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Inventor's Guide

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The Inventor's Guide to Technology Commercialization outlines the essential elements of technology commercialization at the University of Utah. The guide is organized to answer the most common questions we typically field from our research community and is designed to provide a broad overview of the technology commercialization process and services available for researchers.

Index:
  1. Overview of Technology Commercialization
  2. Research Considerations
  3. Technology Disclosures
  4. Assessment of the Invention Disclosure
  5. Patents and Other Legal Protection
  6. Marketing
  7. Considerations for a Startup Company
  8. License Agreements
  9. Commercialization
  10. Revenue Distribution

For more information, or answers to additional questions, please call Technology & Venture Commercialization at 801-581-7792.

1. Overview of Technology Commercialization

What is technology transfer?

Technology commercialization is the movement of knowledge and discoveries from the university environment to the general public. This can occur through publications, educated students entering the workforce, exchanges at conferences and relationships with industry. For the purposes of this guide, however, technology commercialization refers to the formal licensing of technology to third parties and the organization of new technology-based companies for the benefit of the community, the state and the world.

What is Technology & Venture Commercialization (TVC)?

Technology & Venture Commercialization (TVC) is a University of Utah organization that operates under the University of Utah Research Foundation (UURF). TVC is a service organization that works with inventors to facilitate outreach and commercialize their research. The office acts as a bridge to coordinate efforts between industry, venture capitalists, and other funding sources to commercialize the University of Utah inventions. TVC has been a part of the University of Utah since 1967 and has established a leading reputation in areas such as the formation of new companies, filing of patent applications, research sponsorship, and gross license income. TVC is composed of specialists in licensing, business development and legal matters, all of whom are widely experienced in commercializing technologies across a broad array of fields including the physical sciences, life sciences and information technology. We are responsible for managing all of the intellectual assets for the University of Utah, its medical centers and hospitals, Huntsman Cancer institute and ARUP.

Why should I disclose? Am I obligated?

The University IP policy states that the University owns inventions, discoveries, and improvements made as a result of either one University employment or through the use of University resources (see the Policy and Procedures Manual, Section 7-002, Part III-B, available online at http://www.admin.utah.edu/ppmanual/framed-index.html).

What does the University do with its intellectual property?

After the initial assessment of a new technology and the determination of its potential IP value TVC will work to either license a technology to an existing company or start a new company. TVC has recently established many new business and development initiatives to facilitate and support the startup of new technology based companies in Utah. TVC has relationships with local and national venture capitalists, angels and corporate partners to assist it in commercializing its technologies. It also works with several new programs developed in conjunction with the School of Business to train faculty and graduate students in entrepreneurship.

Once a potential partner is identified the university negotiates a license for either all or part of the rights to a company (can be large, small, startup, etc.) so that they can practice the intellectual property toward a new service or product. Licenses can be exclusive or non-exclusive. In return a licensee will typically return some benefit back to the university, usually in the form of patent cost reimbursements, fees and royalties based on product sales incorporating the intellectual property, equity in the company or some combination of these benefits.

Why is intellectual property important to the inventor?

It directly benefits an inventor to create and protect intellectual property in three ways. First, the inventor benefits under the university's intellectual property policy by sharing in the financial rewards of licenses. Second, licensing efforts often either establish or strengthen ties to industrial firms, and these reinforced relationships can directly improve opportunities for additional sponsored research. Third, this is a good way for inventions to be used for the public good.

How long does the technology commercialization process take?

The process of protecting the technology and finding the right licensing partner may take months - or even years - to complete. The amount of time will depend on the development stage of the technology, participation by the inventing faculty, competing technologies, the amount of work needed to bring a new concept to market ready status and the resources and acceptance of potential licensees.

What is the Bayh-Dole Act?

At the close of World War II, the US government evaluated how money spent on basic research was benefiting the general public. Following years of political debate, it was determined that while intellectual property is important to capture and develop, it was also apparent that the government is ill equipped to manage such IP from its broad diversity of funded programs. Ultimately, the Bayh-Dole Act (Public Law 96-517) was passed in 1980 to create a uniform patent policy for all organizations accepting federal money. The Bayh-Dole act allows universities and other non-profit institutions to have ownership rights to discoveries resulting from federally funded research provided certain obligations are met. The universities are required to protect and commercialize the discoveries, submitting progress reports to the funding agencies. The Bayh-Dole act is credited with stimulating interest in technology commercialization activities and generating increasing research, educational opportunities and economic development.

2. Research Consideration

May I use material or intellectual property from others in my research?

