Technology Transfer
at the University of Maryland College Park
Prepared by: Office of Technology Commercialization
I. Introduction & Mission Statement
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Keeping University inventors informed of the progress of their submitted invention disclosures.
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Marketing all technologies disclosed to the Office. Three percent of the invention disclosures received by OTC are returned immediately to the submitting parties because OTC has determined they are not novel . Marketing usually is accompanied by significant industry contact, including signing Confidentiality Disclosure Agreements and fielding questions.
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Providing outreach to faculty, staff and students on campus.
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Preparing and filing government reports in compliance with the reporting requirements of the Bayh-Dole Act.
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Overseeing the patent prosecution of those cases forwarded for patent preparation and supervising the maintenance of U.S. and foreign applications and patents.
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Licensing University technology to third parties and acting as the primary negotiator.
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Monitoring all license agreements for licensee compliance.
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Being the first unit to enforce the University’s patent portfolio.
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Distributing income to inventors, departments and co-owners in accordance with University policy.
For inventions disclosed to OTC that include biological materials that third party researchers may want to use, OTC will obtain campus approval from the Department of Environmental Safety (http://www.des.umd.edu/index.html) to ship biological samples to such third parties under a Material Transfer Agreement (MTA). OTC will prepare that agreement for signature and monitor that agreement while in force.
B. OTC Principles
The University of Maryland’s mission of education, research and service guides OTC. Technology transfer and faculty innovation result from this mission. Therefore, the following principles guide the University’s technology transfer mission:
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Technology transfer actively facilitates:
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About 37 percent of the invention disclosures received by OTC are submitted by inventors whose inventions are created with federal dollars. Under federal law, the Bayh-Dole Act codified at 35 U.S.C. 200 et seq., the University must seek corporate partnerships for federally funded inventions. There is a mandate to license such technologies to companies with fewer than 500 employees, “small entities."
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The academic mission is the key, and no license agreement shall unreasonably inhibit it.
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If OTC is unable to license or decides not to protect an invention, OTC will release rights to cooperating inventors or the funding agency prior to the expiration of patent rights.
C. OTC Interaction with Patent Counsel and Industry
According to University policy, the University owns any innovations that are the result of the work of its employees. An important component of making the policy effective is that inventors are prohibited from independently seeking patent protection for their work and from signing contracts with businesses for the use of an invention.
The achievement of appropriate protection and contracts for development or transfer involve complex legal issues in which the University has a significant responsibility and vested interest. Therefore, it is vital for employees and administrators to depend on OTC for assistance with disclosure, protection, development and transfer of discoveries. In addition, any unsolicited contact by outside organizations should be referred to OTC immediately. University personnel should interact with patent counsel or company representatives only with the knowledge and approval of OTC, and especially not at the direction of outside organizations or individuals.
III. Intellectual Property
A. What is Intellectual Property?
In the United States, the Constitution gives Congress the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries” (Article 1, Section 8, Clause 8). Pursuant to this authority, Congress enacted the first patent law in 1790. It is now codified in Title 35 of the United States Code.
Intellectual property is any writing or discovery that is a new and useful process, machine, composition of matter, life form, article of manufacture, software, trademark, trade secret, copyrighted work or tangible research property. It includes such things as new or improved devices, circuits, chemical compounds, drugs, genetically engineered biological organisms, antibodies, clones, cell lines, data sets, software, Web-based tools, musical processes, photographs or unique and innovative uses of existing inventions.
For an invention or intellectual property to be patentable, it must be a process, machine, article of manufacture, composition of matter or related improvement.
A process is a mode of treatment of certain materials to produce a given result. It is an act or series of acts performed on the subject to be transformed and reduced to a different state or thing.
A machine is a distinctive means for accomplishing a certain result. It differs from a process in that it is limited to a particular apparatus.
A manufacture is an article or product. In this case, patentability depends on the functional relationship of structural elements.
Composition of matter refers to chemical and metallurgical compositions and may include certain combinations of ingredients as well as new compounds and recombinant organisms.
It is also possible to patent an improvement to any item patented in one of the above categories, but it must be more than a change in design or proportions and must, like inventions in the other categories, meet the three criteria discussed below.
A patentable invention must be useful (have a specific use). A patentable invention must also be novel (be new and original); and non-obvious. Even though an invention is novel, it must not be obvious to a person of ordinary skill in the related technology at the time the invention was made. Inventions that are not patentable include: laws of nature, algorithms and theories per se, plans of action, mere ideas or results.
B. What is a Patent?
A patent is a published, legal document that is the result of a formal filing for the property right granted by a sovereign nation. A patent gives the holder thereof the exclusive right to exclude others from the manufacture, use, import and sale of an invention for a period of years; or if the invention is a process, the right to exclude others from using or conducting the process, also for a period of years. This right to “exclude” is a negative right. A patent does not necessarily allow a patent owner to practice an invention. The patent owner too may be “excluded” from exploiting an invention by a dominating patent owned by another.
