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June/July 2024: Transactions

Creative Licensing Solutions for Shortening the Timeline to Monetization

Barbara Merle Gilmore and Sima Singadia Kulkarni

Summary

  • Predisclosure counseling can provide a coordinated strategy for structuring patent prosecution and pursuing commercialization efforts.
  • Creative prepatent IP licenses can reduce fees and provide the licensee with an opportunity to direct development of the patent portfolio.
  • An arrangement that allows for accelerated development of inventions can de-risk and expand an entity’s patent portfolio through short-term monetization.
Creative Licensing Solutions for Shortening the Timeline to Monetization
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Universities seek to license their intellectual property (IP) for a multitude of reasons and in many ways. Some license IP to enhance the reputation of the university and its professors, which may lead to new or additional investment in the institution. Others focus on licensing to provide professional opportunities for their professors and students. Still others hope to recoup institutional investment in research activities. Top internationally known research organizations frequently are approached directly by potential licensees, while other institutions successfully employ different strategies to bring their inventions to society.

This article highlights two innovative, successful licensing strategies achieved with the help of a unique tech transfer and commercialization partner assisting research institutions in purposefully developing, refining, and bringing their inventions to market.

The first example focuses on a novel technology that significantly reduces brewing time and manufacturing costs for quality sour beer products. The technology was licensed to a global leader in the development of yeast and specialty ingredients prior to patent issuance.

The second example highlights a creative joint venture arrangement between a healthcare system, a venture capital group, and the tech transfer and commercialization partner that accelerated development for inventions conceived of by frontline workers, and where the time from idea to successful commercial launch of the first invention was less than 30 months.

In both cases, the institutions provided predisclosure counseling but followed traditional invention disclosure protocols, including requiring filing of the formal invention disclosure form and subsequent patent application filings. The predisclosure counseling provided the parties involved with a coordinated strategy for structuring patent prosecution and pursuing commercialization efforts in a manner that optimized the chances for success.

Brewing Up a Different Licensing Agreement

A biology professor at the University of the Sciences in Philadelphia, now merged with Saint Joseph’s University (University), discovered a novel yeast species capable of fermenting a pleasant, aromatic sour beer. While typical sour beer production relies upon secondary fermentation with bacteria to develop a complex sour beer flavor profile, which can take months or years to fully develop, this novel yeast strain is capable of acidifying beer to a sour state in as little as five days, with final attenuation at two to three weeks. These sour beers have bright lactic acidity balanced by a slight sweetness and mouthfeel from glycerol produced during fermentation. Perfectly complementing the tartness of the beer is the pleasant bouquet of apple esters with no discernable off-flavors. This invention, comprising the use of the novel yeast species, enables the rapid brewing of a delightful sour beer without the limitations and risks of using bacteria. In other words, this innovative invention benefits corporate, professional, and homebrewers by producing an exceptional sour in half the time as prior art methods.

Following a review of the invention disclosure, the University’s tech transfer and commercialization partner evaluated the commercial potential of the invention, finding it would have broad appeal to manufacturers, and identified potential licensees. The University then filed a provisional patent application directed to compositions and methods for brewing sour beer. Immediately after the provisional patent was filed, the tech transfer partner facilitated discussions with identified licensee prospects. Subsequent negotiations resulted in an agreement with a privately held global leader in the development, production, and marketing of yeast, bacteria, and specialty ingredients. The company now markets the invention internationally.

Unlike many institutional licensing agreements, this IP was licensed before the patent issued, with unique terms recognizing the then provisional patent status: a small portion of the agreed-upon license fee payment was made before the patent issued, and a much larger payment was made immediately upon issuance. Further, sales milestones, developed and agreed to by the licensee, were set and incorporated into the agreement.

