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Particular Conflict of Interest Issues

Why do we market?
Under the Bayh-Dole law, the University has an implicit obligation to ensure that inventions funded by the Federal government are effectively commercialized. Stanford is therefore committed to looking for “the best” licensees to transfer technology from Stanford to the marketplace for the public benefit.

In order to ensure that companies have fair and open access to technologies developed at Stanford, OTL “markets” Stanford technology to companies that may have an interest in developing the technology. If there are several parties interested in a license, OTL will endeavor to license either non-exclusively or grant field of use licenses, if possible. If it is not possible to accommodate all interested parties, OTL will license the company most committed and able to bring the technology to the marketplace. Stanford does not give preferential treatment to its inventors and their start-ups. However, OTL and the University recognize the importance of the inventor’s role in helping to transfer technology and in evaluating the ability of a company to develop licensed products.

Inventors who are interested in starting a company or who have a strong preference for a particular company are sometimes wary of the marketing process, feeling that their “baby” will be given away to a stranger. However, Stanford feels strongly that “marketing” is one way of being a good steward of the technology and managing institutional conflicts of interest. Marketing mitigates allegations of “no bid contracts” and allows all interested parties to have an opportunity to learn about new technologies from Stanford and to negotiate a license. In a fair and open process, the “best” licensee can be chosen.

Inventors should cooperate in good faith with OTL’s marketing efforts. Inventors should share information with potential licensees to help them determine if they are interested in investing resources to develop the technology. Inventors will benefit from such interaction by better understanding the commercialization process and the kind of information that a company needs to evaluate a technology. Even if Stanford ultimately grants a license to the inventor start-up, inventors often get a better sense of the marketplace, or even find potential partners, from Stanford marketing the technology.

With a transparent process, the University can be confident that, in the unbiased professional judgment of OTL, the best licensee is developing the technology.

Arms Length Negotiations
Inventors who want to start a company around their technology often feel that their company should get a “good deal” from OTL so that it is easier to attract investors, compete with other companies etc. in order to develop the technology. However, because the University needs to maintain an arms-length relationship in all its business transactions, license negotiations and the final license agreement must fall within the normal range of terms and conditions of similar licenses to non-inventor-associated companies, taking into consideration the unique circumstances of each technology and transaction. Each of the terms e.g., royalties, term of exclusivity, diligence etc. must be thoughtfully negotiated and justifiable to external scrutiny. Ultimately, a license agreement must be approved through a conflict of interest review process prior to OTL signing the agreement.

Best practices for Student Start-Ups
Both Stanford and its entrepreneurs have responsibilities to optimize technology transfer and mitigate conflict of interest (COI) when licensing Stanford intellectual property to a start-up is considered. Stanford has a rich history of translating inventions, and these practices (PDF) are designed to build on that strong base.

Best practices for Faculty Start-Ups
Stanford is committed to avoiding either perceived or actual conflict of interest issues with respect to faculty start-ups. Both Stanford and faculty have responsibilities (PDF) to optimize technology transfer and mitigate COI when licensing Stanford IP to a faculty start-up is considered.