University Intellectual Property Rights

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If you develop IP while you are a student or employee of a university, what are your rights? Who owns what and how do academic inventions or discoveries become profitable?

Technology Ownership

Policies may vary across universities, but typically, universities will own the IP that arises from the following contexts:

• IP created as a part of sponsored research
• “Work for hire,” meaning IP created within the scope of employment
• IP created pursuant to a written agreement that says the IP ownership will be transferred to the university
• IP created that uses significant funds and facilities of the university

Technology Transfer

Unlike companies that develop their own technologies, universities do not transform discoveries and inventions of researchers into marketable commercial products directly; instead,the university licenses the rights to businesses or non-profits to further develop a product and bring it to the market. A successful commercial license yields royalties which are divided between the inventor and various university stakeholders.

Licensing Agreement Terms

Royalties. The amount of royalties tends to range somewhere between 1% to 10%.The royalty amount will depend on a variety of factors including type of technology, stage of development, projected costs of further development, royalty rates of comparable products, and strength of the patents.Depending on the type of business and funding, the royalties may be in the form of cash or in equity in the company or a combination of cash and equity.

Exclusivity. If the university grants an exclusive license to one company, licensing royalties will tend to be higher and the university will often reserve rights to terminate the license if the company is not diligent in developing the invention (the idea being that university inventions are intended to reach the public in a way that enhances technological advancement and serves the broader public good, and should not sit on a shelf collecting dust). A non-exclusive agreement can reduce potential conflicts and allows the university to engage with multiple companies, potentially increasing the chance of success, while each company licensee will likely pay a lower royalty fee than would be required in an exclusive arrangement.

Expenses. Sometimes the university handles patent filing expenses, and in other cases the company may cover those expenses.

Other. Provisions for sublicensing rights, ownership of improvements, and license termination provisions are among some of the other commonly negotiated provisions.

Other Types of Agreements

In addition to the more basic licensing agreement, sometimes there may be a collaboration agreement or sponsored research agreement to facilitate further development and collaboration between researchers and the company to facilitate the technology transfer. In cases involving physical materials such as biological materials or chemical compounds or certain equipment, the company and university may enter into a material transfer agreement.