A patent is an agreement between the inventor(s) and the public. Patents aid scientific progress by allowing full public disclosure of an invention while granting the owner the right to exclude others from making, using, importing or selling the defined invention. The term of a patent (other than a design patent) begins on the date the patent issues and ends on the date that is 20 years from the effective filing date of the application. However, patents that were in force on June 8, 1995, or that issued on an application filed prior to that date have a term of 20 years or 17 years from the date of issue, whichever is greater.
The quid pro quo of the U.S. patent process is that the inventors must explain fully how to make and use their invention, and in return the inventors are issued a patent allowing them to exclude the world from making, using, importing or selling an invention in the United States.
As property, a patent may be sold or assigned, pledged, mortgaged, licensed, willed or donated. Commercialization may be accomplished by the owner exercising the rights referred to above or by permitting others to exercise rights under the terms of one or more licenses.
Patents are not self-enforcing. It is up to patent owners to monitor against infringement.
C. Inventorship and Invention
Any person who has made a patentable discovery may file an application for a patent. However in the United States, a university, corporation or other business association may not file an application in its own name. The application must be filed in the inventor’s name in every instance. Inventors at the University are obligated, pursuant to policy, to assign their invention rights to the University.
Please review the University of Maryland Interim Policy on Intellectual Property (http://www.otc.umd.edu/Inventors/Policy02-08-02.pdf) carefully for specific information relevant to inventorship and ownership at the University. Where two or more persons make joint contributions to a patentable discovery, all inventors must be named in the patent application.
“An inventor is one who has conceived of an invention. Conception is the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied to practice,” from The Law of Chemical and Pharmaceutical Inventions: Patent and Nonpatent Protection, 2nd edition, pg. 1654.5 (Rosenstock; Aspen Law & Business 2004).
Inventorship is not the equivalent of authorship, and it is not a reward mechanism or a position of status. In fact a patent may be declared invalid if more or less than the true inventors are named.
Two or more people collaborating on joint research, located oceans apart, may be joint or co-inventors so long as they communicated with one another and contributed to the conception of the invention. However, where an assistant merely carries out the directions of another and in doing so constructs a new device of the other or employs a new process of the other, the assistant does NOT become a joint inventor since the assistant was merely following suggestions and applying skills or abilities normally performed or required.
The determination of invention is also a legal question, and this question is determined by the U.S. Patent and Trademark Office (USPTO at http://www.uspto.gov/) and patent counsel for the University. Thus, it is more important for researchers to disclose ideas, findings and results to OTC as soon as possible than to debate about “invention.”
In general, patentable inventions are creations that are better, cheaper, more efficient, use fewer steps, save time, are less harmful, shine brighter or act selectively or synergistically, etc. As a rule of thumb, if data or results are being used in support of a proposal seeking research money or are set forth in a draft of a paper to be peer reviewed, then such data or results likely are the result of novel research and an Intellectual Property Disclosure form should be submitted to OTC. The Intellectual Property Disclosure form is found at http://www.otc.umd.edu/inventors2/disclosures.html.
It is important, however, to distinguish invention from mere research results. Discovering the pathway leading to an allergic reaction is a research result. Manipulating the pathway to prevent or enhance the reaction is a patentable advance. When in doubt, disclose the discovery/invention to OTC or contact OTC with questions.
Even if a discovery is not patentable it may be valuable intellectual property. Tangible research properties including antibodies, cell lines, clones and data sets may have commercial value but are not patentable. Software inventions can be patented in some cases but are usually protected by copyright. For instance, source code that may have taken a year or more to generate may not be patentable but may have value to a company. Thus, it is always a better course of action, and consistent with University policy, to disclose. The inventors should spend some time accurately completing the Intellectual Property Disclosure form and detailing the invention. See Section IV below. When received by OTC, the completed Intellectual Property Disclosure form is assigned a docket number and entered into a computerized technology management system. In this manner the invention can be tracked and evaluated for development and market potential.
D. Government-Sponsored Inventions
In 1980, there was a major change in federal patent law with the enactment of Public Law 96-517, known generally as the Bayh-Dole Act. This change and subsequent amendments enable universities to retain the rights, title and interest in inventions made under government sponsorship.
In order to retain these rights, a university must comply with the requirements of the law.
- A university must report all inventions made under federal sponsorship to the applicable federal agency within 60 days of disclosure to that university by the inventor.
- Title must be elected generally within one year of the report.
- A patent application must be filed in the United States within two years of title election.
- The university must seek out licensees to utilize the invention – small businesses are preferred.
In all cases, the government retains a nonexclusive right to use the invention or have it utilized for government purposes. The government also retains certain march-in rights to inventions not commercialized after several years.