Yes. It is important to document carefully the date and conditions of use so that we can determine if this use may influence the commercialization potential of your subsequent research results. If you wish to obtain materials from outside collaborators, an incoming material transfer agreement (MTA) should be completed.

Will I be able to share material, research tools or intellectual property with others to further their research?

Many areas of research require researchers to openly share their results with other researchers in order for the overall research area to progress. The university recognizes this and does not want the intellectual property policies to stand in the way of performing quality research. However it is imperative to document items that are to be shared with others. If you wish to send materials to an outside collaborator, an outgoing material transfer agreement (MTA) should be completed. It may also be necessary to have a confidential disclosure agreement completed to protect your research results or intellectual property.

Will I be able to publish the results of my research and still protect the commercial value of my intellectual property?

Yes, but since patent rights are affected by these activities it is best to submit an invention disclosure form well before any public communication or disclosure. There are significant differences between the U.S. and other countries as to how early publication affects a potential patent. Whenever public disclosure occurs, the inventor loses world-wide patent rights for that invention. Additionally, there is only a one-year window to obtain patent protection in the United States. Whenever possible contact TVC prior to public disclosure to make sure your work is appropriately protected.

What right does a research sponsor have to any discoveries associated with my research?

The sponsored research agreement or grant agreement should specify the intellectual property rights of the sponsor. In the case of the U.S. government (NIH, NSF etc.) they maintain non-revocable non-exclusive license to use the technology. For commercial sponsored research the University of Utah retains ownership of the patent rights and other intellectual property resulting from the sponsored research. However, the sponsor may have rights to obtain a license to the intellectual property arising from the research. Often, sponsored research contracts allow the sponsor a limited time to negotiate a license for any patent or intellectual property rights developed as the result of research. Even so, the sponsor generally will not have contractual rights to discoveries that are clearly outside the scope of the research (and which do not use funds from the research agreement). Therefore, it is important to define the scope of work within a research agreement.

Sponsored research agreements are handled by the Office of Sponsored Projects (OSP). Their representatives work closely with TVC on IP issues in sponsored research agreements. If you have questions please visit their website or call 801-581-8949.

What about consulting?

When faculty or staff enter into consulting agreements they remain bound by all University policies and procedures regarding the disclosure and ownership of potential IP. Consulting agreements are not negotiated by TVC or OSP but TVC does provide guidelines for faculty to better understand the process. Researchers who enter into consulting agreements should familiarize themselves with the U of U policies relevant to consulting activities. The researcher is expected to ensure that the terms of the consulting arrangement are consistent with the University's policies, including those related to IP ownership, employment responsibilities and use of intellectual property. TVC is available to provide informal advice on how your consulting agreement relates to the University's intellectual property you have created.

3. Technology Disclosures

What is an Invention Disclosure? How do I submit an Invention Disclosure?

When an inventor believes that they have made something that qualifies as an invention, they need to reveal the information to TVC by filling out an online document known as an invention disclosure form (accessible here). This disclosure should list all sponsors of the research and should include all the information necessary to pursue protection and commercialization activities. It is critical that you complete every section of the disclosure in as much detail as possible or its processing can be delayed. You should also note the date of any upcoming publications or other public disclosure describing the invention. This document will be treated as confidential. You will be contacted by the assigned licensing manager shortly after your submission to discuss the invention and its potential commercial applications.

Why should I submit an Invention Disclosure?

All researchers are responsible to disclose all intellectual property that could constitute inventions or copyrighted works to TVC. This is done through completion of an invention disclosure form. Invention Disclosure is critically important for all projects, especially where any portion of the funding comes from the federal government, private foundation, or commercial sponsor. Federal law requires prompt disclosure and the University, inventors, and involved companies could lose very significant rights if disclosures are not promptly made.

When should an invention disclosure form (IDF) be submitted?

Any faculty, staff or student who believes he or she may have created an invention or has a novel idea is obligated to disclose the nature of invention and provide background information and literature to the University's Technology Commercialization Office. An IDF should be submitted to TVC once a researcher can concisely define the invention and have reduction to practice to substantiate the invention either through modeling or through experimentation. A disclosure form should always be submitted prior to public disclosure. To avoid overlooking inventions, researchers should err on the side of inclusion and let the Technology Commercialization Office secure a professional evaluation. The Office has ongoing relationships with dozens of patent attorneys and a budget for paying these attorneys to examine any, even remotely novel developments in a project.

How do I know if I have an invention?

