & Industry Sponsored Research (OIP-ISR) UC Merced (UCM) Office of Technology Transfer (OTT) UC Riverside (UCR) Office of Technology Commercialization (OTC) UC Santa Barbara (UCSB) Office of Technology & Industry Alliances (TIA) UC Santa Cruz (UCSC) Office for Management of Intellectual Property (OMIP) UC San Diego (UCSD) Technology Transfer Office (TTO) UC San Francisco (UCSF) Office of Technology Management (OTM) Lawrence Berkeley National Laboratory (LBNL) Technology Transfer and Intellectual Property Management (TTIPM) 4

7 TECHNOLOGY TRANSFER ACTIVITY Invention ReportinG During the twelve-month period ending June 30, 2009, 1,482 inventions were disclosed by faculty and researchers at the ten UC campuses; a decrease of 1.0% over the number of inventions reported in FY08 (Exhibit 1). Exhibit 2 INVENTION DISCLOSURES BY CAMPUS* Year Ending June 30, 2009 UCSF 151 UCB 131 UCD 172 Exhibit 1 INVENTION Disclosures* ,304 1,308 1,411 1,497 1,482 UCI 112 UCLA 333 UCM 21 UCR 60 UCSB 92 UCSC 27 UCSD FY05 FY06 FY07 FY08 FY09 *Invention disclosures managed by IAS and by the campus offices. See Exhibit 28 for LBNL s invention disclosures. UC San Diego increased its new disclosures by 66 inventions (from 330 in FY08 to 396 in FY09). Other campuses with increases included UC Los Angeles, with an increase of 19 inventions (from 314 in FY08 to 333 in FY09); UC Merced, with an increase of 9 inventions (from 12 to 21), UC Riverside, with an increase of 7 inventions (from 53 to 60); and UC Santa Cruz, with an increase of 3 inventions (from 24 to 27). The campus distribution of newly reported inventions for FY09 is shown in Exhibit 2. During the twelve-month period ending September 30, 2009, 109 inventions were disclosed by inventors at LBNL, a decrease of 21 inventions from the 130 disclosed in FY08. * Inventions having inventors from more than one campus are counted multiple times, once for each campus with an inventor. As of June 30, 2009, the systemwide invention portfolio (excluding LBNL) was comprised of 9,343 active inventions. The size of each campus invention portfolio is indicated in Exhibit 3. Exhibit 3 CAMPUS INVENTION PORTFOLIOS* As of June 30, 2009 UCB 1,067 UCD 913 UCI 782 UCLA 1,700 UCM 43 UCR 260 UCSB 615 UCSC 154 UCSD 2,610 UCSF 1,350 * Inventions associated with inventors from more than one campus are reported multiple times in this exhibit. 5

8 Technology Transfer Activity and Financial Information Patent Activity UC has received more US patents than any other university in the world. A patent is a form of legal protection granted by the US or a foreign government that gives a patent holder the right to exclude others from making, using, selling, or importing the patented invention for a defined period of time, generally twenty years from the date the patent application is first filed. Both US and foreign patent rights often must be pursued for an invention in order to maximize the likelihood of successful commercialization. Acquiring adequate patent coverage for all aspects of a new technology may require more than one patent filing for a given invention. Often, a first filing in the US takes the form of a provisional application, a type of filing which preserves US patent rights and secures the benefits of an early filing date for a period of 12 months at a relatively low cost as compared to the cost of filing a regular application. A provisional filing is likely to be made during the time period when the invention is being marketed to potential licensees. Once a license agreement is in place, the licensee usually bears the cost of seeking and maintaining patent protection. Secondary filings frequently lead to the issuance of multiple patents related to a single invention. Secondary filings are necessary in order to cover all aspects of the invention and may include the filing of divisional applications and of continuation applications where new matter is added. Several years will elapse between a filing and the issuance of a patent by the patent office. Patent activity at the ten UC campuses for FY09 is presented in Exhibit 4. The number of US first filings increased by 4.5% compared to 623 in FY08, while the number of secondary filings declined by 1.1 % from 530 in FY08. Foreign patents issued increased by 42.5% from 353 in FY08. Exhibit 4 PATENT ACTIVITY* Year Ending June 30, 2009 U.S. Applications Filed First Filings Provisional 613 First Filings Regular 38 Secondary Filings Provisional 119 Secondary Filings Regular 405 Total 1,175 Subtotal First Filings 651 Subtotal Secondary Filings 524 Subtotal Provisional Filings 732 Subtotal Regular Filings 443 First Foreign Filings** 277 US Patents Issued 244 Foreign Patents Issued 503 * Patent activity related to inventions managed by IAS and by the campus offices. See Exhibit 28 for LBNL s patent activity. ** An invention is counted only one time in the first foreign filings category regardless of the number of countries in which foreign patent protection is sought. Exhibit 5 shows the number of US patents issued to UC in the past five years for its campus inventions, with the number of US patents issued increasing 8.9% (from 224 to 244) in FY09 as compared to FY Exhibit 5 US PATENTS ISSUED TO UC* FY05 FY06 FY07 FY08 FY09 * US patents issued related to inventions managed by IAS and by the campus offices. See Exhibit 28 for LBNL s US patents issued. 6

