Why OTL Markets
FAQs about fair and open access, conflicts of interest and related licensing issues
What does "fair and open access" mean and how is it linked to marketing? Under U.S. law 15 USC 3710a, known as the Stevenson-Wydler Act of 1980, the U.S. government licenses its inventions according to the principle of fair and open access. Per 37 CFR 404.4:§ 404.4 Authority to grant licenses. Federally owned inventions shall be made available for licensing as deemed appropriate in the public interest and each agency shall notify the public of these available inventions. Marketing to companies that may have an interest in developing the technology is a best practice to support fair and open access. Since the university is responsible for licensing IP developed with federal research funding under the Bayh-Dole act, Stanford has considered that it has an implicit obligation to ensure that inventions funded by the Federal government are effectively commercialized and that all companies have fair and open access to technologies developed at Stanford. U.S. companies have the expectation that they should have opportunities to bid for licenses of IP developed through research supported by U.S. tax revenue. Why do we have COI policies? Stanford's COI policy was created by action of the Faculty Senate and periodic updates are reviewed and approved by vote of the Senate. The policy states that conflicts of interest are common and practically unavoidable in a modern research university. At Stanford, conflicts of interest can arise out of the fact that a mission of the University is to promote the public good by fostering the transfer of knowledge gained through University research and scholarship to the private sector. Important means of accomplishing this mission include faculty consulting, outside speaking engagements, publications, and the commercialization of technologies derived from faculty research. It is appropriate that faculty be rewarded for their participation in these activities through consulting fees, honoraria and sharing in royalties resulting from the commercialization of their work. It is wrong, however, for an individual's actions or decisions made in the course of his or her University activities to be determined by considerations of personal financial gain; faculty should be sensitive even to the appearance of that possibility. Such behavior calls into question the professional objectivity and ethics of the individual, and it also reflects negatively on the University. Why does Stanford want fair and open access for others? Following the U.S. government's best practice, marketing to potentially interested companies is important for being a good steward of the technology and managing conflicts of interest for inventors and Stanford. Marketing mitigates allegations of "no bid contracts" and allows all interested parties to have an opportunity to learn about new technologies and to negotiate a license. In a fair and open process, the "best" licensee can be chosen. Why do we market inventions that are not funded by federal or state funds? OTL's practice is to be consistent about how Stanford inventions are handled, regardless of funding. In addition, funding sources often change after the initial invention disclosure. Sometimes this is due to an error or oversight on the initial form. Often it is because government funding is subsequently involved in reducing the invention to practice. How and why should inventors participate in marketing? 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. If inventors wish to share confidential information, OTL can facilitate a non-disclosure agreement (NDA) as needed with the interested company. 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. Why is the marketing period 3 months? OTL's practice is to market inventions for 2- 3 months because this time period seems sufficient to enable larger companies to respond, but not too long to appreciably slow down technology transfer to smaller companies. The process for reviewing invention disclosures at larger companies usually requires at least 3 months. Can the marketing period be less than 3 months? Yes, OTL is flexible about the marketing period. It can be shortened significantly, depending on OTL's assessment of the need to accommodate large companies. For example, if large companies are not likely to be interested or if the optimal licensee is not a large company. What if more than one company is interested in obtaining a license? If there are several parties interested in a license, OTL will endeavor to grant field of use exclusive licenses, if possible, or to license non-exclusively. Occasionally, OTL must choose one company among several choices to enable effective development; the choice will be based on the ability of a committed company to bring the technology forward to society as quickly as possible. Doesn't the marketing phase create the potential for other companies to "steal" Stanford’s IP? No. OTL does a non-confidential marketing that describes the essence of the invention but not the details. In addition, in most circumstances, OTL has already filed a patent application and relies on the application to protect the IP. Inventors review these materials before they are posted or provided to outside entities. How is the IP of the Stanford inventors protected during the open marketing phase? Have there been cases where Stanford IP has been "stolen" by outside companies who had the opportunity to examine it during the marketing phase? OTL has no evidence that 'stealing' has occurred as a result of marketing. Often, OTL has filed at least a provisional application before marketing and if an application has not been filed, the information provided will be very general. Because it typically takes many years for a patent to issue, companies can either try to "work around" the pending application, or decide not take a license with the expectation that a subsequent patent will not cover their product. Can Stanford offer preferential treatment in licensing to Stanford inventors? Stanford is committed to fair and open access to all companies and to finding the "best" licensee to develop a technology. Often, entrepreneurial inventors are in the best position to bring the technology to commercial fruition because they know the invention well but Stanford cannot offer inventors "preferential treatment." What if another company is interested in the technology that would be the basis for an inventor start-up? OTL asks any interested party to submit a development plan of a few pages describing how the company would bring a product to the marketplace. While OTL is committed to trying to license to and enable start-ups whenever possible, the inventor's start-up would need to make the case that it is in the best position to develop the technology. Is the expertise of the inventor(s) important in licensing? 