ࡱ; &'  !"#$%()*+,-./012R F_CompObj\WordDocumentYObjectPoolzƧzƧ  FMicrosoft Word 6.0 DocumentNB6WWord.Document.6;  Oh+'0;Vo u    MMacintosh HD:Applications:Microsoft Office:Microsoft Word 6:Templates:NormalFReview of the University of Alaska Technology Development CorporationPreferred CusܥhO eAY^>pTTTTTTTxUxUxUxUxUUU"xUX@UU(UUUUUUXXXXXXX&YXXY{XTU"%UUUUXUTTUUUUUUTUTUXT8U^TTTTUXUUOfficial Minutes Board of Regents Special Meeting of the Full Board May 21, 1997 VIA AUDIOCONFERENCE Regents Present: Michael P. Kelly, President - Fairbanks R. Danforth Ogg, Vice President - Kodiak Mary Jane Fate, Secretary - Tacoma, Washington Chancy Croft, Treasurer - Anchorage Michael J. Burns - Anchorage Elsa Froehlich Demeksa - Juneau Sharon D. Gagnon - Anchorage Joe L. Hayes, Jr. - Fairbanks Joseph R. Henri - Anchorage Jerome B. Komisar, Executive Officer and President of the University of Alaska - Fairbanks Regents Absent: Joe J. Thomas Lew M. Williams, Jr. In Attendance: Anchorage: E. Lee Gorsuch, Chancellor, University of Alaska Anchorage Hilary Davies, ū컨A Faculty Senate Fairbanks: Joan K. Wadlow, Chancellor, University of Alaska Fairbanks David Creamer, Vice President for Finance and Planning James A. Parrish, General Counsel Wendy Redman, Vice President for University Relations John P. Keating, Provost, University of Alaska Fairbanks Robert Miller, Director of Public Affairs J. Mark Neumayr, Associate General Counsel John Dickinson, Assistant Vice President for Finance Jeannie D. Phillips, Board of Regents' Officer Erin Lillie, Fairbanks Daily News-Miner reporter Rob Boswell, ū컨TDC Board Member Diane McLean, ū컨TDC Staff Member Juneau: Marshall L. Lind, Chancellor, University of Alaska Southeast Other: Mark Helmericks, ū컨TDC Board Member - Prudhoe Bay Mitch Usibelli, ū컨TDC Board Member - Parks Highway Merritt Helfferich, ū컨TDC Board Member - Santa Cruz, California I. Call to Order The meeting was called to order by President Kelly at 10:15 a.m. on Wednesday, May 21, 1997. II. Adoption of Agenda The agenda was adopted by unanimous consent: PASSED "The Board of Regents adopts the agenda as presented. I. Call to Order II. Adoption of Agenda III. Review of the University of Alaska Technology Development Corporation IV. Other Items of Concern V. Adjourn This motion is effective May 21, 1997." III. Review of the University of Alaska Technology Development Corporation Reference 1 The following narrative was provided to the Board of Regents and the Board of ū컨TDC in the agenda and is reprinted here. The University of Alaska Technology Development Corporation (ū컨TDC), a private, not-for-profit corporation, was created in 1994 to assist the university in complying with its minimum legal obligations and to further the commercialization of its intellectual property so that it could be licensed for public use quickly and cost-effectively. In September 1994, the university agreed to license its patents and other intellectual property to ū컨TDC and loaned ū컨TDC start-up and operating funds, such loan(s) to be repaid from royalty and other income derived by ū컨TDC. Loans totaling $480,000 have been provided to ū컨TDC during the 3-year period that it has been in existence. No payment of interest or principal has been made by ū컨TDC. In November 1996, an updated business plan for ū컨TDC was presented to the Board of Regents. During the presentation of the plan, several concerns were discussed including ū컨TDCs slower than expected development and its expected inability to operate without sources of revenue other than just shared royalties and licensing fees. There also was concern expressed by members of the Board of Regents following the presentation about the appropriateness of any additional loans from the Inflation Proofing Fund given the uncertainty of the repayment. The problems confronting ū컨TDC have to some extent been beyond its control. Unlike other organizations similar to ū컨TDC, the University of Alaska did not possess an extensive portfolio of intellectual properties, existing royalty streams, or a consistent flow of annual disclosures capable of establishing such a portfolio at the time ū컨TDC was established. Unexpected education and development activities were necessary in order for ū컨TDC to familiarize the universitys faculty with ū컨TDCs mission and the benefits of applied research activities. Although increased disclosure activity has resulted from these efforts, the sustainable level of such disclosures is still expected to be less than initially anticipated, reducing the number of patentable intellectual properties and the revenues potentially available to ū컨TDC in the future. As reported in November, the impact of these problems and delays is that the horizon for ū컨TDC to operate without loans will be longer than initially anticipated and unlikely to occur unless a more certain source of revenue is provided by the university to fund part or possibly all of ū컨TDCs administrative costs. The vice president for finance and planning was directed to work with ū컨TDC in exploring new sources of funding or ways of lowering existing costs and other options for continuing the universitys technology transfer activities without the need for future loans from the inflation proofing fund. Since the November meeting, several alternatives have been explored with two courses of action seeming to be the most responsive for effectively administering the universitys intellectual properties in the future. The first alternative would be to continue the commitment to ū컨TDC with a more certain revenue source established to better ensure its existence. The executive vice president of ū컨TDC has recommended and has secured support from the University of Alaska