UMIP - REPUTATION AND VALUE THROUGH INTELLECTUAL PROPERTY®

A Guide to UMIPThe University of Manchester’s Agent for Intellectual Property Commercialisation

Dear Colleague,

I am pleased to provide anintroduction to this publication whichoutlines the activities of UMIP (TheUniversity of Manchester IntellectualProperty) and provides a practicalguide demonstrating how you, theUniversity and the wider society canbenefit from the commercialisationand application of knowledge,expertise and intellectual propertycreated and developed in the University.

At heart, all of the University’sactivities are concerned with thebusiness of knowledge transfer.Through our teaching and research,we play a key role in advancingeducation, discovery and innovation,but also more broadly in enrichingour culture and enhancing thequality of public life in our society.

The protection and commercialisationof our expertise and intellectualproperty is simply another aspect ofthat broad knowledge transferprocess. If handled professionally, itcan also provide a valuable revenuestream for the University and alucrative source of additionalfinancial reward for individualmembers of academic and researchstaff and students.

It is for these reasons that exemplaryknowledge and technology transfer isidentified as a key strategy in ourStrategic Plan.

In pursuing that strategy, theUniversity has formulated one of thecountry’s most generous andforward-thinking policies onIntellectual Property andcommercialisation. It has also setitself ambitious targets to increaseinvention disclosures by staff, theproportion of our research incomederived from industry sources andthe value of licences granted to third parties to develop IP created inthe University.

The aim of all of these policies is tomotivate you and make thisUniversity the preferred destinationfor innovators and creators ofintellectual property and thepreferred partner for major nationaland international companies.

UMIP is wholly owned by theUniversity, acts for the University andhas responsibility for taking forwardthese policies and managing thecommercialisation of UniversityIntellectual Property. It operatesthrough a network of its staff basedin the Faculties.

This Guide explains in detail howUMIP operates and how you and theUniversity can benefit from itsservices in this important area ofactivity. I hope this booklet willencourage you to explore further theopportunities for commercialisationarising from your research activities.

Professor Dame Nancy Rothwell FRSPresident and Vice-Chancellor

Our aim is to make this University thepreferred destination for innovatorsand creators of intellectual propertyand the preferred partner for major

national and international companies.

Professor Dame Nancy Rothwell FRS

THE UMIP MISSION

UMIP contributes to the aims and objectives of The University’s “ExemplaryKnowledge and Technology Transfer” agenda by providing Intellectual Property (IP)management and commercialisation activities:

UMIP enhances the reputation and value of the University by:

> transferring science and technology to the market place through IP sale,licence or spin-out.

> making an important contribution to the economy regionally, nationallyand internationally and to the quality of public life.

> reinvesting returns from successful IP commercialisation activities back tothe University, for example, through income from the sale of spin-outcompany shares or royalty income from licence agreements.

We look forward to continuing to play a full part in realising the University’sambition for IP to 2015 and beyond.

Contents

What is UMIP? 6

What does UMIP do? 8

How is UMIP organised and governed? 10

Organisational chart 11

What is Intellectual Property (IP)? 12

What is IP Commercialisation? 14

Why commercialise? 16

The commercialisation process 18/19

What do you do if you have an idea? 20

Practical Support 22/25

Key components for success 26

The Innovation Centre (UMIC) 28

For initial UMIP contacts, please see insert at the back of this guide.

For further information about UMIP, please see our website: www.umip.com

Copyright The University of Manchester Intellectual Property, 2011

Based on an idea at MIT and The University of Michigan

What is UMIP?

Why should you read this?

Generation of new knowledge is theheart of the University. This oftenleads to intellectual property (IP).

As an employee of the Universitywhether as an academic, researcher,administrator or technical staffmember it is important that youknow what IP is about and what theUniversity’s agent for IPcommercialisation, UMIP, does. Ofcourse it is of particular relevance toanyone actively interested inknowing how to protect andcommercialise IP. If you have an ideathat you think has commercial meritthen contact us.

UMIP is a division of The Universityof Manchester I3 Limited (UMI3) - theUniversity of Manchester InnovationGroup, created following theintegration of UMIC, the Universityof Manchester’s Innovation Centreand UMIP. The name I3 (I-cubed)reflects the entrepreneurial spirit ofUMIC’s and UMIP’s activities:Inspire/Invent/Innovate. You can findout more about the InnovationCentre on pages 28-29 of this Guide.

