Issues Related to Licensing Technology from Universities

Many of the successful products available on the market today started as inventions in a university laboratory. Sports beverages (Gatorade), magnetic resonance imaging, gene splicing and even on-line search (Google) all had their start in a university. Since the Bayh-Dole Act was passed in 1980, many universities have tried to license their technology and patents to companies and entrepreneurs in hopes of achieving more success. Unfortunately, there have been some issues with this process. To license university technology these issues must be overcome and the first step is to learn what they are.

Failure to Review the Payment Obligations

Companies need to be careful to scrutinize all the terms related to payments that have to be made to the university under the license. If royalty income is paid based on the percentage of sales, it is important for the definitions of sublicensing income and net sales to be correct. This is a common issue with those who try to license university technology, but can be overcome when the definitions and wording is looked at closely.

Not Ensuring the Termination Provisions Work

Statistically speaking many university licensed technologies are not successfully commercialized, even when commercially reasonable efforts are put forth by the licensee. In these cases it is quite important to have a smooth licensee termination process.

The license termination provisions will vary based on the industry and technology; however, most companies should insist on the right to terminate the license for convenience after giving a written notice, assuming all payments owed to date have been made. This will allow a corporate licensee to return the license that it is not productive without having to pay any sort of penalty or engage in wasteful litigation.

There are many considerations for university technology. Getting to know what they are can help ensure a smooth process.

Find out more about licensing university technology by visiting the Tekcapital website.

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