Licensing Technology from Universities

by Cristin Berkey, Ph.D.

March 31, 2009

 

 

Discoveries often occur in academic labs that do not have the resources to commercialize them.  Entrepreneurs, on the other hand, want to obtain the rights to these inventions so they can make products. What are the important issues in negotiations between inventors and companies? A recent WEST event* considered all sides of the process with a panel that included: an investor, a licensor, a technology transfer specialist, and a patent attorney.

1. What is technology worth?

How do you put a price tag on a new technology? Panelists agreed that early stage technology is very hard to value. Several factors that contribute to the value of intellectual property include:

  • Novelty
  • Potential market value
  • Scope of patent protection

2. What should licensors consider? 
It is important to gather as much information as possible about the technology. Panelists also recommended investigating what it’s like to work with the licensing office.  Some universities, it turns out, are easier to work with than others. Panelists suggested talking directly with other companies, often listed on the institution’s web site, that have successfully negotiated with the university.

3. What do universities look for in licensors? 
Inventions are valuable, but only if the licensee can produce a marketable product. Universities and inventors are careful in selecting licensees who will be able to produce value and royalties from their intellectual property. Good indicators for success include a:

  • Strong team
  • Detailed plan for development of the technology
  • Solid funding strategy

4. What works in licensing negotiations?

All parties need to have similar expectations for the development and marketing of the technology. These issues should be covered early on, before any financial considerations are discussed.


5. The bottom line?

Negotiating a license can be a complex process and involve a host of conflict of interest rules. Both sides need to be on the same page and focused on getting the deal done in a way that is responsible to their own interests.

*The WEST event “ACQUIRING IP FROM UNIVERSITIES (IN YOUR LIFETIME...)” was held on March 26th, 2009 in Cambridge MA. Click Here for more information about the event.