UMIP consists of faculty orientedbusiness management teams and anIP Services team backed up by acorporate services team provided byUMI3, which supports UMIP withservices such as finance, legal andHR as well as sales, marketing andpromotion. The UMIP office hassecondees from its professionaladvisors as well as ‘associates’ suchas designer-in-residence, regulator-in-residence,entrepreneur-in-residence and aDirector of Entrepreneurship.

Our website is www.umip.com

UMIC’s website is www.umic.co.uk

UMI3’s website is www.umi3.co.uk

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The University of Manchester Intellectual Property ("UMIP") acts solely as agentfor the University in relation to any matter relating to intellectual property andknow how created at the University ("IP"). This is whether such IP is created byemployees, students or others. UMIP does not represent anyone else in suchmatters. If anyone else requires advice in relation to such IP then they must taketheir own independent legal advice.

What is UMIP?

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The airplane stays upbecause it doesn’t have time to fallOrville Wright

UMIP was established by TheUniversity of Manchester to select,protect and where appropriatecommercialise the results ofresearch carried out by employeesand research students within allschools of the University.

UMIP works in highly positiverelationships with researchers,entrepreneurs, business people,professional advisers and investorsto achieve its goals.

In brief, UMIP:

> Manages IP created at the University

> Identifies, protects and evaluatesthe commercial potential ofresearch outputs from all faculties

> Holds the University's patentbudget and manages its Proof ofPrinciple awards and its seedcorninvestment funds

> Commercialises IP via the mostappropriate route: sale, licence or spin-out

> Has access to an extensivenetwork of industry experts,consultants, professional advisersand investors

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What does UMIP do?

Inventions reachedtheir limit long ago,and I see no hope forfurther development.Julius Frontinus, 1st century A.D.

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How is UMIP organised?

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UMIP consists of CommercialisationExecutives, Licensing and VentureManagers backed up by an IP Services team.

This team manages the University’spatent, trademark and designregistration portfolio and conductdue deligence activities prior to IPcommercialisation. The team alsoadvises the University on IP issues.

Please see the insert at the back ofthis guide for your contacts.

The teams have been structured toprovide the best possible service toall four faculties, with theCommercialisation Executives beingyour first “port of call”, and theVenture and Licensing Managersfocusing on the projectmanagement of those IP projectswhich are progressing throughUMIP’s innovation and development process.

IP is a term used for the rightswhich protect your ideas and otherforms of intellectual creation in justthe same way that you ownphysical assets. Some rights have tobe registered to be effective, othersarise automatically without a formalregistration procedure.

The main forms of IP are:

> Patents> Copyright> Designs> Database rights> Trademarks

If you would like to know moreabout the nature and scope of IP,you can obtain a “Researcher’sGuide to IP and Confidentiality”from UMIP or view it at:www.umip.com/researchers_guides.htm

There are also three other relevantguides and a ‘workbook’ available inhard copy form and on the website.

In addition, there arecommercialisation case studies tocomplement this Guide which arealso available for download.

UMIP can describe the University’s IP policy to you and the positionthat the University takes in various circumstances.

For further information about theUniversity’s IP Policy, see theexecutive summary at:www.umip.com/ip_execsummary.htm

What is Intellectual Property, often called simply “IP”?

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Sometimes questions are more important

than answers.

Nancy Willard

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What is IP Commercialisation?

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Innovation is thespecific instrument ofentrepreneurship...the act that endowsresources with a new capacity to create wealth.Peter Drucker

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IP commercialisation refers to thetransfer of IP in return for payment,whether in cash and/or in kind. Inthe same way as a house can bebought and sold, IP can also be soldor transferred to another owner.This is called an ‘assignment’.

If the IP has been developed and haspotential for business application, itmay be appropriate to transfer theIP into a new, start-up companywhich is dedicated to itscommercialisation. This is commonlyreferred to as a ‘spin-out company’.

IP can also be licensed. This is similarto the lease of a flat. The IP owner(the “Licensor”) permits someoneelse (the “Licensee”) to use the IPusually in return for payment. If theIP has been used to make aparticular product, payment willoften be made in the form of aseries of regular payments, generallylinked to sales, known as “royalties”.In addition, IP can also be subject toan outright sale.

What are the advantages of each route?

If the IP is in a new field and hasmany potential applications, it couldhave enormous financial potential.As a shareholder in a spin-outcompany it would be possible foryou to see significant capital gainsfrom the sale of your shares.

If the IP is a development orimprovement of an existing productor process, then it is moreappropriate to license the IP to anexisting company who will spendthe time and resources to implementor commercialise the IP. As the IPoriginator you would receive a shareof the royalties.