Inventions are easy to define, but can be difficult to recognize. An invention is "the discovery or creation of a new material (either a new manufactured product or a new composition of matter), a new process, a new use for an existing material, or any improvements of any of these." Computer software may also be classified as an "invention."

The United States patent law requires that an invention meet the following three criteria, in order to be eligible for patent protection:

  • Novelty: The invention must be demonstrably different from already available ideas, inventions or products (known as "prior art"). This does not mean that every aspect of an invention must be novel. For example, new uses of known processes, machines, compositions of matter and materials are patentable. Incremental improvements on known processes may also be patentable.
  • Usefulness: For an invention to be patentable, it must have some utility or application, or be an improvement over the existing products and/or technologies.
  • Non-Obviousness: The invention cannot be obvious to a person of "ordinary skill" in the field. Non-obviousness usually is demonstrated by showing that practicing the invention yields surprising, unexpected results.
  • After evaluating the invention disclosed to TVC, the professional Licensing Staff will determine whether a potential invention meets these criteria.

    Some University research projects are clearly oriented toward invention from the outset. For example, the goal of a project may be to develop a new alloy, or it may be to find a new test for AIDS. If the research is successful, the result is likely to be an invention. Other research at the University may not lead to a new discovery or invention. For example, a study of the effects of radiation on plant growth might identify previously unknown effects, but this new knowledge, while valuable and publishable, is not necessarily an invention. However, an invention could result if, while studying the radiation effects, the researcher discovered that a specific radiation frequency-applied at a particular period of plant gestation increased the size of the mature plant by an average of 5 percent. The technological process of applying that radiation frequency at a specific time in a plant's life could be an invention.

    Sometimes identifying which part of a complex research effort might constitute an invention is very difficult. History is replete with examples of inventions buried in scientific studies focused on other issues. Frequently, new tools or techniques are developed to meet a particular research objective, but are overlooked once the objective is reached. These tools and techniques may constitute valuable inventions. This example illustrates that the scope of possible inventions can be very broad.

    Should I list visiting scientists, collaborators from other universities or collaborators from industry on my invention disclosure form?

    All contributors to the ideas leading to a discovery should be mentioned in your disclosure, even if they are not university employees. TVC will determine the rights of such persons and institutions. Often a shared relationship is set up between the University of Utah and the collaborating university with both institutions jointly responsible for patent costs and marketing efforts.

    Can a student contribute to an invention?

    Yes, a student may even be the sole contributor or inventor. The policy for ownership of an invention developed with or by a student is the same as for any other member of the university.

    Should I disclose research tools?

    Typically, research tools are materials such as antibodies, vectors, plasmids, cell lines, mice and other materials used as "tools" in the research process. Research tools do not necessarily need to be protected by patents in order to be licensed to commercial third parties and generate revenue for your laboratory. Other research tools (such as a new separation process) may need to be patented in order that a company will invest in the engineering development to make the process broadly useful. If you have research tools which you believe to be valuable, TVC will work with you to develop the appropriate protection, licensing and distribution strategy. We will also help you in distributing research materials at zero or minimal charge to other academic collaborators while preserving the materials' commercial potential.

    Does submitting an Invention Disclosure to TVC secure patent protection?

    Submitting an invention disclosure does not directly result in any form of protection. TVC assesses a technology for commercial applicability and then makes a decision about filing for patent protection. You will be kept well informed of the process and should TVC decide to not seek patent protection for your technology, you will be given the opportunity to pursue protection on your own.

    What constitutes public disclosure?

    There are some gray areas to this question, but public disclosure includes journal publications, website publications, presentations at conferences, posters, dissertation/master thesis or abstract publication. More generally when the intellectual property is made publicly available and accessible to those skilled in the art to which the invention relates. If you have any questions about this please contact TVC.

    What is "prior art" and how do I find it?

    Prior art refers to anything regarding the potential invention that has come before. Remember, for instance that a patent has to be novel and non-obvious. Journal publications, foreign patents, issued U.S. patents and patent applications are all areas that can contain prior art. Since the inventor knows better than most what the invention entails, he or she should be familiar with much of the prior art regarding the invention space. Searches of the Internet, journal articles and patents are helpful examples of place to perform prior art searches. Researchers can search the patent office at www.uspto.gov.

    4. Assessment of an Invention Disclosure

    How does TVC assess Invention Disclosures?

