In November 2017, Vigilant Aerospace had the pleasure of making a joint presentation with NASA Armstrong at the R&D 100 Conference in Orlando, Florida.
The presentation, titled “Commercializing Federal R&D: Secrets to Startup Success,” discussed the process, resources and key tips and insights gained from our experience licensing and commercializing NASA technologies in order to help other companies and investors effectively pursue the innovations from federal labs.
Vigilant Aerospace CEO, Kraettli Epperson, and NASA Armstrong Technology Transfer Specialist, Janeya Griffin, provided insider perspectives on the story of Vigilant Aerospace from the beginning of the licensing process and to commercializing cutting-edge technology developed by engineers at NASA Armstrong Flight Research Center. The session presented the story of Vigilant Aerospace as a case study for successful technology transfer and commercialization with background, steps taken, and lessons learned.
Watch the full slide presentation with speaker commentary here:
From the video:
Moderator:
In this session we’re going to explore a NASA startup case study that well present key information to help other companies and investors effectively pursue the productization of government technology.
Our speakers are Janeya Griffin who’s a Licensing Manager and technology transfer specialist at NASA Armstrong Flight Research Center in Edwards, CA. She’s given numerous presentations on transferring technology from federal laboratories. She’s an executive board member for the Federal Laboratory Consortium. For tech transfer she holds a certification in entrepreneurial technology commercialization from Cal State University in San Bernardino and to Bachelor of Science degrees criminal justice and chemistry. She’s a big time techie.
Second speaker is Kraettli Epperson, the CEO and co-founder of Vigilant Aerospace Systems, a company that provides autonomous solution oriented software for unmanned aircraft based on the patent exclusively licensed from NASA. He twenty year career as a serial entrepreneur and investor in federal startups. He also is the co-founder of R7 Solutions, which provides mapping and workflow systems for utilities, pipelines, sonar, wind, and rail systems – including software to manage the land data system for Houston Metro’s billion-dollar regional rail system.
Welcome Janeya and Kraettli.
Janeya:
Okay. So you guys ready? Yes? So, this is going to be an interactive session because I don’t want you guys to get bored and I don’t want you guys falling asleep. So, if you are and I pick on you just be ready to answer a question.
But, like you said my name is Janeya Griffin. I’m at NASA Armstrong Flight Research Center. And so, today we’re going to be kind of tag teaming this.
We’re going to be talking about: What are the startup successes and how are you able to basically license a federal laboratory technology as a startup. What does that look like? So, Kraettli is going to give a little bit of talk about what is FlightHorizon, which is the product that they actually commercialized using the NASA technology and we’ll also talk about vetting federal technologies for their commercial potential.
There are a lot of different innovations that come out of the federal labs and so finding out which of those innovations are actually relevant is really important for us in how we actually go about licensing those technologies. We’re going to talk about validating some of the market potential. Where do we see the best fit? How did Kraettli actually look at that market to determine whether or not this was going to be a good fit for his company?
And, then also negotiating a win-win deal. The federal laboratories in general, NASA just be one of them, is really focused on fairness and actually seeing licensees succeed, because it’s great for our economy, right? And, so we’ll talk about that we’ll go into a little bit more detail. We’ll talk about building a market ready product, and I think Kraettli, you’ll go a little bit more in detail on that. And, then what does cultivating the market actually look like that will give you a little bit of a conclusion, some lessons learned and then answer your questions. So, I’ll ask that all questions be held until the end and then I think we will have about ten minutes to answer questions.
Kraettli:
All right. Hi. I’m Kraettli and I’m going to be talking about Vigilant Aerospace Systems, which is the startup company that has licensed this technology. We’ve worked very closely with Janeya and Laura who are both in the tech transfer office at Armstrong and fortunately we have senior NASA Engineer Ricardo Arteaga with us today, who is the inventor of the technology.
So, I’m going to tell you really quickly before we kind of go into what we’re really going to talk about the licensing process, the startup process, the transition process from patent and prototype into commercial marketable product. I’m going to give you just a little bit of background on what the technology is and I’m going to go pretty quickly through most of my slides, because I want to leave plenty of time for Q&A at the end.
So, this is the technology both piloted and autonomous vehicles and it actually monitors the airspace and provides specific commands to do self-separation and avoidance of aircraft, whether it is piloted, manned aircraft or unmanned. And, so it is a system to for doing fully autonomous self-separation and situational awareness in the airspace.