9 LBNL s patent activity is shown in Exhibit 28. US patent filings for the fiscal year ending September 30, 2009, increased by 4.4% over FY08, from 135 to 141. These included 61 first filings, of which 58 were provisional filings; and 80 secondary filings, of which 11 were provisional filings. 26 US patents were issued during the fiscal year ending September 30, 2009, for LBNL inventions, as compared to 18 US patents issued for LBNL inventions in FY08. At the end of FY09, there were 3,617 US and 3,696 foreign patents in the systemwide portfolio for its campus inventions (Exhibit 6). The total number of foreign-filed patents continues to exceed the total number of US-filed patents, having first overtaken the total number of USfiled patents in FY06. The number of US patents in each campus portfolio is presented in Exhibit 7. Because of the substantial lag time between invention disclosure/filing and patent issuance, UC Merced, which received its first invention disclosure in FY06, has not yet had a patent issued for its inventions ,275 3,168 FY05 U.S. Exhibit 6 TOTAL UC PATENT PORTFOLIO* 3,316 FY06 Foreign 3,692 3,757 3,425 FY07 3,546 3,597 FY08 3,696 3,617 FY09 * Patent portfolios at year-end related to inventions managed by IAS and by the campus offices. Exhibit 7 CAMPUS US PATENT PORTFOLIOS* As of June 30, 2009 UCB 569 UCD 414 UCI 267 UCLA 581 UCM 0 UCR 84 UCSB 325 UCSC 72 UCSD 611 UCSF 744 * Patents associated with inventors from more than one campus are reported multiple times in this exhibit. 7

10 Technology Transfer Activity and Financial Information Licensing and Related Activity A license agreement grants a licensee access to a University invention in exchange for the licensee s commitment to further develop and commercialize the invention. Utility licenses generally cover useful processes, machines, manufactured items, or compositions of matter protected by utility patents and are likely to be licensed exclusively. In contrast, plant licenses cover sexually and asexually reproduced plant varieties and most are licensed non-exclusively to multiple growers and distributors worldwide. The provisions of the license define the rights and responsibilities of the two parties. In the typical utility license agreement, the licensee is granted access to an early stage invention that is protected by a UC patent or patent application. In other instances, such licenses grant property rights to materials developed by UC. In exchange, the licensee makes a commitment to commercialize the invention and to pay UC agreed-upon fees, including reimbursement of patent expenses and royalty payments when products reach the marketplace. The specific terms of the agreement are determined through a complex negotiation process. In managing these license agreements, UC must collect monies when due and monitor progress to ensure that the licensees exercise due diligence in developing inventions toward commercial application. Prior to the execution of a license, certain shorter-term agreements are sometimes executed. A secrecy agreement is used in conjunction with marketing and affords a potential licensee access to confidential information that assists the company in determining if it has an interest in pursuing a license for a given technology. In FY09, UC entered into 708 secrecy agreements for its campus inventions (LBNL entered into 160 secrecy agreements during its fiscal year). A letter agreement generally is used to confirm a company s intent to negotiate a license and often commits a company to pay certain fees or patent costs while negotiations are underway. Option agreements protect a licensee s interest in an invention while more in-depth technical or marketing research is performed. Exhibit 8 shows licensing activity for campus inventions in FY09. With regard to agreements, UC entered into 403 new licenses and related technology transfer agreements, including 148 utility license agreements, 63 plant license agreements, 26 option agreements, and 166 letter agreements. During its fiscal year, LBNL entered into 10 utility license agreements and 7 option agreements (Exhibit 28). Exhibit 8 LICENSING ACTIVITY* Year Ending June 30, 2009 Agreements Issued Letters of Intent 166 Options 26 Utility Licenses 148 Plant Licenses 63 Total Active Licenses (year end) Utility Licenses 1,336 Plant Licenses 596 * Licensing activity related to inventions managed by IAS and by the campus offices. See Exhibit 28 for LBNL s licensing activity. As of June 30, 2009, the systemwide portfolio (excluding LBNL) totaled 1,932 licenses, an increase of 1.0% over the total at the close of FY08. The LBNL portfolio totaled 63 licenses as of September 30,