E. Non-patentable Creations
OTC's activities include protecting, marketing and licensing intellectual property that perhaps does not meet the standards of patentability. For instance, software created and used by an administrative or academic unit on campus may not reach the standards of patentability and thus may not be patentable. However, the source code may be inherently valuable. It may have taken months to conceive and write and perhaps enhanced over years. Properly shepherded, the source code may be licensable and of value to a third party. Software products currently licensed and not protected by patents include Treemaps and Spacetree created by HCIL (Human Computer Interaction Laboratory) and OTC's own software for managing technology transfer activities of a university. In fact, a start-up company was created using OTC's software. These products are protected by copyright and the source code as trade secret.
Analogous to inventors, creators are responsible for generating the source code leading to software products. The creators may include those who conceived of the software and those who have written the code.
In certain instances, software may be protected by a U.S. patent. As noted above, algorithms per se are not patentable. However, processes conducted by software or manipulated by software may indeed satisfy the patentable criteria of being new, useful and nonobvious. Examples of licensed patentable software from the University of Maryland include risk assessment software and software that facilitates the annotation of photography.
IV. Completing the Intellectual Property Disclosure Form
The University's Intellectual Property Disclosure form is found at http://www.otc.umd.edu/Inventors/disclosure.html. It is a generic document for disclosing all University of Maryland inventions and creations, including non-patentable biological material.
The form may at first appear onerous to complete. However, much of the form simply requires the checking of boxes or filling in administrative information required to implement the University's IP policy or to satisfy state government demands or federal reporting demands.
Section 1 (page 1 and one page for each inventor or creator), requires the name, signature and Social Security number of the inventor(s). (These are State requirements.) As set forth in Section III of this manual, any inventor/creator (even if not a University inventor) shall be listed on the disclosure form.
Because the IP policy requires monetary splits that may include an inventor's department, OTC requires additional information concerning joint appointments and percentages of appointments.
Section 2 of the form merely requires the creator to check circles providing information relating to the stage of development of the technology being disclosed.
Section 3 asks for the novel features of the technology being disclosed and how the invention differs from the current technology. A statement regarding the current failings or shortcomings of current technology and how the new invention overcomes these deficiencies is also requested.
Section 3 may be the hardest part of the invention disclosure to complete, but the more information provided to OTC the faster OTC can understand the invention. As above noted, if data or results are being used in support of a proposal seeking research money or are set forth in a draft of a paper to be, for instance, peer reviewed, then such a proposal or paper may be used to answer Section 3 of the form. Attach the paper to the form and complete Section 3 by identfying where in the paper the invention is described and where in the paper a proposed novelty of the invention is set forth (page and paragraph or line numbers are helpful). The information can also be copied and pasted into the invention disclosure form.
Section 4 of the form requires the date the invention was conceived. Lab notebooks should be maintained. See OTC Lab Notebooks.
As mentioned above, foreign rights may have been lost by publication. Where that publication is less than one year old, however, U.S. patent rights may be secured. These dates of public disclosure are important to OTC.
Section 6 involves future research and requires checking circles that apply.
The goal of OTC is to transfer University technology to industry not to accumulate patents. Thus, certain marketing information known to the inventors is required in Section 7. Merely listing company names as potential licensees of an invention is not very helpful. Please provide contacts, phone numbers, etc.
Under federal law, OTC must complete reporting requirements for inventions that are federally funded. The information requested in Section 8 can be partially completed by checking appropriate boxes.
Section 9 provides additional marketing information to OTC and is again easily completed by checking appropriate boxes.
Section 10 is to be completed by OTC staff.
In certain instances the inventors may wish to reward lab personnel or administrative assistants by naming non-inventors/non-creators to receive income. This can be accomplished by completing Section 11 of the Intellectual Property disclosure form and identifying an appropriate "designee." Note, the income used to compensate a "designee" is the income portion given up by the inventor to the designee.
V. The Patent Process
A. Patent Application Contents and The Patent Process
Although the makeup of a patent application varies considerably, a typical application should include:
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Name(s) of the inventor(s);
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An invention title;
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Drawings of the invention, when feasible, and descriptions thereof;
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A brief statement regarding the field to which the invention relates;
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An explanation of the problem or background of the invention;
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A detailed description of the invention that should include examples of results;
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One or more claims defining the invention in legal terminology; and
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An abstract of the invention.
When received by the USPTO, the patent application is assigned to an examiner who is a specialist in the field relevant to the invention. The examiner conducts a patent/literature search to determine whether the application discloses patentable subject matter and, based on search results, judges the allowability of each claim.
To qualify for a patent an invention must meet three tests:
1. Novelty – To be patentable, an invention must be “new.” Even though an invention is new to the inventor, it is not patentable if another inventor made the same discovery earlier. In addition, if the invention has been known to others in the United States, or if the invention was patented or disclosed in a printed publication more than one year prior to filing a patent application or sold in the United States more than one year prior to filing a patent application, a new patent is barred. In reality, novelty is an easy standard to satisfy. Anything different from the prior art is deemed novel.
2. Utility – The subject must be of some degree of use for some purpose that is not immoral. The law does not require the device to be a commercial success, perfect or of such general utility as to supersede all current means of accomplishing the same purpose. The test of operativeness is to ascertain whether the subject invention does (even imperfectly) that which is claimed.
