Your research can make a greater societal impact through technology transfer.
It is important to remember that before publishing or presenting on your research, you should disclose your idea to the Office of Technology Transfer by submitting an invention disclosure form. Especially for inventions from research under federal grants, the intellectual property created from your work has the potential to create jobs and enhance economic growth. Protecting the intellectual aspect of an invention, whether filing a patent application or copyrighting software, is vital to maintaining the value and enhancing the potential for industry engagement. Although we would like sufficient time to assess the invention, we can file a provisional patent application the same day in order to protect your idea.
The Office of Technology Transfer supports your research and the innovative creations from your lab to foster relationships with industry partners around the world.
Things you should know!
From the perspective of a university, technology transfer is the process of transferring an innovative technology that was invented at the university from research by faculty to a third party corporate entity (LLC, C-Corp). The company uses the technology to develope and sell a new product based on that technology. The actual transfer that takes place is the transfer of rights granted to the company to practice the protected and university owned intellectual property, which can be in the form of a patent or copyright. The grant is executed under a license agreement between Lehigh and the company. The license agreement is the legal contract for the rights which includes financial and business terms, and obligations to the company for commercializing the technology into products sold into the marketplace. The financial and business terms often include a royalty rate tied to sale revenue of products as well as milestone achievements during the development state of the technology. Please see Anatomy of a License Agreement for further information on the financial and business terms in a license.
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Intellectual Property or IP is an intangible asset that is from the creation of human intellect. US federal law defines what is eligible for protection and the rights granted to the owner of the IP; the owner being the author or inventor of the IP. Common rights granted to the owner are exclusive rights to protect against unauthorized use by others, meaning that the author/inventor of the creation/invention has right to prevent others from using their specific creation/invention. IP is an artistic or scientific creation having many forms and depending on the federal law, creates a time and scope limited monopoly in the protected creation. The typical forms of intellectual property are:
- Trademarks (The Lanham (Trademark) Act 1946)
- Trade Secrets (Defend Trade Secrets Act of 2016 (DTSA))
- Copyrights (The Copyright Act of 1976)
- Mask Works (Semiconductor Chip Protection Act of 1984)
- Patents (U.S. Constitution, Article One, section 8, clause 8, U.S.C. Title 35, Recent Amendment: Leahy-Smith America Invents Act (AIA) 2012)
IT IS IMPORTANT TO DISCLOSE YOUR INVENTION BEFORE ANY PUBLIC DISCLOSURE.
Public disclosure can seriously diminish the value and harm the potential for patent prosecution.
Most countries around the world view public disclosure of an invention as an absolute bar to getting an issued patent, with the exceptions of a few countries like the United States and Japan which have a 1-year grace period for filing a patent application after a public disclosure has occurred. The following are forms of public disclosure:
- Written published journal article
- Verbal presentation at a conference
- Poster presentation
- Discussions with a 3rd party entity
Industry loves to speak with faculty about their research, for many reasons, but mostly, you provide expertise and knowledge they don’t have in-house. When discussing your research, a potential project, or an idea with a third party, it's always best to have a Non-Disclosure Agreement (NDA) in place to protect your confidential information, very important.
If you can't get the NDA executed, and discussions are scheduled, please do the following:
- Speak about WHAT you can do, but not HOW you do it.
- The WHAT is why they're interested, the HOW is the valuable part.
The Patent Filing Process is done within the Office of Technology Transfer.
Like any legal contract between two parties, the license agreement describes the consideration exchanged and obligations of the parties. The university (licensor) license agreement typically has financial and business terms that the company (licensee) must meet in order to maintain rights to practice the invention.
Common business and legal terms important in a university license agreement include:
- Grant - The granting of the right to make, have made, use, import, sell, and offer for sale Lehigh Licensed Product(s) which are based on the technology intellectual property.
- Exclusive or Nonexclusive Rights - The grant can be exclusive rights to the company, meaning that they are the only ones that can make and sell products based on Lehigh Licensed Product(s); or nonexclusive rights meaning that another company, or multiple companies, may receive the same right to make and sell Lehigh Licensed Product(s).
- Field of Use - The Field of Use (FOU) is the field that the company can develop and sell products in the market. A technology can have multiple applications for products. The university can optimize the value of the technology by licensing to multiple companies exclusive rights for each different application. This is called a platform technology. Otherwise, if the technology has one application, only one company has exclusive rights to practice the invention in the FOU covering that one specific application.
- Upfront License Fee - The upfront license fee is a fee charged to the company for acquiring the license. This can vary depending on the level of development and funds used to create the invention. For established companies, the fee is always an amount of money, but for start-up companies, this fee can be equity ownership in the company.