    One of the main functions of TVC is to process new invention disclosures to determine their scientific uniqueness and market potential. When a new disclosure is received into the office it is first checked for accuracy (all sections must be filled out in as much detail as possible), the funding source is verified, it must be signed by all University inventors and the assignment section must be compete. If any of these components are not complete TVC cannot begin to process the disclosure. A complete disclosure is entered into TVC database, assigned a U# and assigned to an internal Licensing Manager. The Licensing Managers often with the help of the inventors, review the novelty of the invention, search the depth of competing technologies, conduct an IP search to determine the likelihood of protection and determine the market potential of a future product or service, including the amount of time and money required for further development.

    How is market analysis done?

    Market analysis involves gathering information in order to assess the overall value of the technology. Information is gathered from the internet, published literature, and general knowledge of companies participating in the given field of the invention. Obviously, the preexistence of a large number of successful companies in the given field is a good indicator of the potential market opportunity. Also, businesses would prefer to know that any technology they adopt will provide them with a clear and significant advantage over their competitors. Thus, if an invention only makes a moderate improvement to a preexisting technology, then that improvement may face a difficult challenge in establishing itself in an already crowded market.

    On the other hand, if a discovery opens up an entirely new market it can be very advantageous to establish control of the IP necessary for others to get into the same new field. Being able to control a commercial field creates a strong market advantage and may entice companies to invest more heavily in a given technology. Larger company investments can mean greater financial returns to the inventors and the University. Unfortunately, work that is new to a given field can also be viewed as a commercial risk since there are no comparable products.

    The calculus of valuing a new idea hinges on many factors. The process may be empirical by looking at similar deals on similar technologies, or it can also be intuitive by estimating a sense of where a technology is headed in the future. In either case, input from the inventors is always important since they are the most knowledgeable in their given field. Additionally, TVC may solicit advice from other researchers on campus. Together, the combined efforts of TVC, the inventors, and other researchers on campus should provide an outline of how the technology might be used and what may be its potential worth.

    Is an invention ever reassigned to an Inventor?

    If TVC decides an invention is not protectable and/or a market does not exist for the invention, then the university may, upon the request of the inventor(s), reassign (transfer ownership) to the inventor(s). Reassignment of inventions funded from U.S. government sources requires the government's prior approval. Among the key factors in the university deciding to reassign are whether additional university resources or private resources could best improve marketability and whether all inventors agree with the reassignment. Upon reassignment, the inventor(s) are responsible for payment of prior patent costs and all further development, patenting and marketing expenses. If additional university resources are used to further develop the invention, the university may reassert ownership interest in the invention.

    5. Patents & Other Legal Protection

    What can be patented?

    An invention is patentable if it is novel, non-obvious, and useful. Novel, of course means new. Non-obviousness is achieved if someone who is skilled in the art would not have thought of the idea easily. A new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement may be eligible for patent protection. Methods making use of concepts and ideas may be eligible for patent protection. On the other hand, concepts and ideas per se are not patentable.

    Can someone patent a naturally occurring substance?

    Not in its natural state. However, a natural substance that has never before been isolated or known may be patentable in some instances, but only in its isolated form. A variation of a naturally occurring substance may be patentable if an inventor is able to demonstrate substantial non-obvious modifications that offer significant advantages in using the variant.

    What is the United States Patent and Trademark Office (USPTO)?

    The USPTO is the federal agency, organized under the Department of Commerce, that administers patents on behalf of the government. The USPTO employs patent examiners skilled in all technical fields in order to appraise patent applications. The USPTO also issues federal trademark registrations.

    What is the definition of an inventor on a patent and who determines this?

    Under U.S. law, an inventor is a person who takes part in the conception of the ideas in the patent claims of a patent application. Thus, inventorship may change as the patent claims are changed during prosecution of the application. An employer or person who furnishes money to build or practice an invention is not an inventor. Inventorship may require an intricate legal determination by the patent attorney prosecuting the application.

    Who is responsible for patenting?

    TVC contracts with outside patent counsel for patent protection, thus assuring access to patent specialists in diverse technology areas. Inventors work with the patent counsel in drafting the patent applications and responses to patent offices in the countries in which patents are filed.

    Who owns the University Intellectual property?

    All IP is assigned to the University of Utah Research Foundation as dictated by University policy.

    What is a provisional application?

    In the United States, you can file a provisional patent application to cover your invention. A provisional patent establishes a priority date with the USPTO but does not begin the examination process. It gives the inventor a one year window in which to file an application to the U.S. or foreign countries. During this time the inventor can further develop the invention, determine marketability, acquire funding or capital or seek licensing agreements. If a non-provisional patent is not filed within one year of the provisional application, then this application and priority are abandoned.

