From: Elizabeth Hood
Sent: Thursday, August 25, 2005 1:31 PM
To: 'xxxxxx@HRINET.ORG'
Subject: Re: Private company request for major time to negotiate license

Perhaps is would be better to broker it more as an option contract.
They would pay annual fees throughout the 30 month period where they
could do internal testing, etc.  That way they could have the time to
determine whether they wanted it, but the university would not be out
lots of money.

As for the restrictions on licensing, every company wants those.  At
another university, an argument against this was simply that it was
contrary to the policy and mission of the university, which was to
further economic development and get technology into the market (for
similar reasons, we would not license to a company whose purpose would
be to sit on the technology and not act on it).  A similar rationale
could be used for the first problem - a 30 month period does not quickly
move towards the university goal.

 Another concern that is that the company wants a first option for an
exclusive or non-exclusive license.  It is often not worth it to a
company to have a non-exclusive, nor is it worth it to the university.
However, that is for a manufactured item, or a widget. If the technology
to license is a method, the non-exclusive license may be essential so
that many users can license it.

Elizabeth E. Hood, Ph.D. (with input from Tina Cunningham)
Associate Vice Chancellor for Research and Technology Transfer
PO Box 2760
State University, AR 72467
phone: 870-680-8427
cell:  870-926-9566
fax: 870-972-2336
email: xxxxxx@astate.edu

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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 subscription information and a web-searchable archive, are available
 via our web site at http://www.hrinet.org (click on "Listserv Lists")
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