Transcript The Review Process - University of Texas System

Yours? Mine? Ours?
Research Collaborations and
Drafting Effective Intellectual
Property Sharing Agreements
NACUA Sponsored Research
and Technology Transfer Workshop
BethLynn Maxwell
The University of Texas System
Office of General Counsel
Austin, Texas
Washington, D.C ~ Nov 15-17, 2006
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Effective Intellectual Property
Sharing Agreements
Inter-Institutional Agreements
and
Material Transfer Agreements
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Inter-Institutional Agreement
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What is an Inter-Institutional
Agreement?
a.k.a. “IIA”, “Royalty Sharing
Agreement”
More than intra-agency or inter-agency
agreement
Contract between 2 or more parties
(e.g., institutions)
Outlines patenting & commercialization
processes
Each party has an ownership interest in
common technology (joint ownership)
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Pros for Negotiating IIAs
Saves time, money and resources
Only one co-owner negotiates on
behalf of all co-owners
Only lead party signs license
agreement
Co-owners negotiate pesky deal terms
before commercialization begins
Aligns/ organizes the co-owners
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Cons for Negotiating IIAs
Should save time, resources and
money
Time lost because co-owners get
bogged down negotiating their deal
terms
If co-owners can’t (won’t) agree, then
relationship starts off on wrong foot
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What’s in an IIA?
Parties = co-owners
How is common ownership created?
Names ‘Lead Party’
How does non-lead give authority to Lead Party?
Non-lead licenses right to Lead Party
Non-lead gives Lead Party right to negotiate on its behalf
How are proceeds split?
How is split determined?
How are solely owned and jointly owned technologies handled?
What about equity?
Who pays patenting costs and expenses?
Who deals with assignments, warranties and representations?
Mechanism for enforcing against potential infringers in IIA
Who handles and pays for litigation?
Termination Rights
Protecting co-owners confidential information
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Factors to Consider When
Choosing Lead Party
Number of contacts in area of invention
Who can market the technology better?
What do you do to market technology?
Percent contribution by institution
Experience of staff in technology transfer
office
Are you licensing similar technology?
One of the co-owners just doesn’t want to
take lead
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Who Handles the Following?
Lead or Non-Lead?
Patent Prosecution
Out-licensing
Accounting
Infringement
Defense
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Sticking Points When Negotiating
How is revenue shared?
Management fee
Payment of patent costs
Signatures on license agreement
Approval rights for Non-Lead Party?
Include certain license requirements
in IIA
When can IIA be terminated?
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Sticking Point:
How is Revenue Shared?
Split follows amount each co-owner
contributed to invention
Revenue split in proportion to % each
co-owner contributed to invention
Inventor’s help co-owners to decide
How is equity handled?
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Sticking Point:
Management Fee
Do co-owners agree to fee?
If yes, how much?
How do you agree on amount?
Capped or uncapped?
If capped, at what amount?
Sliding scale for cap?
Does fee apply to equity?
Are other costs recoverable – besides
patent expenses
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Sticking Point:
Payment of Patent Costs
How are they split?
Costs are shared in = proportion as revenue sharing
Past patent costs could be deducted from license
revenue prior to distribution
Future patent costs
Initially paid by Lead Party and lead invoices Non-Lead
Should costs be capped?
What if one party opts out of paying its share of U.S.
or foreign patent prosecution
Paying party has sole authority over licensing and patent
prosecution
Paying party – no obligation to share revenues with nonpaying party
How are costs allocated when marketing sole Lead
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and joint lead and non-lead IP?
How are Costs Allocated When
Marketing Sole Lead and Joint Lead
and Non-Lead IP?
Marketing both sole Lead IP and joint
lead and non-lead IP
Can’t be 50:50
Count number of patents?
Allocate percentage based on number
of patents
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Sticking Point: Signatures on
License Agreement
Who signs License Agreement (not IIA)?
Only Lead Party signs
Saves time, resources and money
All co-owners sign
All co-owners could sign but cannot allow co-owners
to re-negotiate license terms
Negotiations could come to halt
Lead Party cannot enter into fully paid-up
license without prior written consent of
Non-Lead party
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Sticking Point: Approval Rights
in License Agreement
Does Non-Lead Party get approval
rights?
Rarely
Only gets “review and comment”
rights
Majority of IIAs
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Sticking Point:
License Requirements in IIA
Customary financial terms
Field of use
Territory
Exclusive or non-exclusive license
If exclusive license granted:
Licensee will be obligated to pursue commercially
reasonable and diligent efforts to commercialize invention
Licensee will pay all past and future patent expenses
Publication rights and continued use of invention
reserved for co-owners
Standard indemnity obligations
Standard disclaimers against all warranties
Language that licensee gets no implied licenses re:
use of other IP belonging to co-owners
Marketing diligence milestones
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Sticking point:
When can IIA be terminated?
Include in IIA
Specific diligence requirements on
Lead Party
Non-Lead Party can terminate IIA
If the Lead Party does not license
technology within certain number of
months or years
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Material Transfer Agreement
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What is a
Material Transfer Agreement?