11 ,114 Exhibit 9 TOTAL UTILITY LICENSES* 1,200 1,315 1,359 1,336 Exhibits 9 and 10 show the five year trend in the size of the utility and plant license portfolios for campus inventions. The utility license portfolio had been continuously increasing for many years, but in FY09 showed a decline of 1.7% to 1,336 utility licenses as compared to FY08. UC continues to work with its licensees around the world to explore opportunities for gaining intellectual property protection and commercializing selected strawberry and other plant cultivars in countries where such intellectual property rights have not previously been available. In regard to the distribution of plant licenses among the campuses, UC Davis has 469 plant licenses in its portfolio and UC Riverside has FY05 FY06 FY07 FY08 FY09 Exhibit 11 shows the number of utility license agreements associated with each campus. * Total utility licenses at year-end related to inventions managed by IAS and by the campus offices. Exhibit 10 Exhibit 11 TOTAL UTILITY LICENSES BY CAMPUS* Year Ending June 30, 2009 TOTAL PLANT LICENSES* UCB UCD 99 UCI 81 UCLA UCM 3 UCR 28 UCSB UCSC 11 0 FY05 FY06 FY07 FY08 FY09 UCSD 286 UCSF 328 * Total plant licenses at year-end related to inventions managed by IAS and by the campus offices. * Licenses associated with inventors from more than one campus are reported multiple times in this exhibit. 9

12 Technology Transfer Activity and Financial Information Although a new invention is typically the subject of a new agreement when there is commercial interest in it, new inventions can also be added to existing agreements. In particular, since UC inventors often make follow-on inventions that are closely related to their earlier work, it is common for existing licenses and options to be amended in order to incorporate these follow-on inventions. In FY09, 356 campus inventions were licensed (utility) and 80 were optioned under new or amended agreements (Exhibit 12) Exhibit 13 Total LICENSed/Optioned Inventions* 2,118 1,910 1,707 1,532 2,226 Exhibit Inventions LICENSed/Optioned* Year Ending June 30, Number of Inventions Licensed/Optioned Letters of Intent 290 Options 80 Utility Licenses 356 Plant Licenses 38 * Inventions managed by IAS and by the campus offices that were licensed or optioned during the fiscal year. As shown in Exhibit 13, the total number of licensed/ optioned campus inventions at the close of the fiscal year reached 2,226 inventions, an increase of 5.1% over the close of FY08. The campus distribution of these licensed/ optioned inventions is shown in Exhibit FY05 FY06 FY07 FY08 FY09 * Total number of inventions managed by IAS and by the campus offices that are subject to a utility license or an option agreement as of the close of the fiscal year. Inventions associated with an option and a license are counted only once in this exhibit. Exhibit 14 TOTAL LICENSED/OPTIONED INVENTIONS BY CAMPUS* As of June 30, 2009 UCB 261 UCD 144 UCI 194 UCLA 429 UCM 15 UCR 62 UCSB 264 UCSC 27 UCSD 443 UCSF 418 * Inventions that are subject to a utility license or an option agreement as of the close of the fiscal year. Inventions associated with inventors from more than one campus are reported multiple times in this exhibit. Inventions associated with an option and a license are counted only once in this exhibit. 10

13 START-UP COMPANY FORMATION A technology transfer agreement such as a license, an option, or a letter of intent can be significant in spurring formation of new start-up companies, with invention rights providing an asset that is highly attractive to venture capitalists and angel investors. In the case of start-ups involving UC technologies, inventors may frequently play a critical role in founding the company. Furthermore, several UC campuses have programs for facilitating new company formation, and UCOP has hosted events to facilitate networking between UC researchers, industry, and investors. Start-ups based on UC technologies play an important role in California s economy, especially in biotechnology. A 2003 study of California s biotech firms found that one-third of them were founded by UC scientists, and one-fourth of all biotech firms in the US are located within 35 miles of a UC campus. 1 Overall, 461 start-up companies have been formed with UC campus inventions since Exhibit 15 shows recent start-up company formation involving UC inventions, with 47 start-ups being formed in FY09. Exhibit 16 shows FY09 start-up company formation by campus, with UC Los Angeles accounting for nearly half of FY09 s activity FY05 Exhibit 15 START-UP COMPANIES FORMED* 42 FY06 41 FY07 48 FY08 47 FY09 * Year of start-up company formation based on execution date of the first license, option, or letter agreement granting rights to a UC invention managed by IAS or by a campus office. Exhibit 16 START-UP COMPANIES FORMED BY CAMPUS* Year Ending June 30, Yarkin, C., & Murray, A. (2003). Assessing the Role of the University of California in the State s Biotechnology Economy: Heightened Impact Over Time. UC Industry-University Cooperative Research Program Working Paper Series. UCB 9 UCD 2 UCI 4 UCLA 22 UCM 1 UCR 0 UCSB 4 UCSC 0 UCSD 7 UCSF 0 * Year of start-up company formation based on execution date of the first license, option, or letter agreement granting rights to a UC invention managed by IAS or by a campus office. Start-up companies formed with inventors from more than one campus are reported multiple times in this exhibit. 11

