UCAR > Communications > Staff Notes Monthly > March 2001 Search

March 2001

Delphi Questions: IP policy, Director's Conference Room

Question #467 (received 26 January):

WITI, RAP, UCAR, the UCAR Foundation, and a major commercial weather information provider engaged in the DiCast project to implement an automated weather forecasting system for locations within the United States and throughout the rest of the world. As a result of this project, RAP received revenues from three sources:

(1) RAP fulfilled its contractual obligations to WITI on the DiCast project in October 2000. The ~$900,000 project was completed under budget by more than $150,000.

(2) The software system passed several one-month-long reliability and quality tests on its first attempts. This entitled WITI and RAP to a contractually stipulated bonus from their client. RAP's portion of this bonus was about $110,000.

(3) In addition, through a licensing agreement between WITI and the UCAR Foundation, RAP received a rumored ~$640,000. These were royalties received for the license of UCAR technology.

Therefore, I estimate that RAP has netted more than $900,000 from the work on this project.

My questions have to do with the royalties received for the license of UCAR technology, referred to in (3) above.

It is my understanding that under UCAR's IP policy, for nonpatented technology, it is left to the discretion of the division director to name key contributors, if any, who are entitled to a share of any royalties.

Recently, the RAP division director has named key contributors for the technology licensed to WITI in two separate actions. First, seven individuals were nominated by the RAP division director for the prestigious UCAR Technology Advancement Award for their work on the DiCast project. Second, the division director selected eight individuals (the aforementioned seven plus one additional key contributor) to receive small incentive awards from the bonus money described in (2) above. These two actions clearly indicate that the RAP director has identified the key contributors to the technology and that their contributions were beyond what is expected as normal work product.

My questions are:

(1) How much money did the UCAR Foundation receive from WITI as a result of the licensing agreement? How much of this money received by the foundation has been distributed to each of UCAR, NCAR, RAP, and any other entities?

(2) Now that the RAP division director has identified the key contributors, when will distributions of the licensing royalties to employees occur?

Response (13 February):

The questioner notes that RAP retained revenues from three sources: contract revenue, bonus revenue, and royalties received for the license of UCAR technology. While the dollar amounts attributed to each of these sources of revenue are generally correct, UCAR did not receive royalties per se as a result of its agreement with WITI. It is true that UCAR and the UCAR Foundation entered into an agreement with WITI in which WITI agreed to pay royalties based on a percentage of WITI's revenue for the right to use UCAR technology. However, the anticipated WITI revenues were never realized because WITI was sold to LifeMinders before WITI could execute the business plan that was to have produced the revenue. As a result, WITI never paid any royalties to the UCAR Foundation. Instead, the foundation realized capital gains from its equity position in WITI in the form of cash and LifeMinders stock. The UCAR Foundation agreed to share a portion of its cash proceeds with RAP in lieu of any royalties RAP might have received under the WITI/UCAR Foundation license agreement.

So the answer to the questioner's first questions is that (1) while the UCAR Foundation did not receive any money from WITI as a result of the licensing agreement, it did receive almost $2 million in cash from the sale of WITI; and (2) out of those cash proceeds, the UCAR Foundation will pay $640,000 to RAP over a three-year period.

The questioner is correct in saying that under UCAR's IP policy it is left to the discretion of the division director to name any key contributors who are entitled to a share of any royalties. However, the questioner then states that individuals who were nominated for a Technology Advancement Award and given an incentive award have been named as key contributors. This is not the case. Each of these actions stands on its own. UCAR Policy 1-1-8 states, "It is the responsibility of the individual Division/Program Directors to identify individual inventors or key contributors . . . during the intellectual property disclosure process. Only (i) individuals named on an issued patent or (ii) key contributors identified in the disclosure documents and approved by their respective Division or Program Directors will be entitled to royalty sharing." In this case, the director of RAP did not name any key contributors during the disclosure process or at any other time in relation to UCAR's IP policy. Absent the division director's specific designation of key individuals, there is no authorization to make any distribution of revenue to individual employees.

I would like to point out that most division directors have not named key contributors when nonpatented technology is being commercialized. This has been true for NCAR Graphics, COMET modules, and GPS dropsondes, to name a few. While I don't pretend to speak for the various division directors, I believe they generally are of the opinion that these technologies are evolutionary in their development and are typically the result of many years of effort by a large number of people over a long period of time. Selecting the small group of people who happened to be involved at the moment the technology was transferred to the private sector would not recognize the efforts of past or future contributors, or those of supporting personnel who helped sustain the development.

