Licensing intellectual property (“IP”) from a university or research institution can provide your company with foundational IP that can help jumpstart product development and attract investment. It can also raise some potential risks depending on various factors, such as the IP to be licensed, who created that IP, and your company’s relationship with the licensor. Below is a non-exhaustive list of considerations to keep in mind when licensing IP from a university or research institution.
Concurrent engagement – If your company will engage (as a founder, employee or otherwise) any person who will have a concurrent appointment at the licensor institution (and especially one involving IP creation), be wary of potential concurrent engagement issues. A key potential concern is that the licensor’s policies and agreements with the person that your company engages may apply broadly and purport to include any IP that person creates (including IP relevant to your business) that has any conceivable nexus with the licensor’s work or resources. It can be helpful to seek a written confirmation from a university or research institution of a person’s role with your company, and that all IP that person creates pertaining to the field or operations of your company is deemed to be owned solely by your company.
Freedom-to-operate – Where possible your company should seek to obtain a license for all IP rights necessary to ensure that the business will not infringe the licensor’s IP rights when conducting its planned business. This is especially true when your company may spin-out from the licensor and your company engages (fully or part-time) current or former licensor personnel to perform important services for your company. This requires conducting some level of due diligence on the IP assets to be licensed and mapping those assets to your planned business operations.
Negotiations – Universities and research institutions often require the use of their standard form contracts, and negotiations of contract terms can be time-consuming and expensive. Consider agreeing to core deal terms (e.g., the scope of IP being licensed, and any applicable economics) in an LOI or term sheet to try and iron out some of the most material terms before working on long-form agreements.
Non-Patent Assets – Many universities and research institutions treat all technology licensed as patented assets in various ways, including how license and sublicense rights are structured, what economics (e.g., a royalty) are required and the effects of license termination. Non-patented technology (e.g., software and know-how) often requires specifically negotiated terms so it’s important to try to include those terms in your contracts.