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. The entrepreneurial inventor can always have, at a minimum, a non-exclusive license to the invention. In practice, inventor start-ups have almost always made the case that they are the best licensee and have been chosen to receive an exclusive license when requested. What if the other company offers more money? OTL is committed to transferring the technology for the public good and the ultimate success of the technology. OTL considers that a potential licensee with a team that is passionate about the technology is more likely succeed than a company that has financial resources but is not as committed. Money is a consideration, but the primary decision depends on an assessment of which company has the greatest likelihood of ultimate success moving the invention into use by society, not which company is likely to bring the University or the inventor the most money. Does OTL give inventor start-ups a better deal? 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 and compete with other companies in order to develop the technology. However, because the University is obligated to maintain an arms-length relationship in all of 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. OTL personnel are not conflicted and therefore are able to maintain a true arms-length relationship whereas faculty entrepreneurs are in a conflicted position. Can OTL decisions be appealed? Yes, an inventor may appeal a licensing decision by contacting the Vice Provost and Dean of Research.
FAQs about fair and open access, conflicts of interest and related licensing issues
Stanford is committed to provide "fair and open access" to inventions derived from federally funded research. Marketing Stanford technologies helps to achieve this fair and open access. In addition, Stanford feels strongly that marketing is one way of managing institutional conflicts of interest. These are some questions that inventors (particularly those who would like to start companies) have about this practice.
- What does "fair and open access" mean and how is it linked to marketing?
- Why do we have COI policies?
- Why does Stanford want fair and open access for others?
- Why do we market inventions that are not funded by federal or state funds?
- How and why should inventors participate in marketing?
- Why is the marketing period 3 months?
- Can the marketing period be less than 3 months?
- What if more than one company is interested in obtaining a license?
- Doesn't the marketing phase create the potential for other companies to "steal" Stanford’s IP?
- How is the IP of the Stanford inventors protected during the open marketing phase? Have there been cases where Stanford IP has been "stolen" by outside companies who had the opportunity to examine it during the marketing phase?
- Can Stanford offer preferential treatment in licensing to Stanford inventors?
- What if another company is interested in the technology that would be the basis for an inventor start-up?
- Is the expertise of the inventor(s) important in licensing?
- What if the other company offers more money?
- Does OTL give inventor start-ups a better deal?
- Can OTL decisions be appealed?
What does "fair and open access" mean and how is it linked to marketing? Under U.S. law 15 USC 3710a, known as the Stevenson-Wydler Act of 1980, the U.S. government licenses its inventions according to the principle of fair and open access. Per 37 CFR 404.4:§ 404.4 Authority to grant licenses. Federally owned inventions shall be made available for licensing as deemed appropriate in the public interest and each agency shall notify the public of these available inventions. Marketing to companies that may have an interest in developing the technology is a best practice to support fair and open access. Since the university is responsible for licensing IP developed with federal research funding under the Bayh-Dole act, Stanford has considered that it has an implicit obligation to ensure that inventions funded by the Federal government are effectively commercialized and that all companies have fair and open access to technologies developed at Stanford. U.S. companies have the expectation that they should have opportunities to bid for licenses of IP developed through research supported by U.S. tax revenue. Why do we have COI policies? Stanford's COI policy was created by action of the Faculty Senate and periodic updates are reviewed and approved by vote of the Senate. The policy states that conflicts of interest are common and practically unavoidable in a modern research university. At Stanford, conflicts of interest can arise out of the fact that a mission of the University is to promote the public good by fostering the transfer of knowledge gained through University research and scholarship to the private sector. Important means of accomplishing this mission include faculty consulting, outside speaking engagements, publications, and the commercialization of technologies derived from faculty research. It is appropriate that faculty be rewarded for their participation in these activities through consulting fees, honoraria and sharing in royalties resulting from the commercialization of their work. It is wrong, however, for an individual's actions or decisions made in the course of his or her University activities to be determined by considerations of personal financial gain; faculty should be sensitive even to the