Rather than found a startup yourself, you may elect to sell or license your invention to an established company. Licensing the invention is basically like letting that company rent your idea, and in exchange, you collect a royalty payment. Advantages include little risk and much less effort. Disadvantages include loss of control. This approach is often chosen by scientists when it would be very difficult to build the infrastructure needed to develop and market the product. Universities often engage in licensing intellectual property to industry. This is fairly common in the pharmacology industry for example.
Licensing Intellectual Property 101 – American Intellectual Property Law Association.
Licensing Biotech Intellectual Property in University-Industry Partnerships – Drosdoff V. Cold Spring Harb Perspect Med. 2015 Mar; 5(3): a021014. doi: 10.1101/cshperspect.a021014.
Types of collaboration agreements commonly used between biotech companies and universities or federal laboratories include the following:
- Confidential Disclosure/Non-Disclosure Agreements – These are often used when you need to disclose trade secrets to someone to get some service from them or to collaborate with someone. The agreements ask the other party to promise to keep the information confidential for a specific period and describe the action you would take if they broke this confidentiality or used your trade secret. They are often used with employees and professionals you consult.
- Cooperative Research and Development Agreement (CRADA) – These agreements between federal laboratories and businesses, researchers, and other non-federal groups allow the use of personnel, services, facilities, equipment, intellectual property, or other resources by the other party.
- Material Transfer Agreement (MTA) – These specify terms and limits when materials you develop or own are transferred for use in the other party’s research. For example, a mouse model, software, cell line, or reagent might need an MTA.
- Sponsored Research Agreement (SRA) – These agreements are between the research funding agency (the sponsor, e.g., the NIH) and the small business or university where the research is funded. They describe details, such as the scope of the research work, budget, payment schedule, licensing of the IP, and contract termination.
The key elements of these collaborative agreements include the following:
- Inventions – How is it defined?
- Ownership of inventions – Who is assigned ownership?
- Rights to inventions – Who has freedom to operate rights (FTO)?
- Confidentiality and publication – Publication, which is a plus in academia, may be at odds with the business’s best interest.
Resources and Sources
This complex topic is typically handled by legal counsel.
NIH Technology Development Model Agreements and Definitions
NIH Model Licenses and Definitions
Ferguson S, Kaundinya U. Licensing the Technology: Biotechnology Commercialization Strategies Using University and Federal Labs. In Biotechnology Entrepreneurship: Leading, Managing and Commercializing Innovative Technologies. 2nd ed. Elsevier. Edited by Craig Shimasaki; 2014.