It is based on an exclusively licensed patent, which was was fully published at the start of last year. We have fully implemented software. We have transponder integration. So, there’s some hardware including avionic transponders, radars, other things that we’re adding to the system to feed into that detect-and-avoid process. So, it’s either laptop or tablet based. You can see a picture over here of it. It really helps meet FAA requirements and other civil aviation authority requirements who are unmanned aircraft to be able to detect-and-avoid or see-and-avoid aircraft around them.
So, it fills a really important technical gap in the market right now that everybody is scrambling to try and figure out with sensors and then the intelligence on the system to really deliver the safety.
So, it has years of flight testing. We’ll talk a little bit about that and Ricardo was the initial inventor and flight tester of this. And, it’s really designed to meet a growing demand in industrial flying, which is focused on long-range flying for inspecting things like bridges, pipelines, solar farms, highways… All the infrastructure that needs to be looked at regularly that doesn’t always get looked at… really important growing need for public safety.
I’m going to show you a really quick video, just so you can see in the interface how the software works.
So, here you’ll see here that white aircraft represents your own aircraft and it’s going through a maneuver here. Those yellow and red circles are warning circles around the aircraft. And, the software has detected that there’s an potential conflict in collision as so it has as directed to the aircraft to descend. And, then now it is going past that potential conflict and it is ascending back onto its original flight plan. And, you can see that the green line is that flight guidance that the software is monitoring the airfield this is a real quick example of the way that the software works. So, it’s doing a lot of thinking in the background. It can monitor the entire airspace and, on a sub-second basis, make decisions about when to keep the ownship safe.
Janeya:
Okay. So, vetting federal technologies for commercial potential. So, let’s just talk real quick about a lot of the technologies that come out of the federal labs.
So, there are actually three hundred plus federal laboratories, so like I said, NASA is just one of those. And so, what exactly are we looking at when these innovations are coming down the pipeline to us? We have our inventors, our innovators – Ricardo being one – disclose these technologies to us and so we have to actually look at whether or not there is any commercial potential for it. And then, from an investment standpoint, in terms of patenting; in terms of do you put more resources continuously to further develop the technology; in terms of manpower; in terms of reaching out to other companies and kind of looking at what the market looks like from an assessment for that. And so, all of this is it costs money of course and so we need to figure out is this something that we actually want to go forward with.
So, why NASA patents IP. Who in here pays taxes? Thank you. Thank you. Okay, so NASA thanks you. The federal laboratories thank you for paying your taxes, but what we want to do is to bring a return on investment to our taxpayers. So, how do we do that?
We patent ideas that come out of mission specific goals. We have innovations that come out of that. So, like I said, we look at that to see if there is any commercialization potential. NASA’s mission, as opposed to all other federal laboratories… They each have their own mission in terms of what their goal is to actually get these technologies out to the commercial sector. But, NASA’s mission is actually to disseminate all the technologies we have to the widest extent possible. And so, we do that by offering all of the technologies that we have up for these different categories. There are a bunch of different applications that actually come out of the technologies that we have.
So, I’ll go back to the mission specific goals so each project each program has their own specific mission and so technologies come out of that when problems are solved. The inventors actually to disclose those technologies to us. We look at the commercial potential and what are the functionalities of that technology, right? So, when you look at the functionality of that technology… that functionality can actually be applied to many different industries. So, you might have a technology, for instance, that is in the health and biotech industry, but it was not invented for that initially.
So, these are all the different categories that we actually have on our website which I’ll give you guys a minute that you can look at all the functionality of the technologies and then kind of see where that may fit for you.
There’s three things that we actually look at. So, you look at the market research. Does that technology actually meet a market need? Is there a problem that it’s solving outside of what it was originally invented. So, if that is yes, then we move forward. And, then we also do prior art search. We try to look at it as almost like a competitive matrix. So, what are the other technologies, or methodologies, or even competitors the 50 competitors that exist currently in the market and is there a competitive advantage that this technology would have over what’s currently existing. So, if that’s a yes, then we also move forward. Then the level of development. We like to use what’s called a TRL or technology readiness level. That really allows us to dictate where the technology is development wise.
So, I think in Scott’s presentation, you know we were talking about bridging the gap and what that looks like with development and getting it from a commercialization standpoint… from a development standpoint to a commercialization standpoint. When is it actually ready to be commercialized?
A lot of the technologies that we have within the federal laboratories have a very low TRL, so we need to actually partner with companies and startups to actually further develop that technology, so that it actually is ready to be commercialized from that standpoint.