3. Nonobviousness – A patent must not be obvious to a person who has ordinary skill in the art. This criterion is subjective and is the most troublesome of all the requirements. However, mere simplicity of an invention does not bar the inventor from obtaining a patent.
On fully disclosing the invention and setting forth the best mode, and in meeting the three requirements listed above, a patent should issue.
OTC will oversee the filing of all necessary patent applications for an innovation. Working closely with the inventor(s) and patent counsel, an application is prepared and managed by the OTC staff.
The costs associated with assessing, marketing, licensing and protecting a disclosed innovation are initially borne by the University. In addition, services of patent counsel for conducting literature and patent searches and preparation of patent applications are also provided. These direct costs may be recovered from future income of the invention.
B. Publication and Provisional Patent Applications
Technology transfer also occurs via publishing. Publishing is important in the dissemination of information about discoveries. However, the timing of publication may prohibit patenting. As noted above, a patent is a special type of publication that describes the invention to the public in return for protection against unauthorized use. A written description of the invention published more than one year prior to filing a patent application in the United States places the invention in the public domain and voids any ability to obtain a patent. In the United States a one-year grace period is available to file a patent application after disclosure through publication or similar event.
In June 1995 Congress allowed for the filing of provisional patent applications. OTC’s strategy includes first filing a low-cost provisional patent application before a more expensive regular patent application. If statutory requirements of the patent law are met, the provisional patent application establishes a USPTO filing date. A provisional patent application must include a description of the invention complete enough that others could make or use the invention without further experimentation. It must also contain a description of the best mode of using the invention. Inventors are responsible for providing this information to OTC.
In cases of pending publication, provisional applications may be filed to protect foreign and U.S. rights. However, if an invention has already been disclosed to the public through publication, a provisional application may be filed to protect U.S. rights only. Provisional patent applications preserve the rights of the invention in the United States for up to 12 months. At the expiration of the 12-month period, a regular patent application must be filed if a patent is desired. Unlike a regular patent application, a complete provisional application does not require one or more claims since no examination on the merits of the invention will be given. The 12-month period provided in the provisional application does not count toward the 20-year limit of the patent term.
A provisional patent application has a one-year shelf life and must be converted on or before the anniversary date of its original filing to a U.S. utility patent and/or an international patent or all rights generated by the provisional application are lost. However, if the invention has not been publicly disclosed in the year of the provisional patent, the provisional application can be re-filed, and the invention is given another year of provisional protection. Where a publication precedes the provisional filing, all patent rights may be lost.
During the time period between filing the provisional patent application and its one-year anniversary, the inventor can continue to develop the invention while OTC markets the technology seeking potential licensees.
OTC can and will file regular patent applications without filing provisional applications. Such a decision is based on criteria that includes but is not limited to:
The cost of a patent filing and prosecution must always be weighed against the potential income resulting from the commercialization of the rights bestowed in a patent when determining whether to file.
A provisional application can be filed within one year of publication to extend the deadline for filing a patent application. If the U.S. patent application is filed prior to any publication, worldwide patent rights are preserved for one year from the U.S. filing date. It is this statutory grace period and the provisional patent application process (the combination is unique to U.S. patent practice) that provide the tools allowing OTC and the University to effectively balance the need to publish, a mandate to patent and the transfer of proprietary rights to industry.
Publication in the legal sense is difficult to avoid. Articles in newspapers, newsletters, bulletins, textbooks, posters, journals, theses (which are posted on the University Digital Repository for the University of Maryland (DRUM) Web site at https://drum.umd.edu/dspace/handle/1903/3) and reports may all qualify as publications. Oral presentations may constitute publication in some countries, as would distribution of a paper or abstract at a public meeting. A key factor in triggering the statutory bar date is that the publication must be enabling – it must describe the invention in sufficient detail so the invention could be duplicated or put to use by those with ordinary skill in the art.
Inventors should seek advice and carefully consider the timing and ramifications of publication. This is especially true if the predominate market for the invention is not in the United States. When in doubt, contact OTC or file an Intellectual Property Disclosure form (http://www.otc.umd.edu/inventors2/disclosures.html) before publishing.
C. Patent Ownership
Under the University of Maryland Interim Policy on Intellectual Property, the University owns all technology created by faculty and staff (see http://www.otc.umd.edu/umpolicies/iptree.doc for exceptions), and OTC is charged with licensing the intellectual property of the University.
D. U.S. vs. Foreign Patents
The United States is a member of a convention that provides that a patent application can be filed in other countries within a year of the U.S. filing and will be accorded the priority date of the U.S. filing. More than 60 countries have signed this treaty, which guarantees the same rights to citizens of foreign countries that are granted to their own citizens. So, any time an application is filed in one country and then re-filed in another less than a year later, the second filing is given the benefit of the first filing date. To obtain patent protection in another country, the filing must be in compliance with local laws. Generally, most foreign countries have the following guidelines:
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Unlike the U.S. patent laws, any prior publication describing the invention nullifies the right to patent ab initio, or from the beginning;
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The application must be very clear in describing how to make or use the invention.