Terms for this prepatent issuance license, reviewed and approved by University General Counsel and the University of the Sciences (now Saint Joseph’s University) Associate Provost for Research and Graduate Administration and Policy Jean-Francois Jasmin, PhD, included:

  • Split licensing fee. A small initial license fee, nonrefundable and noncreditable against royalties, was due within 10 business days from the effective date of the agreement. The licensee paid the larger balance of the license fee upon granting of the U.S. patent. The University, with the agreement of the licensee, also applied for multiple foreign patents. Further, it was arranged that the license fee could be paid in up to three separate tranches over a period not to exceed 18 months.
  • Prior patent expense. Reimbursement of patent expenses incurred before licensing was due within 10 business days from the effective date of the license agreement. In keeping with the spirit of the partnership, outside patent counsel was selected by the University, and the licensee was consulted at each step of subsequent protection.
  • Royalties. The licensee agreed to pay royalties quarterly based on sales volume. The University licensing team worked with the licensee and their sales management team as they projected international sales for a three-year period. A minimum number of kilograms of the novel yeast sold were not subject to royalty, but royalties were paid quarterly on a per kilogram basis after that minimum was reached.
  • Nonroyalty sublicense income. As is standard in a university licensing agreement, the parties also agreed to a share of nonroyalty sublicense income to be paid to the University.

The University and the primary investigators were delighted with the prepatent timing and creative license terms. The staged approach provided a lower entry point for the licensee, reduced out-of-pocket and unreimbursed prior patent fees for the institution, and validated a model for licensing future provisional stage inventions across multiple fields.

Given the timing of the license, the licensee was able to be involved at an early stage of patent prosecution, thereby having an important opportunity to direct development of the patent portfolio. In contrast to traditional licenses, where oftentimes deadlines for filing decisions have passed, in this case the licensee was able to pursue IP protection in geographical jurisdictions that were important and relevant for their business, with respect to both manufacturing and selling the final product.

This approach represents a fundamental aspect of this unique tech transfer partner’s mode of operation: one that is considered a core tenet of their best practices, where their clients benefit from strategic IP guidance paired with industry engagement. This progressive, quicker-to-market, and cost-reducing approach is recommended as a best practice for each university tech transfer and commercialization partner across their international client IP portfolio.

Commercializing Innovations Straight from the Front Line

Lankenau Institute for Medical Research (LIMR) is part of Main Line Health, a multifacility health system serving parts of Philadelphia, Pennsylvania, and its western suburbs. LIMR is known not only for its position in U.S. medical research history but also for its ACAPRENEURIAL™ approach to research. LIMR opened in 1927 and was the first research center in the nation dedicated primarily to the study of cancer, as well as the first to discover a genetic defect that contributed to human cancer, thus launching the modern era of molecular genetics in cancer research. Its investigative areas have since expanded to include cardiovascular disease, autoimmune disorders, regenerative medicine, infectious disease, neurological and gastrointestinal disorders, and population health.

Its signature ACAPRENEURIAL™ model, conceived and trademarked by George C. Prendergast, PhD, LIMR president, CEO, and a prolific inventor himself, focuses on invention, innovation, IP, and new company development, with a secondary goal of pursuing new academic knowledge.

Until 2020, LIMR’s patent portfolio comprised, for the large part, biological inventions requiring FDA approval before commercialization. The portfolio was characterized by a long path to monetization, wherein product launch often happened (if it happened) up to 10 years after the issuance of a corresponding patent. However, Dr. Prendergast’s efforts to de-risk the portfolio prompted by the success of the unique ACAPRENEURIAL™ approach resulted in a broadened strategy. LIMR began to consider innovations that could reach society more quickly and be more inclusive of the entire Main Line Health community of innovators.

Lankenau Ventures

LIMR leadership considered multiple models but selected one in particular because it provided the best fit with the institution’s culture and mission. In 2021, LIMR formed a three-party joint venture with Early Charm Ventures and L2C Partners. Early Charm Ventures, a venture studio in Baltimore, Maryland, was formed to create, own, and operate ventures focused on converting science into revenue via the formation and implementation of sustainable business infrastructure.

This joint venture, incorporated as Lankenau Ventures, exists solely to develop and commercialize the ideas and innovations uniquely originating with Main Line Health frontline workers, including nurses, home health aides, physicians, management, staff, and emergency response personnel. It was launched with an initial cash investment by LIMR to be repaid from initial proceeds.

Within Lankenau Ventures, each partner assumes a distinct responsibility:

  • Early Charm Ventures provides all back-office functions, including operations, marketing, business development, and device design, refinement, and prototype manufacture.
  • LIMR provides Lankenau Ventures with (1) the right of first refusal on all owned or assigned inventions falling within clinical and medical software, clinical tests, and medical and hospital devices; and (2) a testing ground for prototypes.
  • Lankenau Ventures individually licenses each LIMR invention for a period of 24 months, at which point the IP returns to LIMR unless one of the following conditions is met: (1) nondilutive funds are raised to further the invention, (2) a development grant is received to further the invention, (3) the invention is commercialized, or (4) the invention is licensed or sold to a third party.
  • L2C Partners manages LIMR IP, including obtaining invention disclosures and implementing patent prosecution strategy, and provides Lankenau Ventures with investor management services, coordinating between all three parties.

