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 – Granting commercial licenses – Detailed reporting requirements – Indemnification for IP infringement (!)

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 …

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

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.

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)

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

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.

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