Stanford Office of Technology Licensing’s (OTL) mission is to transfer Stanford technology for public benefit while generating royalty income to support research and education at Stanford. Below outlines our process for licensing technologies to industry collaborators, including startups.
Stanford OTL Perspective
OTL believes that a license agreement is the basis for a mutually beneficial long term relationship. In line with this, OTL is committed to negotiating fair and reasonable agreements for both parties. We also recognize there are some fundamental differences between a license agreement entered into with an educational institution and a license agreement entered into between two commercial parties. OTL hopes that an understanding of the ground rules within which OTL operates will result in a smoother and more efficient negotiation process.
A negotiation can be completed quickly or drag out for months (or even years!), depending on the nature and number of deviations from OTL’s standard terms and conditions. We recommend companies select an attorney who is both experienced in successfully working with university technology transfer offices and accustomed to a collaborative negotiation process. Our standard agreements are balanced and have been widely accepted by industry.
Stanford is a signatory and a strong supporter of the “Nine Points to Consider in Licensing University Technology.” This document outlines the university perspective and succinctly lays out key points in a university license. Reading and understanding these points will streamline negotiations. OTL’s standard agreement terms reflect these principles, including the requirement to diligently develop technologies in order to bring them to the market for public benefit.
The process starts when Stanford inventors submit a new invention disclosure to OTL. OTL works with inventors to evaluate their innovations, apply for intellectual property protection, and market the technologies to industry. Below we outline the licensing process for companies:
1. Technology Marketing
OTL, largely through its Business Development and Marketing team, is constantly connecting to companies to share new Stanford technologies. It does this in multiple ways: by sending out non-confidential abstracts describing the technology to industry contacts in that market space, by posting available technologies on OTL’s Techfinder website, and by one-on-one communication with companies via collaboration meetings. If a company is interested in learning more about a specific technology, we can provide additional information, such as links to published journal articles or patent details. We can set up discussions between the company and our inventors to learn more about how the technology works. Depending on the invention, a confidentiality agreement may be needed. If you wish to share your areas of interest or want to learn more about Stanford technologies, please connect with OTL’s Business Development and Marketing team.
2. Development Plan
Once a company decides it’s ready to move forward with either a license agreement or option, it submits a technology development plan detailing how it would bring the technology to market. This could include a description of the expected product, the market that it would serve, a timeline for product development, and financial projections over the first few years of the license. If the company is a startup, it’s helpful to share more about the team and its resources, including funding level. OTL uses the company plans to develop the financial terms and structure for the license.
3. Term Sheet
Based on the company’s development plan, the licensing manager negotiates a term sheet for the Stanford technology. The term sheet lays out the high level terms, such as the field of use, type of exclusivity, financial terms of the license, and diligence milestones. The financials may include an upfront fee (along with an equity grant in the case of startups), annual minimum payments, earned royalties based on sales, milestone payments, and reimbursement of patent expenses. The license terms will vary depending on the specific technology, market, and company. For example, an exclusive license to a new startup raising funds will most likely include equity and a more back-end-loaded financial structure. If OTL instead licensed a multinational company, the terms would not include equity or need to be as back-end-loaded.
4. License Negotiation
Once the term sheet has been agreed to, the licensing manager will draft the license agreement (based on our standard template) and work with the company on any sections that require an explanation or possible alternative language. The negotiation will probably require flexibility and creativity by both parties to arrive at a mutually satisfactory agreement. If an inventor is affiliated with the company (e.g. co-founder, equity holder, consultant), OTL will provide information to the university as part of the conflict of interest (COI) review. This review is usually done in parallel with the negotiation of the license and needs to be finished and approved before OTL can sign the agreement.
5. Monitoring Progress
Signing a license agreement is the beginning of a long term relationship between Stanford and the company. OTL monitors the licensee's performance for the duration of the license to ensure compliance with the license agreement and development of the Stanford technology. Usually this is done through periodic financial and development reports that are required under most license agreements.
6. Amending Licenses
As technologies, companies and markets evolve over time, it is often necessary to re-evaluate a licensing relationship to adapt to changed circumstances. Either party can request an amendment to the agreement at any time during its life.
We look forward to going through these steps with our industry collaborators for the successful transfer and development of Stanford technology.