14 Technology Transfer Activity and Financial Information TECHNOLOGY TRANSFER INCOME Total Income from Licensing Total income from licensing for UC s campus inventions the income the University receives from its technology agreements with industry was $121.4 million in FY09 (Exhibit 17) if one excludes $4.6 million received in FY09 for litigation settlements. This FY09 total licensing income represents a 5.5% decrease from FY08. There are two components of total licensing income. The royalty and fee income component includes: agreement issue fees, maintenance fees, and other milestone payments received on specific dates or at specific points in the product development process. These payments encourage companies to diligently pursue product commercialization. Generally, earned royalties account for the largest portion of royalty and fee income and are received once products and processes using UC inventions reach the marketplace. Reimbursements, the second component of total licensing income, represent the recovery of patent and legal expenses. Exhibit 18 shows the amount each campus contributed to FY09 total licensing income. While most campuses experienced declines, UC Davis s contribution to total licensing income rose 18.8% from $9.1 million in FY08 to $10.8 million in FY09. Other campuses with increases from FY08 to FY09 were UC Riverside ($2.2 million to $2.5 million) and UC Santa Cruz ($0.1 million to $0.3 million). Exhibit 18 TOTAL LICENSING INCOME BY CAMPUS* Year Ending June 30, 2009 (Thousands) UCB $7,202 UCD $10,849 UCI $5,989 UCLA $29,215 UCM $63 UCR $2,502 Exhibit 17 TOTAL LICENSING INCOME* (Millions) UCSB $5,010 UCSC $320 $ $109.6 $ $ $ $ UCSD $26,631 UCSF $32,867 Other** $5, * Total licensing income consists of two components: royalty and fee income, and patent/legal reimbursements. ** Total licensing income, primarily from a portfolio of IAS-managed DOE Laboratory inventions, most disclosed prior to the establishment of the Laboratory-based licensing offices FY05 FY06** FY07 FY08*** FY09**** Patent/legal reimbursement revenue Royalty & fee income * Total licensing income consists of two components: royalty and fee income, and patent/legal reimbursements. This Exhibit shows total licensing income for inventions managed by IAS and by the campus offices. See Exhibit 29 for LBNL s royalty and fee income. ** The total licensing income reported for FY06 ($110 million) does not include an up-front payment of $100 million from the settlement of litigation. *** The total licensing income reported for FY08 ($128.4 million) does not include up-front payments and reimbursements of $42.6 million from the settlement of litigation. **** The total licensing income for FY09 ($121.4 million) does not include up-front payments and reimbursements of $4.6 million from the settlement of litigation. 12

15 Royalty and Fee Income Royalty and fee income for campus inventions in the fiscal year ending June 30, 2009, was $98.7 million when excluding $4.4 million received in FY09 for litigation settlements. This income derived from 1,947 inventions. As compared to FY08, royalty and fee income (excluding settlements) decreased by $5.5 million. In FY09, $612,833 was realized from the sale of equity previously acquired under 8 license agreements. As a result of these transactions and the execution of 14 licenses in FY09 that included equity as partial consideration, at the end of the fiscal year UC held equity related to technology transfer activities in 108 companies. Income from the top five commercialized UC inventions (i.e. inventions that had reached the marketplace and were generating royalty and fee income) contributed $47.5 million in FY09, accounting for 48.1% of total royalty and fee income (Exhibit 19). The top twenty-five inventions collectively accounted for $74.7 million or 75.7% of total royalties and fees. Inventions appearing on this list for the first time include the Tango Mandarin and the Vesicle Loading Method. Exhibit 19 UC TOP-EARNING INVENTIONS* Year Ending June 30, 2009 (Thousands) royalty & Invention (Campus, Year Disclosed) Fee Income Hepatitis-B Vaccine (SF, 1979 & 1981) $15,909 Treatment of Intracranial Aneurysms (LA, 1989) $11,427 Interstitial Cystitis Therapy (SD, 1980) $8,723 Egf Receptor Antibodies (SD, 1983) $5,947 Bovine Growth Hormone (SF, 1980) $5,488 Subtotal (Top Five Inventions) $47,494 Chromosome Painting (LLNL, 1985, 1989 & 1995) $4,102 Biodegradable Implant Coils (LA, 1998) $3,389 Firefly Luciferase (SD, 1984) $2,511 Dynamic Skin Cooling Device (IR, 1993) $2,467 Camarosa Strawberry (DA, 1992) $2,322 Energy Transfer Primers (BK, 1994) $1,504 Optical Network Switch (DA, 1997) $1,275 Albion Strawberry (DA, 2004) $1,244 Feline AIDS Virus Diagnostic (DA, 1986) $1,221 Tango Mandarin (RV, 2005) $1,130 Vesicle Loading Method (LBNL, 1984) $866 Detection of Mycoplasma (IR, 1984) $802 Ventana Strawberry (DA, 2001) $772 Aids for Learning Disabled (SF, 1994) $753 Yeast Expression Vector (SF, 1982) $573 Universal Oligonucleotide Spacer (BK, 1996) $561 Magnetic Resonance Imaging (SF, 1976) $543 Fluorescent Dyes-Calcium (BK, 1984) $482 Novel Phosphorous Fertilizers (RV, 1990) $475 Comparative Genomic Hybridization (SF, 1992)** $412 Genomic Microarrays (SF, 1995)** $412 Total Income (Top 25 Inventions)** $74,698 Total Income (All Inventions) $98,705 % of Total from Top 5 Inventions 48.1% % of Total from Top 25 Inventions** 75.7% * This list is limited to revenue-generating inventions that have been commercialized. The total income from royalties and fees shown here excludes payments from settlement of litigation. ** Because of a tie for 25th place, a total of 26 inventions are listed here. For purposes of calculating Top 25 total income, only income from one of the 25th place inventions is included. 13

