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Licensing to Existing Companies
A License Option Agreement is a contract between the university and a company that grants the company an option to acquire commercialization rights to an invention in the near future. Normally, an option is granted for a company that has an interest in the technology, but does not know yet how well it can be commercialized. Sometimes an option is granted as part of a Sponsored Research Project, so that the investing company knows it has rights to the developed technology. An option holds the technology for the company for a defined period to allow the company to do research (both technical and market) to determine if the invention has value.
A License Agreement is a contract between the university and a company for rights to commercialize an invention. A license for an invention can be for an issued patent, a pending patent, a Trademark or knowhow. It can also include copyrighted material. A license simply provides the licensee the right to practice the technology or invention. A license can be world-wide in scope, or limited to a geographical area. It can be exclusive or non-exclusive. It can be for a specified field of use. The field of use can be a technology area, a market area or a geographical area.
The licenses OSU executes have several components. They specifically list the technology licensed, by using the Disclosure Number and Title. If a patent or patents are pending or issued, that too is listed. The licensee is designated. The level of exclusivity and fields of use are given. An up-front fee is usually included, which will probably be applied to the patent prosecution costs that have been accumulated. A royalty rate is given and often a minimum royalty that is non-refundable, to ensure the licensee actually commercializes the invention(s). Performance milestones may be indicated. A schedule of payments to cover past and continuing IP/Patenting costs may be included. Termination by either party is spelled out, when, under what circumstances, and what notices need to be given before termination (usually with some sort of period to fix the problem).
Licensing to a Start Up
TDC encourages students and faculty members starting a company with OSU – to license intellectual property. Licensing to a startup is somewhat different than licensing to an existing company.
Option: We often start with an option agreement to a startup
- Smaller upfront fee
- Specific performance terms to meet before converting the option to a license
- Most option performance terms deal specifically with the development of the technology, but for startups, we also want to see progress towards a viable business plan, business model, product and funding.
- If the performance terms are not met, the option will expire. IF they are met, then a license can be negotiated.
License: Similarly, license terms for a startup are somewhat different than for an existing company.
Smaller up-front fee again, but with a larger payment down the road, after certain performance milestones are met.
Performance milestones related to funding, product development and first sales. Royalties might be deferred until sales hit a certain level. If performance milestones aren’t met, then the license can be terminated.
Ecosystem to support commercialization through Start Ups
Cowboy Technologies, LLC is a for profit entity established to provide early seed-stage activities for OSU-developed technologies. Created as a part of and managed through OSU's Center for Innovation and Economic Development, Cowboy Technologies is a one-of-a-kind initiative. Technologies will be carefully screened from TDC's portfolio and reviewed by CT's screening process before being selected as a CT 'Project'. Technologies that demonstrate the greatest potential for entity launch and long-term success will receive highest consideration. Project support to launch includes:
- Assisting in later stage investment strategies and finding early seed stage funding
- Identifying and securing long-term management capabilities
- Facilitating participation in the SBIR/STTR program
- Providing seed funding up to $200,000 depending on milestone attainment
The School of Entrepreneurship and Riata Center operate within a broader ecosystem that provides support to business startup and technology commercialization efforts on campus.
i2E is a private, non-profit corporation focused on funding and growing innovative small businesses in Oklahoma.
Finding a partner to help commercialize university inventions is often a difficult process. There are many great technologies coming out of OSU, but because of market realities companies may not be able or willing to take a license to commercialize an invention. In these cases, the TDC will work with the inventor to identify the best possible route for the technology. One route is to develop the technology further by identifying industry partners that are willing to provide sponsored research to the lab, obtaining additional outside grants and/or TBDP funding and attempt to license the technology when it is further developed. Another is the inventor(s) and TDC make a joint determination that the technology would better serve the public by publishing a paper and cease commercialization efforts.