Foreign intellectual property protection is extremely expensive. Typically, only those innovations that have a high potential income market or a licensee willing to cover the expenses are filed abroad.
VI. Other Types of Intellectual Property Protection
A. Plant and Design Patents
Plant patents may be filed if discoveries are made and asexual reproduction results in any distinct and new variety of plant, including cultivated sorts, mutants, hybrids and newly found seedlings, other than a tuber-propagated plant found in an uncultivated state. Plant patents provide 20 years of protection for the right to exclude others from asexually reproducing the plant or selling or using the plant that was reproduced.
Design patents result from the invention of any new, original and ornamental design for an article of manufacture. In the United States, there is a six-month grace period from the first date of publication to file an application for design patents. Design patents have a 14-year term of protection.
B. Copyright and Information Science Protection
The intellectual property rights of information science technologies, which include software, CD-ROM, video and print inventions, can be protected through three different mechanisms – copyright, trademark, trade secret or patent protection. Each form has advantages and disadvantages. Some of these forms of Intellectual Property are discussed above in Section IV. These forms of IP are further discussed in this section.
Copyright protection of software is simple and inexpensive, because registration of the copyright can be accomplished by submitting generally less than 50 percent of the program. Trade secret protection can be used in combination with copyright. Both source code and object code can be copyrighted. The protection provided by copyright is limited, however, because copyright does not protect the concept of the software program, only the details of a given package. Copyright protection can be allowed for an original work of authorship fixed in any tangible medium of expression. This includes such things as literary works, computer programs and databases. A copyright protects the expression but not the idea of the expression or the facts contained in it.
The copyright owner has the exclusive right to reproduce the work, make derivative works, distribute copies to the public, publicly display the work and publicly perform the work. Copyright lasts for a finite period. The actual duration of copyright varies depending on when the work was first created or published. When the period of copyright protection expires, the work enters the public domain and anyone may use the work for any purpose.
For modern works (works created on or after January 1, 1978) authored by an individual, copyright begins on the date the work is created in a fixed, tangible form and lasts for the life of the creator plus 70 years subject to the following modifications:
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If a work is created by more than one person, copyright begins on the date the work is created in a fixed, tangible form and lasts for the life of the last surviving creator plus 70 years.
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If copyright in a work belongs to a corporation, university or similar entity, copyright lasts for the shorter of 95 years from the date the work is first published or 120 years from the date the work is created.
The Interim IP policy (http://www.otc.umd.edu/umpolicies/iptree.doc) in effect at the University since December 2002 sets out the criteria for deciding who owns copyrightable materials, software, inventions, etc. Inventors should review the appropriate section in the Interim policy to determine their ownership rights.
Patent protection is available for software to the extent that software meets the same requirements as other patented subject matter. This type of protection can protect product features that copyright or trademark cannot. An example of patent protection use for a software technology would be claims to algorithms that cause a physical process to occur. In addition, a patent protects not only the tangible expression of an idea embodied in the software but also may protect the broader concepts outlined in the original idea. Decisions on the type of protection to be used will be based on the cost of the method of protection versus the potential income generated from products, the timeline of publications and industry concerns.
C. Trademarks
Trademark protects words, names or symbols used by manufacturers or merchants to identify and distinguish their product from others and to indicate the source of the products. A trademark is granted because of its distinctiveness in the consumer market. Once a mark is granted, it can be renewed every 10 years for as long as the mark is used.
D. Tangible Research Properties
Monoclonal antibodies, cell lines and other tangible research properties are often not submitted for patent protection. However, OTC treats tangible research properties just as it does other patentable inventions in all other respects. OTC will provide guidance in additional research development, assist in preparing disclosures, conduct marketing analysis and negotiate licensing agreements as necessary and appropriate. The monoclonals, depending on their value, may be deposited in the American Type Culture Collection’s Safe Depository (http://www.atcc.org/Home.cfm) in order to heavily restrict use to only authorized parties. Only those who have received approval from OTC have the opportunity to remove limited amounts of the material.
Tangible research properties, such as monoclonal antibodies or cell lines, fall under general patent policies for the purposes of protection, but it is not always feasible to pursue patent protection. Most tangible research properties have extremely limited use and application, which makes the cost of patenting prohibitive; however, they often have licensing potential and may be licensed when appropriate. For example, in a number of instances it is not very expensive for someone to develop a monoclonal antibody that acts similarly to a patented one that already exists. In this case, a patent has little real value.
A Material Transfer Agreement (MTA) must be used if patented or unpatented biological or chemical research properties are to be shared with those outside the University for nonprofit or research purposes. First, the transfer must be approved by the Department of Environmental Safety at the University (http://www.des.umd.edu/index.html).
