May 29-30, 2003

ITEM 119-1002-R0503    Approval of University System/Employee Joint Venture; The University of Montana-Missoula

THAT: In accordance with Montana University System Policy 407, the Board of Regents of Higher Education authorizes The University of Montana-Missoula to enter into a licensing arrangement with Applied Ecological Services, Incorporated, for intellectual property developed by University employees Jack Stanford, Mark Lorang, John Kimball, and Richard Hauer, each of whom has a significant financial interest in Applied Ecological Services, Incorporated.

EXPLANATION: The University of Montana employees Jack Stanford, Mark Lorang, John Kimball, and Richard Hauer have, and are developing, technologies to acquire airborne and satellite imagery, to conduct ecologically-based analyses on the imagery data, and to translate these analyses to commercially useful forms. Some of these technologies may be protected by patents, some by copyrights, and some by trade secrets.

The University of Montana wishes to grant exclusive and/or non-exclusive licenses to Applied Ecological Services, Incorporated, so that it may exploit these technologies commercially. Granting Applied Ecological Services, Incorporated, these licenses will not interfere with any contractual obligations the University holds, but it will provide a business opportunity for a Montana-based company.

These licenses will cover the United States, as well as other parts of the world, and will contain provisions for The University of Montana to receive an up-front licensing fee and a percentage (ranging from 4 percent to 8 percent) of adjusted gross revenues generated by Applied Ecological Services, Incorporated, using technologies owned by The University of Montana. Furthermore, Applied Ecological Services, Incorporated, will pay for costs of patents covering territories in which the company has exclusive rights.

Granting this license will encourage these University scientists to develop the company as a new, profitable Montana venture and will set an example for other entrepreneurs from the University looking for opportunities for commercial use of their innovations and creations. The University will incur no cost for this agreement, and although expectations of large financial returns exist, they may be many years in coming. This agreement will assist in the formation and growth of a new small business for Montana and will establish goodwill with University employees.