Our Process

OTL's Standard Operating Procedure

1. The inventor submits an Invention and Technology Disclosure Form to OTL, thus creating a record of the invention (descriptive information), the inventor(s) involved, who sponsored the work, and public disclosures and publications. Disclosure Forms can also be obtained by calling OTL at (650) 723-0651.

2. Disclosures received by OTL are logged in, assigned a docket number, and assigned to a specific associate for management. Henceforth, the assigned associate is responsible for all actions relating to the docket.

3. The associate will meet with the inventor(s). Together they will discuss the invention and make a preliminary evaluation of manufacturing feasibility, novelty, potential applications, and possible markets (see Invention Evaluation Worksheet for further information.) A preliminary licensing strategy will be developed.

   Different inventions require different licensing strategies. For example, a basic new scientific tool likely to be widely used is typically licensed on a non-exclusive basis. In contrast, an invention which requires significant investment of resources by a company is typically licensed on an exclusive basis. The exclusive license provides an incentive to the licensee to commit risk capital investments required for product development.

   Part of developing a license strategy involves seeking information and feedback on market risk from various sources such as potential licensees and venture capital firms. Confidentiality agreements may be required to protect overseas patent rights if no public disclosure of the invention has occurred.

4. Based on this information, the associate will determine whether or not Stanford will elect title and file for a patent on the invention. (See The Patent Approach of Stanford's OTL.)

   OTL does not file patent applications for all invention disclosures it receives due to the high cost of filing ($6,000 - $10,000.) It is desirable to have an interested potential licensees before committing to patent filing. However, in rare cases, the commercial potential may justify filing when guarantees of cost reimbursement by potential licensees is not reasonably assured.

   The filing and prosecution of patent applications are done by outside patent attorney firms. Technical competence, prior experience in similar cases, and inventor preferences are considered by the associate in her/his selection of the appropriate patent attorney.

   The inventor's (see OTL brochure "Who is an Inventor") cooperation is essential in patent filing and prosecution. The chosen patent attorney will be familiar with the field of the invention, but he/she is unlikely to be an expert at the level of detail that makes the invention novel, useful, and non-obvious. You, the inventor, by providing both written and verbal information, will make an important difference and are indispensable for obtaining meaningful patent protection. Inventors can also assist by doing a prior art search. (For more information about patents, go to the Patents page.)

5. Royalties are distributed according to Stanford's Royalty Sharing Policy, as described in Paragraph 8 and 9 below.

6. Concurrently with making the patent decision, the associate will market (see "Particular COI Issues") and, if successful, begin license negotiations with potential licensees. Companies likely to be interested are approached and are given an opportunity to evaluate the invention (if required, on a confidential basis). Inventor's suggestions of companies to be approached are extremely valuable. A license proposal is prepared if the company shows strong interest. Negotiations follow which may require flexibility and creativity by both parties in order to arrive at a mutually satisfactory agreement. Every license has circumstances that necessitate special considerations. For example, startup companies typically cannot afford large initial payments but are able to compensate with equity in the company and/or payments once products are on the market.

7. The signing of a License Agreement is the beginning of a long term relationship. The licensee's performance is monitored by the associate for the duration of the license. Most License Agreements require periodic financial or development reports from the licensees.

8. All royalty payments are collected by OTL. After the conclusion of Stanford's fiscal year (Aug. 31), cash royalties received are distributed as follows:
   • 15% is deducted to support OTL's operation; any direct expenses, such as patent costs that are not reimbursed by the licensees, are also deducted.

     The Net Royalties are then divided three ways:

     • One third to the inventor(s);
     • One third to the inventor's Department; and
     • One third to the inventor's School.

   Department and School royalties must be used for research or educational purposes only and represent an important additional source of unrestricted funds for these entities.

9. OTL may at times accept equity in lieu of cash as part of the license issue fees. After 15% is deducted for OTL's administration fee, inventors receive their proportional share (per #8 above) and the remainder, managed by the Stanford Management Company, is earmarked for the OTL Graduate Fellowship Fund and administered by the Dean of Research and Graduate Policy.

10. It is often necessary to re-evaluate a licensing relationship to adapt to changed circumstances, or to take into account new situations. Either party can request an amendment to the Agreement at any time during its life.