Option agreement intellectual property


Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. In cases when the sponsor acquires ownership of option agreement intellectual property copyright or invention, the university retains a royalty-free right to use the intellectual property for any internal research and teaching purposes, and may retain the right to sublicense to investigators for research and teaching purposes.

Company ownership of intellectual property resulting from federally sponsored research requires the permission of the federal funding agency. No sooner than three months following termination of this Agreement, or any extension thereof, the University shall have the right to request that Sponsor make a final decision regarding such assignment.

Any assignment made by the University to the Sponsor shall include the following conditions: For intellectual property jointly made by employees of a university and an option agreement intellectual property sponsor, under U. All rights and title to Joint Intellectual Property belong jointly to University and Sponsor and are subject to the terms and condition of this Agreement. If the contractor is a nonprofit organization, it agrees that: The assignment might include no conditions.

Alternatively, some possible terms include: For copyrights, and for patents in many foreign countries, the ability to license without accountability to or permission option agreement intellectual property the other party may be limited. For the purposes of discussing the rights to use intellectual property, the three scenarios used in the previous option agreement intellectual property are also used here: Under this scenario, three approaches are described to acquire license rights to use intellectual property.

The document then goes on to describe the scope of the license provisions considered within each of these approaches. When the university owns the intellectual property, sponsors may wish to acquire license rights to the intellectual property, including the right to use and the right to make derivative works.

These rights may be in the form of an option in which the sponsor can elect a future license, or in the form of option agreement intellectual property grant of a specific license as part of the research agreement, although these are not mutually exclusive. Three approaches for transferring these rights are discussed below: The research agreement provides for an option period during which the sponsor has the sole right to elect a license, to be negotiated in good faith.

While an invention disclosure or filing of a patent application is of significance, many inventions for which applications are filed are never commercialized.

Thus, a sponsor will typically have insufficient information at the time of filing to reach an informed option agreement intellectual property on whether to commit to a commercial development under a license agreement. One reason for the university to conclude a license agreement, however, is to commit the sponsor to a. This option shall extend for —— [time] from the disclosure of intellectual property to the sponsor, OR filing of a patent application, OR notice of patent allowance, OR issuance of a patent, OR conclusion of the contract period.

Terms and conditions of these licenses are to be negotiated in good faith and agreed upon between University and Sponsor. The sponsor and the university need to discuss which choices are to be included in the research agreement.

For example, an exclusive license may negate the need for the grant of a non-exclusive license. This commitment may consist of continued funding of the research program, payment option agreement intellectual property patent costs, internal company development, or other considerations, including further funding tied to a patent application or other milestones. The beginning and length of the option period varies widely according to the nature of the anticipated intellectual property option agreement intellectual property the industry involved.

In general, universities want a short option period to option agreement intellectual property the university to seek a third party licensee in the event that the sponsor is not interested in a license. The sponsor, option agreement intellectual property the other hand, would prefer a longer option period in which to assess the commercial potential of the intellectual property.

For intellectual property which is a potential product, such as that which may arise from research funded by a pharmaceutical company, the option period generally extends for some period beyond the initial invention disclosure or filing, and may extend beyond the termination of the sponsored research agreement.

In some industries, it takes longer to determine the commercial value of the intellectual property. In such cases, an extended option period, perhaps even beyond issuance of a patent, may be appropriate. Intellectual property of these types sometimes arise from research in such industries as petroleum, chemical, and heavy manufacturing, and is typically utilized with other proprietary technologies in actual commercial use.

In some cases the research agreement grants a specific license to the sponsor to use the intellectual property and describes the extent of the permitted use, as distinguished from an option which grants only the right to obtain a license at a later time, but no present rights.

So some license provisions may be defined in the research agreement. However, by including an option for a license in the research agreement, negotiation of most license provisions may be deferred until some time after disclosure of the specific intellectual property. In practice, when the option agreement intellectual property elects to take a license, the parties are almost always able to reach acceptable terms for a license agreement for the intellectual property resulting from the sponsored research.

If agreement cannot be reached, mediation or arbitration can sometimes be helpful. Occasionally, in spite of these efforts, agreement still cannot be achieved within the agreed option agreement intellectual property time. When this occurs, the university has the right to negotiate with third parties. If the university is able to reach agreement with a third party on more favorable terms than were presented to the sponsor, under the right of first refusal, the sponsor has the right to accept such a license offered to a third party.

The right of first refusal may be acceptable to a university if it is contingent upon option agreement intellectual property sponsor negotiating a license agreement in good faith during the option negotiation period.