In general the returns frominvolvement in a successful spin-out are greater than royaltiesfrom a licence although spin-outreturns tend to take longer torealise and require a much greaterpersonal commitment. Also, the risk of a spin-out not beingsuccessful is higher.

Both routes can bring other“benefits” such as case studyteaching material anddevelopment contracts.

Occasionally secondment to thespin-out is possible and whensufficient investment money hasbeen raised, there is also thepossibility that you will receive feesas an adviser to the spin-out board.

The University’s IP Policy explains inmore detail how the royaltypayments or shareholdings areallocated and can be accessed onthe University’s intranet.

Commercialisation case studies canbe found on UMIP’s website at: www.umip.com/researchers_guides.htm

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It is widely recognised thatinnovation and entrepreneurshipneed to be stimulated in order tomaintain and promote economicgrowth. The University thereforeactively seeks to protect its IP andto commercialise the results ofresearch where appropriate. TheUniversity also has an obligation toconsider protecting IP where theresearch is funded by a ResearchCouncil or charitable institution.Much industrially sponsoredcontract research is fundedspecifically to generate valuable IP.

Revenue earned throughcommercialising our IP is likely tobenefit your School and theUniversity in addition to yourself.The rewards both reputational andfinancial can be attractive, but the process requires carefulmanagement, often over a long period.

Although it is impossible to guaranteethat your idea can be protected or willbe commercialised, we have a proventrack record of success. Building onover 20 years of technology transferactivity we have helped:

> Raise £100Ms for spin-out companies

> Create hundreds of jobs> Conclude over 45 annual

licences with UK and international companies

> Sell shares and collect royalties regularly

You can find examples on the UMIP website.

The Commercialisation Process

UMIP brings to you a blend ofentrepreneurial expertise, in-depthknowledge of University IP, projectmanagement skills and, critically, anunderstanding of the needs of anddemands upon University IPoriginators. UMIP will work with youto design a business model for the IPand generate the development,operational and marketing plans forits commercialisation route.

Using our in-house teams as well asour extensive networks of externalprofessional service providers,venture capital sources, dynamiccommercial managers andmarketing agents and businesscontacts we tailor-make anapproach that is appropriate andsuccessful for your licence or spin-out projects. This way we canmarshall large and relevantresources to help you increase thelikelihood of success and the speedwith which it can be achieved.

UMIP employs a rigorous innovationselection process which assesses youridea for commercial potential andthe type and potential strength ofits IP protection. Stage-gatemanagement within this process willindicate whether the IP is bestlicensed or whether a spin-outcompany would be the mostappropriate vehicle forcommercialisation. This ensureseffective use of time and resourcestoo. Sometimes the IP can be soldoutright as a once-only sale.

Why commercialise?

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You must do thething you thinkyou cannot do.Eleanor Roosevelt

This is the written notice of IP to UMIP that begins the formal IP commercialisation process.An IP disclosure remains a confidential document and should fully describe and record yourIP so that the options for commercialisation can be evaluated and pursued.

Early contact with UMIP is necessary to discuss your invention/IPand to provide guidance with respect to disclosure, commercialassessment and protection processes.

PRE-DISCLOSURE

INVENTION DISCLOSURE

ASSESSMENT

The process for which protection for IP is pursued to encourage third party interestin commercialisation. If patentable protection begins with the filing of a patentapplication with the Patent Office and, when appropriate, foreign patent offices.Once a patent application has been filed, it will require several years and tens ofthousands of pounds to obtain issued UK and foreign patents. Other protectionoptions include copyright, designs, database rights and trademarks.

PROTECTION

The period in which UMIP reviews (with your input) the IP disclosure, requests patentsearches (and other IP searches if applicable) and analyses the market andcompetitive technologies to determine the IP’s commercial potential. Based on theinformation gathered, a decision on whether to continue the commercialisationprocess will be made. Decisions against continuing may be due to issues such asunpatentability of the idea/observation or limited commercial potential. If the IPshows potential, the evaluation process will guide our strategy on whether to focuson licensing to an existing company or creating a new business start-up.

UMIP’s Commercialisation Process

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If creation of a new business hasbeen chosen as the optimalcommercialisation vehicle, UMIPwill work to assist the founders inplanning, creating and seekingfunding for the spin-out andproject manage the early stages.

FORM A SPIN-OUT

If the IP will best be commercialisedby one or more existing companies,UMIP will seek potential licenseesand work to identify mutualinterests, goals and plans tocommercialise the IP fully.