An MTA provides for the understanding that the materials are made available only for scientific research and may not be used for commercial purposes. An MTA typically includes provisions about ownership of material, description of material, restrictions or distribution of material by the recipient.
If commercial applications are envisioned, the use of such material should be governed by an appropriate license agreement.
The University shall not be liable for any use; transferee agrees to indemnify and hold the University harmless.
E. Trade Secrets
Trade secret protection of software or other types of inventions is accomplished by simply not revealing information such as the source code. Trade secret protection is, therefore, inexpensive. However, once the secret is out, all protection is lost. Reverse engineering of software is a real problem for trade secret protection.
F. Plant Variety Protection
Plant variety protection (PVP) is an act that encourages the development of novel varieties of sexually reproduced plants and makes them available to the public. PVPs provide protection to those who breed, develop or discover these types of plants, and thereby promote progress in agriculture in the public interest. Unlike the plant patent, a PVP should be used to protect plants that are not propagated by cuttings. A PVP certificate provides protection for 18 years. If the certificate is not issued within three years from the effective filing date, the Secretary of Agriculture may lengthen the term by the amount of delay in the prosecution of the application.
VII. Marketing and Licensing
A. Inventor Participation and Responsibility
Successful technology transfer cannot be accomplished without the support, cooperation and participation of the inventor. The inventor generally has a better understanding of industrial players in the field and should advise OTC of any contacts. Similarly, an inventor's input during the patent prosecution often results in a much stronger patent. Without the inventor's full support of the process, OTC may, in accordance with policy, choose to withhold any income received until cooperation is secured from the recalcitrant inventor.
Disclosure of confidential material to any outside party constitutes a public disclosure. It is very important that a confidentiality disclosure agreement (CDA) be executed prior to such a disclosure. Inventors should also contact OTC if a publication, abstraction, oral presentation or thesis defense is anticipated. Failure to seek protection prior to publication may compromise certain patent rights.
B. Marketing Intellectual Property
OTC has been the most successful at licensing a technology to those companies with which the University has prior relationships. This is especially true when the University utilizes a contact the inventor has with industry. Eighty percent of licenses signed by OTC are based on such relationships. Some inventors, however, may not have contacts, or the contacts are not interested in the invention at that time. In such an event, OTC will use its three-tiered marketing approach to find a “non-relationship” licensee. Information databases, licensees and other corporate contacts and trade publications are just a few of the resources used to find such a partner.
C. Confidentiality Disclosure Agreement
In the course of evaluating an unpublished invention for license potential, it is often necessary to share proprietary and confidential information between a company and the University and its inventor. Therefore, a Confidentiality Disclosure Agreement (CDA) must be in place when disclosing intellectual property information in order to protect intellectual property rights for the future. OTC executes such agreements on behalf of the University and its inventors. In addition to fulfilling the information needs of a potential licensee, the disclosure of the invention to a company also provides valuable insight to OTC into the technical assessment, marketability and potential income associated with a technology. If a CDA has been executed, all parties are bound to its terms for non-disclosure of information for a period of three to five years.
D. Licensing Inventions
If a patent is awarded, an invention will have been judged to be novel, useful and nonobvious, but it may still lack elements needed for success. Commercialization is often difficult, and an assessment of the likelihood of economic development should be considered before deciding to proceed.
While the process of intellectual property protection is intended to promote progress and serve the public, it also benefits inventors through recognition and monetary returns when the commercial potential is realized. This is usually accomplished through licensing agreements. At the University, 39 percent of invention disclosures result in revenue to the inventor, although some fail to cover patent costs. In the past five years (FY00-FY04), $1.5 million has been distributed to inventors.
A patent owner who has protected an innovation, having the right to exclude others from using the invention, may also grant permission to others to use the invention. A license agreement is the typical contract by which an invention developed, for instance, in an educational institution, is put into commercial use. A license is essentially an agreement by the owner of the intellectual property rights (the University) not to sue the licensee for infringement, so long as the licensee’s actions are within the terms of the agreement. A license typically addresses:
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The term of the license;
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The territory of the license;
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Any limits to the license grant; usually a license is exclusive to one party;
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Amount of up-front fee or other consideration to be paid by the licensee;
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Amount and assignment of royalty rates, including a minimum payment;
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Milestones the licensee must meet and provisions for termination of the license in event of failure;
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Provisions for the inventor to continue to use the invention for research purposes and to be able to publish consistent with University of Maryland policy (http://www.president.umd.edu/policies/);
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Provision for the licensee to indemnify the inventor or institution granting the license;
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Provisions to terminate, for instance, for failure to sell product or to pay fees.
Under a license agreement, the University must be protected. Faculty inventors retain the rights to continue research in the licensed field and to freely publish and disseminate related materials to others. In preparing the agreement, OTC uses the standard format approved by the Attorney General for the State of Maryland through the campus Office of Legal Affairs. License negotiating is an adversarial but civil process. University and industry interests, while perhaps not at odds, are motivated by different drivers. The University will not compromise its academic freedom or generate institutional liability for the sake of securing a license.