Fairbanks for a fixed percentage of the University of Alaskas indirect cost recovery to be dedicated for this purpose. At a level of 1.35 percent, approximately $180,000 would be provided to ū컨TDC, funding most, if not all, of its administrative costs. At a level of 2.0 percent, approximately $268,000 would be provided which would fully support ū컨TDCs administrative, patent, and commercialization costs. Page 6 of this agenda shows the amount these percentages would generate at each MAU. It is the recommendation of the administration that the level be set at 2.0 percent if this alternative is selected so that all future loans can be discontinued. Otherwise, loans totaling about $60,000 to $80,000 per year could be needed for two to three more years to fund ū컨TDCs patent and commercialization costs. Under this proposal, a reduction in the amount of royalties retained by ū컨TDC also should be considered since the current agreement is based on only $25,000 of administrative support from the university. The primary advantage of the ū컨TDC proposal is that it would provide a stable and predictable source of funding for ū컨TDC, better enabling it to plan and carry out its assigned role. The major disadvantages are that the universitys indirect cost recoveries are not growing as fast as in the past, significant other cuts are planned in the research institutes who benefit the most from the overhead recoveries, and the university already has committed over $800,000 per year from this same revenue source to fund the debt service on the new IARC facility. The second alternative would be for the administration of the university to once again perform this responsibility. Under this approach, the compliance and education functions would be performed by each MAU, and the evaluation and commercialization activities would be contracted through another university. Tentative discussions already have been conducted with the University of Idaho Research Foundation, the University of Washington Research Foundation, Utah State University, and the University of South Alabama about contracting for a portion of the services now performed by ū컨TDC. Discussions with other institutions also are expected to occur. All of the referenced institutions have expressed an interest in performing this role with direct costs and royalties being shared under such an agreement. Each MAU, under this approach, would perform their own education and compliance functions, with ū컨F likely needing to add an additional staff person to accomplish this role. The Statewide Finance Office would continue to coordinate the patenting and licensing activities and provide funding for education programs and the shared patenting and commercialization costs. The total cost of this alternative would be about $120,000 or less than 50 percent of the ū컨TDC proposal. The primary advantages of this proposal are its lower cost and access to an experienced technology development function for licensing and other commercialization support. The primary disadvantages would be a somewhat reduced emphasis on these activities, less emphasis on technology transfer activities within Alaska, and a reduction in the revenues received from successful patents and licenses. After analyzing both alternatives, it is the recommendation of the universitys statewide administration that future financial support for ū컨TDC be discontinued and the management of the universitys intellectual property be administered internally in collaboration with an organization similar to ū컨TDC at another university. In reaching this recommendation, the decision was based on factors other than just lower costs. The number of expected annual disclosures and the expected markets for the types of intellectual properties developed at the University of Alaska are less than what was envisioned at the time ū컨TDC was established. For these reasons, it is likely that the functions performed by ū컨TDC will always require financial support in excess of the royalties and other fees generated through the licensing of the universitys intellectual properties. If it is possible for these activities to be self-supporting, a strong and effective commercialization effort would need to be undertaken by ū컨TDC. It is in this area that ū컨TDC has made the least amount of progress and only now plans to begin the recruitment of an executive director possessing the experience and skills necessary to improve this aspect of their organization. Absent an attractive and sizable portfolio of intellectual properties, however, the likelihood that ū컨TDC can attract and retain a skilled professional is greatly reduced. At best, an expensive compensation package will need to be offered to successfully recruit the type of individual needed to perform this role. These circumstances make the risks associated with ū컨TDC too great to justify the additional annual expenditures. In regard to the outstanding loans with ū컨TDC, it is recommended that any amount in excess of the net assets of ū컨TDC be forgiven and the universitys administration directed to commit all future royalties not due university faculty and scientists to be used to repay the outstanding principal and interest. If, after three years, it is not expected that future royalties will be large enough to repay the loan, the administration would be required to identify other revenue sources or forego natural resource fund expenditures to make the repayment. As additional background information, Reference 1 includes materials that were included in the agenda and passed out during the Board of Regents meeting on April 17, 1997. MOTION #1 The Board of Regents directs the president to convey the boards gratitude to