Hi Folks,

I'd like to tap on the collected wisdom of the group for a minute.  We have a small business with whom we are negotiating an Intellectual Property Agreement as part of a subcontract on a federal grant (we are the prime), and there are a couple contentious points that I could use some ammo to rebut.  Namely,

1. The corporation doesn't want any language in the IP Agreement about commercialization milestones or minimum royalties due in a subsequent license.  Aside from it being a VERY BAD IDEA to ignore these points, is there any regulation I can cite as to why we could not allow the corporation to be in a position to sit on our IP without serious efforts to commercialize?

2.  The corporation wants to give us stock in their private-held company instead of royalties.  I'm against this for a number of business reasons, but as a matter of law/regulation can we agree to this, especially given the Bayh-Dole requirement to share royalties with our inventors?

3.  If they can't give us stock, then the corporation wants the IP Agreement to state exactly what the royalty percentage will be for any future license.  Doesn't this run afoul of the Tax Reform Act of 1986, jeopardizing the tax-exempt bond status of the building in which the research will be conducted?  If we can't specify the royalty percentage, would we be within the regs to  alleviate their concerns with language like, "any subsequent license will include terms regarding royalties, which shall typical of prevailing royalty rates in the field of use of the subject Intellectual Property."?

Thanks for your insights!

Craig

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Craig Reynolds / Office of Research & Sponsored Programs
Central Michigan University / Foust 251 /
Mt. Pleasant, MI 48859 / T: 989.774.3859 / F: 989.774.3439

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