So, sometimes they’re not ready to go and we need a company that is willing to invest in order to take that next step further. And so, we do a lot of marketing. NASA doesn’t like the term “marketing,” but… What we do is called active outreach. We do a lot of passive outreach as as well, so that’s when you see like our website with the technologies that are available for licensing on the website. And, if you happen to come to our website then you can browse that and go do that and you contact us, but the active outreach that we do is actually going out to conferences and talking to people, cold calling people that we think have a fit or have a need for the technology. So, that that happens as well.
We have a lot of online postings. And, if you go to Technology.NASA.gov it gives you an entire outlook on the actual technology transfer program across the entire agency. So, not just at NASA Armstrong. So, there’s ten different NASA centers – Armstrong being one of them – and we focus on flight research.
So, here you’ll see one of our inventors is actually at a conference talking to potential licensees about the technology, about the benefits of it; how it could potentially solve some of their problems or maybe even asking them what are the problems that they’re facing? Because, what we’re seeing a lot now is that you know when we develop products like I said before they’re not ready to actually go out and be commercialized right away. So, if we could try to include that development process and what those needs are into the development of that product or of that technology, then it furthers it along a little bit more.
We also have NASA licensing webinars and so we’ll have the inventor provide a webinar where they can give all the information about the technology. We’ll invite a bunch of people out and they will be able to ask questions from the webinar and then download the slide presentation. Also, if you go onto this website, we have our patent for the entire patent portfolio across the entire agency in one one place.
All you do is go online you can type in a keyword maybe you like UAVs, like aerospace… all of those technologies that are associated with that keyword will pop up. All of the patents will pop up. It will give you information about that technology: Who you can contact. What are potential applications? What are some of the benefits? And, then there’s also a link that you can click on that will take you straight to a licensing application.
Kraettli:
All right so from a startup company, or really an investor’s point of view, how do you find these technologies and how does our particular story go based on on what Janeya is talking about, with all the ways that NASA does outreach? So, this is my not very great cell phone photo of the first time that I saw Ricardo speaking and presenting his technology. And, this was a very exciting moment. I did take a photo of it.
We had heard about this technology because one of our other partners was asking around the NASA and at the Federal Laboratory Consortium organization: What’s an interesting technology? What’s the hottest technology right now in the FLC system? And, someone told us: “You should do see this presentation.” And, so I went to saw this presentation and that’s when we first started having this discussion with NASA Armstrong.
Conferences and publications are fantastic. These websites are great. I look at them regularly. NASA has lots of innovative programs to get stuff out of the lab and have, you know, a stream… There are some technologies… I’m sure Janeya will talk about this today.
They have a really fast licensing process just for specific technologies. So, the first thing that we had to do was validating the market. We did that by initial screening to meet and talk with the inventor. We signed an NDA with NASA, so they provide us with all the technical background on this very freely to look at all that. That led us to do a lot of research.
We looked at market applicability. Where does this fit in the market? You know. Where was it needed? And, it was an obvious need in the future. I’ll talk about what are our problem solution statement looked like as we were doing our analysis. That’s really guided our entire company competitiveness as it compares.
We had to do some initial basic research about as is compared to the other ways to solve this problem. And then, is a disruptive? That’s a word that gets used a lot in early stage technology investing and the idea is: Is it going to create a new category of product? Is it 10 times better than something that exists in that category now? Is it truly disruptive because it’s very difficult to raise private capital and venture capital for businesses if they don’t have that potential to be highly disruptive. And then, ultimately, what we came up with, which I’ll talk about more at the end, is our problem solution statement.
So, when we went out looked at this, this is based on a FAA forecast. This is has to do with the millions of new drones and particularly commercial drones, not just the toy drones, but the midsize and larger group that are rapidly entering the market. That’s happening in the US, it is happening outside the US. There’s a lot of experimentation going on right now. A lot of early market development. So, that was one of the first things we looked at. Half a dozen different forecasts from different people. The other thing that we thought about looked at was the nature and size of the problem. So, this is a problem that we were able to quickly identify of unmanned aircraft encountering manned aircraft. Manned aircraft reporting encounters with unmanned aircraft.
The number that we look at is the fact that in the 2015 for the 2016 reporting period that went up by 46% in the United States. It’s an average of about 5.3 incidents per day all the way to the point that they’re published by the FAA as an incident. There’s probably multiples of that where it doesn’t actually all get all the way to publication. We knew there was a big growing problem here. So, our problem solution statement was millions of drones with no good connection to Air Traffic Control, which is a big open problem that we are hoping to fill. No ability to detect-and-avoid. You’ve got an aircraft that is at the extent of your line-of-sight, extended visual line-of-sight, beyond line-of-sight. These are kind of technical categories of how you fly. So, we looked at that.
