Licensing Inventions and External Business Activities
What is a license?
A license is a legally binding written agreement in which one party, having definable right in a property, transfers or grants some part of those rights to another party for some type of consideration.
What role does OTT play in licensing an invention?
OTT usually prepares a brief, one page non-confidential summary that offers a basic description of the invention, with a focus on its unique advantages. OTT will distribute the summary to stimulate interest in the invention using a number of tools (inquiries, market research, industry events) designed to locate and identify companies that look like good candidates for licensing.
I have a great relationship with a company representative who has an interest in my research. May I negotiate a license agreement with him for my invention?
OTT has extensive knowledge about many terms and conditions that are contained in license agreements, but inventor input is also vital to the process. The most advantageous outcome will occur if the inventor and OTT are able to share their strengths during license negotiation. Regardless, signature of license and other agreements is limited only to those with delegated signature authority.
What is the inventor’s role during the licensing process?
The inventor may be the best champion of the invention and source of information to potential licensees. The relationships fostered with scientific colleagues in the corporate world are often a key catalyst in the effort to find a licensee.
How long can it take to find a licensee?
Locating a potential licensee can take a few months and sometimes years depending on the attractiveness of the invention, stage of development, competing technologies, and the size of the market. Since many academic inventions tend to be in the early stages of development, a substantial commercialization investment may be required which can make it difficult to readily attract a licensee.
Can an invention have more than one licensee?
Yes, an invention can be licensed to multiple licensees, either non-exclusively to several companies, or exclusively to several companies but for different applications, or geographic locations.
What is the difference between licensing a patent and selling a patent?
When a patent is licensed, ECU still holds title to the patent. Selling patent rights indicates a transfer of ownership from ECU to the buyer. For tax purposes, ECU does not typically sell its intellectual property rights.
Am I entitled to royalties and other fees ECU receives from a licensee?
Inventors are eligible to receive a generous proportion of net income earned from licensing activities.
How are inventor revenues distributed if there are multiple inventors?
Inventor license income is generally distributed equally among the inventors, absent a written agreement prescribing a different distribution formula. However, cases may vary depending on the number of patents licensed to a company, number of inventors recognized, and contribution of each inventor.
Can an ECU employee engage in a side business?
An ECU employee may engage in a side business when it has been properly reviewed for conflicts of commitment by the employee's supervisor and conflicts of interests are managed with an approved COI management plan. SPA employees must obtain supervisor approval prior to entering into a side business to ensure that employee commitment to ECU is not affected. EPA employees must submit to their supervisor a notice of intent to engage in external professional activities for pay ten days prior to engaging in the side business. An approved COI management plan must also be in place. No ECU employee engaging in a side business may use any ECU or state resources for their side business. ECU or state resources include, but are not limited to, employee work time, ECU offices, equipment, facilities, name, vehicles, communications resources, and mechanisms. There are many conditions that may need to be reviewed before an employee is able to engage in a side business. Employees should seek advice from their supervisors.
Can an ECU employee start-up or run an external business?
An ECU employee may engage in business activities outside of ECU’s employment provided they comply with university policies, such as conflicts of interest and conflicts of commitment.
Can an ECU employee consult with a company, trade organization, or other entity for pay?
It is expected, but not required, that faculty will participate in external professional activities for the purpose of staying current in their field of expertise, provided that employees comply with university policies, such as conflicts of interest and conflicts of commitment.
Can I license my ECU invention if I start up my own company?
ECU start-up companies may license ECU inventions but only after meeting several criteria. Requirements for a license agreement include submission of a valid business plan for development of a marketable product, demonstration of commitment from a business expert qualified to run the company, identification of development milestones, and more. ECU is prohibited from negotiating with an individual who serves a dual role of ECU inventor and representative of the start-up company, so a qualified business expert must represent the company in license negotiations with ECU.
What is my role in the process of starting a company?
University inventors may not have the skills or the desire necessary to start up and run a business enterprise so ECU inventors more often chose to serve as a chief technical officer, technology consultant, or advisor for technical development to the company.
What constitutes a conflict of interest and how can I avoid complications arising from one?
A conflict of interest (COI) is a situation where your personal interests may be perceived by an independent party to affect your roles and responsibilities as an ECU employee. Having a COI is not a reflection of one's character and it does not mean that a project must be abandoned. Rather, the COI should be disclosed to the university and then managed according to a conflict of interest management plan mutually agreed upon by the employee and ECU. If a COI is managed, complications arising from a COI can be avoided.