I suggest you DO NOT give them first option for Non-exclusive
license.  Also make that a first option to "negotiate in good faith
for a royalty bearing license".  Obviously do not accept a first
right of refusal.  I think your time limits make sense.  Please
consider both current and possible future limits on patent; we may be
stuck with a first to file law.  And be sure that each first option
they exercise include, along with whatever other revenue you
negotiate, your out of pocket costs for whatever preliminary patent you seek.

For years industry has said, "Well other institutions do it!"  But
they show no evidence!

And consider what kind of inventions the master agreement
covers.  You are unlikely to find a sponsor who is both interested in
and capable of commercializing the entire inventiveness of an
individual or group.  So provide a relatively short period before
they must relinquish the option due to disinterest because it does
not fit their business pattern.  You don't want them bottling up
inventions in fields they can never commercialize!

Oh, yes -- do NOT let them delay publication for more than the short
period that you need to file preliminary patent applications.  That
would loose any claim of "fundamental research" for avoiding possible
export controls on the invention or the reearch.

Chuck

At 11:30 AM 8/25/2005, you wrote:
>Greetings from the North!
>
>Quick question...we are negotiating a Master Agreement with a
>private company.  On inventions by our faculty that the company has
>agreed to file patent applications or to reimburse us for filing, we
>offered a first option to negotiate an exclusive license, gave them
>3 months to elect to exercise their option and then 6 months to
>negotiate an exclusive license.  We also agreed to extend the 6
>months to negotiate if necessary.
>
>The company wants the first option to negotiate an exclusive OR
>non-exclusive license, 6 months to elect to exercise their option,
>and then 30 months to negotiate a license.  (Yes, it is 30
>months...2 1/2 years...not a typo!)  They even want to be able to
>extend the 30 months to negotiate if necessary.
>
>Other than the fact that this is contrary to standard practice, and
>not a good business practice, it doesn't appear (at first glance) to
>violate institutional policy.  Obviously we do not want to provide
>what amounts to 3 years in essentially tieing up an
>invention.  Other than just saying NO and walking away, what other
>arguments have you used?  Can't help but wonder if the company wants
>to use the 30 months to do further R&D internally.
>
>The company indicates they have sponsored research agreements with 1
>other educational institution (that they won't name), and they
>further indicate that they have been able to get this type of
>arrangement with the other institution.  Their premise for asking
>for this much time is that they don't want an invention that was
>funded by their company to fall into the hands of their
>competitors.  Earlier the company wanted to restrict who we could
>negotiate license agreements with, again to retain their competitive advantage.
>
>Has anyone out there agreed to terms that are this long, or does it
>give you heartburn?  What sort of assurances (if any) have you been
>able to provide private companies as to protecting inventions from competitors?
>
>As always, any and all advice is greatly appreciated!  If you want
>to reply to me directly (xxxxxx@ndsu.edu) I will post a summary
>to the listserve.
>
>Thanks!
>
>Val Kettner
>Assistant Vice President
>Sponsored Programs Administration
>North Dakota State University
>701-231-9608
>xxxxxx@ndsu.edu
>
>
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Herbert "Chuck" Chermside, CRA
Director Emeritus, VCU Sponsored Programs
Executive Director, Research Administrators Certification Council
1915 Robindale Rd.
Richmond, VA 23235-3931
804-320-5502
xxxxxx@verizon.net

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