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Foundation* Grants and IP Terms

Foundation* Grants and IP Terms. Sally O’Neil, Manager, Industrial Contracts Office SMART meeting April 5, 2011. Nonprofit Grants. Issues that Concern Us: Foundation getting rights to own inventions under certain circumstances Revenue sharing terms Control over licensing/patent prosecution

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Foundation* Grants and IP Terms

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  1. Foundation* Grantsand IP Terms Sally O’Neil, Manager, Industrial Contracts Office SMART meetingApril 5, 2011

  2. Nonprofit Grants • Issues that Concern Us: • Foundation getting rights to own inventions under certain circumstances • Revenue sharing terms • Control over licensing/patent prosecution • Granting commercial licenses • Detailed reporting requirements • Indemnification for IP infringement (!)

  3. Where Do These Issues Show Up? • IP and Patenting Sections in Grant or Separate Exhibit • Reporting Sections • Indemnification or Insurance Section • Other Places Too So ICO typically will ask for the whole package: agreement, PI, work statement, budget …

  4. Title to Inventions • University must assign ownership to foundation if we don’t file a patent application or later abandon one. (They want to assure active development of technology.) • May create conflicting obligations with 3rd party funders, such as federal government or others. • Approach: We qualify with: “To the extent legally able...” and retain “research rights” for us and other universities

  5. Royalty Sharing • Requires University to share licensing revenue on inventions funded by the grant. (Foundation is seeking ROI to reinvest in more research.) • Can result in unfair windfall to foundation • Can mean the foundation shares licensing “wins,” but not “losses” • Our approach: If we’re sharing royalties, we focus on what constitutes a fair return to foundation.

  6. What’s Fair? • Base royalty sharing percentage on: • “Net revenue” (deduct costs, OTL’s 15%, inventor share, state share, if CIRM funding, etc.) • Sharing proportionate to amount of funding provided by foundation to invention • Royalty sharing begins only after net income exceeds certain threshold (e.g., $250K)

  7. Commercial License • Avoid – Most foundations do not have commercialization capability • Prevents us from granting an exclusive commercial licenses, which could hobble development of some technologies for the public benefit • Approach: Offer foundation a royalty-free, noncommercial, internal license

  8. Licensing Control • “March In” rights -- requires assignment or cancellation of license if commercialization not realized within a preset frame • Can make it impossible to find licensee • Establishes/reflects potentially unrealistic expectations • Approval required before we can grant an exclusive license or for the specific license terms • Approval over license agreement creates uncertainty during negotiations – licensees reluctant to invest significant time/take risk • Approach: Educate foundation on issues.

  9. Industrial Contracts Office Who(m) do you call? Bookmark the Departmental Assignments on our website: http://www.stanford.edu/group/ICO/general/ICOStaff.html OR ICO.stanford.edu “ICO Staff Information”

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