- Running Royalty Rate - The Running Royalty Rate (RRR) is the percentage a company pays the university off the sales of the Lehigh Licensed Product(s). RRRs can vary depending on the type of technology and market where products are sold. As an example, Company XYZ makes a widget incorporating a Lehigh technology, and sells that widget for $100. The license agreement Royalty Rate for the sales of Lehigh Licensed Product(s) is 10%, then Company XYZ owes Lehigh $10 for each Lehigh Licensed Product(s) sold. Assuming Company XYZ has a total annual sales of widgets of $1,000,000, then Lehigh would receive $100,000 in royalty payments from Company XYZ for that year's sales of the widgets.
- Milestone Fees - A license agreement may have fees tied to milestones of sales, development, or regulatory accomplishments. The Milestone Fee is a one-time fee based on the success of achieving that specific milestone.
- Diligence Milestones - Diligence Milestones are goals set by the university to encourage the company to commercialize the technology into products. These milestones are obligations for the company to meet in order to maintain the rights to practice the invention and sell Lehigh Licensed Product(s). A typical milestone may be developing a prototype, first commercial sale of a product, or reaching a certain financial goal for sales of the Lehigh Licensed Product(s).
- Patent Expenses - The expenses to file, prosecute, and maintain the patents protecting the invention are paid by the company licensing the rights to practice the invention. Unreimbursed past patent costs that Lehigh has accrued over the time from filing to the "Effective Date" of the license agreement are typically paid upfront by the company. Future patent costs are paid by the company as they are invoiced to them from Lehigh for actions by an IP law firm and/or fees associated from a patent office for each country where a patent application was filed.
- Sublicensing Rights - An exclusive license typically has sublicensing rights to the licensee. This means that Company XYZ can license the rights they received from Lehigh to practice the invention to another third party entity. A company will do this if they receive exclusive rights for multiple FOUs, but are commercializing the technology for one application, and want to bring in revenue for Lehigh Licensed Product(s) sold in other FOUs by the other company. Lehigh receives a portion of the revenues from Company XYZ for sublicensing.
- Equity - As mentioned before, we can license the rights for Lehigh inventions to an established company or a startup company. Since cash is very important for startup companies to use for development of the technology and their business operations, the upfront fee can be in the form of equity ownership in the company. This means that Lehigh will be a minority owner in the company. This means that Lehigh will be a minority owner in the company in the form of common stock. This initial ownership position can be protected from dilution of additional investment, but typically that has a limit to earlier funding rounds. This equity ownership position may at some point, and depending if the company is successful in developing a product and sustainable business operations, be subject to a liquidity event. The liquidity event can be either an acquisition by a larger company or Initial Public Offering. In either case, Lehigh's equity position can be cashed out and monies received for the value of the stocks. This revenue back to Lehigh will fall under the Lehigh patent policy and a portion be distributed to the faculty inventor much like any revenue from the license agreement.
The Bayh-Dole Act of 1980
The Bayh-Dole Act (Patent and Trademark Law Amendments Act)
The Bayh-Dole Act passed in December of 1980 was one of the most significant pieces of legislation for university technology transfer to date. Created by two United States Senators, Birch Bayh of Indiana and Bole Dole of Kansas, to counter some of the malaise the mid-1970s recession. Both learned of the inefficiency of inventions coming out of federally funded research with their respective universities in their states, Purdue for Senator Bayh and the University of Kansas for Senator Dole. At the time, the US Government had accumulated over 28,000 patents with only a small percentage having been licensed and commercialized into products. The Bayh-Dole Act gave universities receiving federally funds for research more power to bring inventions created from this research forward to commercial products. Basically universities:
- Elect title to inventions from federally funded research
- Are mandated to file patents on inventions they elect to own
- Collaborate with commercial concerns to promote utilization
- Require licensees to substantially manufacture products in the United States
- Are expected to give licensing preference to small businesses
- Must report all inventions and utilization of inventions to the federal government
- Educate faculty and staff on the importance of timely disclosures to the university
- Use a portion of royalties after expenses for scientific research or education
- Share revenues from royalties with the inventors
When electing rights to own inventions from federally funded research, the university grants back to the US Government an irrevocable, nonexclusive, royalty-free (NERF) license to practice or have practiced for or on behalf of the United Stated the subject invention throughout the world.
In addition, the US Government has March-in-Rights. The government's march-in rights allows the funding agency, on its own initiative, to effectively ignore the exclusivity of a patent awarded under the act to a university and "March-in" to grant additional licenses to other entities who can commercialize the technology. They would do this March-in for failure by the university to take effective steps needed to achieve practical application of the invention or where the health and safety needs of consumers are a major concern. To our knowledge, the US Government has never exercised this right.