Company Structure, Formation & Corporate Basics

Licensing IP from a university or hospital

Many companies are built on intellectual property licensed from academic or research institutions, such as universities and hospitals. Companies may also license technology from those types of institutions to supplement their existing intellectual property. These licenses are typically patent licenses, but may also be licenses to software, materials or other intellectual property. Many institutions have their own licensing office dedicated to commercializing intellectual property of the institution. Some of the key points to consider when licensing intellectual property from these types of institutions include:

A. Identify the relevant intellectual property. Often a licensee will know of research being conducted at the institution and have determined that the results of that research are of interest. You may also identify intellectual property owned by an institution from academic publications or presentations by the applicable researchers, records available at the US Patent and Trademark Office (or foreign equivalent) or in materials made available by the institution’s licensing office.  

B. Establish contact with the institution. Prospective licensees of institutions’ intellectual property may have initial contact with the researchers involved in inventing the relevant technology, and those researchers can often be useful to help navigate the institution’s requirements to establish a license. However, the institution’s licensing office typically is the key gatekeeper for negotiation and execution of the license agreement.  

C. Review the institution’s usual license terms. Before speaking with the institution, review available information regarding that institution’s intellectual property policies, which will tell you a lot about how the institution approaches requests to license its intellectual property. You may also be able to obtain a copy of the institution’s form license agreement online. Your legal counsel will often be experienced in negotiating licenses from the institution and should be able to provide relevant information on likely deal terms as well.

D. Prepare your business plan. In order to negotiate a license agreement, you must be prepared with a business plan for your company and your proposed commercialization of the technology. The institution will want to maximize the use and value of their intellectual property, and, assuming the intellectual property is of interest to others as well, you must be prepared to make a compelling case that your company is the optimal licensee. You must also be prepared, in many cases, to discuss granting to the institution some equity in your company, which will require a realistic assessment of the value of your company and of the relevant technology.

E. Academic and research institutions are not built to keep secrets. So, in all of your discussions with a university, hospital or similar institution, keep in mind that they are generally built on a principle and culture of knowledge sharing, and not on preservation of trade secrets. While the institution may be able to license materials or data, carefully consider whether those materials or data will in fact be accessible to the public generally. Consider to what extent inventors may be disclosing important details in their academic publications.

F. Negotiate the license terms. Institutions are often faithful to their form license agreements, but there are numerous potential variations on those forms which your counsel should have experience negotiating with the institution. Read about terms you should have in your license agreement. Licenses with institutions include those same issues, but in many cases with many precedents indicating where there is flexibility in terms and where there is not.