the Board of Directors of the University of Alaska Technology Development Corporation for that organizations success in developing enthusiasm for technology transfer within the universitys faculty and staff, identifying compliance requirements associated with the development of intellectual property under federal grants and contracts, and its dedication to developing opportunities for the commercialization of the universitys intellectual property. This motion is effective May 21, 1997. MOTION #2 The Board of Regents directs the university administration to: 1. terminate all existing agreements with the University of Alaska Technology Development Corporation (ū컨TDC) and to no longer assign or license its patents or other intellectual property with ū컨TDC; 2. forgive any outstanding debt in excess of the net assets of ū컨TDC; and 3. commit all future net royalties and/or other sources of funds, if needed, to fully restore the reduction in the assets of the Inflation Proofing Fund resulting from the cancellation of the ū컨TDC debt. This motion is effective May 21, 1997. MOTION #3 The Board of Regents directs the Systemwide Academic Council to report to the Academic and Student Affairs Committee in September 1997 regarding (1) staffing assignments made to ensure that the educational and compliance functions will be adequately performed, and (2) negotiations with another institution which ensure the adequate evaluation and commercialization of promising intellectual property. This motion is effective May 21, 1997. David Creamer, vice president for finance and planning, reviewed the history of the relationship between the University of Alaska and the University of Alaska Technology Development Corporation and outlined the administrations recommendations. Members of the ū컨TDC Board of Directors spoke regarding their concerns in completely dissolving the corporation and the need to revise existing agreements if the corporation is not dissolved. Regent Croft moved, seconded by Regent Burns, that Motions 1, 2 and 3 be approved. Regent Fate moved to amend Motion #2 by substituting modify for terminate in Item 1 and to substitute audit for forgive in Item 2. The amendment failed with Regents Burns, Fate, and Ogg voting in favor and Regents Croft, Demeksa, Gagnon, Hayes, Henri and Kelly voting in opposition. Regent Henri expressed his concern that there had not been enough time to discuss the proposed recommendations and moved to table Motions 1, 2 and 3. Regent Ogg seconded the motion to table. The motion to table failed with Regents Fate, Henri and Ogg voting in favor and Regents Burns, Croft, Demeksa, Gagnon, Hayes, and Kelly voting in opposition. Regent Croft moved a substitute motion, seconded by Regent Burns, and passed unanimously that: SUBSTITUTE MOTION PASSED The Board of Regents directs the president to: 1. convey the Board of Regents gratitude to the Board of Directors of the University of Alaska Technology Development Corporation (ū컨TDC) for that organizations success in developing enthusiasm for technology transfer within the universitys faculty and staff, identifying compliance requirements associated with the development of intellectual property under federal grants and contracts, and its dedication to developing opportunities for the commercialization of the universitys intellectual property; 2. serve notice of intent to terminate or modify all existing agreements with the ū컨TDC; 3. propose the establishment of a new relationship with ū컨TDC; and 4. report to the Board of Regents Committee of the Whole at its September 1997 meeting regarding the presidents recommendation concerning the establishment of a new relationship with ū컨TDC and/or staffing assignments made to ensure that the educational and compliance functions will be adequately performed. This motion is effective May 21, 1997. Regent Fate moved, seconded by Regent Croft, and passed with unanimous consent that: PASSED The Board of Regents of the University of Alaska directs the president of the University of Alaska to report to the Board of Regents in September 1997 regarding education and compliance functions relative to patents and copyrights obtained by personnel while under employment of the University of Alaska. This report should include ways and means of evaluating and commercializing intellectual property without jeopardizing the University of Alaskas property rights or authors intellectual property right to full royalties or proceeds as a result of the commercialization of the property. This motion is effective May 21, 1997. IV. Other Items of Concern There were no other items of concern. V. Adjourn President Kelly adjourned the meeting at 12:22 p.m. Official Minutes Special Meeting of the Full Board May 21, 1997 Audioconference  PAGE 9  PAGE 1 *|HH(EG(HH(d'`ࡱ; SummaryInformation(tomerJeannie Phillips'@a@'}@"B"@Microsoft Word 6.0.124 ESghw FSV_?D\ _ ` r s y z  'ZV`5T!!*"B"(%2%%%'$'U'U^^IU^IVIUII\U'p'w'x'$(.(, ,-P.Q.W.Z.[..../?/_/00P0Z0t00000000001R1W1X11111_22222233t44499999::!:H::::;;;<<L<P<U<b======R>S>T>Z>@@@@@AA'A]A^AUIUU^U^I^I^IZ^AoAAAAAAAAAAAAAAAAAAAAAAWBuuDPIPIP uDPI UcIcI"ERSghyz;[x!"0EFUVa<^"W!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!0,>?Fx[ \ s t U p { } y z !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0! 0!  0h# ^_EFv!w!S#T#$$,&-&v+w+--O.P.[.\.00000011!!! !! !! !! !!!! !! !!!!!!!!!!!!!!!! !!!!!!!! p0! 0! 0!'12222234455v6w66677R9S99999::;;W<X<<<====S>T>!!!!!! !!!!!!!!!!!!!!!!!! !!!!!!!!!!!! 0! 0! 0! p0!$T>[>\>??@@@@@@AA'A(A]A^AoAAAAAAAAAAAAAAA!!!!!!!!!!!!!!!!!!!!!!!!!!! 0! 0!K @ Normal ]a c"A@"Default Paragraph Font @ Footer !)@ Page Number @ Header !>AA !!  !!!!! 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