16 Technology Transfer Activity and Financial Information For the fiscal year ending September 30, 2009, LBNLmanaged inventions generated $2.7 million in royalty and fee income for licenses that are under the patent policy, a slight decrease of 0.1% over the prior year. Copyright income for LBNL increased 66.2% from $512 thousand to $851 thousand as compared with FY08 (Exhibit 29). Payments to Joint Holders When an invention results from collaboration between UC and non-uc researchers, multiple entities may become joint holders of the invention-related patents. In these instances, interinstitutional agreements are often negotiated to establish which entity will manage the patenting and licensing of the invention and the collection and distribution of invention income; such collaborations are relatively common. In FY09, 307 of 1,482 new campus disclosures (20.7%) included non-uc inventors and 84 new interinstitutional agreements were signed, a 16.7% increase over FY08. In FY09, $6.2 million was redistributed to other entities for campus inventions covered by interinstitutional and other income-sharing agreements. For financial reporting purposes, these monies are treated as an offset to income. As is seen in Exhibit 20, these redistributions have increased from FY08 to FY09. Income Associated with Patent/Legal Expenses Because inventions are highly technical, UC uses specialized outside attorneys to draft and secure patent protection both in the US and abroad. Costs to secure, maintain and protect patent rights associated with an invention are substantial. Obtaining a licensee s commitment to reimburse these costs is a high priority objective of license negotiations, and reimbursements, therefore, are considered to be part of total licensing revenue. In FY09, UC received $22.7 million in patent/legal expense reimbursements related to campus inventions, excluding reimbursements associated with litigation settlements. This is a decrease of 6.2% over reimbursements received for such expenses in FY08. Exhibit 20 PAYMENTS TO JOINT HOLDERS* (Millions) $ $5.4 $5.6 $4.3 $6.1 $ FY05 FY06** FY07*** FY08 FY09 * Payments to joint-holders related to inventions managed by IAS and by the campus offices. ** The payments to joint holders reported for FY06 ($5.6 million) do not include payments of $7.9 million for the settlement of litigation. *** The payments to joint holders reported for FY07 ($4.3 million) do not include payments of $0.5 million for the settlement of litigation. 14

17 TECHNOLOGY TRANSFER EXPENSES Legal and Other Direct Expenses Legal and other direct expenses totaled $32.4 million in FY09 for campus inventions (Exhibit 21), excluding a $0.9 million credit against expenses due to litigation settlements. Most technology transfer legal expenses are associated with patent prosecution and maintenance, defined as payments to outside counsel for drafting patent applications as well as other costs for securing and maintaining patent protection for UC inventions. Other major categories of legal expenses include those for patent interference proceedings and enforcement of patent rights against infringement, and those for defense against litigation in civil proceedings. The extent of reimbursement of legal and other direct expenses is a negotiated term of a license agreement. In FY09, reimbursements of legal expenses for campus inventions (excluding litigation settlements) totaled $22.7 million, resulting in net legal expenses of $9.7 million (Exhibit 21). Exhibit 22 provides a breakdown of FY09 net legal expenses (i.e., legal expenses after reimbursements), not adjusted for settlements, by different categories of expenditure. Patent prosecution and maintenance accounted for $8.9 million of net legal expenditures, while interference and infringement actions accounted for $0.4 million. Legal defense reimbursements and credits exceeded legal defense expenditures in FY09 by $1.2 million, and are thus excluded from Exhibit 22. Patent prosecution activities accounted for a relatively large percentage of net legal expenditures in FY09, reflecting both a reduction in other expense categories and substantial reimbursements and credits due to settlements reached in prior years. Interference & Infringement 4% Exhibit 22 NET LEGAL EXPENSES* Year Ending June 30, 2009 Other 4% Exhibit 21 LEGAL EXPENSES* (Millions) $40 $34.4 $35.1 $32.8 $ $26.9 Patent Prosecution & Maintenance 92% $17.7 FY05 $10.4 FY06** FY07 FY08*** FY09 **** Gross legal expenses Net legal expenses $15.8 $8.7 $9.7 * Legal expenses related to inventions managed by IAS and by the campus offices. ** The gross and net legal expenses reported for FY06 do not include $16.2 million in legal expenses for the settlement of litigation. *** The gross and net legal expenses reported for FY08 do not include $5.8 million in gross legal expenses and $5.2 million in net legal expenses for the settlement of litigation. **** The gross and net legal expenses reported for FY09 do not include a credit of $0.9 million against gross legal expenses and do not include $1.2 million in net legal expenses for the settlement of litigation. * Net legal expenses related to inventions managed by IAS and by the campus offices. The net legal defense expense category is not included in this exhibit since there was a net credit of $1.2 million against such expenses in FY09. It is anticipated that UC s licensing personnel will continue to be successful in negotiating reimbursement of a substantial amount of patent costs. Nonetheless, it is expected that there will continue to be significant legal expenses associated with patenting and litigation as the technology transfer program matures, patent activities continue to accelerate, and relationships with inventors, sponsors and licensees become increasingly complex. Information on LBNL patenting and licensing expenses is not provided in this report. In-house patent expenses and operating expenses related to the licensing function are allowable costs under UC s current contract with DOE and are not readily separable from other LBNL expenses. 15

