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III. Licensing

The university markets the invention as appropriate. If warranted in view of all relevant considerations (including requirements of funding agreements and applicable law, marketing results, and ability of the start-up company to commercialize the invention), the university may license the invention to the start-up company. Considerations include the following:

  1. Conflict of Interest in Licensing

  2. The university inventor’s role in license negotiation is subject to Licensing Decision Review or LDR.  Form TT-100, the Inventor / Author Statement Concerning Involvement in Licensing Decisions may be required.

    The LDR is required by the California Political Reform Act (Act), which establishes rules designed to ensure that public officials "perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them." The rules apply to public officials at all levels of government in California, including university faculty.

    In order to comply with the Act, the university has developed policies for Managing Potential Conflicts of Interest in Licensing Under the California Political Reform Act, associated Guidelines on Managing Potential Conflicts of Interest in Licensing, and a guide to What Inventors Need to Know about Conflict of Interest in Licensing.

    When a university inventor has a disqualifying personal financial interest in a decision concerning a potential licensee of an invention, either

    • that employee must disqualify himself or herself from "making, participating in making or influencing a university decision" concerning that invention, including selection of licensees and other decisions made in the course of commercializing the invention; or
    • when that employee does not disqualify himself or herself from involvement in such decisions, a Licensing Decision Review of the licensee selection and of other licensing decisions must occur.

    The inventor’s share of royalty income paid to a university inventor by the university relating to the licensing of his or her invention is not considered to be a disqualifying personal interest of the inventor in the licensee of that invention.

    The Act will permit participation in negotiating, advising or making recommendations with respect to any university decision, including those related to licensing, so long as there is appropriate review by non-interested persons or persons, which the Licensing Decision Review accomplishes.

  3. University Receipt of Equity in the Start-Up Company

  4. The university equity policies apply if the university receives equity in consideration of licensing the invention to the start-up company.  University equity policies and guidelines generally state that in appropriate circumstances, the university may accept equity as partial consideration for technology licensing. These policies are in place in recognition that small or start-up companies may find it particularly difficult to commit significant cash outlays for both developmental and licensing costs. In such cases the university may accept equity, in lieu of cash, for license fees. When accepting equity, the university seeks to hold a position of 10% ownership or less in a licensee at the time that the licensee becomes a publicly traded company. The university will not hold a position on the board of directors, and will not exercise voting rights, but may exercise observer rights on the board of directors.

  5. Inventor Share of Royalties

  6. The university inventor receives a share of the net royalties and fees from licensing, in accordance with the Patent Policy. Equity received by the university in consideration of licensing the invention is also shared with inventors using the same formula for royalty sharing.

    In compliance with the UC Patent Policy, the university inventor receives a share of the net royalties and fees from licensing under a defined formula. The formula and process are in the UC Patent Policy.  Payments to inventors are made each year in November based on the preceding fiscal year income, expense, and reimbursement.

     

    Non-inventors who make substantial, but not inventive, contributions to an invention can be included in the benefits of royalty income that the university receives, if the inventors so agree. The university will honor a written agreement among all of the inventors that sets forth the formula for the distribution of royalty payments. Additional recipients under such royalty-sharing agreements may also be University research programs or other institutions. Such royalty-sharing agreements must be signed by all of the inventors.