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MagCorp creates “Shared IP Model” to help simplify partnership structure

Excerpted from the November 2021 issue of University-Industry Engagement Advisor. UIDP members can view the entire issue here.

Magnetics Corporation (MagCorp), a new company co-founded by alumni of Florida State University, has established what it asserts is a unique model for university-industry partnership, highlighted by a “Shared IP Model” that pre-designates the division of IP rights. The initial implementation of the model, which involves not only FSU but also the National High Magnetic Field Laboratory — a facility at FSU that has the highest-powered magnet laboratory in the world — was unveiled at a recent UIDPConnect 2021 session entitled, “Revolutionizing Technology Development Partnerships.” The model seeks to remove traditional barriers to university-industry collaborations, often involving IP conflicts.

The five-year agreement allows university researchers to work within the lab, with one of its main goals being the acceleration of magnet technology development. “We host users annually from 135 universities in the U.S. and 114 around the world; 20 government labs and 25 around the world; and 20 U.S. industry research groups and 13 overseas,” shared Greg Boebinger, a staff member in the National High Magnetic Field Laboratory (MagLab). “When we have an idea that could be commercialized, we do not have the ability to do that.” In this new relationship, he asserted, “we can match the pace and deliberativeness of universities with the speed of industry.”

The idea for MagCorp was hatched several years ago through discussions with industry partners, said director and co-founder Jeff Whalen. Whalen has a PhD from FSU, served on the research faculty at MagLab for 10 years, and is now a STEM entrepreneur in residence at the university’s Jim Moran College of Entrepreneurship. He said that industry identified a gap between what was scientifically invigorating and what could make cash flow. “Those two don’t always mesh,” noted Whalen. “This problem-solving gap was the impetus for creating MagCorp, and the biggest driver.”

The commercial sector has been hesitant to cross the gap, Whalen asserted, because of confusion about the process. When you talk to commercial partners and ask why they don’t engage and try to leverage their assets, he explained, they respond with questions like “Who do I call?” “How do I start?” “Do they have what I need?” “What will the deal look like?” “How much will this cost?” “What kind of approvals do I need?”

In addition to such questions, Whalen noted, industry objections included the fact that universities operate at a different speed, which will not suffice for what they need to do operationally, and that when they talk to university representatives, they feel like they are getting a science lesson. “Nobody wants to talk about business opportunity,” he quoted one industry partner.

“There has just never been an advocate for facilitating this communication,” said Whalen. “We refer to MagCorp as a destination for scientists to have the infrastructure to solve problems that industry faces today — right now — to literally be able to put MagLab to work for industry partners.”

Shared IP Model

At the core of MagCorp’s solution is its shared IP model: 40% to the industry client; 40% to FSU/MagLab; and 20% to MagCorp. The company has also executed a Master Services Agreement with FSU, so “expectations are set, and projects begin faster.”

MagCorp CEO and Chief Legal Counsel Abby Queale, who holds a law degree from FSU, recalled learning about the challenges of dealing with IP while in the FSU legal office, “when tomatoes were thrown at me” for holding up deals.

She says this IP model addresses those challenges. “This split does not just make it easy,” she noted. “We looked at how it’s done in industry. At MagCorp, the split among the co-founders [is appropriate] because we’re more valuable as a trio than any combination of two or one of us. Academia gets a very good split, too, especially with large grants that are multi-disciplined or multi-institutional. That’s very astute joint IP management. What’s new here is the three-way split. When you talk to industry, they say ‘we funded the project — we probably should own all the IP.’ I think that’s correct. The universities say, ‘We’ve invested a large amount of money into a unique world-class infrastructure and faculty,’ and when I was there, I thought they were right as well.”

If you look at the legal definition of a patentable invention, she went on, “it’s something new, something useful. The MagLab and FSU, and universities in general, have the ‘new’ part down, industry has the ‘useful’ part down, and a market channel that is usually ready to go that they’ve sometimes taken years to build. So now we’re looking at more valuable IP; it’s market-originated, and more valuable because of it. Something we found out in practice was when we had a faculty member call me saying they were so relieved: ‘I could not believe the conversation I had with an industry lead engineer; we actually got to collaborate.’

“No one worried about not owning the IP, or giving anything away,” Queale continued. “What they really loved was a lot of folks do not want to have a conversation about inventorship. Everyone at that table has a boss they report to, and they want to bring back an asset. Everyone has incentive.” The faculty, she adds, “were very happy.”

“We were literally put in place to have the answers,” noted Whalen. “It does not mean changing the existing modes of engagement with FSU and the lab; instead, we are curating those modes, acting as a concierge to the lab for these partners in a very simple way.”

Another advantage of the model, Queale continued, is reduced indirect costs. “I’m not saying there should not be overhead to the university, but sometimes when the rate is pretty high it’s not necessary,” she noted. “Again, we sat down with the university; we take some of those costs off the university’s plate.”

As for the master formal agreement, she continued, “there’s no point in us being a concierge if we have to renegotiate with the university each time. As of December 2020, we were able to add scopes of work and budget for our clients to that agreement, so we can get these projects started faster.”

The model, she tells UIEA, echoing Whalen, “was designed to keep the existing industry-sponsored model unchanged. Industry is still the sponsor; they see us as the technology development partner, using the expertise of the industry partner without working with the university, or having to find an expert.” As most of the projects are already interdisciplinary, she adds, other elements of the university might naturally need to be involved. In such cases, she notes, “we would not wait, and stick [just] with MagLab if we have the team we need.

