Following is a general outline of the technology commercialization process.
- Captures the background information on the new discovery.
- Licensing team works closely with inventors to gather pertinent information.
- Invention is evaluated for novelty and non-obviousness.
- Prior art patent search is performed and shared with inventors for review/comment.
- Market research is performed to evaluate commercial potential and competitive advantages.
- An investment decision is made whether to move forward or not with protection of intellectual property (IP).
- A strategy is developed to protect the IP.
- IP management team works with inventors and external patent attorneys.
- Manage patent prosecution.
- The objective is to find potential qualified companies to commercialize the IP, in the short-term (within 12-30 months).
- Technology summaries are drafted and posted on the License KU technology webpage.
- Marketing is outsourced to appropriate vendors and/or conducted by the licensing team.
- In the majority of cases, IP is licensed to existing companies.
- Inventors motivated to start new businesses are encouraged to form companies and take a license to their IP. On average, three new startups a year are formed through commercialization of KU intellectual property.
- Upon finding a suitable company, a license agreement (typically exclusive) is negotiated and executed.
- The terms generally include fees, payment of patent costs, royalties and commercialization milestones.
- See Licensing FAQs for further information.
- The licensee company takes on the responsibility for:
- developing the product(s)/service(s).
- scaling up production, manufacturing and product distribution.
- generating sales.
- An exclusive license allows the company to sub-license the IP to other companies.
- Licensees are expected to submit annual reports and quarterly reports upon the occurrence of sales.
- KUCTC monitors each license agreement for compliance.
A license agreement provides a company the rights to use KU-owned intellectual property to develop and commercialize (bring products and/or services to the market).
The license agreement typically* includes the following terms:
- License fee
- Field of use
- Payments of patent costs
- Commercial diligence / Development milestones
- Royalty on sales
- Minimum royalty
See Swift Startup License terms and requirements
Since each emerging technology has different market value, the cost for a license is negotiated with a licensing manager. KU uses industry standards for terms, e.g. royalties, stage of development.
Generally, licensing a KU technology involves three expenses:
- Licensing fee
- Patent costs (past and future)
The license fee and past patent costs reimbursement are due after executing the agreement, and royalties are paid to KU when a product is sold.
To ensure that the licensee has a reasonable commercialization strategy, KU expects licensees to submit a detailed business plan (under a confidential disclosure agreement) to develop and commercialize the intellectual property. The deliverable milestones are in congruence with the business plan.
To exchange confidential information between KU and a potential licensee (e.g. an unpublished patent application or a company’s business), the parties sign a non-disclosure agreement (NDA or CDA). The licensee agrees not to use the confidential information without a license agreement and not to disclose it if it is not in the public domain.
Royalties are calculated on a percentage-of-sales or fee-per-unit basis. KU expects a minimum royalty each year after an agreed upon development period. The minimum royalty is included in the license agreement to encourage timely commercialization and active marketing of the technology and is set at a relatively low amount compared to the expected royalties. Any royalties actually earned offset that minimum royalty, and it is usually not an additional fee.
An option agreement gives a company the right to review a technology to determine if it is a good fit for the company. During the option period, KU will keep the technology off the market and it will be available only to the company to license for a one-time fee.