18 Technology Transfer Activity and Financial Information INCOME DISTRIBUTIONS The income derived from royalties and fees, less the sum of payments to joint holders and less net legal and direct expenses, is distributed in various shares as required under UC and campus policies. In FY09, income distributions related to campus inventions (excluding income and expenses associated with the settlement of litigation) totaled $82.8 million, distributed as shown in Exhibit 23. Exhibit 23 INCOME DISTRIBUTIONS* (Millions) Inventor Shares UC Patent Policy grants inventors the right to receive a portion of net income accruing to individual inventions. In FY09, 2,072 inventors received a total of $38.8 million (excluding litigation settlements) for IAS- and campusmanaged inventions. Under current policy, inventors receive 35% of net invention income. Inventor shares are calculated based on invention income and expense activity through the close of the prior fiscal year. Thus, most of the inventor shares distributed in FY09 were calculated based on invention financial activity through June 30, Trends related to the amount of inventor share payments are reflected in Exhibit 23. $ $ $77.6 $ $ $ General Fund Share The portion of UC s technology transfer income allocated to the UC General Fund totaled $10.7 million in FY09 (Exhibit 23; excluding litigation settlements). The General Fund share is equal to 25% of the amount remaining after deducting payments to joint holders, net expenses, and inventor share payments from royalty and fee income FY05 FY06** FY07 FY08*** FY09**** Income after mandatory distributions Inventor shares Research allocation share General fund share * Income distributions related to inventions managed by IAS and by the campus offices. ** The distributions reported for FY06 do not include a general fund distribution of $10.5 million, inventor share distributions of $29.1 million, nor income after mandatory distributions of $36.2 million related to the settlement of litigation. *** The distributions reported for FY08 do not include a general fund distribution of $6.0 million, inventor share distributions of $12.9 million, nor income after mandatory distributions of $18.0 million related to the settlement of litigation. **** The distributions reported for FY09 do not include a general fund distribution of $0.8 million, inventor share distributions of $2.3 million, nor income after mandatory distributions of $2.4 million related to the settlement of litigation. 16

19 Research Allocation Share The current Patent Policy requires that 15% of net royalty and fee income from each invention be designated for research-related purposes on the inventor s campus or Laboratory. These monies are used in accordance with plans developed at each campus and Laboratory. The research allocation for campus-related inventions, which is computed based on inventions disclosed on or after October 1, 1997, totaled $3.2 million in FY09 (Exhibit 23). Income After Mandatory Distributions All income derived from royalties and fees remaining after deductions for payments to joint holders, net legal and direct expenses, and other distributions, is available to the campuses subject to certain other campus-specific debits and credits for patent-related activities (not shown). This category combines expenditures that Annual Reports prior to FY07 showed separately as Operating Expense and Campus Share distributions. Income after mandatory distributions totaled $30.2 million in FY09 (Exhibit 23; excluding litigation settlements). 17

