Vanderbilt's Commercialization Process: Licensing
A license is the principal means for transferring intellectual property from Vanderbilt to a company for commercial exploitation. A license is essentially a promise that Vanderbilt will not to sue the company for the company’s planned infringement of intellectual property rights in return for financial and other consideration. Most patent licenses are exclusive in nature, whereas most licenses for materials are non-exclusive.
The licensing process is comprised of Institutional Due Diligence, Negotiation of Business Terms, and License Agreement Negotiations.
Due to the legal complexity of licensing transactions and the need to address a myriad of multifaceted business issues to satisfy both parties, finalizing a License Agreement is a team effort involving the licensing officer and other members of CTTC, the inventor(s), the Office of the General Counsel, and occasionally other groups such as the Office of Contracts and Research Administration, Office of Contracts Management, Corporate Relations, and the primary department or center in which the technology was developed. The licensing officer walks the inventor through all salient aspects of the agreement before its execution.
It is not uncommon for a potential licensee to express interest in an invention, yet demonstrate reluctance to commit to the diligence and financial obligations required of a License Agreement. Such reluctance may stem from uncertainties regarding the operability of the invention, the long timeline to first sale, regulatory hurdles, or the expense associated with product development and testing. In the absence of other industrial partners, we may grant such company an option to license the invention. An Option Agreement is a short agreement – generally 5-6 pages in length – under which CTTC agrees not to license the invention to third parties for a specified period of time in exchange for a cash payment and, potentially, coverage of patent costs. The term of the Option Agreement is variable, spanning from a few months to as long as one year. The option fee is based on the length of the option and the value of the opportunity reserved. During the option term, the company has the exclusive opportunity to research outstanding questions, either internally or under a Sponsored Research Agreement at Vanderbilt, thereby reducing the company’s risk. If the company elects to exercise its option, the parties negotiate a License Agreement. If the option is not exercised, the licensing officer continues to market the invention..
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