FIND A LICENSEE

Revenues received by UMIP from licensees such as up-front payments and royalties are distributed to

IP creators and to the University/IP creators' faculties.Shareholdings and the sale of shares from spin-out

companies can benefit the IP creator and the University.

REVENUE

PROOF-OF-PRINCIPLE

UMIP’s Proof-of-Principle (PoP) programme can provide the funds neededto take a novel idea to a demonstrable stage - validating its commercial

potential - in order to attract potential investors or licensees. UMIP assistswith arranging such funding. The amount of money required for PoP varies

and is typically invested over a twelve month period.

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CONTRACTUAL

UMIP manages documents such as licence agreements/shareholder agreements etc

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If you have an idea or observationand are wondering if it has potentialvalue contact one of ourCommercialisation Executives. Lookat our website for a list of keycontacts or refer to the leaflet at theinside of the back cover of this Guide.

What happens next?

You will be invited to meet with oneof our Commercialisation Executives,specific to your faculty, to discussyour idea/observation. We will thencomplete an Invention Disclosurebased on the information you give.

The Invention Disclosure is veryimportant. It helps UMIP'sCommercialisation Executives todefine and understand the results ofyour research and, in the firstinstance, identify if there is any IP toprotect. It provides us with thepreliminary information needed tobegin the process of protecting it.The Invention Disclosure and otherdocuments in the UMIP process aredesigned to complement thelaboratory notebook, which may bethe primary source of much of theinformation required and should becarefully preserved and madeavailable, on request, to theUniversity or its agents. It will alsobe proof of inventorship/creationand aid registration.

To avoid risking the protection ofcertain of your IP rights and possiblyhindering the opportunity to marketyour IP, contact UMIP before holdingany discussions with people outsideof the University or indeed anyonewho is not an employee of theUniversity such as students, VisitingFellows or Honorary Lecturers. If apatent or design right applicationhas not yet been filed and youridea/observation has been publiclydisclosed (e.g. published papers,poster sessions, conference, webdisclosure or other communication),potential protection of any IP maybe jeopardised. Please contact UMIPin sufficient time to allow us toconsider the filing of a patent ordesign right application beforepublicly disclosing youridea/observation. We will provideyou with a ConfidentialityAgreement for the party to signbefore you describe your inventionor design to them. We would evenrecommend it for otherautomatically protected IP, such assource code.

UMIP has a strong workingrelationship with the University’sResearch Office and with the ContractServices Team to ensure that IP andconfidentiality issues are managedclosely and in a consistent way.

What do you do if you have an idea?

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Research is the process of going up alleys to see if they are blind.

Marston Bates

Practical Support

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Proof-of-Principle (PoP) Programme

One of the major early hurdles toovercome in IP commercialisation isto find the early stage fundingneeded to take a novel idea to ademonstrable stage and therebyvalidating the commercial potential of that idea in order toattract potential investors orlicensees. To overcome this firsthurdle the University has set up a ‘Proof-of-Principle’ scheme forprojects with good potential. The amount of money awarded is usually around £100k but onoccasion up to £150k, often to be spent over a twelve monthperiod to move the project on to thenext stage - for example, to financea prototype, more in-depth market studies and/or the

generation of additional data for a patent application. UMIP is also very experienced in securingPoP funding from a variety of non-University sources.

Ideas are initially screened bymembers of UMIP’s Faculty teamsand then by a panel, includingmembers of UMIP’s InvestmentCommittee. Applications areassessed every three months usingcriteria such as: IP situation,applications of the idea, marketanalysis, benefits and risk analysis. A rapid and considered response isgiven and successful applications cancommence immediately.

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If you do things well,do them better. Bedaring, be first, bedifferent, be just.Anita Roddick

Development Funding

Through UMIP, sources of furtherfunding exist to give follow-onsupport to exceptional projects withoutstanding commercial potentialwhich have successfully completed‘Proof-of-Principle’ (PoP). Theseproject finance grants and “late seed” investments are usuallyin the £100k to £750k range and areused to maintain momentum in alicence project or spin-out or to“gear-in” funding beyond the PoPphase. Funding requirements forspin-outs tend to be much higherthan for licence projects.

UMIP has a regular dialogue aboutits deal flow with VCs, businessangels and government agencies inits network so as to facilitateeffective technology transfer. Inparticular, it has access to the UMIPPremier Fund.