There really wasn’t a good solution. The solution exists, is viable and had good IP protection, which is obviously an important analysis that we undertook. Uses the existing infrastructure so I have to remake the way we do Air Traffic Control in the U.S. It meets a likely regulatory hurdle. So, we had to learn about the regulations issued. It was really a first to market opportunity to create a go-to-market strategy.
Janeya:
Okay. So, we’re going to talk about negotiating a win-win deal. And, what does that actually look like?
So, are there any startups in here? Well, maybe you guys know of startups. Or, if you do, you can tell them this information as well.
What you see a lot, and I’ve gone to a lot of different conferences and spoke with a lot of people from the startup era, is that they are really stuck on: “Why would NASA want to work with me? I’m just the startup. This is not something that, you know, that they would really be interested in.” But, that’s actually not true.
So, we know that the startup culture is something that is really taking our economy to the next level, right? So, if you want to continue to help that grow and so, what does that look like for us, right?
What we’ve come up with is actually our startup option for licensing. And, Kraettli didn’t get a chance to take advantage of this, but they wanted through some other… some different terms.
But, the startup license basically is a free license for the first three years of developing a technology or bringing it to practical application. So, we’re telling the startups to basically hold their money and use it towards something else rather than coming to pay licensing fees. So, go out. Develop this technology. Further the development of it. And then, when you find a customer or when you bring it to practical application, then come back to us and then that’s when you will start paying royalties. And, it’s a pre-negotiated license agreement on the terms. 4.2% percent royalty rate. $3,000 as an annual minimum.
So, this allows us to really help those startups who may be you know looking for the next best thing, or the next innovation. Or, to have a competitive advantage against what’s out there on the market.
So, how do you stay relevant is that you continue to innovate. But, if you’re kind of stuck what do you do?
You have access to the NASA portfolio and all those patents. Then you can kind of pick and choose which one you want that may be able to help your product or you may be able to actually create a business out of that product. So, we really look at, like I said, before… The federal government isn’t in it to make money. We want to create a return on investment for the taxpayers. But, we’re not trying to tax the next tax payers, right?
We look at what is a win-win deal, because when our licensees actually succeed that is a success for us. So, what can we do to kind of help them go and help them further go along in-order-to win.
So, there are a bunch of different evaluation licenses, a bunch of different licenses that we have. The Startup is just one option.
We have an Evaluation license, which allows the company to actually evaluate the technology. Evaluate the feasibility if it’s something that’s actually going to be suitable for their company and want to work with the product or the idea to see if it is something they want to go with. Or, if the market even says anything about: “Hey, this is something that we want.” Where it is something that’s actually solving a problem. That’s needed. And so, we give them about maybe six months to a year, it really just depends on, you know, what that program is like. But, it’s $2,500 and we allow you to internally do research and evaluate the technology to make a decision when actually licensing it from a commercial standpoint to create a product.
And then, you have your commercial licenses, so you have a non-exclusive license, you have exclusive, partially exclusive, and then co-exclusive.
So, Kraettli took advantage of the exclusive option and that was something that we negotiated. But, we also wanted to understand what was fair to them and what was something that would allow them to win in, you know, what they wanted to do.
So, a lot of times, investors don’t like the word non-exclusive. So, if that’s something in their strategy in terms of fundraising. How they’re going to get a the capital to get to where they need to go, then we kind of look at that. We’re aware of how businesses or what businesses need to do in order to survive – in order to be successful. We take all of that into account. So, if you’re a startup, but you’re also looking for exclusivity, then we are able to be flexible with what those options look like. Like I said, we want it to be a win-win deal.
And then, they also have Space Act Agreements, which provide you access to our inventors and then sometimes the facilities and the capabilities that we have. With the federal government, there are… I think they normally use what are called CRADAs – cooperative research and development agreements.
So, NASA is unique and we have the authority to use a Space Act Agreement, which came about during kind of like the Cold War. We were doing the space race or up against Russia. So, they wanted NASA to be able to partner with industry in order to get us there a lot faster. Those agreements are able to be negotiated as well.
If you are looking for maybe some time from an inventor in order to help you develop your product, would like the to consult for you, if you would like to use some facilities, we could negotiate with that mechanism; which is basically a mechanism that allows for that flexibility.
Kraettli:
Alright. So, continuing on with the story of Vigilant Aerospace, and how we fit into this framework.
