Guidelines for Licensees + Investors

• UBC owns the title and all rights to inventions, improvements and modifications made by faculty, staff and students while conducting research using university funds and research facilities. Disclosure of inventions is made to the University-Industry Liaison Office (UILO).
• Since the majority of funds to support research are obtained from the Canadian taxpayer, the University will give preference to licensees where the technology will be exploited in British Columbia or Canada, provided that this makes sound business sense.
• Because the mission of the University is primarily one of education and research, the University must retain the right to use the technology for research, scholarly publication, education or other non-commercial purposes, and retain rights to present and publish accounts of its research and all information relating to the technology in journals or other publications.
• Under UBC Policy 88, inventors receive 50% of net consideration, either by way of equity or royalty arising from a license agreement for UBC technology; however the University will require that the inventors waive their rights to such consideration if the inventors are major shareholders by way of being company founders.
• In managing its technology portfolio, UBC is seeking a balance between royalty and equity income. UBC will license technology for either royalty, equity or a combination, depending on the interests of the parties.
• Inventors are required to provide full disclosure of their interests to UBC where there may be a real, potential or perceived conflict of interest, particularly where inventors are officers or directors of a company in negotiations with the University for rights to a technology. Such disclosure must include information related to graduate students and post-doctoral fellows who may receive equity or other consideration from the prospective licensee.
• UBC’s name may only be used in statements of fact and not in any way that suggests or implies endorsement or promotion of a product or service based on technology developed at UBC.
• The licensee may not use UBC trademarks without prior written consent of the University.
• As a public educational institution, the University is unable to expose itself to claims for damages that may arise from the use of any technology. Therefore, the University will make no warranties or representation with respect to the technology. Any Licensee is advised to undertake its own due diligence in relation to the technology and its application. For the same reason, the Licensee will be required to indemnify the University against any claims arising from the use of the technology.
• The Licensee will be required to obtain insurance in amounts and on terms that are acceptable to the University and in any event no less than that which a reasonable and prudent businessperson would obtain.
• The Licensee will not be permitted to assign, transfer or mortgage technology licensed from the University without the prior written consent of the University.
• The University will require full disclosure by prospective investors to facilitate the University conducting appropriate due diligence. The University will not enter into any business relationship with anyone who has a criminal record relating to fraud, breach of public trust or similar offences or who is subject to an order or ruling issued by a securities regulatory authority as a result of an offence under securities legislation. UBC reserves the right to terminate agreements with any company which falls within one of the previous proscribed categories.
• Prospective licensees will be required to reimburse UBC for specific costs such as patent expenses incurred by retaining patent agents or payment of government fees. The University may require reimbursement of other reasonable costs such as legal expenses on a case by case basis. Prospective licensees will be required to demonstrate their ability to meet their immediate and short term financial obligations to the University. Licenses will not be granted to companies which have inadequate working capital or who become bankrupt during the course of negotiations.
• Spin-off companies and other licensees of UBC technology frequently undertake contract research at the University.
• Such research contracts are undertaken under the same terms and conditions as those for industry.
• Licensees should also be aware of UBC's global access licensing principles, under which the University will endeavour to provide developing world access to relevant technologies in partnership with licensees.

The process from initial contact to completion of a license agreement may be summarized as follows:

1. Initial information meeting to assess general interests of a prospective investor.
2. Follow-up meeting to discuss specific technologies that may be of interest.
3. Execution of a non-disclosure agreement between the parties to facilitate more detailed discussions.
4. One or more meetings with inventors of a specific technology. The purpose here is to ensure that there is a reasonable prospect for the appropriate 'chemistry' between the inventor(s) and the investor(s).
5. Due diligence by the University on prospective investors and due diligence of the investors on the University technology.
6. Preparation of a preliminary business plan either as part of the initial investment proposal or as part of the seed round financing.
7. Possible discussion of an option agreement between the parties, for consideration.
8. Negotiation of a term sheet.
9. Preparation, review and execution of a license agreement.
10. Possible drafting of shareholders agreement, articles of incorporation, certificates of registration, board resolutions or other documentation.
11. Concurrently, the University may be assisting the investors in obtaining additional commitments of funding from both private and government sources.
12. The normal time frame for completion of these activities is 3 to 6 months but in some circumstance may take 12 months or more.

• UBC does not have the ability to directly invest cash to purchase shares in any round of financing of a spin-off company.
• UBC inventors will waive their rights to share in equity or royalties received by UBC if they choose to be directly compensated by the company. In such cases, UBC will pro-rate the level of compensation required under the license agreement to net-out the inventor's share.
• UBC expects to be party to a shareholder's agreement.
• UBC may request a seat on the board of directors of the company, or alternatively, observer status at board meetings or copies of all submissions made by management to the board.
• UILO makes a practice of attending company annual general meetings.
• Share certificates are transferred to UBC Treasury for management.
• Inventor's share of the equity is distributed to them as soon as possible.
• Shares are managed to maximize the return from each individual shareholding over the long term (10 to 15 years).
• Pre-dilution share positions typically range from 5% to 20% with an average of 10%.
• Dilution normally occurs after the closing of seed financing ($250,000 - $500,000).

• UBC is the steward of technology developed with public funds. As such, it will only consider assigning ownership of the technology to a company in situations where there is a reasonable expectation that the company will survive and the technology can be exploited in British Columbia.
• Requirements are sector and technology specific but normally include:
• Substantial financial investment ($5million-software to $15million-biotech)
• Appropriate corporate governance (reference TSE Guidelines)
• Joint venture or strategic partner with a creditable industry partner
• Completion of Phase II clinical trials

These conditions are set out in advance in the license agreement and may be re-negotiated as necessary to meet changing business realities.