Contract between 2 or more parties
Governs the transfer of one or more
materials from the owner or authorized
licensee to recipient
Recipient = e.g., a research institution or
university
Use is limited to research purposes only
Typically limits use of material and
disposition of “new” material created from
that use.
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Types of Materials
That Can Be Transferred
Cell lines
DNA libraries
Monoclonal
antibodies
Organisms
Reagents
Growth factors
Drugs
Clones/Cloning tools
Animal models
Computer software
Devices/equipment
Chemicals
Plasmids
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Sources/Owners of Materials
For-profit organizations
Not for-profit organizations
Universities
Research institutions
Hospitals
Government entities
Individuals
Same list could be used for Recipient
of materials
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So, What’s the Big Deal?
Why does University Principal
Investigator want/need material?
Needs material to further research
To generate more substantive data
To verify/validate results
Owner may be only source of material
Not commercially available
Material too costly to synthesize
Material is proprietary
Opportunity to collaborate
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Why Owners Provide Material ~
Up-side for Sharing
Extends/stretches limited amounts of
materials and resources
Increases owner visibility
Opens new research avenues for owners
Allows all to learn from others
Owners collaborate with gifted academic
faculty
Prestige of co-authoring scientific papers
Identify future researchers
Recruiting opportunities
Fosters collaboration
Synergistic impact – great minds …
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Owner Concerns ~
Down-side for Sharing
Major investment expended to create
material
Concerned about potential liability
Why bother? Time sink!
Confidentiality concerns
Material is hazardous or may be subject to
special regulations
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Who Negotiates & Signs MTAs?
Incoming MTAs
Office of Sponsored Projects or Contracts
Office or Technology Licensing Office ~ most
preferred
Department / College
Principal Investigator ~ least preferred
Outgoing MTAs
Office of Sponsored Projects or Contracts
Office or Technology Licensing Office
Who signs MTAs?
Someone with signatory authority for research
institution
Not the principal investigator
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MTA Review Process
Incoming/Outgoing
Handled the same as any contract
Principal Investigator completes “MTA
Questionnaire”
Internal approvals
Attach compliance approval
Internal signatures
Obtain signatures
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MTA Questionnaire and Checklist
1.
(Incoming)
Is material relevant to any IP disclosures
2.
Likelihood of IP – patent or copyright?
3.
Will progeny, derivatives, modifications or other
substances result from use of materials?
4.
Do you agree to relinquish your rights to this
intellectual property?
5.
Do you plan to request the University relinquish its
claim to the intellectual property?
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MTA Questionnaire and Checklist
Incoming (Cont’d)
6.
If you agree to relinquish your rights, do you
understand and attest that the licensing income
could be significantly diminished or negated
under these terms.
7.
Do you also understand that these terms could
handicap your future ability to accept awards from
other sponsors.
8.
Source of funds will you use under this MTA?
9.
Does research involve federal sponsorship?
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MTA Questionnaire and Checklist
Incoming (Cont’d)
8.
What role will the requesting materials play in your
research? Major or minor?
9.
Will the use of the material conflict with other corporate
sponsorships or agreements?
10.
Is there an alternate source for the requested materials?
11.
Delivery date of materials to university?
12.
Will you return any unused material or destroy the
material?
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MTA Terms and Potential Issues
Who are the “parties”
What if Provider is a foreign entity?
No revisions allowed!
How are “Materials” defined?
Restrictions on handling/use of materials
Transfer or distribution of materials
Ownership and licenses
Publication guidelines
Confidentiality requirements
Reporting and expiration
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Who are the Parties?
Providing Entity and Recipient Entity
Not the principal investigator
Example A: MTA made between ABC, Inc.
(“Provider”) and Dr. I. Domagic, a scientist
with University (“Recipient”)
Example B: MTA made between ABC, Inc.
(“Provider”) and University (“Recipient”)
Example B is correct – Scientist at
“Recipient” should not sign MTA.
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Provider = Foreign Entity
What the big deal about Foreign
Entity Providers?
Problems arise when governing law is
the foreign entity’s country
Bigger problem when foreign entity
will not make governing law silent (no
revisions allowed)
Even bigger problem when Recipient
has to indemnify Provider
BIG, BIG problem if Recipient = State
Institution
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What If No Revisions Allowed?
MTAs that won’t allow any revisions
How do you handle them?
Potential to halt research
Even bigger problems
Governing law
Foreign country or domestic
Indemnification provisions
“… to the extent authorized by the Constitution
and state laws of Texas …”
Handling non-conforming agreements
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Definition of the Material
Materials should be narrowly defined
Example:
Option #1: “Material” includes “xyz” that is
actually provided to Recipient by Provider
under this MTA, any progeny of “xyz”, and any
unmodified derivatives of “xyz”.
OR
Option #2: “Material” includes “xyz” that is
actually provided to Recipient by Provider
under this MTA, any progeny of “xyz”, and Any
unmodified derivatives of “xyz”, any
modifications of “xyz”, and any information,
data, and/or results generated by Recipient and
related to “xyz” under this MTA.