We did go through the full licensing process and negotiated terms. And, also, we have a Space Act Agreement – which has been very helpful. So, in our process, we applied for the license.
So, there’s a formal application process. As a part of that, we were competing to describe to NASA what we were going to do and how we were going to be the best option for this technology. So, we put together the business plan. We put together full pro-formas. Then we put together a forecast and a balance sheet Profit and Loss in order to have the full business plan in place as a part of our application and bid for this technology.
So, the bidding process we went through and put all those materials together as an ongoing discussion with NASA. And, then we placed our formal bid for this technology through a federal register publication process to be doing the type of license that we’re doing.
So, you know, I had ideas all through that process. We’ve done all of our research and homework. So, we were optimistic that it was going to work out. That’s the process that we went through.
Critical factors in us getting the license and really us being able to make the startup work. Getting familiar with the market technology was really takes a lot of homework. We had a vision for the product, so we didn’t just say we take this and we’re going to put it on the market.
We really have a larger vision for how it fit in overall aviation, unmanned aircraft ecosystem that’s rapidly developing in the U.S. We had an idea for product market fit – where it was going to fit into that market. And then, a vision for the future. So, how do we take that second or third version of this product, as the market developed, and bring that out. We feel that those things were very important.
So, we negotiated with NASA. The things that I would say about that negotiation… Obviously, we negotiated a lot of things like license fees, percentage rates, milestones – things that NASA needs us they complete at certain points in order for the license to continue to be viable from their point of view. And, in that process, you know, we learned a lot.
All of those things were important parts of our negotiation. We relied up on books. We relied upon the guidelines. There’s obviously a whole industry of information out there. Some of you were probably involved in the industry.
We had an attorney with great experience. We had other advisors who had great experience. And, all of that allowed us as a startup to quickly get the expertise we needed to go ahead and put our business plan together and be successful at licensing.
So, I’m going to talk a little bit about our development process. The commercialization process… So, once we won the license… YAY! We’re very very happy about that. Really excited.
We started our IP transfer process pretty quickly. So, we collected all the information about patent prosecution. All of the source code for the prototype software that Ricardo and his team had been developing and then test plan for years. All of the documentations, the notes that were lab notes.
NASA is great about having lots of materials around their inventions. So, that was great. We took that in and we put into our own commercial Agile software development process. We put it on a timeline and we started working on an extensive evaluation of the existing software. So, we were really lucky.
One of the reasons that we licensed this was there was existing software and existing flight tests on it. So, that put it head and shoulders above a lot of other technologies we might have considered.
So, we immediately started looking at what is was going to take to take this problem where it was being used at NASA out to the larger commercial markets. We worked on the interface. And, worked with a piece of software on functional changes.
The market was changing rapidly. We wanted to be able to deal with smaller aircraft, for example, so we made changes. New hardware was coming out almost all the time. Aviation is a little slow with new hardware, but there were these things on the market that we wanted to be able to talk to, so that we could get a much larger swath of the market.
So, we immediately started working on that while reviewing quality control just to continuous cycle. And then, it started taking it out to customers and started getting customer feedback, which was the most exciting part of this. And, that allowed us to create a product market app of specific things that customers wanted around this sort of kernel of value. How is this going to fit into their operation? And, so we started working on that and doing testing, testing, testing. Lots of different types of flight testing.
So, I’ll just mention. Ricardo and his team began testing this in 2013. We went out and created, as soon as we had our small UAS… So very large very expensive Ikhana, which is a Predator civilian model that we don’t have ourselves and really don’t have access to. And, most of our customers are not necessarily flying large aircraft like that, so we decided we’re going to prove to market… This was really quite a deliberate decision on my part… That we can also find the same technology that NASA’s been using on these large and expensive operations on very small aircraft. And, we immediately went out and did that and we had a lot of support and cooperation from NASA in doing that.
So, we went back in 2016 and 2017 and have been doing additional flight testing. Basically, through our Space Act Agreement and NASA’s been very generous with their airspace, which they can control to allow us to do things like beyond visual line-of-sight testing. And, to get the FAA and the FCC involved. That’s been great.
And, Ricardo Arteaga and his team have an AIAA paper coming out that we’ve been able to make some contributions to in December and January.
So, we have ongoing flight testing now. This is what we do. We’re adding new features, filters. We are working on what it looks like when you have swarms of aircraft in the air talking to each other. And doing lots of customer demonstrations and now customers flights.