    What is the patent process?

    Patent applications are generally drafted by a patent attorney or a patent agent. The patent attorney generally will ask you to review an application before it is filed and will also ask you questions about inventorship of the application claims. At the time an application is filed, the patent attorney will ask the inventor(s) to sign an Inventor Declaration and an Assignment under which the inventor(s) assigns his or her rights in the patent to the University of Utah, which in turn assigns its rights to the University of Utah Research Foundation.

    Within 12-24 months, depending on the technology, the patent attorney will receive written notice from the USPTO as to whether the application and its claims have been accepted as patentable in the form as filed. More often than not, the USPTO rejects the application because either certain formalities need to be cleared up, or claims are not patentable over the prior art. The letter sent by the USPTO is referred to as an office action. If the application is rejected, the patent attorney must file a written response usually within three to six months. Generally the attorney may amend the claims and/or point out why the PTO position is incorrect. This procedure is referred to as patent prosecution. Often it will take two PTO office actions and two responses from the attorney before the application is resolved. The resolution can take the form of a PTO notice that the application is allowable (they issue a patent). During the prosecution process, input from the inventors is often needed to confirm the patent attorney is understanding of the technical aspects of the invention and/or the prior art cited against the application.

    Is a patent application confidential?

    The PTO hold patent applications confidential until published by the PTO 18 months after initial filing.

    How long does it take to obtain a patent?

    Generally patents are issued within 18 to 36 months after application though inventors in the biotech and computer fields should plan on a longer waiting period. During this period a patent is "pending".

    How many years will my patent last?

    Utility patents are granted for a term which begins on the date of the grant and ends 20 years from the date the patent application was first filed. Inventors can lose their rights when periodic maintenance fees are not paid or when the term expires.

    Can an invention be corrected once a patent is granted?

    Typographical errors may be corrected by filing a certificate of correction. When a patent is defective in certain aspects, the patentee may apply for a reissue patent. New matter cannot be added to the invention. A reissue patent is granted following the examination of the changes made to the invention. It replaces the original patent and is granted only for the remainder years left from the unexpired term.

    Does it cost anything to file a patent?

    Unfortunately it is not free to file a patent. Between USPTO filing fees and associated attorneys costs, filing a patent in just the United States can cost between $10,000 and $30,000. International patent filings are even more expensive as they cover a larger number of countries and often involve foreign attorneys and translators. A PCT filing plus filings in major industrialized nations have been known to cost well over $100,000. Additionally, there are annual maintenance fees for all patents, pushing the cost over the lifetime of a patent even further.

    What is a maintenance fee?

    All U.S. utility patents issued are subject to the payment of maintenance fees which must be paid to maintain the patent in force. These fees are due at 3 1/2, 7 1/2 and 11 1/2 years from the date the patent is granted.

    What happens when a patent expires?

    After a patent has expired anyone may make, use, offer for sale, or sell or import the invention without permission of the patentee, provided that matter covered by other unexpired patents is not used.

    What is infringement of a patent?

    Infringement of a patent consists of the unauthorized making, using, offering for sale or selling any patented invention within the covered country during the term of the patent. A patentee can sue the infringer and can ask for an injunction to prevent the continuation of infringement and for an award of damages.

    What should I do if I believe that my patent is being infringed upon?

    Contact the licensing manager at TVC office responsible for your technology. They will work with you and the possible infringer.

    What is a trademark or service mark?

    A Trademark includes any word, name, symbol, device, or combination, that is used in commerce to identify and distinguish the goods of one manufacturer or seller from those manufactured or sold by others, and also to indicate the source of the goods. In short, a trademark is a brand name. A service mark is any word, name, symbol, device or combination that is used or intended to be used in commerce to identify and distinguish the services of one provider from those of others and to indicate the source of the services. It is not necessary to register a trademark or service mark to prevent others from infringing upon the trademark. Trademarks generally become protected as soon as they are adopted by an organization and used in commerce, even before registration. With a federal trademark registration, the registrant is presumed to be entitled to use the trademark throughout the U.S. for goods or services for which the trademark is registered. The University has some trademark protection on items such as sports logos, mascots, emblems, and images of University events. University trademarks are maintained by the Licensing Department and more information can be found can be found on their web site at http://www.trademarks.utah.edu.

    What is a copyright?

