FAQ for Companies Licensing University Technology
This FAQ covers three areas:
Terms of License Agreements
Patent Prosecution and Litigation
Q. How do I find out what technologies are available for licensing at the university?
A. Short summaries of our technologies are available online in a searchable database under the Technology Search tab.
Q. I found a technology I'm interested in. Now what?
A.:Contact the CVIP Office for more detailed information on the technology. The case manager will work with you to provide additional non-confidential or confidential information (under a confidential disclosure agreement) as the situation warrants.
Q. Great! I want to license the technology. What information does CVIP need from me?
A. Since the university deals with all sorts and sizes of organizations, the specific information we require in one situation may differ from that required in another (e.g. large, established multinational corporation vs. start-up company).
In general, we will need a description of your company, business model, and possibly resumes of the management team or project leads. There is no required format for these reports. It could be a simple few paragraphs or the formal business plan you send to potential investors. We will want to see a written description of how you plan on commercializing the technology with an indication of your estimated time line. Later you will also need to prepare a term sheet for the license agreement.
In summary, we will require at a minimum the following items:
- Description of your company: industry, business units, size, etc.
- Management description: key officers of your organization, including the key business and scientific contacts we should work with
- Technology development and commercialization plan: how you plan to develop and commercialize the technology
- Licensing term sheet: address the material terms of the proposed license agreement, including but not limited to the grant of rights such as exclusive vs. non-exclusive, territory rights and the field(s) of use
Terms of License Agreements
Q. What is actually licensed in the agreement?
A. This depends on the technology. It may be any of several forms of intellectual property including an issued patent, pending patent applications, copyrighted materials, a trademark, and/or "know-how". Patent grants typically include “progeny” of the parent application such as divisional and continuation applications, as well as foreign counterparts.
Q. What is a “field of use”?
A. Our licenses are defined by specific “fields of use”. A field of use is a limited area of commercialization such as telecommunications, therapeutics, or agriculture. The “fields of use” granted to a licensee depends on their demonstration of ability to achieve commercial success in those areas.
Q. What is a territory?
A. The university may hold patent rights in multiple countries. The territory of the license defines in which countries the university grants rights for the technology. The territory may be defined as “worldwide” provided the licensee has the capability and intention to commercialize reasonably broadly overseas.
Q. What is a sublicense?
A. Exclusive licensees are typically granted the right to pass-through the licensed rights to third parties for the express purpose of achieving those commercialization goals established in the primary license agreement. For example, a licensee may need to sublicense its rights to a manufacturer and/or distributor in order to bring the product to market. A sublicense is usually granted with prior approval of the university, and the university shares in any income generated by the sublicense. Sublicense rights are not granted to non-exclusive licensees.
Q. What is the royalty rate?
A. The university does not set one standard royalty rate for inventions, nor can it assign value to an invention which has not yet been created (i.e., future inventions whether related or not). The royalty rate ultimately negotiated depends on several factors including the stage of development of the technology, the applicable commercial industry, and the nature of the invention (e.g. whether it is a platform technology or one of many patent rights a company may need to secure to produce a product). For most technologies, the royalty payments are based on net sales of the product.
Q. What are milestones?
A. Milestones are mutually agreed upon points in the commercialization process that represent progress toward the end goal. Usually, the licensee makes a payment to the university upon achieving a milestone event. If a company misses a milestone, the university will not automatically revoke the license. The parties will typically discuss what factors contributed to the missed milestone and whether commercial success is still possible, and new milestones may be negotiated.
Q. What are the fees?
A. The upfront or signing payment, annual maintenance or minimal royalty payments, and milestone payments are fees that are designed to encourage the licensee to be diligent in their commercialization efforts. The specific amounts of these fees are determined during the license negotiation.
Q. We're just a start-up and short on cash. Can we offer equity in our company?
A. Yes, the university does accept equity in certain instances, but it will not completely eliminate required cash payments and we will ask for reasonable protection from dilution. Before entering an equity arrangement, companies should consider how much further assistance they will need from the university. Conflict of interest rules may preclude the university from assisting in certain tasks (i.e., clinical trials), once it has taken an ownership position in a company.
Q. Do you offer warranties or indemnification?
A. No. Universities cannot offer warranties or indemnification for their technologies.
Patent Prosecution and Litigation
Q. What patent costs do I have to pay?
A. Exclusive licensees are expected to reimburse the university for all patent costs: past, present, and future related to the licensed technology.
Q. How is patent prosecution managed?
A. The university maintains control of the prosecution to protect ongoing research and commercialization efforts. However, exclusive licensees are encouraged to participate in the patent prosecution process as the university recognizes they have valuable first-hand knowledge of the market. We typically provide the licensee with copies of all material documents, consult with on significant prosecution decisions, and allow access to our outside patent counsel upon request. The university also consults with the licensee when determining whether and where to file and maintain patent rights in foreign countries.
Q. What if I discover someone infringing the patent?
A. Exclusive licensees are generally permitted the first right to take action against alleged infringers of university patents. Non-exclusive licensees are not allowed to pursue alleged infringers. However, we encourage all licensees to contact the university as soon as possible after being made aware of the potential infringement to discuss the appropriate response.