The Licensing Process

The licensing process begins when a patent application has been filed, or software or copyrighted works are ready for commercialization. The licensing manager creates a non-confidential one-page summary and begins marketing the technology to potential licensees.

Databases and industry contracts are helpful for identifying the most appropriate people at candidate companies who have the expertise, resources, and business networks to bring the technology to market. An inventor's contacts can also be helpful for identifying a potential licensee. 

Often, the formation of a startup company around the technology is the best path to commercialization. Once a licensee is identified and a company is interested in the technology, the licensing manager negotiates a term sheet, and once completed creates a license agreement for the rights to the technology. 

Familiarize yourself with the frequently used terms included in license agreements. 

Grants: Exclusivity (exclusive/non-exclusive), Field of use, Territory, Sublicense rights, Reservations to the university so the technology can be used for research/academic purposes.  

Financial Considerations: License fees, equity (for startups), royalties on sales by licensee and sublicensees, sublicensee fees, minimum royalties and/or annual maintenance fees, milestones/diligence payments.

Patent prosecution/payment: Typically, the university will control patent prosecution and provide the licensee the opportunity to make comments, decisions about the prosecution strategy, which countries to file in, etc. In an exclusive license, the licensee reimburses the university for all its costs associated with preparing, filing, prosecuting, and maintaining the licensed patents.

Diligence Milestones: Diligence milestones to be met by the licensee to ensure that the technology is being diligently developed and commercialized. 
 

License agreements are legal agreements that transfer intellectual property to third parties. They define the rights to University patents, copyright and software. Technologies are made available under a wide range of licensing models including:

Exclusive licenses grant rights to use intellectual property to a single organization. Sometimes an exclusive license will be granted that limits the exclusive rights to a specific market, to a field of use, or by some number of years, so that multiple licenses can be offered with non-overlapping limited exclusivity. 

Non-exclusive licenses are used when there is a desire to grant rights to intellectual property to more than one organization. Each organization has equal rights to the technology. This may be due to the broad utility of the technology and is frequently the way that materials, copyrighted works, and software are licensed.

Express licenses are useful for speeding up the licensing process for frequently licensed technologies to companies and individuals. The licenses are typically non-exclusive and include predetermined, non-negotiable standard terms and conditions. Express licenses are often used for software and copyrighted works and include options for immediate payment and download. The technologies are provided as-is.

Option Agreements are entered into with third parties that describe conditions under which the university reserves a right for a third party to negotiate a license for intellectual property. Option agreements can be provided as part of a sponsored research agreement or in standalone form. Typically, these agreements enable third parties to evaluate a technology for a limited time prior to entering into a full license agreement.  

Confidentiality agreements (CDAs) and Non-Disclosure Agreements (NDAs) are used to protect the confidentiality of an invention or research during evaluation by potential 3rd party’s such as potential licensees. NDAs also protect proprietary information of third parties that University researchers access when conducting or evaluating research opportunities. These agreements facilitate the discussions of confidential materials, and protect information disclosed during discussions.

Material Transfer Agreements (MTAs) are used for incoming and outgoing materials. These agreements describe the terms under which University researchers and outside researchers may share materials, typically for research or evaluation purposes. An MTA ensures Intellectual property rights are not endangered when materials are used from or by another entity.

Inter-Institutional Agreements describe the terms under which two or more institutions (generally universities) will collaborate to assess, protect, market, license, and share in the revenues received from licensing jointly owned intellectual property.

Sponsored Research Agreements describe the terms under which sponsors provide research funding to Rutgers. Sponsored Research Agreements are negotiated by Rutgers Sponsored Research and Corporate Contracts teams. Clauses relating to intellectual property are often additionally reviewed by members of the licensing team.