    A Copyright is a form of protection provided by the laws of the U.S. and other countries to the authors of "original works of authorship". This includes literary, dramatic, musical, artistic, and certain other intellectual works as well as computer software. This protection is available to both published and unpublished works. The Copyright Act usually gives the owner of the copyright the exclusive right to conduct and authorize various acts, including reproduction, public performance and making derivative works. Copyright protection is automatically secured when a work is fixed into a tangible medium such as a book, software code, video etc. In the United States, copyright protection lasts the lifetime of the author plus 70 years.

    In some instances, the university registers copyrights, but generally not until commercial product is ready for manufacture. ALL new Software and source code should be disclosed just as any new invention and processed and managed by TVC.

    How do I represent a copyright notice?

    Although copyrightable works do not require a copyright notice, we do recommend that you use one. For works owned by the university use the following notice: "© 200X University of Utah. All rights reserved."

    6. Marketing

    How does TVC market my invention?

    TVC uses many sources and strategies to identify potential licensees and market inventions. Sometimes existing relationships of the inventors, TVC, and other researchers are useful in marketing an invention. Market research can also assist in identifying prospective licensees. In addition, we also examine other complimentary technologies and agreements to assist our efforts. Faculty publications and presentations are often excellent marketing tools as well.

    Where are potential licensees found?

    Licensees can be identified in many ways. First, the inventors often are aware of the commercial companies who would be interested in the work. Industry–specific marketing efforts including trade show participation, affiliations and market research carried out by TVC also seeks to identify potential licensees. Additionally, issued patents listed by the USPTO can provide names of companies who currently have patents similar in nature and often times these can prove to be potential licensees as well.

    How much inventor involvement is there in the licensing of technology?

    Studies have shown that 70% of licensees were known to the inventors. Thus research and consulting relationships are often valuable sources for licensees and TVC encourages the participation of inventors. The more involved and interested the inventor is in the licensing of a technology the higher the chances are that successful licenses will be secured. Normally the inventor is the first best source of information on what companies would be interested in licensing the technology. Once interested companies are identified, the inventor is the best person to describe the details of the invention and its technical advantages. The most successful technology transfer results are obtained when the inventor and the licensing manager work together as a team to market and promote use of the technology.

    What is a confidentiality Agreement?

    A CDA is an agreement between the university and an outside entity (company or person) to facilitate discussions of confidential information. For companies, sharing of their business needs and development problems can lead toward developing solutions with university personnel, but the company would not want such confidential information revealed to their competitors. For universities, maintaining confidentiality can preserve rights (domestic and foreign) to inventions.

    Can I sign a Confidentiality Agreement on behalf of the University of Utah?

    As the University of Utah does not want to expose its Researchers, Faculty, and Staff, to individual liability for confidential information received in their capacity as a University Researcher, Faculty or Staff, certain TVC representatives have been authorized to sign these agreemements on behalf of the University. By having the University of Utah take responsibility, this limits any exposure to liability that the Researcher, Faculty or Staff may have with respect to such confidential information.

    Can there be more than one licensee?

    Yes, an invention can be licensed to multiple licensees, either non-exclusively to several companies or exclusively to several companies, each only for a unique field of use (application) or geography.

    What is an Exclusive or Non-Exclusive Option Agreement?

    Option agreements are used so that companies can be exposed to a technology and consider whether or not securing a license makes sense. Options are granted for a limited time in order for feasibility to be investigated, and an option does not grant commercial rights. An option can be either exclusive, where for a given limited timeframe no other options will be granted to evaluate a piece of intellectual property, or can be nonexclusive where other options may also be granted from the university. The ouTVCme of an option is a go/no-go decision by the company to license the technology.

    How long does it take to execute a license agreement?

    Every license is unique in that it brings together university intellectual property to solve a company's specific problems. Once the intellectual property is identified by the company, terms of a license need to be negotiated to a mutually acceptable answer. Execution can take as little as a few weeks to over a year, depending on the complexity and the response times of all involved.

    What happens after a license has been executed?

    TVC tracks the progress of the licensee towards milestones and goals established in the signed agreement. Licenses usually state that technology progress reports must be submitted regularly until a product hits the market. Some companies will fund research and development of the technology at the University in the inventor's lab. Others may offer a consulting position to the inventor as they develop a product at the licensee's facilities. TVC usually continues to manage the patents, if there are any, and will sometimes need to handle patent interferences, patent infringement, or deal with arbitration or litigation surrounding a technology or a license. Once the product is offered for sale, then TVC requires quarterly reports and royalties from the licensee. Inventor's shares are paid out annually, or sometimes quarterly if the payments reach a significant level of income. If approved by the UURF, the department shares are paid out late in the year, usually about six months after the close of the fiscal year.

