Commercializing your invention
A license agreement is a contract between the institution, who owns the IP, and a third party, usually an industry or a corporate, in which institution’s rights to use a technology are transferred to the licensee company (without giving up ownership) for financial and other benefits. The aim of TTO is that the technology will find a suitable home where it will be developed and exploited by the licensee for society’s benefit, complying with government business policies, and in return, provide a reasonable financial return to the licensor (Institution) and the innovators. Usually agreements are done with spinouts, startup and well established corporates. In case of Spinouts, the innovation usually is done by one or some or all of the founders of the Spinout at the university itself, during the course of their academics and / or research.
TTO looks at the following aspects of the invention for a potential technology transfer, and digs out more information on:
- approximate production cost of the product when produced on scale
- the product as compared to competition or near competition
- the profile of end users or customers
- distribution and sales channels
- potential sales in coming years, and sales margin
- synergy with existing businesses and their market profile
Many times the industry or the potential licensee needs to validate the technology in their environment or the actual environment where the product has to be used in a workflow (instead of demonstration in the Lab or a pilot case, as in a University research setup). In such a case, an option agreement is used to enable the industry partner to evaluate the technology and its market potential for a limited time before licensing. An option agreement provides companies with a non-commercial, internal-use license against a fee. The option holder is also mostly responsible for payment of patent costs during the option period. However, depending upon the success of the technology, a license may or may not happen after the Option agreement expires. However, the confidentiality of the technology and its use is bound to the participating company through the Option Agreement.
A License agreement has some standard features and some custom features. The Standard features of a license include financial terms, such as annual fees, milestone fees, a royalty on product sales, and reimbursement of patent costs. In case of a spinout or a startup, this may also include a minority share of equity. Apart from this, other important terms of the license are:
- Degree of exclusivity: exclusive, non-exclusive or
- Degree of restrictions: restricted by territory or field of use
- Reservation of rights for the Government in case the invention was funded by government-funded research or is important from national defence perspective,
- Reservation of rights for the Institution: for use by the Institution for their future research and educational activities
- Sub-licensing: Whether the licensee can sub-license the technology further to others in the market place to extend its outreach, and to what extent
- Performance requirements to ensure that the licensee is committed to the technology and has resources to develop and exploit the technology for intended market reach. These terms also help track the real time progress of technology towards its commercialization
All licensing negotiations are held between the TTO and business representatives of the company.
Relationship post licensing
As per the license agreement, the licensee continues to advance of the technology and makes further investments to refine the product or service. This step usually includes further development, regulatory approvals and other activities. Usually the license caters for licensee’s need to have an access to the innovator for further product development, and the interest of the licensee in utilizing innovator’s services for various assignments and any sponsored research related to the license or any personal agreements. TTO likes to maintain an ongoing working relationship with each licensee over the term of the license agreement to monitor progress at regular intervals to ensure product development and market outreach.
Revenues received by TTO from licensees are distributed to Institution for further research and education, inventors and to fund the activities of TTO.
The technologies transferred to industry brings industrial efficiency and competitiveness, brings new drugs, products and therapies to the public, fosters economic development of the country and creates jobs through startups and spinouts.
The Licensing activity also results in sponsored research projects, and collaborative innovation investments, and share valuable resources that contribute to the national mission of being a self-reliant (aatmanirbhar) economy.