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Our Process

Information about what to expect as an inventor working with OTL can be found in OTL and the Inventor, the OTL Inventor’s Guide (PDF), and the OTL Start-Up Guide (PDF).

Our executive director, Katharine Ku, talks about our mission and the basics of licensing in a video for the University's Entreprenurial Corner.

The Technology Transfer Process at a Glance (pdf)

OTL's Standard Operating Procedure

  1. Disclosure. 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. (See our America Invents Act page.)

    Note: Inventors and creators are required to make a good faith determination of whether or not an invention or copyrighted work falls within the Stanford policy. Stanford is not in the position to make such a determination and relies on its inventors and creators to understand the policy. Therefore, Stanford will not confirm in writing whether or not an invention or copyrighted work falls outside the policy through a “waiver of rights” letter.
  2. Associate Assignment. 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. Evaluation. 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). Sometimes the decision may be not to pursue the commercialization of an invention. (see When OTL Decides Not to Pursue an Invention.) If the invention is pursued, 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 patent rights if no public disclosure of the invention has occurred.
  4. Patent Application. 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 often 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 cooperation is essential in patent filing and prosecution (see OTL brochure "Who is an Inventor"). 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.

    The patent attorney will work with you to write and review patent applications and responses to the patent office (see Instructions for Reviewing Your Patent Applications, reprinted with permission of Fenwick and West). Inventors can also assist by doing a prior art search. (For more information about patents, go to the Intellectual Property page.) The attorney will ask the people named on the disclosure about his/her contribution to the conception of the invention to determine the correct inventors on a particular patent application.
  5. Marketing and License Negotiation. 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.
    If the company show strong interest, a license proposal is prepared. 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. Note that only 20-25% of invention disclosures are licensed.
  6. Monitoring Progress. 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.
  7. Royalty Sharing 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.
  8. Equity Sharing. 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 #7 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.
  9. Amending Licenses. 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.