Technology Transfer Agreements

Technology transfer agreements include drafting of Joint development agreements, Sponsored research agreements, Material transfer agreements etc. All these agreements have one common important feature regarding Intellectual Property (I.P.). In these agreements I.P. can be patents, copyrights, and to a lesser extent trademarks.

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Joint Development Agreement (J.D.A.)

Before entering into J.D.A., parties need to evaluate the relative strengths of each other including expertise in a field, and how they can collaborate their works for an end product. Both parties expertise need to complement each other for successful implementation of J.D.A. Below are some of the important relevant provisions for a J.D.A.

Master agreement: This agreement is useful to outline the basic structure of the agreement along with risk allocation, legal obligations, sharing of I.P. etc. Later on, multiple joint development agreements can be executed as separate “statements of work,” which can be attached as exhibits to the master agreement. This master agreement is useful, if there is some long-term working relationship between the parties. If the parties intend to work on only one joint development agreement, they may prepare the “statement of work,” declaring various obligations including milestones for a project, resource management based on the project, material sharing requirements etc along with J.D.A.

Obligations: Each party need to have respective performance tasks reachable under deadline and any resources that contribute to the joint development. The resources include financial, researchers, materials etc. Reaching a milestone under a deadline need to be mentioned in the agreement.

Joint ownership: The agreement need to specify who own’s the I.P. developed under the joint development agreement. If the parties do not specify the ownership matter in the agreement, then both are joint owners of the I.P. This may be undesirable option for both of the parties because each party may give away the non-exclusive, sub-licensing right without consultation with the other party. If some outside party infringes the I.P. right, joint owners may sue that infringing outside party. In litigation, without taking explicit permission from the joint owner in litigation, other owner may reach settlement agreement. Therefore, it is important to specify who owns the jointly developed I.P. product. They may split the jointly developed I.P. depending on the percentage (%) similarity to the field of use and other party gets non-exclusive, paid-up license for the entirety of the I.P. validity.

Background I.P.: Each party may need to know certain I.P. of other party in order to perform and develop the product due to the collaborate nature of the work. Other than I.P., there may be certain know-how of the other party that may be useful in the joint development of the project. If the parties are of equal strength, in-terms of technical capabilities in a field, then they may agree to “cross-license,” each other background I.P. for the sole purpose of joint development of product. The “cross-license” can be non-exclusive. Sub-licensing may be needed if a party to the agreement want to use third party contractors. They may explicitly agree to not use each other background I.P. outside of the joint development project for maintaining confidentiality purposes.

If the parties are not of equal strength in-terms of technical capabilities in a field, then that unequal party’s strength may be financial in which case they need to contribute more to the project for sharing of background I.P.

Sponsored Research Agreement

Sponsored research agreement have unique requirements depending on the sponsoring and sponsored party status. The sponsoring party can be a private company, Investment firm, Federal Government etc. The sponsored party can be non-profit public or private University conducting research usually in sciences, engineering, and technology. Depending on the unique combination, there are additional requirements and disclosures for the sponsored party. All sponsored Universities maintain technology transfer office department for commercialization of their research. Below is the brief outline and important terminology about sponsored research agreement.

Classification of research depending on sponsoring party: The research should be classified and partitioned depending on the sponsoring party. Government sponsored research should not be commingled with the private company sponsored research because Government sponsored research need to comply with Bayh-Dole Act.

Bayh-Dole Act requirements: If the sponsoring party is United States Government, then the following requirements must be followed. They are:

1.”The term “subject invention” means any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement….” 35 U.S.C. § 201(e). The act allocates rights in the “funded project between Government and federal contractor which includes an person, small business firm or non-profit organization.”  35 U.S.C. § § 201(c) (e), 202 (a).

2. The Bayh-Dole Act provides that contractors may “elect to retain title to any subject invention.” 35 U.S.C. §202(a).

3. To be able to retain title, … a contractor must “disclose each subject invention to the Federal agency within a reasonable time.” 35 U.S.C. §202(c)(1). Federal contractor (i.e., University) must “make a written election within two years after disclosure” opts to retain title to the invention; and the federal contractor must “file a patent application prior to any statutory bar date.” §§202(c)(2)-(3).

4. The agency that granted the federal funds receives from the contractor “a nonexclusive, non-transferrable, irrevocable, paid-up license to practice…[the] subject invention.” 35 U.S.C. §202(c)(4).

5. Marching rights: The federal agency may give away non-exclusive license of the invention to a third party, when the federal contractor “is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use.” 35 U.S.C. § 203(a)(1).

Obligations: The agreement should specify the mutual obligations to the sponsored project. In a research university situation, the sponsoring party need to provide financial assistance to the sponsored party. The sponsored research university need to meet at-least a threshold of milestones to satisfy the criteria under the agreement. It is understood that in a research science and technology project, failures are stepping stones to success, and thus only a threshold rate of success is needed.

Patent prosecution & regulatory matters: Patent prosecution sometimes take time, and money. Typically, sponsored party University pursues patent prosecution due to knowledge in subject matter along with presence of in-house legal team specialized in patent law. Also, patent prosecution fees and wait-time for Universities is low because they come under the category of micro-entity status.

If the subject field involves regulatory agency such as Food and Drug Administration (F.D.A.), there are additional steps that need to be followed before pursuing and resultant grant of a patent.