Having the right of first refusal may provide the added level of comfort that a sponsor needs to justify the research investment. For its part, the sponsor may feel that, in the absence of detailed license terms in the research and option agreement, a right of first refusal is needed to reduce the risk that the university will prematurely initiate negotiations with option agreement intellectual property third party.

However, upon the conclusion of such negotiations and before any license is granted to any such third party on terms more favorable than were offered to Sponsor, University shall offer Sponsor a license on the same terms.

If Sponsor is willing to enter into a license with University on such terms, Sponsor shall be granted the license instead of such third party. Regardless of which of the above approaches to acquiring a license is utilized, consideration of the scope of the license is the same. Below is a discussion of possible provisions to be considered, including provisions for exclusive and non-exclusive licenses, royalty rates, field of use, and inclusion of a full license agreement.

Exclusive licenses are especially important in some industries, such as pharmaceuticals, biotechnology, and chemicals, whereas they may not be as important to others, such as electronics and automobile manufacturing. If a technology is of general use or limited value, option agreement intellectual property if it is a small part of a large system, the sponsor may choose a non-exclusive license.

Sponsors often expect non-exclusive rights to inventions resulting from sponsored research to be royalty-free, but companies are generally willing to pay royalties for exclusive rights. In some industries, pharmaceuticals, for example, if a sponsor is granted a non-exclusive license, the university may have difficulty interesting other licensees.

Some potential licensees may not be willing to spend large sums of money developing a product using the intellectual property that the original sponsor chose not to develop, but could subsequently use royalty free or market in animproved form. If the sponsor elects a non-exclusive, royalty-free license to use the intellectual property solely for research purposes, the university is still able to grant an exclusive license to a third party for commercialization of the intellectual property.

If the sponsor takes an exclusive license, the university must retain the right to use the intellectual property in its own research and instructional programs. Generally, royalty provisions are not included in research agreements. The pre-specification of royalty rate— or a range of rates—does not preclude discussion of other financial considerations during negotiations of the license.

Royalty rates are influenced by a number of factors including the potential market size and profitability of the licensed product, the potential cost of commercialization, the obligation to pay royalties to more than one licensor-holder for the product, the value added to the product by the university invention, and the degree of exclusivity granted by the license.

The field of research, type of invention, size of the research project, prior or background rights, stage and option agreement intellectual property of research being carried out, and the nature of the potential intellectual property, also may affect the rates. Royalty payments may be capped on a cumulative, percentage, or annual basis. The royalty base will require definition and may be based on: No contract language is provided here for royalty provisions because these and other variables must be considered.

See the definition of derivative works in footnote 15 on page If royalties are to be paid for derivative works, the basis and extent of this option agreement intellectual property may be further defined in subsequent license agreements or in the initial research agreement depending on the specificity of other intellectual property terms in the agreements and the preference of the parties. Under Title XIII Tax-Exempt Bonds and the House and Senate amendments to it, option agreement intellectual property status of public bonds may be adversely affected under certain conditions, particularly for pre-negotiated royalty rates with exclusive licenses.

Because of its complexity, competent tax advice may be necessary. The license may allow exclusive or non-exclusive use within specific fields. In many instances, the sponsor may wish to obtain a license for all fields of use. The university, however, may be concerned about the ability of the sponsor to fully commercialize option agreement intellectual property licensed product in every possible field of use. In fact, such full development is an ideal rarely realized in practice.

Market size, development costs, and other factors often make the development of an invention for particular applications or markets unprofitable.

The sponsor may develop certain applications or markets through sublicensing or joint ventures. For certain types of products, such as pharmaceutical, a broad field of use may be critical to commercial success. For instance, successful commercialization may ultimately depend on the later discovery of a new medical use for a compound that was not considered commercially valuable during the original negotiations. Alternatively, a drug may have multiple uses that collectively make the product sufficiently profitable to justify undertaking the research.

The sponsor may not be willing to gamble resources on a subset of possible applications. In many cases both the university and the sponsor are reluctant to negotiate a full license as part of the research agreement because it is time-consuming.

However, some sponsors insist on it. When the parties have sufficient information about the probability of intellectual property resulting from the research, as well as its likely commercial value, a full license agreement may be. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

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The university and sponsor jointly own the intellectual property. Page 7 Share Cite. The university owns the intellectual property. Option for a license. Page 8 Share Cite. Grant of a license. Page 9 Share Cite.