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Use of Material by Recipient
What your MTA could say:
The Material will be used solely by Recipient for research
purposes only.
Can Recipient Principal Investigator share with colleague
down the hall?
What if it includes the following language?
The Material will be used solely for non-commercial
research purposes at Recipient’s facilities.
Material will be not be used in animals or in products used
for animal food.
Material will not be used in research that is subject to
consulting, licensing or similar obligations to a third party.
If used other than as proposed, Provider will solely own any
results, discoveries, or inventions arising out of such use by
Recipient.
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Distribution of Material to Others
Standard terms (preferred):
Recipient will not transfer Material to
others outside of the Recipient Institution
More restrictive:
Recipient will not transfer Material to
others outside of Recipient Scientist’s
laboratory, or to any person who is not
obligated to assign their entire interest to
any invention to the Recipient institution.
CAUTION:
Recipient scientist may violate distribution
restrictions if the terms are unclear, overly
burdensome, etc.
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IP Ownership & Licenses ~
Provider Wants
To own everything that comes from Material
Non-exclusive license to make, use and sell
Recipient Wants
Ownership determined by US Patent Law
What I invent, I own …
Wants to only grant non-exclusive license for
internal, research purposes
+ option to negotiate royalty-bearing exclusive license
Needs to retain license to use invention for
internal research purposes only + retain
publication rights
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IP Ownership & Licenses ~
What is Appropriate?
(1*) Provider retains all right and title in
and to Materials and Information. Nothing
contained in this MTA shall prevent
Provider from sharing Material with other
parties. Inventorship of any discoveries
developed using Material shall be
determined according to U.S. Patent Law.
Definition of “information“ – information
given to Recipient from Provider under
MTA
OR
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Or …
(2) Provider retains all right, title and interest to
Materials and Information. Recipient will disclose
Inventions to Provider. Provider may, at its sole
discretion, file patent application(s) for
Inventions. Provider will have control of strategy
and expenses with respect to such filing.
Recipient hereby grants to Provider and its
affiliates (i) a perpetual, fully paid-up,
nonexclusive worldwide license with right to
sublicense to all Inventions, and (ii) the exclusive
option to obtain an exclusive, worldwide license
to all Inventions, with total compensation for such
exclusive license not exceeding 1% of net sales
of products from Inventions.
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Answer
Answer: Option (1) is appropriate
Provider should own their Material and
Information provided to Recipient under
MTA
Recipient submits a final report on the
results of the work conducted with the
Material to Provider
Recipient retains publication rights
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Publication Concerns
Provider Wants
Right to approve publications before they
are published
To delete data or information in
publication that it deems should not be
included in publication
Recipient Wants
Provider to only have “review and
comment” rights
Discretion to publish in sole hands of
Recipient
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Publication Rights ~
Which is Appropriate?
• (1*) Recipient is free to publish the results
of research performed using Material;
provided that Recipient gives Provider
review and comment rights
•
Provider has 30 days to review and submit its
comments to Recipient
• (2) Recipient will not disclose results of
research using Material without prior
written approval from Provider. Recipient
also agrees to delete information from
proposed publications if directed by
Provider.
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Answer: Option (1)
(1) Recipient is free to publish the results of
research performed using Material;
provided that Recipient gives Provider
review and comment rights
• Provider has 30 days to review and
submit its comments to Recipient
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Confidentiality Obligations
Standard terms:
Recipient agrees to use reasonable efforts to
keep Information transferred with the Material
to Recipient confidential
marked “confidential”
with appropriate exceptions
for a reasonable amount of time
More restrictive:
Recipient will hold in strict confidence the
Material and Information for a period of no
less than 10 years
10 years from when?
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Reports & Expiration ~
Which is Appropriate?
(1*) Recipient shall provide a final report
containing research results using Material to
Provider within 6 months of expiration of the
MTA. Provider will maintain results in
confidence if requested by Recipient. This MTA
expires 3 years from date of signature, or upon
completion of the research, whichever occurs
first.
OR
(2) Recipient will provide complete updates on
research results to Provider every 3 months,
and a final report upon completion of the
research. Provider will have the right to use the
data and results for any purpose without
compensation to Recipient.
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Answer
(1) Recipient shall provide a final report
containing research results using Material to
Provider within 6 months of expiration of the
MTA. Provider will maintain results in
confidence if requested by Recipient. This
MTA expires 3 years from date of signature,
or upon completion of the research,
whichever occurs first.
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Export Control
Apply standard review procedures
State Department: Inherently military
technologies--International Traffic in Arms
Regulations (ITAR)
Commerce Department: “Dual-Use”
technologies (primary civil use) -- Export
Administration Regulations (EAR)
Treasury Department, Office of Foreign
Assets Control (OFAC): Prohibits
transactions with subject to boycotts, trade
sanctions, embargoes
Deemed Export Issues
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Special Concerns
Special Requirements for Handling
Select Agents under Patriot Act
Shipping Issues
Hazardous Materials
Packaging
Inspection permit
Environmental Health and Safety
Office
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Thank you ~~
Any questions?
BethLynn Maxwell
[email protected]
512.499.4518
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