Janeya:
Okay. So, we’re going to talk about some of the outreach contributions that we shared with the commercialization and also internally. So, like I said, and this is like my motto… You know. We want to bring a return on investment to tax payers. So, what we do is… How we show you that we’re bringing you an investment… or bringing you a return is by writing success stories.
So, what are the successes that our licensees are doing in the commercial sector with technology that was not originally invented for that? How is it impacting the economy? What type of products are they putting out? What problems are they solving? And, how is the money that the taxpayers are providing really able to help that? So, we also put in for awards. One of the… I guess at the federal labs, a lot of the outside companies are not able to submit themselves for them. So, what we do, because we are a member of that community, we are able to include them into that submission.
So, we have won several awards that focused on commercialization of technologies, being innovative, licensing, and actually working with the commercial industry. And, so we actually do that for all of our licensees, because we want them to be successful. When they are successful, we are successful.
And, of course, NASA has a broader reach in terms of who’s actually looking at them. So, if we can put out to our audience that: “Hey, these are the technologies that are in the commercial space that you now have access to.” Then, that actually works out for both of us.
Kraettli:
So, we just have a few minutes left. So, I’m going to go through the few slides real quickly here.
So, we have pursued… As a startup, we don’t have a huge amount of money for marketing, so we have focused public relations and have been very successful with that. People are very interested in what we’re doing. NASA republishes some of our press releases, which has been very helpful. And so, we’ve gotten a huge amount impressed and that’s resulted in a lot of people in the industry quickly finding us and approaching us, which has been fantastic. We also speak to a lot of conferences. That’s really been great to talk to the people who are really focused on our area.
And, we do a lot of Industry outreach. So, this is something that even the smallest startup can do, at very little cost, and have a big impact.
We manage a newsletter. We only talk about ourselves and we have a lot of subscribers. So, people are very interest in the products that were talking about. We have a blog. We have a strong social media presence, by months. And, we want to be on your desk.
And, the other thing is that we actually created an initiative to maintain and a beyond line-of-site capable drone list for the industry. All we ask for is that you subscribe to our newsletter to get that for free. And so, about quarterly we will update that. It’s the only list of all of the beyond line-of-sight capable drones on the market available now in the U.S. And, that’s had a great industry response. It’s tangential, but very, very important to what we do.
We’ve been very well received by the senior analysts in the industry. I’ll just skim through these as I know that we’ve got limited time here. And, I’ll let Janeya take over.
Janeya:
Okay. So, in summary. NASA is a good source of innovations to be commercialized. So, other government agencies as well. So, like I said, we’re part of the Federal Laboratory Consortium of over 300 labs. We all do tech transfer. And so, that is I guess a secret is not really a secret. Unless you know where to go. And so, having that out all the websites. Basically, bringing awareness to: “Hey you guys have access to these technologies. You have access to our innovators. You have access to our facilities and capabilities that we provide. Because, we want to help you be successful.” I think is a message that not a lot of people hear. But, this is why you’re here so you can learn the secret. And so, there are a lot of collaborative R&D benefits for both parties.
As Kraettli said, we’ve actually helped them with some of the R&D that they were doing in terms of the testing. So, they actually came out to the center at this dry lake bed, that has no lake, of course it’s dry. And so we flew over all that. That was a great opportunity, not only for us, but also for them because they were able to get gave data that they can now share and actual integrate into more product development and better testing and better information for their customers.
Kraettli:
Alright. I just have a few final lessons learned from our startup’s point of view that I’m gonna share with you.
At the end of the day, first thing was we did a lot of homework. Do your homework! That was important when we were bidding on this to be the elusive licensee. We needed to know what we were talking about.
Find great technologies to start with. We were able to look at things that we really thought were really at the top of the list in the federal laboratory ecosystem. And, something that was really ready for commercialization. We researched it in depth. We were looking for…. At the same time you have to match that to a rapidly growing market and that’s something that we were really able to do with that. That was really a key. We hired experienced advisers. That should go without saying but it really is important when you’re doing something like this.
You have to be patient. Obviously accessing federal technology does take time. You know you have to follow the rules and go through the process to make that happen. And, the thing that we’re constantly reminded of and that we take out to the market. And, we take to our investors. We take to our employees… Everyone that we talk to… It’s so important, that relationship with NASA. We really are standing on the really huge shoulders and a lot of research and effort that’s gone in. That we’re then able to just be sort of the tip of that spear and take it out into the market. And, that’s incredibly helpful.
