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University of Michigan Innovation Partnerships
University of Michigan Innovation Partnerships

The License Process

Academic research innovation takes place in a complex environment, with competing requirements from the funding agencies sponsoring the research, federal and state law, University policies, the professional goals of the inventors, and the specific needs of the potential licensees. We strive to bridge these gaps by creating win-win scenarios where all parties benefit from the partnership.

Upon your company’s initial contact with the licensing representative, we can provide links to or copies of the publicly available materials describing the invention for your preliminary review. If you believe that the technology might pose a solution to your company’s needs, then we move to put your company’s technical experts in contact with our inventors to confirm the many specific details surrounding the implementation of the invention in the corporate environment. Often we will ask for your company to sign a Non-Disclosure Agreement ‎(NDA) to protect any of the University’s proprietary information that may either reside in a still unpublished patent application or may not be contained in the published patent. With an NDA in place, the technical teams can meet and discuss the technology.

Sometimes even after these technical discussions, uncertainties remain about the technology (will it scale up to industrial production levels? Can it interface with existing company tooling? Can the company’s staff reproduce the inventor’s work?) and a brief period of further testing or evaluation may be desired. We offer Option Agreements to reserve to the company the exclusive right to obtain a license agreement. If these Options are to last for more than a short time (3-6 months) we include developmental milestones to be completed by the company before it may exercise the option to obtain a license. Financial consideration for holding this exclusive Option usually includes the company’s reimbursement of the University’s patent costs incurred during the Option Period, as well as an Option Fee.

In many cases, no further testing is necessary and the negotiation of an exclusive or non-exclusive License Agreement can begin. For those companies who have completed licensing transactions with other major research universities, you will find few surprises in our agreements. For companies who are doing such deals for the first time, we recommend reading the following section, Points to Consider When Negotiating a License (see below).

Just as every technology is different, so too is every deal – we usually start with a term sheet covering definitions, diligence, and financial terms, but we are ready to discuss adjusting any of the terms that we are empowered to change. These changes would reflect the unique needs of both parties and the economic and practical realities that define the market opportunity being addressed. As such, we can’t promise that terms in any two licenses will be the same, but they will be fair for that situation. See the License Agreement Terms section below for more information on standard Option and License Agreements.

Points to Consider When Negotiating a License

The University of Michigan, along with many university tech transfer offices, has endorsed the Association of University Technology Managers’ (AUTM) list of points to consider as companies license inventions from a university.

What We Look For in a Licensee

The decision to license to a prospective licensee is shared by the U-M Innovation Partnerships professional and the inventor(s), whose proactive cooperation is often essential for success.

Interest in Continuing Research at U-M

The evaluation and technical development of an invention may require additional research. You may wish to sponsor additional research to support the development of the project.

Negotiating Financial Terms and Equity

The University obtains financial compensation through: license fees, royalties, milestone payments, minimum royalties, and, in some cases, equity.

Faculty, Staff, or Graduate Student Involvement in Companies

In cases where faculty/staff members hold a financial stake in the company (including, but not limited to, equity, employment, management, or a consulting arrangement) or if a graduate student is involved, there may be a perceived conflict of interest.

General License Agreement Terms

Licenses with universities generally will include the following sections.

Agreement Types

Non-disclosure Agreements (NDAs) are often used to protect the confidentiality of an invention as it is being evaluated by potential licensees. NDAs (sometimes called confidentiality agreements or CDAs) also protect proprietary information of third parties that University researchers need to review in order to conduct research or evaluate research opportunities. U-M Innovation Partnerships enters into NDAs for University proprietary information shared with someone outside of the University or two-way NDAs to enable both partners to share information. The Office of Research & Sponsored Projects (ORSP) generally manages NDAs solely related to research contracts.