20 Technology Transfer Activity and Financial Information Exhibit 24 SYSTEMWIDE TECHNOLOGY TRANSFER ACTIVITY FY05 FY09* Fiscal Years Ending June 30 Fiscal Year Comparisons FY05 FY06 FY07 FY08 FY09 % CHANGE (FY08-FY09) Inventions Inventions Disclosed 1,304 1,308 1,411 1,497 1, % Total Active Inventions (year-end) 7,395 7,513 8,272 8,953 9, % Patent Prosecution US Applications Filed First Filings % Secondary Filings % Total 1,030 1,184 1,208 1,153 1, % US Patents Issued % Total Active US Patents (year-end) 3,275 3,316 3,425 3,546 3, % First Foreign Filings % Total Active Foreign Patents (year-end) 3,168 3,692 3,757 3,597 3, % Licensing Agreements Issued Options % Utility Licenses % Plant Licenses % Total Active Agreements (year-end) Options % Utility Licenses 1,114 1,200 1,315 1,359 1, % Plant Licenses % Inventions Licensed/Optioned Inventions Optioned % Inventions Licensed (utility) % Inventions Licensed (plant) % Total Inventions Licensed/Optioned (year-end) Inventions Optioned** % Inventions Licensed (utility)** 1,470 1,589 1,772 1,910 2, % Inventions Licensed (plant) % Start-up Companies Start-up Companies Formed % Exhibit 24 only reports technology transfer activity governed by the UC Patent Policy for inventions managed by IAS and by the campus offices. It does not include copyright and material transfer agreement activity that is also carried out by the campus offices. * Technology transfer activity related to a small number of DOE Laboratory inventions managed by IAS is also reflected in these figures. See Exhibit 28 for technology transfer activity related to inventions managed by LBNL s technology transfer office. ** An invention may be both optioned and licensed (utility), so the sum of these figures for a fiscal year may exceed the values reported in Exhibit 13 for licensed/optioned inventions. 18

21 Exhibit 25 SYSTEMWIDE FINANCIAL ACTIVITY FY05-FY09 Fiscal Years Ending June 30 (Thousands) Fiscal Year Comparisons FY05 FY06 FY07 FY08 FY09 % CHANGE (FY08-FY09) Income from Royalties and Fees $92,902 $193,500 $97,594 $146,314 $103,105-30% Less: Payments to Joint Holders (5,403) (13,464) (4,798) (6,114) (6,217) 2% Adjusted Gross Income (A) 87, ,036 92, ,200 96,888-31% Legal and Other Direct Expenses (34,393) (43,136) (35,087) (38,602) (31,486) -18% Less: Reimbursements 16,707 16,545 19,292 24,668 22,946-7% Net Legal Expenses (B) (17,686) (26,591) (15,795) (13,934) (8,540) -39% Income Available for Distribution (A+B) 69, ,445 77, ,266 88,347-30% Income Distributions Inventor Shares (C) 28,228 60,471 35,562 48,087 41,106-15% Research Allocation Share (D) ,380 2,475 3,160 28% General Fund Share (E) 10,138 23,078 10,045 19,545 11,503-41% Income After Mandatory Distributions (F) 31,025 69,174 30,014 56,160 32,606-42% Total Income Distributions (C+D+E+F) 69, ,445 77, ,266 88,375-30% Exhibit 25 only reports financial activity (not adjusted for legal settlements) governed by the UC Patent Policy for inventions managed by IAS and by the campus offices. Campus offices also generate income through copyright licenses, material transfer agreements, and through research support committed in conjunction with technology transfer activities. This income is not included in this report. * Financial activity related to a small number of DOE Laboratory inventions managed by IAS is also reflected in these figures. See Exhibit 29 for financial activity related to inventions managed by LBNL s technology transfer office. 19

22 Technology Transfer Activity and Financial Information Exhibit 26 FY09 CAMPUS TECHNOLOGY TRANSFER ACTIVITY* Year Ending June 30, 2009 UCB UCD uci ucla ucm ucr ucsb ucsc ucsd ucsf Inventions Inventions Disclosed Total Active Inventions (year-end) 1, , ,610 1,350 Patent Prosecution US Applications Filed First Filings Secondary Filings Total US Patents Issued Total Active US Patents (year-end) First Foreign Filings Total Active Foreign Patents (year-end) Licensing Agreements Issued Options Utility Licenses Plant Licenses Total Active Agreements (year-end) Options Utility Licenses Plant Licenses Inventions Licensed/Optioned Inventions Optioned Inventions Licensed (utility) Inventions Licensed (plant) Total Licensed/Optioned Inventions (year-end) Inventions Optioned** Inventions Licensed (utility)** Inventions Licensed (plant) Start-up Companies Start-up Companies Formed Exhibit 26 only reports technology transfer activity governed by the UC Patent Policy for inventions managed by IAS and by the campus offices. It does not include copyright and material transfer agreement activity that is also carried out by the campus offices. * Technology transfer activity related to inventions having one or more inventors at each campus. A number of inventions involve inventors from multiple UC campuses. Technology transfer activity statistics for these inventions are reported multiple times, once for each campus involved. Thus, for any given measure of activity, the sum of individual campus numbers may be greater than the systemwide totals reported elsewhere in this report. ** An invention may be both optioned and licensed (utility), so the sum of these figures for a campus may exceed the values reported in Exhibit 14 for licensed/optioned inventions. 20