But, obviously, it does take that time and patience to make that happen. And, we’ve also been very happy to take advantage of what agreements and opportunities that NASA’s continued to make available to us, and we’ve created with our time and money with NASA, so we the best impact. You can do sorts of tests there can’t do anywhere else with people and sensors and things that we just don’t have anywhere else. And, that’s been really fantastic for us. And that’s commercializing federal R&D.
Janeya:
Are there any questions?
Audience Member #1:
Kraettli, you mentioned about bidding process. Can you explain what the bidding was? I didn’t understand what that means. Was there more than one licensee at the time?
Kraettli:
I’ll let Janeya answer part of that as well. But, yeah… In order to get the exclusive license for this technology you have to go through a process of presenting, in our specific case, to NASA and their technology transfer office. They have to do a lot of review of that, obviously. And then, they also ultimately have to talk to other people that are bidding for the same technology. And, there was some of that in this case. And, ultimately, they have to publish that to the federal register. For example, so there’s a public notice that you’re going to license this. And, that’s all. There are rules set out for that regulation. So, we got to learn those rules. Our attorney knew those rules. So, that’s the process we went through.
Audience Member #1:
Just a follow-up: What is the bidding like? Is it I’m going to give you more money? Or, I have a better plan to bring this to market?
Kraettli:
Hopefully some of all of the above. I think Janeya can speak…
Janeya:
Yeah. So, of course, with the government, you have to be fair and you have to complete everything that you do. And so, because this is tax payer funding, and we’re making money from it, essentially. Right? Because you get the royalties and then we take those royalties and put back into more R&D.
So, the mission that I talked about earlier: Disseminating to the widest extent possible, right? So, you have to provide some form of justification and rationales as to why we’re only going to give it to one company rather than just give it to everybody. Or, supply some sort of non-exclusive over an exclusive license.
And so, because of the exclusiveness, we have to look at what are the other commercial companies that are out there? Have they actually inquired about it? Is it something that they would be interested in? And so, in order to do that, because maybe they haven’t had the opportunity to see this, we put it out on the federal register for a certain amount of time. As long as 15 to 30 days and you give other companies opportunity to say: “Hey I didn’t know that this existed. I want some part of that exclusivity.” And so, if that does happen then you would have to actually step back look at both of the commercialization plans and say: “Okay. Who is going to be the most successful at bringing this to market?” And, then looking at the the overall company and what that looks like.
So, there’s kind of a comparability, right? And so, if there is actually an opportunity to carve out a space for each of them, then we will look into doing that. Because we want to disseminate it to the widest extent possible.
Now, from Kraettli’s perspective, it is considered a bidding process and so that’s probably where the confusion came in. Because it’s not really bidding. But, it feels like a bidding process. And so, those are the policies that we have on licensing technology. Did that answer your question?
Audience Member #1:
Yes, yeah.
Audience Member #2:
In the example you just gave, of two competing against it. I haven’t heard of a co-exclusive license.
Janeya:
Yeah. So, there is an option for co-exclusivity. That’s something that both of the companies would actually have to agree on. Normally, you would give that if the market is actually big enough for multiple players. You know… maybe they have separate applications and it’s not direct… it may be indirect competition. And so, we kind of look at that to say: “Okay. Well, is this something that is going to be detrimental?” So, like I said, we want the company to be successful. And so, if now we’re licensing to two companies and they’re going to be fighting at each other’s throats for a piece of the market. Who’s actually going to win?
Like, if one of them is going to go down, then it doesn’t make sense to do that. So, might just do a non-exclusive and say that: “You guys can both take it.” And then, that would be at the risk of the company. But, we like to be definitely talk to them about that beforehand. But, they would have to agree in order to do that.
Kraettli:
Well, you might have, you know, industry exclusivity. Right? So, if you had one application that’s exclusively for military one applications it’s exclusively for oil and gas exploration or like something that. You could do licenses.
Janeya:
Yeah. So, that’s where we get into partial exclusivity and that is for a specific field of view. So, even though it might be within the same industry, like I said, it might be for separate applications.
Audience Member #3:
You talk about open source and what’s the decision point where you might say: “Well, this IP, we’re just going to open it up to everyone,” versus a specific process like this where you go through vetting and..
Janeya:
Right. So, one thing that I didn’t cover was our software catalog. So, a lot of the software that is generated we kind of just give away unless it really has to have some form of justification for us actually put some testing and packaging into it.
Now, when you come up with some ideas that they essentially, you know, you want to be pushed out into the market, then, you know, we kind of look at that and kind of just decide. But, we have to look at all of the criteria that would enable us to actually make that decision.