“No project,” she continues, “is going to fit in a silo — no matter what. If, for example, there are new materials folks in the lab that are making materials for magnets, there’s also a facility across the street — the High-Performance Materials Institute. Sometimes there are overlaps in the FSU Innovation Park. We didn’t want the agreement with FSU to just cover MagLab; we want to access all of it. We want to be able to pivot quickly for clients and put the right team together.”

Stepwise Engagement Model

Once a partnership is underway, MagCorp proceeds with what it calls its Stepwise Engagement Model, which starts with a feasibility study, and then moves on to proof of concept, prototyping, and commercialization.

Of course, that is all predicated on attracting an interested industry partner. How does the company find those partners? Do they come from FSU, or the lab, or do they approach MagCorp directly? “It’s a mix,” says Queale, “with probably more outreach on our own. For example, we attend industry trade shows. There are company reps there; plenty of them are aware of what universities [can offer], but there are probably more that do not. They go to the magnetics trade show, for example, if they have problems they want to solve.”

Once a potential industry partner has been identified, Queale explained, “we go to a faculty member, tell them there’s an industry member who has a problem, and nine times out of 10 they’ll say, ‘this is exciting.’ So, then we talk about putting something on paper to get something akin to an RO1 grant, with say a seven-figure budget, a three-year timeline, and two or three co-PIs. That’s what the faculty are experts at, and we’re here because of that; we help translate.”

She noted that early steps could include accessing small translational grants, such as the FSU Research Foundation Grant Assistance Program, designed to support enhancements of inventions disclosed to FSU. The grants are for projects requiring less than $50,000. “This de-risks for all parties,” she explained. “Industry is used to ‘small and quickly,’ as opposed to the lab, which is generally used to ‘big over a long timeline.’”

When it comes time for a feasibility study, she tells UIEA, “that’s where we come in with our consulting. We have 30 subject matter experts already signed up. I make sure they’re in compliance with conflicts of interest and commitment. There could be simulation involved, or a survey, and if new materials are being developed, we may be able to look at alternative materials to save money. This way everyone can feel safe and pivot very quickly. This ties into our master agreement.”

Whalen shared three projects that MagCorp has already successfully been involved in. One, with Oak Ridge National Laboratory, involved a very large 3D printer. “I asked them why they contacted us,” he recalled. “They said, ‘We came to you simply because you’ll be able to develop for us a more effective, cheaper solution than we would develop in a much longer period time.’ I think this was great validation.”

A second project involved commercial partner UNandUP, which is doing federally funded SBIR work for magnetic guidance catheters and magnetic drug delivery nanoparticles for the creation of novel new technology.

The third was a partnership with Lockheed Martin working under The Defense Production Act to develop and establish a new MIL STD for rare earth magnets.

Faculty, TTOs on board

Faculty support has been a significant factor in MagCorp’s successful launch, said Queale. “Once we got faculty buy-in it really helped tremendously,” she noted. “They like that consulting part. They sign one agreement with MagCorp, and they know they will not get in trouble with FSU policy; there are no Stanford v. Roche concerns [related to IP assignment], which can have a chilling effect.”

FSU, she added, “was very good letting us start the consulting model; we’ve already seen revenue from that, and it helped us survive COVID.” Licensing and consulting revenue through universities are the other two revenue stream elements for MagCorp.

One “bonus,” added Whalen, is that “in the past when I talked with faculty about SBIR and STTR, they’d say, ‘Well, I never started a company before; how do I do it? Should I do it? Should I keep my day job? I know someone who could start a company, but not in Tallahassee; would you or the local folks be mad at me if the company is not in Tallahassee?’ When I told them that MagCorp can be the company that is the applicant, that can sub-award the university into that lab, they jump up and down.”

As for TTOs, “we’ve been asked if we compete with TTOs, and it’s absolutely not the case,” said Queale. “We cast a wider net. The TTO has been about going to AUTM and LES, faculty go to academic conferences to meet with companies, and we go to industry trade shows to meet with companies. We’re just trying to help — we’re not in competition at all.”

In fact, Boebinger noted, “we’re seeing more interactions with the TTO since MagCorp came into being, first with the consultancies, and now with this master agreement coming into being. I think it raised awareness among our researchers that this a possibility, that they have the freedom to go through FSU or MagCorp — in either direction.”

The company is already reaching out to other institutions for potential partnerships, and at the seminar the presenters encouraged other universities interested in the model to contact them. “We approached several national labs we met at a trade show and have been in conversations with them,” Queale shares. “When we presented at UIDP, we had some universities approach us.”

In addition, she says, during COVID MagCorp also offered some courses taught by MagLab scientists. “Now, that’s a new product offering we can provide in the future to industry audiences,” she says. “We have quite a few medical device clients that have smart people; they need the information that basic materials courses just do not teach.”

Ideally, she continues, she’d like to see the model applied to virtually any industry-sponsored partnership. “MagLab was low-hanging fruit; it was the largest lab on campus, so it made perfect sense,” she explains. “There’s a lot of momentum.”

Contact Boebinger at 850-644-0851 or gsb@magnet.fsu.edu; Queale at 850-296-2553 or abby@magneticscorp.com; and Whalen at 850-321-5540 or Jeffrey@magneticscorp.com. u

Posted November 10, 2021