    Will TVC initiate or continue patenting activity without an identified licensee?

    Often the university accepts the risk of filing a patent application before a licensee has been identified. After the university's rights have been licensed to a licensee, the licensee generally assumes patenting expenses. At times we must decline further patent prosecution after a reasonable period (often two to three years) of attempting to identify a licensee.

    How are inventor contribution percentages assigned?

    Inventor contribution percentages refer to the formula by which the adjusted royalty income is split amongst the inventors. The standard disposition is equal sharing. However, it is up to the inventors to propose and agree on a different formula and communicate that agreement to TVC. This should be filled out on the disclosure form but can be changed at a later date. It is recommended that this be accomplished no later than the filing of the non-provisional patent application for patent-related intellectual property.

    7. Startup Company

    What is a startup?

    A startup is a new business entity formed to commercialize one or more related intellectual properties. Forming a startup business is an alternative to licensing the IP to an established business.

    As a faculty/staff member would the university allow me to start a company and continue my position here?

    Yes. However, the University will not release you from your university commitments, teaching and/or research duties, simply because you start a company. Remember, running a company requires considerable effort and time and establishing a company takes even more time and effort. Being involved in a startup also presents unique conflicts which must be disclosed and managed by the inventors and the University. You should speak with your licensing manger to discuss these options in detail.

    Are there any university policies or rules that are applicable to establishing a business?

    Yes, there are several policies found in the Faculty Handbook that apply to you and your business formation. These policies relate to conflict of interest and conflict of time commitment situations. Links to some applicable policies can be found at Forms & Policies

    Can I license from the university a technology that I developed/invented at Utah for my company?

    Yes. However, licensing a technology with your company would be done, as with any other company, on a business basis, not just because you are a member of the University.

    Faculty, academic staff, and students should carefully weigh the risks and opportunities of starting a new business against licensing to an established firm. A preliminary market assessment should be conducted to determine the prospects for both options. This market research will be useful regardless of future choices. Market research can identify potential licensees and/or begin to build a business plan for a startup company.

    Will TVC help me with my company by providing business advice and/or financing?

    TVC has several programs for assisting in the market research, business planning and set-up of new companies and in many cases the University will establish a new company itself. It is the decision of TVC as to whether it is in the University's best interest to start a new company or license to an existing company. TVC also has several funding grants and seed funds available for its technologies.

    Where can I find assistance for starting a business?

    TVC has a section of its website dedicated to starting new businesses. We also have an Entrepreneur's Guide that you can receive if you would like more information. You may also contact your licensing manager for further information.

    What do I need to do in order to license a technology from the U?

    In order to license a technology your company should contact TVC expressing an interest in a particular technology. The licensing of a U technology by a U inventor, however, is not automatic. TVC will determine if the sound business decision is to license to your company or an established company. The startup company will need to provide a commercialization plan to TVC before licensing is completed.

    After I set up my company I plan to apply for SBIR and STTR support. If successful, I will want to subcontract with the U to conduct some research. Can I do this?

    Yes. However, by supporting research at the U, especially in your laboratory, your company could cause a conflict of interest for you. This situation needs to be discussed with the Conflict of Interest Committee at the U. You should not be the U principal investigator on any project funded by your company. In addition, an uninvolved person should be selected to review both the research and finances of any project in your laboratory, which is supported by your company.

    I may not have sufficient funds to set up my company in its own facilities or to buy equipment. Can I temporarily use my research laboratory for my company until the company gets on its feet? Or, in other words, does the U provide space or equipment for use by startup companies?

    No. You may be able to support or sponsor research on the technology at the university, as any outside company can sponsor. However, there are requirements for oversight of the research which must be discussed with the Conflict of Interest committee, in order to manage any possible conflict.

    Will starting a company help me attain tenure and larger raises?

    This would be the decision of the departmental chair, dean, and provost.

    Do I need permission to set up a company?

    No. But, without the approval of a management plan to avoid conflict of interest, your company cannot license technologies or conduct any other business with the university.

    What does it take to successfully establish a business?

    There are a number of factors that influence success. Some of these are:

    1. Having a protected product or process that is new and/or superior to anything currently in the marketplace.
    2. Creating a full-time management team well versed in startup and business operations. An inventor and/or an academician usually is not an effective business manager.
    3. Access to sufficient capital and adequate facilities.
    4. Obtaining long-term commitments from venture capitalists and management.
    5. Utilizing available, low-cost, experienced business assistance.
    6. Experiencing good luck.