23 Exhibit 27 FY09 CAMPUS FINANCIAL ACTIVITY* Year Ending June 30, 2009 (Thousands) UCB UCD uci ucla ucm ucr ucsb ucsc ucsd ucsf Income from Royalties and Fees $4,885 $9,845 $4,490 $22,557 $0 $1,949 $2,720 $61 $22,235 $29,252 Less: Payments to Joint Holders (48) (11) (154) (350) 0 (7) (5) 0 (394) (5,248) Adjusted Gross Income (A) 4,837 9,834 4,336 22, ,942 2, ,841 24,004 Legal and Other Direct Expenses (3,746) (2,854) (2,163) (5,493) (243) (1,159) (2,353) (249) (6,465) (4,423) Less: Reimbursements 2,316 1,004 1,499 6, , ,396 3,615 Net Legal Expenses (B) (1,430) (1,849) (664) 1,165 (180) (606) (63) 10 (2,069) (808) Income Available for Distribution 3,408 7,984 3,672 23,372 (180) 1,335 2, ,772 23,196 (A+B) Income Distributions Inventor Shares (C) 1,661 2,720 1,851 10, , ,494 11,046 Research Allocation Share (D) , General Fund Share (E) 437 1, ,233 (60) ,570 3,038 Income After Mandatory Distributions (F) 1,207 3,792 1,255 9,385 (205) ,698 8,905 Total Income Distributions (C+D+E+F) 3,408 7,984 3,672 23,372 (180) 1,335 2, ,772 23,196 Exhibit 27 only reports financial activity (not adjusted for legal settlements) governed by the UC Patent Policy for inventions managed by IAS and by the campus offices. Campus offices also generate income through copyright licenses, material transfer agreements, and through research support committed in conjunction with technology transfer activities. This income is not included in this report. * Financial activity related to inventions having one or more inventors at each campus. A number of inventions involve inventors from multiple UC campuses. Financial activity statistics for these inventions are pro-rated among the campuses according to the number of inventors each campus has. Since some financial activity reported here is credited to UC inventors who are not associated with a campus (including staff at the DOE Laboratories), the sum of individual campus numbers may not equal the systemwide totals reported elsewhere in this report. 21

24 Technology Transfer Activity and Financial Information Exhibit 28 LBNL TECHNOLOGY TRANSFER ACTIVITY FY05 FY09 Fiscal Years Ending September 30 Fiscal Year Comparisons FY05 FY06 FY07 FY08 FY09 % CHANGE (FY08-FY09) Inventions and Patent Prosecution Inventions Disclosed % US Applications Filed First Filings Provisional Applications % First Filings Regular Applications N.A. Secondary Filings Provisional Applications % Secondary Filings Regular Applications % Total % US Patents Issued % First Foreign Filings % Licensing Agreements Issued Secrecy % Option % License % Total Active Agreements (year-end) Option % License % 22

25 Exhibit 29 LBNL Financial ACTIVITY FY05 FY09* Fiscal Years Ending September 30 (Thousands) Fiscal Year Comparisons FY05 FY06 FY07 FY08 FY09 % CHANGE (FY08-FY09) Income from Royalties and Fees Patents and Tangible Research Products $1,826 $2,267 $2,502 $2,702 $2, % Copyrights/Software $145 $635 $716 $512 $ % Total $1,971 $2,902 $3,218 $3,214 $3, % (FY07-FY09**) Inventor /Author Shares Paid Patents & Tangible Research Products $848 $796 N.A.** $1, % Copyright/Software, Trademark, & Other $139 $169 N.A.** $ % Total $619 $987 $965 N.A.** $1, % * In addition to income reported in this table, the IAS-managed portfolio of DOE Laboratory inventions collectively generated $4,934,230 in FY09 royalty and fee income, including $862,230 for LBNL inventions. ** Starting FY08, payment of Inventor/Author Shares is deferred until the following year to match campus inventor share payment schedule. 23

26 UC Technology Transfer on the Web Available Technologies University of California Technology Transfer Available Technologies techtransfer.universityofcalifornia.edu Technology Transfer Offices UC Office of the President: Innovation Alliances and Services (IAS) UC Berkeley: Office of Intellectual Property & Industry Research Alliances (IPIRA) UC Davis: UC Davis InnovationAccess UC Irvine: Office of Technology Alliances (OTA) UC Los Angeles: Office of Intellectual Property & Industry Sponsored Research (OIP-ISR) UC Merced: Office of Technology Transfer (OTT) UC Riverside: Office of Technology Commercialization (OTC) UC Santa Barbara: Office of Technology & Industry Alliances (TIA) UC Santa Cruz: Office for Management of Intellectual Property (OMIP) UC San Diego: Technology Transfer Office (TTO) UC San Francisco: Office of Technology Management (OTM) Lawrence Berkeley National Laboratory: Technology Transfer and Intellectual Property Management (TTIPM) ipira.berkeley.edu oip.ucla.edu research.ucmerced.edu research.ucsb.edu/tech_transfer research.ucsc.edu/intel_prop.shtml invent.ucsd.edu

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