The UMIP Premier Fund (UPF)primarily makes late-seed stageinvestments, in a total of 15-20companies, initially in the £250k-£750k range, with both theintention and capacity to providefollow-on investment up to £3m. Itis an independent fund, managed byMTI Partners and has an office oncampus. Its website iswww.theupf.com

Practical Support

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I can see a time whenevery city will have one.An American mayor’s reaction to the news of the invention of the telephone

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Successful spin-outs and high valuelicence projects are not specific toany particular field of research.Researchers who have becomesuccessful through licence deals orspin out companies are just as likelyto be engineers, chemists, physicists,biologists, psychologists,geographers, management scientistsor researchers in the creative arts.

The IP commercialisation path is along one to travel down beforereaching the destination and can bearduous but UMIP is willing to godown the path with you andintroduce you to people (andresources) who can make the journeymore rewarding. The journey itself can be tremendously valuable initself and enjoyable for you andultimately reputation enhancing andfinancially beneficial.

Recent examples of the successesfrom the University are on our website.

More help

There are various help notes, tips andother information notes on the UMIPwebsite for you as well as a series ofguides, an IP workbook, our IP PolicyGuide and online resource.

Key components for success

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We must not forget that whenradium was discovered no one

knew that it would proveuseful in hospitals. The work

was one of pure science

Marie Curie

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The Innovation Centre (UMIC)

State-of-the-art incubator premises and a vibrant enterprise conferencing and networking centre

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The University of Manchester has aglobal reputation for being at theforefront of innovative andenterprising research. UMIP and theInnovation Centre’s recentconfiguration as partner divisionswithin The University of ManchesterI3 Ltd (UMI3) will deliver manyoperational benefits in thesuccessful transfer of University IP tothe market place efficiently at scale.

The Innovation Centre provides highquality state-of- the-art incubatorpremises for biotech and hi-techcompanies through a mixedportfolio of high specificationlaboratories and office spacesuitable for a variety of purposes.

Many of UMIP’s spin-out companiesreside in the Innovation Centre andare part of a vibrant supportiveenvironment and benefit from beingpart of our ‘Entrepreneurial Hub’.

A major feature of the Hub is anEntrepreneurship Forum, the mainaim of which is to unite the externalcommunity, whose interests lie inentrepreneurship and innovation,with the University’sacademic/research communitythrough a series of workshops,seminars and events.

Forum activities are held at UMIC’sbespoke conferencing and eventfacilities and include:

> Events bringing industryprofessionals together withacademics to exploreopportunities for the co-development of projects andshowcasing of expertise.

> Specialist events for academicsinterested in developing newventures from research focusingon Intellectual Property issues

including advice on patenting andtrade-marking, creating andrunning spin-outs, socialenterprises and licensing of technologies.

> Attracting in competitions,workshops and events linked withenterprise and innovation such asinitiatives for SMEs and localBusiness Angel and Investorprogrammes for companieslooking to fundraise or pitchto investors.

> A newly formatted series of theManchester Masterclass events ontopical subjects such as accessingcloud based computing, designingeffective products, social mediaand marketing.

> Events with innovation supportproviders, both themed andgeneral, that help to providesupport for stimulating new andgrowing businesses – seed campson key subject areas, interactivesessions on stimulating start-upsand high growth business events.

> Drop-in or surgery system, wheresupport providers and associatesare given space to conduct one- to-ones. UMIC have a rangeof private and public sectorassociates providing probono work.

> Profile raising, fact-finding andVIP tours – promoting activities toraise government, stakeholder,funders’ and foreign dignitaries’awareness of UMIC facilities andits tenant community.

A comprehensive rolling eventscalendar can be found on the UMICwebsite at www.umic.co.uk/events

Our partner division in UMI3

Provides valuable information on:

> Understanding IP

> IP Commercialisation

> IP in Research or Consultancy

> IP and Academic Materials

www.manchester.ac.uk/ipresource

Intellectual Property Awareness Resource

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UMIPSpin outs

SharesPrototyping

Business planningSeedcorn investing

LicensingInnovating

Up-front paymentsRoyalties

Sale of IPAssignments

IP protection

®

Patents

Trade MarksCopyright

Investor-in-People

Excellent track record

Experienced staff

Well networked

Effective and confidential service

Licensing

Seed capital contacts

Proof of Principle funds

Patents

Know-how

Copyright

Trademarks

IP agreements

Company flotations

Trade sales

Core Technology Facility46 Grafton Street

Manchester M13 9NTT: 0161 603 7751info@umip.comwww.umip.comIssue 3/01 November 11

Printed on recycled paper

UMIP is a division of The University of Manchester I3 Limited (UMI3)www.umi3.co.uk @UMIPnews