    8. License Agreements

    What is a license?

    A license is permission granted by the owner of intellectual property that allows another party to act under all or some of the owners rights, usually under a written license agreement.

    What is a license agreement?

    License agreements are typically in writing and describe the rights and responsibilities related to the use and exploitation of intellectual property. Utah's license agreements usually stipulate that the licensee must diligently seek to bring the intellectual property into commercial use for the public good. The agreement also seeks to provide a reasonable return to the University of Utah.

    How is a business chosen to be a licensee?

    A licensee is chosen based on its ability to commercialize the technology for the benefit of the general public. Sometimes an established business with experience in similar technologies and markets is the best choice. In other cases, the focus and intensity of a startup company is a better option. Typically, TVC does not have multiple potential licensees bidding on an invention.

    What can I expect to gain if my IP is licensed?

    Per University of Utah policy, a share of any financial return from a license is provided to the inventor(s). In addition, inventors enjoy the satisfaction of knowing their inventions are being deployed for the benefit of the general public. New and enhanced relationships with businesses are another very positive ouTVCme of the licensing process.

    What is the relationship between an inventor and a licensee, and how much of my time will it require?

    Most licensees need some active assistance by the inventor to facilitate their commercialization efforts. This can range from infrequent, informal contacts to a more formal consulting relationship. Working with a new business startup can require substantially more time, depending on your role in or with the company and your continuing role within the university.

    9. Commercialization

    What is commercialization?

    Commercialization is the process of taking a licensed technology and converting it into a marketable product.

    What activities occur during commercialization after my technology has been licensed?

    Most licensees continue to develop an invention to enhance the technology, reduce risk, prove reliability, and satisfy the market requirements for adoption by customers. This can involve additional testing, prototyping for manufacturability, durability and integrity, and further development to improve performance and other characteristics. Documentation for training, installation and marketing is often created during this phase. Benchmarking tests are often required to demonstrate the product or service advantages and to position the product in the market.

    What is my role during commercialization?

    Your role can vary depending on your interest and involvement, the interest of the licensee in utilizing your services for various assignments and any sponsored research related to the license or any personal agreements.

    What revenues are generated for the University of Utah if commercialization is successful?

    Most licenses have licensing fees that can be very modest (for startups or situations in which the value of the license is deemed to warrant license fees) or can reach hundreds of thousands of dollars. Royalties on the eventual sales of licensed products can generate similar or greater revenues, although this can take years to occur. Equity, if included in a license, can yield similar returns, but only if a successful equity liquidation event (public equity offering or a sale of the company) occurs. Most licenses do not yield substantial revenues. A recent study of licenses at U.S. universities demonstrated that only 1% of all licenses yield over $1 million. However, the rewards of an invention reaching the market are often more significant than the financial considerations.

    What will happen to my invention if the startup company or licensee is unsuccessful? Can the invention be licensed to another entity?

    Licenses typically include performance milestones that, if unmet, can result in termination. This allows for subsequent licensing to another business. However, time delays and other considerations can hinder this re-licensing.

    10. Revenue Distribution

    How are license revenues distributed?

    From the University Guide: "Inventors shall receive a share of royalty income or other revenue received by the Research Foundation as a result of commercialization of an invention. The inventors' share of income shall be based on a percentage of such income or revenue remaining after (i)reimbursement of the University for all direct costs of patent prosecution or maintenance (ii) payments to other institutions required by University agreement, including but not limited to inter-institutional agreements for the management of jointly owned patents, and (iii) all development funds advanced pursuant to section III.C.3 ("net revenue"). The inventors' share (in the aggregate where there is more than one inventor) shall normally be forty percent (40%) of the first one hundred-thousand dollars ($100,000) of net revenue, thirty-five percent (35%) of the next two hundred thousand dollars ($200,000) of net revenue, and thirty-three (33%) percent of any additional net revenue received by the Research Foundation."

    What are the tax implications of any revenues I receive from the University of Utah?

    License revenues paid to inventors are generally taxable and are reported as Form 1099 income. Consult a tax advisor for specific advice.

    How are inventors' revenues distributed if there are multiple inventors and / or multiple inventions in a license?

    The "inventors' share" of royalties is divided equally among all inventors unless all inventors agree in writing to another distribution formula of their collective choice.

    How is equity from a license distributed?

    The equity that the University of Utah receives under a license agreement is distributed to inventors that are not receiving equity directly from the licensee, in accordance with the same policy that governs the distribution of cash royalties.