appearance of that possibility. Such behavior calls into question the professional objectivity and ethics of the individual, and it also reflects negatively on the University. Why does Stanford want fair and open access for others? Following the U.S. government's best practice, marketing to potentially interested companies is important for being a good steward of the technology and managing conflicts of interest for inventors and Stanford. Marketing mitigates allegations of "no bid contracts" and allows all interested parties to have an opportunity to learn about new technologies and to negotiate a license. In a fair and open process, the "best" licensee can be chosen. Why do we market inventions that are not funded by federal or state funds? OTL's practice is to be consistent about how Stanford inventions are handled, regardless of funding. In addition, funding sources often change after the initial invention disclosure. Sometimes this is due to an error or oversight on the initial form. Often it is because government funding is subsequently involved in reducing the invention to practice. How and why should inventors participate in marketing? 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. If inventors wish to share confidential information, OTL can facilitate a non-disclosure agreement (NDA) as needed with the interested company. 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. Why is the marketing period 3 months? OTL's practice is to market inventions for 2- 3 months because this time period seems sufficient to enable larger companies to respond, but not too long to appreciably slow down technology transfer to smaller companies. The process for reviewing invention disclosures at larger companies usually requires at least 3 months. Can the marketing period be less than 3 months? Yes, OTL is flexible about the marketing period. It can be shortened significantly, depending on OTL's assessment of the need to accommodate large companies. For example, if large companies are not likely to be interested or if the optimal licensee is not a large company. What if more than one company is interested in obtaining a license? If there are several parties interested in a license, OTL will endeavor to grant field of use exclusive licenses, if possible, or to license non-exclusively. Occasionally, OTL must choose one company among several choices to enable effective development; the choice will be based on the ability of a committed company to bring the technology forward to society as quickly as possible. Doesn't the marketing phase create the potential for other companies to "steal" Stanford’s IP? No. OTL does a non-confidential marketing that describes the essence of the invention but not the details. In addition, in most circumstances, OTL has already filed a patent application and relies on the application to protect the IP. Inventors review these materials before they are posted or provided to outside entities. How is the IP of the Stanford inventors protected during the open marketing phase? Have there been cases where Stanford IP has been "stolen" by outside companies who had the opportunity to examine it during the marketing phase? OTL has no evidence that 'stealing' has occurred as a result of marketing. Often, OTL has filed at least a provisional application before marketing and if an application has not been filed, the information provided will be very general. Because it typically takes many years for a patent to issue, companies can either try to "work around" the pending application, or decide not take a license with the expectation that a subsequent patent will not cover their product. Can Stanford offer preferential treatment in licensing to Stanford inventors? Stanford is committed to fair and open access to all companies and to finding the "best" licensee to develop a technology. Often, entrepreneurial inventors are in the best position to bring the technology to commercial fruition because they know the invention well but Stanford cannot offer inventors "preferential treatment." What if another company is interested in the technology that would be the basis for an inventor start-up? OTL asks any interested party to submit a development plan of a few pages describing how the company would bring a product to the marketplace. While OTL is committed to trying to license to and enable start-ups whenever possible, the inventor's start-up would need to make the case that it is in the best position to develop the technology. Is the expertise of the inventor(s) important in licensing? 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. The entrepreneurial inventor can always have, at a minimum, a non-exclusive license to the invention. In practice, inventor start-ups have almost always made the case that they are the best licensee and have been chosen to receive an exclusive license when requested. What if the other company offers more money? OTL is committed to transferring the technology for the public good and the ultimate success of the technology. OTL considers that a potential licensee with a team that is passionate about the technology is more likely succeed than a company that has financial resources but is not as committed. Money is a consideration, but the primary decision depends on an assessment of which company has the greatest likelihood of ultimate success moving the invention into use by society, not which company is likely to bring the University or the inventor the most money. Does OTL give inventor start-ups a better deal? 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 and compete with other companies in order to develop the technology. However, because the University is obligated to maintain an arms-length relationship in all of 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. OTL personnel are not conflicted and therefore are able to maintain a true arms-length relationship whereas faculty entrepreneurs are in a conflicted position. Can OTL decisions be appealed? Yes, an inventor may appeal a licensing decision by contacting the Vice Provost and Dean of Research.
Best practices for Student Start-Ups
Best practices for Faculty Start-Ups