The license agreement establishes the structure of the University-Company relationship. In a simple non-exclusive license the relationship may be just a one-time delivery and payment. Exclusive licenses create long-term, extensive and more complex relationships that often involve ongoing collaborations and payments such as sponsored research and consulting.
Because a licensing arrangement can represent a significant long-term investment, most companies will undertake a thorough investigation of the patent and market potential and/or evaluate the University’s rights and materials before entering into licensing negotiations. In some instances, a Company may request an option to the technology. During this evaluation time period, the University cannot license to another party. Unlike a license agreement, which has a typical life span of 10 to 20 years or generally the life of a patent, option agreements last for only a few months to a year. Compensation for an option agreement is usually limited to a modest option fee and/or reimbursement of any patent costs incurred during the option period.
Collaborations with investigators at other universities often result in jointly owned inventions. An Inter-Institutional Agreement creates a relationship by which the University and another university can consolidate their licensing efforts and share the costs and revenues associated with the patenting and licensing of a joint invention while one institution takes the lead. Although such agreements can be complex, requiring considerable negotiation time, they add value to the University’s technology by ensuring potential licensees the ability to obtain exclusive rights and that the licensee only has to negotiate with one of the joint entities.
E. OTC Negotiates and Signs Agreements
OTC is responsible for conducting all licensing negotiations and the execution of license agreements on behalf of the University. After an invention is licensed, the University may receive income in accordance with the terms of the license. All such funds, except patent costs and unless otherwise agreed to in writing, are shared with inventors according to the provisions of the University patent policy. It is the duty of OTC to ensure that income received is properly accounted for and distributed through the University system to inventors and their departments. Income can come from many types of fees, including but not limited to up-front payments, technology purchase, option fees, minimum annual license fees and royalties. See the distribution policy at http://www.otc.umd.edu/Inventors/Royaltypolicy.html.
VIII. Company Formation
A. Faculty Start-up Companies
In recent years, universities and researchers have taken an increasing interest in forming start-up companies to commercialize University inventions as opposed to licensing the intellectual property to established companies.
OTC will consider licensing requests from faculty inventors who want to start new companies with their technologies. The inventors must demonstrate technical and business capability to commercialize the intellectual property. Initially, this may be a request to create a well-formulated business plan or proof of profits. The faculty inventors must have their involvement in the start-up company approved by their department and the University of Maryland Policy on Conflict of Interest and Conflict of Commitment (http://www.inform.umd.edu/CampusInfo/Departments/PRES/policies/ii310a.html).
OTC can negotiate directly with inventors. License terms usually include a license fee, payment of past and future patent costs, minimum annual royalties, equity, etc. The decision as to whether to form a start-up company or to work with an established company is a function of:
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The dynamics of the market that the product may address;
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Continued capital requirements;
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The uniqueness of the intellectual property; and
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The risks founders are willing to take.
OTC recommends that start-up company founders seek outside advice and guidance with the formation of a business plan, which should include:
Advice may also come from the New Markets Growth (NMG) Fund ( http://www.newmarketsfund.com/). Initiated by the Robert H. Smith School's Dingman Center for Entrepreneurship several years ago, the NMG Fund is an independent, $20 million venture capital fund that makes equity investments and provides operational assistance to both early-stage ventures and small to mid-sized high growth companies located in Maryland, Washington D.C. and northern Virginia. Qualified MBA students serve as fund staff under the direction of professional venture capital managers. The NMG Fund is the first university-based fund to raise external capital focused on both technology start-up companies and community development.
The NMG Fund seeks situations where either start-ups or more mature companies can commercialize innovative products and processes into domestic and foreign markets. The Fund is most interested in companies that have market validation of their product, have been through the development cycle and are ready to ship product. The Fund also focuses on later-stage businesses looking for expansion capital to address new markets, both vertical and geographic. The NMG Fund’s management team has experience in cross-border transactions and a range of industry expertise, including IT and telecom services, software, outsourced business services, manufacturing and direct marketing.
OTC start-up companies selected by the NMG Fund may receive support including business plan refinement, assistance with legal structure, executive recruitment and potential venture capital funding.
B. Incubators
Housing a start-up company in one of the 13 incubator facilities in the state may provide instant credibility to a start-up company. These facilities can be researched online through the Maryland Business Incubator Association. (http://www.mdbusinessincubation.org/html/members.htm).
The University, through the Maryland Technology Enterprise Institute (MTECH), oversees its own incubator known as the Technology Advancement Program, or TAP. (http://www.mtech.umd.edu/TAP/). Digene Corporation and Martek Corporation are two of roughly 50 graduates of TAP. TAP seeks applications from faculty entrepreneurs and their start-up companies as well as those start-ups from outside the University.