Audience Member #4:
I have a question about the IP philosophy. You said that you evaluate the solutions that you develop to make to make a decision on whether you are going to patent. How does that put you in position if you’re NASA, because if, at the end of the day, you don’t patent and someone else then patents…
Janeya:
[Interjection] Right.
Audience Member #4:
You could actually [inaudible] become used in the future. How do you rationalize that?
Janeya:
So, it depends on… We have to look at… Okay. If we were to release this and bad guys got it, or somebody got it that… You know, let’s just say this is saving lives, right? And so, we decided that we’re just going to release it to everybody. But, then a company comes in and they tweak it and then they patent it. And then, they charge an enormous amount of money, so that people who the people whose lives it needs to save, they can’t even have access to it because it’s so expensive. Right?
And so, we actually look at all of that and weigh those options to say: “Okay, is this something that we’re really wanting to do?”
We also look at if this is something that, you know, maybe turned a standard, right? And so, what is in the benefit of the nation in order for us to… Should we patent it to protect it? Because that is an option, right?
Sometimes we want protect things so a company doesn’t come in and then up-charge it and then sell it to us with something that we actually created. And, that has happened on several occasions.
And so, you have to be very knowledgeable in looking at that criteria to determine… and actually looking at, you know, if that’s a big enough risk. If we’re just going to release it or whether or not we’re going to actually license it to a company. So, that is something that we do look at and goes into helping us I decide whether to patent.
We have a question in the back.
Audience Member #5:
My name is John Smith. I spoke to your [inaudible] at different conferences and visited online and other things. Can you give an idea of which is more successful?
Janeya:
So, I would have to say that, I think that they complement each other. Right? And so, we have to have a little bit of both passive and active marketing in order to really try to reach a broader audience. Because, you don’t want to say: “Okay. Well, I’m just going to focus on active marketing.” And then, you’re losing all of the people that may be just coming to your website to see some of the technologies passively. Right?
And so, I think the active marketing we really use that when we’re focusing on the high-profile technologies within our portfolio – the ones that maybe we just patented and we’re saying: “Okay, we really want to get this out.” We see the commercial viability in this. Maybe worked on it a little bit more to increase what that TRL level is. And so, now we feel that it might be the best-case scenario, in terms of low-hanging fruit, for a company to come in and actually take it to commercialization.
And so, I think it’s a little bit of both. Going to the conferences is really more targeted because we can actually look at the attendees that are there and say: “Oh. We know that this company is doing this.” We could do a little bit of research beforehand. And then, you know where they’re going to be instead of cold calling and saying: “Hey, is this something that you think you would be interested in?” Rather than you’re in their face and you’re asking them, like: “This is… We know this is the problem that you might be having. This is a technology that can solve it.”
Giving them a demo, like, right on-hand, because we have been making small prototypes of whatever that we might bring with us. And so, they’re able to see it. And, we get a lot of interest that way. We say: “Oh my gosh. Yes.” So, you’ve already created and when you go home, you call and get on the phone and have an additional conversation about the next steps in-order-to license. Because, you already found out that they’re interested in the tech.
Audience Member #6:
I have a similar question.
Janeya:
Okay.
Moderator:
Last question.
Audience Member #6:
This has to do with protecting the credit itself. So, you want me to start a company. And this is a technology that probably has potential of being cracked by somebody. Who worries about it? NASA? The company? Or, both?
Janeya:
So, there are a bunch of different, I guess, avenues that you can take in terms of patentability and protection. So, if we realized ahead of time this has the potential to go into markets outside of the U.S., you know, we can actually look at doing an international patent. Because, we know for sure. We’ve done the market research. We know that there is a need. And, we know that there are companies that if they got their hands on it internationally would just sell it. Right?
And so, that might, even though they might not be able to sell in the U.S., if we had a U.S. patent, that would still be competing with our licensees. So, like I said, we want them to be successful. So we do look at that strategy ahead of time.
Now, if a company does, let’s just say, take a technology and now they are infringing on our patent it is up to the company to actually go and sue them. But, NASA would definitely be there to support in, you know, in what those claims that they’re making are. So, we also look at, okay, is this something that they are, you know, utilizing an infringing on? And, if so, then because the company has licensed it, they actually can go and sue the company.
So, with the government, it’s kind of difficult for us to sue another company unless it really has a big detrimental impact to the entire government. If it’s a small company or, you know, if it’s not something that is really detrimental the economy or anything like that. Then, we leave it up to be one for the companies to do that. For the licenses, that is.
Moderator:
Let’s thank Janeya and Kraettli.
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