IP
University startups & IP
3 min
⚡tl;dr ip created while working at university (as a phd or post doc researcher) is usually owned by the university to use in a spin off company, you must be granted a license by the university these licenses are granted by the tech transfer office of each relevant university universities usually negotiate to be paid royalties on future sales and be granted equity in the spin off book a free call with us who owns the ip? the ownership of technology created at a university depends on multiple parameters what is the role of the creator? whether the creator is a student, a phd researcher, or a professor changes the applicable rules where is the university located? while all systems are rather similar, different legal frameworks apply universities apply their respective cantonal laws, and the ethz/epfl apply a federal law only applicable to these two schools the location of the university is also relevant to determining with which entity the founders will have to negotiate the license (see below) was the technology created while working on a university project or not? timing is important to determine which rules apply generally speaking any ip created by a person employed by the university (typically a phd or post doc researcher) is owned by the university any ip created by a student is generally owned by the student however, please note that it is always worth to check the applicable cantonal university law if the ip is developed while carrying out a project within a company, the ownership depends on the agreement signed between the student, the company, and the university it is not uncommon that the ip was created with a contribution from a professor during, e g , a master's thesis in that context, the ip is owned by the student and the professor best practices license it is assessed whether a license on the ip must be obtained from the university, and the license is obtained if necessary scope the scope of the license is carefully examined in light of the company's business model (e g , the possibility to sub license is granted) how to obtain a license as a startup? in order to be able to use the ip developed at university in a subsequent startup, you must, as a founder, negotiate an ip licensing agreement with the technology transfer office of your research institute this licensing agreement, which is also referred to as a tech transfer , grants companies the right to exploit and commercialize the ip rights owned by the university as they were developed by the founders during their employment with the university in exchange for the license, the company will have to pay the university some royalties and might also grant the university some equity in the company royalties are paid on each sale made by your company incorporating the licensed ip the amount varies based on the sector, the product margins, the maturity of the technology, and the expected time to market generally, the royalties are rather low when the expected product margins are small ; the idea is to give the company sufficient resources to keep growing, or when the product is not mature yet and requires significant investment and time to be marketable in the software sector, the range is very wide for example, eppl guidelines mention a range between 1% and 25% in comparison, it's usually between 1% and 5% in other sectors this is related to the high scaling opportunity of software equity is usually organized as options for the university to be freely granted company shares before an exit or an ipo usually, the university simply wants a financial return and does not take an active shareholder role lexr tips decide whether you would rather grant equity or agree to higher royalties both options can be good for founders, and each option can be used against the other one in the negotiation when granting equity, negotiate whether the university can or cannot be diluted when future investors enter the cap table do not focus only on the financial aspects, and examine other terms carefully one key aspect is the possibility for you to sub license the licensed ip the possibility to sub license may be linked to additional royalties or only possible after a given timeframe what is the process? the license is usually granted once the spin off is incorporated however, it is important to start negotiating before the incorporation true false 283,163false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type false unhandled content type the purpose of the term sheet is to agree on the main terms of the future licensing agreement usually, a term sheet is non binding but is simply a way to lay out the terms and negotiate with a common understanding once the licensing agreement is signed, always keep its terms in mind when doing business you might notably not be able to sub license the licensed ip if you don't use the licensed technology, consider terminating the agreement or finding alternative solutions lexr tips during the preparatory phase, get ready check out if your university has guidelines these guidelines can indicate what type of deal the university will try to get for context, you can find the epfl guidelines here during the negotiation phase get support reach out to other founders from the same university, potential investors, and legal experts book a free call here to discuss know the market make a market analysis and know product margins etc know your business plan have a business plan with revenue, cost productions, etc during the valuation phase, let the technology speak explain how it will be used, the business case, what margins are realistic, etc always keep in mind that you can terminate the licensing agreement (and therefore free yourself of the royalties) if you don't use the technology anymore how do i get this done? research institutions usually have their own tech transfer office these offices can provide guidance and support throughout the process additionally, some guidelines may be available book a free call with us to understand how we can help you prepare for this process with our tailored workshop based on your term sheet and how we can assist you during the negotiations