BLG News Fall 2003
What are Material Transfer Agreements and Sponsored Research Agreements and how can they impact Intellectual Property and Licensing?Baylor's Licensing Group, (Baylor Licensing Group (BLG)) receives and reviews Intellectual Property disclosures, coordinates patent prosecution (if necessary) and markets Intellectual Property with the goal of licensing them to for-profit companies. This newsletter discusses clauses in Material Transfer Agreements and Sponsored Research Agreements that impact Intellectual Property and our ability to license Intellectual Property developed by Baylor faculty and staff. The end goal for our office is a license agreement that enables others to utilize Intellectual Property developed at Baylor.
Baylor's Office of Research (OOR) handles Material Transfer Agreements and Sponsored Research Agreements (713) 798-5184. http://intranet.bcm.tmc.edu/index.cfm?tmp=research/oor/index.
For the appropriate documents click on Proposal and Model Contracts; BCM Model Contract Templates in the right hand column; downloadable forms located at the bottom of this page.
1- What are Material Transfer Agreements (MTAs)?
MTAs are documents that are executed when you are receiving materials from colleagues in academics or a for-profit setting, or when you are sending materials to an academic colleague. (Materials transferred to a for-profit entity should be done via a license agreement through our office.) Primary contact for MTAs is Barbara Cochran in OOR 713-798-5184
2- What are Sponsored Research Agreements (SRAs)?
SRAs are documents that are executed with a commercial partner that wishes to sponsor research in your lab. Primary contacts for SRAs are, Paul Kendall and Barbara Cochran in OOR 713-798-5184
3- What is Intellectual Property?
Intellectual Property can be any patentable or non-patentable invention, for example; devices (surgical, medical or laboratory), compounds, diagnostic tests, software, cell lines, animal models, or clones.
4- What clauses in an MTA impact Intellectual Property?
- The definition and ownership of the "Material".
Material and any derivatives or modifications of that Material are considered "Material" and are the property of the Institution that sent it. Observations and Intellectual Property that arise from the use of the Material are NOT considered Material and are not owned by the sending Institution. - However, Material obtained from a company may have limitations on your use of that Material.
When receiving Material from a company, in most cases the company will own any Intellectual Property or discoveries you make with the Material, including any derivatives. Even if the Material you obtained from the company comprises only a small part of the derivative; the company may own the derivative and Baylor's ability to commercialize it or even to share it with other academic colleagues may be encumbered. - No further transfer of Material by the receiving Institution.
An MTA should prohibit further transfer of the Material. ONLY the originating institution should send out Materials, unless there is reason to grant permission for further transfer.
5- What clauses in an SRA impact Intellectual Property and Baylor's ability to license Intellectual Property?
- Ownership of results and Intellectual Property.
Some companies sponsoring research will request that all Intellectual Property resulting from the sponsored project be assigned to them. Therefore, they would own all Intellectual Property outright. This request is unacceptable. The purpose of sponsored research contracts is to have input into a research project and to get access to data arising from the project, not to own it. - Automatic license to research results.
Commercial sponsors will often assert that they have to "pay twice" for rights to the Intellectual Property if they have to pay to license Intellectual Property developed as a result of research they sponsored. This is not the case. Sponsors pay to work with Baylor faculty because they possess skills and expertise that the sponsor lacks. In many cases the research that the sponsor funds is also supported by other funding (i.e. NIH grants), so that the sponsor is accessing research that has been funded by other agencies. Especially when a federal agency is involved, agency funding will be contingent upon strict, pro-Baylor property rights. Therefore, Baylor rejects the assertion that a commercial research sponsor should have an automatic license to Intellectual Property developed with their funding. - Right of First Refusal - "A De Facto Exclusive License for No Financial Consideration."
In a Right of First Refusal, the sponsor has an option to review the Intellectual Property and determine if they want to negotiate terms for an exclusive license. If they do not want an exclusive license, we can market it to third party companies, BUT if we do find an interested party we have to offer it back to the sponsor under terms that are at least as favorable as those being offered to the third party. A third party company will not review technologies encumbered by such provisions. For these reasons, a Right of Refusal basically gives the sponsor a de facto exclusive license to the technology without requiring the sponsor to pay any additional consideration. - Right of First Review and Option.
A right of First Review, also called a First Option is fairly typical in a SRA. This means that the sponsor has the first right to review any Intellectual Property developed under the SRA and to negotiate a license to it. This does not give the sponsor an automatic license, but the right to negotiate terms for a license. However, an Option without a specific expiration (i.e. 30 days) can amount to giving a de facto exclusive license for no consideration if they simply delay exercising the Option indefinitely. - Royalty free non-exclusive license to use results internally.
Often, the sponsor will request an automatic non-exclusive royalty free license to use any Intellectual Property for internal R and D purposes only. Baylor generally allows this use. However, if the sponsor desires to use Intellectual Property for commercial purposes, it is Baylor's position that the sponsor must negotiate terms for a commercial use license. In addition, if the sponsor wants an exclusive internal R and D license, Baylor also requires that the sponsor negotiate a license. Otherwise, the sponsor ends up getting a de facto exclusive license for no consideration. In both cases there is no reason for other companies to take a license as they cannot use the Intellectual Property. - Pre-negotiation of licensing terms for Intellectual Property.
A sponsor will occasionally ask that any license terms for future Intellectual Property be pre-negotiated. Baylor does not agree to pre-negotiations. Valuing Intellectual Property before it is developed is not a prudent practice as it could lead to terms that do not accurately reflect the value of the Intellectual Property.
6- Can I sign these agreements?
NO! You are not the official signatory for Baylor. Any signature required of you is merely in acknowledgement of the agreement and your responsibilities, but does not legally bind the college to its terms.
7- Do these same concerns relate to clinical trial agreements?
Yes.