A license is the technology transfer agreement granting some of the University’s rights as owner of an intellectual property (licensor) to a company who has agreed to certain obligations and responsibilities to commercialize the intellectual property (licensee).
The University licenses its varied technologies (patents, software, databases) to companies who demonstrate the capability and commitment to develop the early stage innovations into commercial products.
Licensees also demonstrate such commitment by providing a written technology development plan to the University. This plan should include, but not be limited to, a description of the technologies to be licensed, the resulting product, market analysis, a product development timeline and the company resources committed to development.
The terms of the license are negotiated based on the licensee’s plan.
After a technology is licensed, the Offices manage the license to ensure all terms and conditions are adhered to and the technology reaches its fullest potential. If the licensee does not comply, steps may be taken to terminate the license, in which case the invention would be available for licensing to another company.
What’s my role in licensing?
Licensing is a primary function of the OTMs; inventors will be informed of progress in licensing. Inventors often are closely connected to others in their field and may be consulted by their OTM on the business terms of the license.
Further, the inventor’s expertise is often critically important to transfer the technology and related know-how to the licensee. The University license places only nominal obligations on the part of the inventor to assist in the transfer of the licensed technology.
When more than minimal time and effort is necessary, the licensee will negotiate a separate consulting arrangement with the inventor.
What effect does a license have on my ability to do research?
You can still continue research using a licensed invention, even if it is exclusively licensed. The University retains the right to use a licensed invention in its academic research and teaching.
The licensing process begins with negotiations with interested industry partners, including start-up companies in which term sheets summarizing the essential business terms of the licensing agreement are exchanged. Below are the types of business terms generally addressed.
Scope of License Rights:
License rights such as exclusive, nonexclusive, field of use limitations and territory limitations are established to be commensurate with the licensee’s product development plans and the market. The University’s licensing objective is to obtain widespread use of its technologies.
Together with the royalties and other monetary terms, the value depends on the scope of the license rights and the market value of the technology licensed.
Royalties are paid by the licensee when products or services that require the use of the technology are sold. Royalties can be expressed as a percentage (%) of sale or a fee per selling unit. Royalty rates vary according to the industry, the significance of the invention and the base upon which the royalty is applied (e.g., unit, component, subsystem.)
Exclusive licenses usually provide the licensee with the right to sublicense, or authorize others, to make, use and sell the University’s technology to facilitate widespread use. Revenues received by the licensee from sublicenses are shared with the University.
Minimum royalty payments are established to encourage diligence in sales of products/ services requiring the use of the technology.
Recovery of the costs incurred for protecting the technology in the U.S. and internationally are part of the license.
Performance (Diligence) Milestones:
University technologies often require a signficant period of time and effort in product development before they are ready for the market. During the development phase, licensees are required to provide periodic reports and meet specific milestones in order to retain a license, especially an exclusive license.