Commercialisation

A licence agreement is a contract under which the owner of a given IP right (the Licensor) grants the use of such IP to another person (the Licensee), within the limits set out by the licence agreement and under the compensation agreed between the parties. Without the existence of such agreement the use of the IP by the third party would be considered an infringement, and the patent holder could sue such third party for that unlawful use.

In this type of agreements, the IP does not change hands. Meaning that the IP holder may, under specific conditions of the contract, take the licence of exploitation from the Licensee, that should stop immediately any commercialisation activity. The Licensor could then, grant authorization of use to another person or decide to open the IP to the public. Making and analogy with the real-estate market, the Licensee is renting the IP to the Licensor in exchange for monetary compensation, for a specific amount of time, and under certain rules.

This monetary compensation can occur by several ways or as a mixture of several mechanisms:

1. Up-front payments (with the signature of the contract)

2. Milestone payments (whenever the technology reaches a specific milestone of development)

3. Royalties (percentage of the gross or net sales of the licenced product or the company, that may vary along time, application, territory, etc)

In case a company wishes to license Intellectual Property that you have produced individually or jointly in the frame of a project, either publicly or privately funded), IRIS is your negotiation partner, liaising between you, the partner and the legal representative and supportive services of your R&D institution. Refrain to compromise on any terms of the negotiation before consulting with IRIS.

Sometimes, a company is interested in your technology but it is still not comfortable into entering a long term licencing agreement, for lack of data or incipient TRL, or because it still needs to study the market. It is therefore very common to sign Joint Development Agreements with the company, following which the R&D Institution gives a right of first option to that company. This right of first option means that the company will be the first to be approached to negotiate a Licencing deal, because the company participated in the development and sponsored the increase in TRL of the technology, until a point where the investment was less risky. However, if the results are not aligned with the expectations of the company, it can refuse the right of first option and the owner of the IP is free to go and negotiate a licence with a third party.

Other deals include a right of first refusal. In this case, the company has the right to evaluate any deal that the R&D Institution may try to do with third parties and may refuse the deal, although not obliged to do the deal itself. Academic Institutions should try to avoid contracts with the right of first refusal, because a private sponsor could prevent the R&D Institution of ever transferring that knowledge to the society.

Licence deals are very complex and usually entail long negotiation time and tactics. It is a deal of patience, where the parties aim to reach a win-win situation. Poorly written collaboration contracts may lead to difficult and very disadvantageous deals to the Academic Institutions.

Nonetheless, licence deals are one of the most important tools to commercialize IP from Academic Institutions. They enable:

1. Long-term collaborations with industry

2. Additional funding to the Institution, research group and inventors

3. Reputation and prestige to the researcher and institution when the product reaches the market.

Additionally, the costs of maintaining the IP right shift to the Licensee. Nonetheless, the Licensor is still responsible to accompany the Licensee in all administrative acts to maintain the IP Right.

An IP assignment is a permanent transfer of ownership of an IP right, such as a patent, trademark, copyright or trade secret from one party (the assignor) to another party (the assignee). The assignee becomes the new owner of the IP and the assignor, in return, receives economic compensation. Returning to the analogy to the real-estate market, an assignment is the equivalent of selling a real-estate to another person.

Although many Academic Institutions refrain from assignments, because they lose track on the IP and are unaware if it will ever reach society, they could be useful tools in some exceptional cases where there is a high probability of liability in the exploitation of the IP asset. The assignor then receives an immediate cash flow return since assignments usually take the form of a one-off lump sum payment. The assignor no longer has responsibility in the maintenance of the IP Right, including its costs.

A spin-off refers to a separate entity – a company, an NGO, and association, etc – that is established in order to bring to the market technology developed by a parent organization, in this case the Academic Institution. It is the vehicle for knowledge transfer by excellence, a fundamental mediator between the research environment and industries, since the spin-off will dedicate itself to bring to market one specific technology, already with the knowledge of the market and industry.

Deciding to form a spin-off company is sometimes the preferred option to licensing early-stage technology to an established company. There are many factors that influence this decision, the first and foremost the willingness of the inventors in becoming entrepreneurs, the existence or not of potential licensees and market for the technology, the stage of development of the technology and the availability of private investors.

NOVA University Lisbon as published a spin-off regulation aiming to foster the creation of spin-offs in NOVA ecosystem.