In this particular case, it is my understanding that the director of RAP is using the funds RAP received from the UCAR Foundation to continue the DiCast development project because there are no other sponsorship funds available for that effort. Without the funds from the foundation, the DiCast project could have been abandoned and the team disbanded. I do not know whether any layoffs would have been necessary. Most directors use their royalty proceeds in this way, to fund or enhance efforts that are of key importance to the mission of the division but that might not otherwise receive the needed support.

—Jeff Reaves,
associate vice-president
Business Services
(Rich Wagoner, acting director of RAP,
provided input for this answer)

Question #466 (received 26 January):

My question has to do with the UCAR policy on intellectual property and technology transfer (IP and TT). There seems to be a mismatch between the description of this policy in the December 2000 issue of Staff Notes Monthly and the version available on the UCAR internal Web site.

The Staff Notes Monthly article refers to 90% of revenue going to the programs and divisions, but the Web site states that 50% of the revenues will be retained by the UCAR Foundation and the division/program will receive 50% of the remainder. The article also refers to an active role in the IP & TT process for the division/program, while the Web site does not include any reference to the division/program in the Responsibilities section. Finally, the article refers to a major revision of the IP & TT policy in 1998, while the Web site lists a 12/94 date at the bottom.

My questions are:

(1) What is UCAR's current intellectual property and technology transfer policy?

(2) Is UCAR required to notify staff when changes are made to distribution percentages or other sections of the IP & TT policy? (Web references: Policy 1-1-8, IP & TT, Provision 8 and Policy 1-1-2, Policy Manual Applicability and Adherence, Responsibilities 1)

(3) Why has the IP & TT policy not been updated on the Web and UCAR staff notified?

(4) When will the IP & TT policy be updated on the Web and UCAR staff be notified?

Response (2 February):

I appreciate having this brought to my attention. Unfortunately, I was not aware that the new IP policy had not been posted on the Web. The current policy, which provides for divisions and programs to receive 90% of the proceeds from commercialization, was approved by the UCAR President's Council almost a year ago. UCAR has a standard procedure for updating the policy manual and notifying staff of changes to policy. Failure to update the IP policy was an oversight, and Valerie Friesen, corporate policy development administrator, did not receive a copy of the revised policy. This oversight will be corrected immediately. My apologies for any confusion this may have caused.

– Jeff Reaves,
associate vice president
Business Services

Question #468 (received 8 February):

A number of people are puzzled and upset with the recent decision to make the Mesa Lab's Director's Conference Room into a storage area for the Science Store. The ML is already short of conference room space particularly during the summer. We believe this decision is shortsighted and makes an existing problem worse.

(1) Who made the decision?

(2) What was the rationale?

(3) Why was the Director's Conference Room deemed expendable?

(4) Is any space near the North ML tower being offered as a replacement?

Response (23 February):

The President's Council considered the many concerns it received about the Director's Conference Room (DCR) no longer being available. As a result of these concerns, and of CGD's generous offer of space to help solve the serious space needs of the exhibits program and the NCAR Science Store, the DCR will be returned to general use in the room- reservation system.

The President's Council based its original decision on the very limited use of the DCR as reflected in the room-reservation system. Judging by the concerns expressed when the decision was announced, it's clear that there is usage above and beyond what we officially record. I ask that people remember to reserve rooms they need so that we are dealing with the best information possible! This information is used to determine priorities for multimedia needs, wiring, etc.

–Katy Schmoll
UCAR vice-president
of Finance and Administration

Questions and suggestions from the staff to management may be submitted in confidence to the coordinator, Janet Evans (ext. 1114, ML room 517). They should be submitted in written form, preferably via interoffice mail in a sealed envelope marked confidential; they must be signed. Detailed procedures for submitting questions are given in the UCAR Policies and Procedures Manual, section 4-1-2. Questions and answers of general interest to staff are submitted to Staff Notes Monthly by Janet. They may be edited for publication. For more information, including links to questions and answers published in Staff Notes Monthly and a log of all questions submitted since 1995, see the Delphi Service Web page.

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Edited by Bob Henson, bhenson@ucar.edu
Prepared for the Web by Jacque Marshall
Last revised: Thu Mar 22 15:52:04 MST 2001