Listening to your customers is a key to success in virtually any field, and it is clear that the operators of the University of Minnesota’s MN-IP licensing program have put that principle to good use.
While their initial standardized licensing options in the program have proven very successful, the university recently introduced a third option. The original deal options — A and B – allow companies to pre-pay a portion of a research agreement in exchange for an exclusive license to the technology developed (Option A); or, alternatively, Option B requires no upfront fees and allows the company to work with the IP until it can more confidently negotiate an exclusive, royalty-bearing license. The new Option C grants a non-exclusive but royalty-free license to develop university IP in exchange for a small upfront fee.
“The genesis of MN-IP is making it easy for business to work with the university, and we are expanding that effort,” explains Rick Huebsch, associate director of the University’s Office for Technology Commercialization. “In the past some companies have said they did not prefer A or B (which are both exclusive), but wanted something different. It’s all based on listening to your customer,” he says.
“What Option C does is allow non-exclusive rights royalty free. We charge a little bit of an upfront fee and the sponsors basically get the freedom to operate.” Specifically, Option C calls for the pre-payment of 10% of a sponsored research agreement or $10,000, whichever is greater. The sponsoring company pays no royalties, annual minimums or other technology commercialization fees on the license. It also has the opportunity to negotiate an exclusive, royalty-bearing license at a later date.
Huebsch explains that some companies are willing to trade exclusivity for greater freedom. “Imagine a company sponsors some research and wants to make sure they have access to the IP but do not want to deal with royalties,” he posits. “[Options] A and B both have royalties; they just want freedom to operate, and do not care if others have access to it non-exclusively. Many companies have told us that if they sponsor research they should have access to [the IP] and never have to interact with the university, or license it.”
He believes some additional value is created through Option C. “We are trying to accommodate these sponsors while at the same time protecting the interests of the university,” Huebsch explains. “They have the option, within six months after reporting the IP, to convert to an exclusive.” While some industries prefer exclusive deals, he continues, he has seen those in software, semi-conductors and petrochemicals, for example, being less concerned about competition than royalties. “They feel they can out-execute their competition,” he observes.
As for the university, Huebsch says the new option not only expands the universe of potential partners but it also cuts down on the time it takes to negotiate a deal. “Traditionally, a company will talk to a professor and think ‘Great, I can sponsor that research,’” he says. “They agree to work together, and then they come to the university and its dealmakers and it takes forever. [In the past] there weren’t any kind of templates. Now, they can come and do sponsored research — pick one of these [options] and get going.”
A detailed article on the MN-IP program appears in the April issue of Industry-Sponsored Research Management. To subscribe and get the full article, and receive every monthly issue filled with expert guidance on building and managing your university’s corporate-sponsored research portfolio, CLICK HERE.
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