Consistent education and participation in nursing and home health events and monthly meetings are key to maintaining a pipeline. Additionally, LIMR and Main Line Health nursing leadership each host an annual Research Day, in which Lankenau Ventures participates, where innovators have an opportunity to showcase their inventions. All partners work together to promote opportunities for Main Line Health frontline workers to develop their ideas into marketable products, providing regular educational sessions and seminars on the innovation, invention development, and IP protection processes. Lankenau Ventures principals frequently attend nursing department staff meetings, and L2C Partners provides one-on-one coaching to inventors before the required invention disclosure form is filed.

Sample Inventions Developed by Main Line Health Frontline Workers

Below are select Lankenau Ventures products developed by Main Line Health frontline workers that are currently being sold or readying for market.

Limb support device. The three-level limb support device can be used to cradle a patient’s limb at varying heights when changing an extremity dressing, allowing a single nurse or aid to perform the task rather than requiring the support of a second nurse. Design and use trials showed this device will help to reduce back injury, common among wound care nurses, as well as help to mitigate the current personnel shortage. The design of the device was further developed and captured in a patent application submitted in 2023 for the now commercial version of this device, currently referred to as the Rogers Limb Support.

Catheter insertion aid. The 3D printed catheter insertion aid is intended to decrease catheter waste, reduce catheter-associated urinary tract infections (CAUTIs), and increase a caregiver’s ability to maintain a sterile field. In the home care setting, private insurance companies typically allow one catheter per patient per frequency order. Catheter insertion requires aseptic and sterile technique, and restriction to one device per incident per patient results in nonsterile reuse if first insertion is unsuccessful. CAUTIs cost approximately $1,000 per incident. Through targeted placement guidance, this invention will alleviate the need to reuse catheters. LIMR filed a provisional patent application for the AccuCatheter in 2023.

Fall prevention devices. Hospital-based falls are devastating to patients, family members, and providers and most frequently result from the unfamiliar environment, acute illness, surgery, bed rest, medications, treatments, and placement of various tubes and catheters. Further, the average total cost of a fall to the health system has been calculated as $62,521, with $35,365 in direct costs. Therefore, fall prevention is front of mind for frontline workers and hospital administration. Main Line Health inventors have developed two fall prevention devices to prevent or mitigate fall-related injuries.

The toileting privacy screen consists of a lightweight sensor bar that detects any attempt by the patient to get up from the toilet and walk back to bed unsupervised, with an adjustable screen that provides the patient with privacy while toileting. A patent application for the original design of this device was filed in 2021, and LIMR anticipates filing additional applications in early 2024 to protect design changes informed by design and use trials.

The portable airbag/cushion-deployment device has a sensor that detects if a patient is falling. The compact device may be mounted in the bathroom or other high-risk areas for falls. A patent application covering the device was filed in 2021 together with a continuation-in-part application in 2022 to cover additional improvements. Lankenau Ventures currently is seeking a partner to further develop the device.

Forum for Creativity and Innovation

The success of Lankenau Ventures has established a framework, a proven pathway to benefiting society with innovations developed by frontline workers and supported by the healthcare institutions for which they work. The model has enabled LIMR, and those institutions to follow, to de-risk and expand their patent portfolio through short-term monetization. And, it has provided a forum for frontline workers to be seen, heard, and recognized for creativity and innovation, thus engendering their loyalty to the healthcare system.

Summary

Both cases provide models for de-risking standard institutional patent portfolios by developing and implementing quicker-to-market (and monetization) pathways. The subject patent portfolios transitioned from an expected eight- to 10-year-to-commercialization timeline to an average of five years, featuring short, mid-, and long-term commercialization. These innovative, successful licensing strategies were achieved with the help of a unique tech transfer and commercialization partner providing strategy and implementation more traditionally resident in the for-profit sector.

©2024. Published in Landslide, Vol. 16, No. 4, June/July 2024, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

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