How Mobileye Founder Convinced Hebrew U. to Relinquish Its Stake on the Eve of $15b Sale to Intel

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File photo: Mobileye co-founder Amnoon Shashua.
File photo: Mobileye co-founder Amnoon Shashua.Credit: Emil Salman

Days before Mobileye was bought up by Intel in the largest exit in Israel’s history, the top administrators at Hebrew University signed an overarching agreement with one of Mobileye’s founders, stating that the university was forgoing all claims to any money that might be made from Mobileye’s intellectual property.

On March 13, Intel announced that it would be buying Mobileye for $15.3 billion. Mobileye develops an accident-prevention warning and alert system for drivers, warning them how far they are from other drivers, for instance. Intel is interested in using Mobileye’s technology to enter the field of self-driving cars.

Days earlier, Prof. Amnon Shashua, one of Mobileye’s founders and then a senior professor at the university, convinced the top administrators to sign a far-reaching statement spelling out that anything developed by university employees in partnership with Mobileye belonged to Mobileye. Thus, the university gave up any financial claims to inventions and intellectual property belonging to staff members.

The signatories are Hebrew University President Menahem Ben-Sasson, Rector Asher Cohen, and Director General Billy Shapira.

The form was signed March 2 in a hasty process, only days after Shashua contacted the administrators and said he needed to present such a form to the U.S. Securities and Exchange Commission. If he could not present the form, he and the company could face extreme risks at the hands of the SEC and the company’s investors.

Mobileye and Shashua refused to present the university with a copy of the SEC’s demands.

After the Intel deal was announced on March 13, university officials began to suspect that Shashua had made false pretenses, and instead was motivated by the pending deal, which brought him personally about $1 billion.

A source told TheMarker that senior administrators then asked Shashua – who was a staff member until resigning last month – why he hadn’t been straightforward about the sale. He reportedly replied that he had kept them from receiving insider information.

Hebrew University and Shashua have had a long-standing conflict over what the university should receive in connection with Mobileye.

The conflict centers on what Mobileye should pay the university for the period from 2004 until now, and what it should pay in exchange for the work of other university staff members who worked with the company in research and development.

After the deal, the university asked two major Israeli law firms for their opinions on what course of action could be taken. To get an estimate of how much the university could receive, Yissum, the university’s company responsible for commercializing intellectual property, asked Mobileye for a list of all staff members ever employed by the company, directly or indirectly, and their connection to the company’s inventions or developments. Yissum asked for details including their employment dates and roles at the company.

Mobileye did not take the demand well, and in response it informed Yissum and the university that Shashua and Prof. Shai Shalev-Shwartz, Mobileye’s VP for technology and a university lecturer, were resigning from the university. The company added that as of the end of September the company would no longer be employing another senior professor and several graduate students.

Mobileye added that there was no reason to continue discussing Yissum’s demands, adding that the sides had settled matters concerning intellectual property created by staff members through several agreements, including the March 2 one.

The March 2 agreement states that neither the university nor Yissum have any claim to intellectual property, patents, or commercial symbols developed by Shashua or others, including those based on technology developed in partnership with university employees. Mobileye can sell or trade in its intellectual property without receiving further permission from the university or Yissum, the agreement states. It covers the period from Mobileye’s founding in 1999 through March 2017.

The document adds that in the 90 days after the agreement’s signing, the university or Yissum will review all the university employees also employed at Mobileye and conduct negotiations over how much should be paid for the intellectual property developed by those employees. These negotiations have not yielded results.

It is not clear why the document was signed by the Hebrew University administrators and not by Yissum, the professional body that handles such matters. Instead, a copy was sent to Yissum’s chairman Dr. Itamar Borowitz upon signing. Borowitz reportedly objected to the agreement and advised the executives not to sign it. He and Yissum declined to comment.

It is also not clear whether the university needed Finance Ministry permission to forgo a potential cash payout from Mobileye.

Finance Ministry officials, for their part, favor a more flexible approach, allowing university administrators to make their own agreements with staff members who found companies to encourage innovation.

University administrators may have accepted the Finance Ministry’s flexibility and preferred to avoid a conflict with Shashua, circumventing Yissum to preserve the university’s relationship with the company and the recognition it brings.

Shashua was hired by Hebrew University as a lecturer in 1996 after completing his post-doctorate at MIT. He and the university had a long-standing disagreement about what the university was owed for Mobileye’s founding. Under the university’s rules, it has a right to 60% of its academics’ shares in their companies.

Shashua countered in arbitration in 2002 that Mobileye does not directly use the results of his research at the university, but rather his more general knowledge. He owned 18% of Mobileye’s shares at the time.

He and the university came to a compromise in 2004 that gave Yissum 1.354% of Mobileye’s shares, and included the university and Yissum forgoing claims to Mobileye’s current and future patents developed in partnership with Shashua. Yissum later sold those shares for $40 million.

Mobileye and Hebrew University issued a joint response stating that their agreement was based on a 2002 agreement, and that the university is not making any financial demands on Mobileye in the wake of the Intel deal. The relationship contributes to the university’s research, the sides added.

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