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Educational Research Business Plan

University Patents, Inc.

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Market Analysis Summary

Market size
The Association of University Technology Managers (AUTM) surveys all universities yearly pertaining to IP related issues. One hundred and ninety (190) U.S. universities (the majority of which are in our target segment) responded to the 2000 survey revealing the following data:

Patents

• 13,032 invention disclosures
• 6,375 New U.S. patent applications (15% increase over 1999)
• 3,764 U.S. patents issued (3% increase over 1999)
• 2.4% of all new patents issued are to academic institutions

The above patents generated the following data on licenses:

• 4,362 new licenses in Year 2000 (11% increase over 1999)
• 50% of new licenses were exclusive, 50% were non-exclusive

License income for FY2000:

• 9,059 of the 20,968 active licenses yielded income (43%)
• These active licenses generated $1.26 billion of users in 2000
• 125 (.6%) licenses generated in excess of $1,000,000
• 57% of income is from running royalties
• 13% of income is from cashed in equity
• 30% of income is from other types of income (i.e., one time fees)

Data from the survey, indicates that the 190 reporting institutions spent $29.5 billion on research this year. Total research expenditures for each institution increased by approximately $474 million for the year. The total number of new patent applications submitted in 2000 increase 15% from the previous year with a 3% growth to 3,764 in total patents granted.

This continuing growth in funding and the trend of increased numbers of new patents and licenses each year, the need for a licensing service should only grow.

4.1 Market Segmentation

There are approximately 2,920 institutions of higher learning within the U.S. of that number, 1,106 are two-year city/community colleges, 1,590 are smaller four-year colleges and universities and 224 are major four-year universities. It is in the four-year universities that the majority of research is done.

52% of universities responding to the Association of University Technology Managers' (AUTM) Licensing Survey: FY2000, report research expenses of less than $100 million. Additionally, 142 (mostly large universities) of the U.S. universities surveyed also reported only 479 full-time employees dedicated to licensing efforts.

Providing the respondents are a representative set of the university system as a whole, there are ~940 U.S. institutions spending less than $100 million on research, the majority of which have less than two individuals dedicated to creating licensing opportunities. These are also the most likely to have smaller staffs available to create licensing opportunities and therefore prime targets for University Patents.

The universities with research budgets under $100 million make up 61% of the institutions generating license revenues up to $5 million per year. Therefore, though these universities have less chance of generating a high value license, they are still generating a great deal of revenue.

4.2 Target Market Segment Strategy

With University Patents' primary customers being universities, we will be encroaching on the responsibilities of their own offices of technology/research. However, through contacting the University of Notre Dame, Indiana University, Purdue University, the University of Idaho and researching the offices of technology at the University of Michigan and Michigan State University, we found that most university offices do not have the time and/or resources, nor the contacts in the business sector to effectively move new technology out to commercialization.