IX. Technology Transfer Resources
A. Technology Development Under Corporate Sponsorship
In some cases, an invention proven in the laboratory may not yet be ready for transfer to a licensee. Additional laboratory research and development may be required by a licensee before technology transfer takes place. Sometimes a license agreement may refer to a technology development contract in which the interested company may agree to support additional research or pay a retainer to buy an option to protect its interests while further development is pursued. OTC negotiates the general terms of the Technology Development Agreement; however, the Office of Research Administration and Advancement (http://www.umresearch.umd.edu/ORAA/index.html) executes the appropriate research contract on behalf of the University with the company and will negotiate specific terms.
B. TEDCO Funding
The goal of the Maryland Technology Development Corporation's (TEDCO at http://www.marylandtedco.org/) University Technology Development Fund (UTDF at http://www.marylandtedco.org/programs/UTDF.html) is to provide resources to Maryland universities to support pre-commercial research on university intellectual property to increase the likelihood of commercializing that intellectual property. The program helps universities to license early-stage technologies more effectively and serves as a source of technology development projects for Maryland companies that are eligible for additional TEDCO and other State financing programs. The University has received about $700,000 in UTDF funding since 2001.
The University, as well as other Maryland universities, is obliged to share revenues with TEDCO on intellectual property created or developed with a UTDF grant and licensed to industry. A university must pay TEDCO 25 percent of all revenue received for rights to intellectual property developed with UTDF funding until it has repaid three times the UTDF funding provided. Thus, a university that receives a $50,000 TEDCO grant to develop patented or copyrighted intellectual property would pay TEDCO 25 percent of revenue received after the UTDF grant award until it had repaid $150,000. After this the university has no obligations to TEDCO. TEDCO does not control any of the terms of a license or exact any royalty of its own from a licensed technology. TEDCO will assist institutions in finding a licensee to the extent the university wishes and provide licensees access to other TEDCO and State programs.
University faculty or staff must apply for UTDF funding in cooperation with OTC. A proposal must include a detailed work plan, specific milestones to be achieved, a timeline and a budget. UTDF grants are usually limited to $50,000 total cost, including 10 percent of direct cost for overhead. For more information about this program, please contact OTC or see the TEDCO Web site at http://www.marylandtedco.org/.
X. Funding
A. GAP Financing
The “financing gap” in the technology development lifecycle is that period of time between when universities stop funding research to where traditional venture capital firms start. This gap is sometimes filled by angel investors…
B. Angel Investors
Typically, angel investors are individuals with money to invest in early-stage or start-up companies. Angel-investor networks are a good place to start looking for funding. These national and local groups of angels meet – formally or informally – to discuss deals and learn about the best new business opportunities. See http://www.md-angels.com/presenting.html
Universities and their funders are generally engaged in basic research and do not provide resources for applied and commercial prototyping. Venture capitalists provide generally from $1 million to $3 million in chunks of money commonly referred to as rounds. These dollars enable company growth – for example, hiring employees, product prototyping and commercialization. Venture capitalists typically provide more money than a “seed” stage company can use. Thus, a gap exists between early-stage-concept funding and product development. Angel investors fill this void. Angel investors typically have between $50,000 and $750,000 to invest in a seed-stage company. At the seed stage it is all about leveraging resources. Angel funding can be leveraged with resources associated with campus and the state and federal governments.
For instance,
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The Maryland Industrial Partnership, or MIPS program, run by the Maryland Technology Enterprise Institute (MTECH) on campus (www.mips.umd.edu) has up to $50,000 for seed-stage companies to partner with a university professor or university lab to further develop university or company inventions.
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TEDCO has a Maryland Technology Transfer Fund (http://www.marylandtedco.org/programs/MTTF.html) that provides investments in companies in two rounds of up to $100,000 each with matching requirements that vary according to the size of the company. These funds are used for research and development activities intended to develop a specific technology or technology package for commercialization.
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The University business plan competition is administered by the Venture Catalysts division of MTECH (http://www.venturecatalyst.umd.edu/). This competition provides cash awards for seed stage or pre-seed stage companies for well-prepared business plans. Awards total $50,000.
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ASM Resources (http://www.asmresources.com/) conducts an annual business plan competition in May. Prizes are up to $50,000 for the first-place winner of this competition.
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C. Venture Capital Financing
Venture capitalists will invest in people with distinguished track records of achievement in their relevant technology and science fields and a demonstrated respect from their peer group. See National Venture Capital Association (http://www.nvca.org/)
Venture capitalists will invest in people with a constructive attitude toward company building and wealth creation and a positive attitude toward their investors. Venture capitalists will invest only in people of high integrity who believe in open and full communication and a spirit of partnership.
Local venture capitalists that have University ties include the New Markets Growth Fund, Space Vest and the Telecommunication Investment Fund.
D. SBIR
Under Development
E. STTR
Under Development
©2005 University of Maryland
All rights reserved
This is an ongoing project and ever-changing document. Additional sections will be added in the near future. Any questions, comments or concerns should be sent to otc@umd.edu.
Content Reviewed & Updated: 3/16/2005
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