Licensing

Generally, licenses include a grant of rights to a form of intellectual property such as an issued patent or pending patent application, a copyright, a piece of software, a device, a tangible research material or reagent, a defined data set, etc. PCI has adaptable license templates to accommodate the wide range of technologies created at Penn.

There are multiple benefits to the inventor after a technology has been licensed including:

1. The satisfaction of knowing an invention is being developed for the benefit of the general public.
2. New and enhanced relationships with business that may augment one’s teaching, research, and consulting activities. In some cases, additional sponsored research funding and support may result from the licensee.
3. Additionally, as required by the Bayh-Dole Act and per University policy, a portion of any net income from a license agreement is shared with inventor(s). For additional information on how licensing income is distributed, please see the University’s Patent and Tangible Research Property Policies and Procedures.

Because know-how often exists in the individual’s mind and is based off a researcher’s skillset, Penn will license know-how if needed by the interested party on a non-exclusive basis and only when it can be reduced to a tangible form. Exclusive licensing of know-how conflicts with Penn’s mission of broadly disseminating knowledge and could negatively impact a faculty member’s ability to conduct future research that might require use of that know-how.

A licensee is chosen by PCI in consultation with the inventors, based on its ability to commercialize the technology for the benefit of the general public. Sometimes an established company with experience in similar technologies and markets is the best choice. In other cases, the focus and intensity of a startup company is a better option.

Potential licensees for a given technology are often already known to the inventors because of existing or past relationships. Thus, close communication and collaboration between PCI and inventors are valuable sources of potential licensees. Licensees are also identified through existing relationships and active marketing outreach of PCI staff. We attempt to broaden these relationships through contacts obtained from website posting inquiries, market research, industry events, and further cultivation of existing licensing relationships.

Although for some technologies potential licensees are immediately evident and interested, it can take months and sometimes years to find a licensee for other technologies. When identifying a potential licensee, important factors to be considered include the novelty and impact of the invention (sometimes referred to as its “disruptive potential”), its stage of development, competing technologies, and the size of the market and the market’s activity level. Most university inventions are early stage and thus require substantial development and investment, which can make it challenging to attract and secure an immediate licensee.

Most licensees continue to develop an invention to validate the technology, reduce its risk, demonstrate reliability, and satisfy the market requirements for adoption by customers. Documentation for training, installation, and marketing is often created during this phase along with benchmarking efforts to demonstrate the product/service advantages (i.e., societal benefit) and to position the product in the market.

Many licensees request, and sometimes require, the active assistance of the inventor to facilitate their commercialization efforts, at least in the early stages of development. This assistance can range from infrequent, informal interactions to a more formal collaboration. Working with a new business startup in contrast to working with an established company can, and often does, require substantially more time, depending on your role in or with the company and your continuing role within Penn. Under all circumstances, your participation with a startup or well-established company is governed by Penn conflict-of-interest policies.

Yes. An invention can be licensed to multiple licensees, either non-exclusively to several companies or exclusively to several companies, each for a unique field-of-use (application) or geography.

Generally, PCI supports Penn software developers who choose to make their programs available to the public through open-source mechanisms, provided that open sourcing is consistent with any obligations to sponsors and funders.

Most licenses have initial or intermediate licensing fees that are relatively modest until a product is ready for sale on the open market (especially for relatively cash-strapped startups) but on rare occasion can reach hundreds of thousands or even millions of dollars. Royalties on the eventual sales of the licensed products can in some circumstances generate significant recurring revenues, although it usually takes many years to occur, if at all. Equity, if included in a license, can also yield long term returns, but only if a successful equity liquidation event (public equity offering or a sale of the company, etc.) occurs. A recent study of licenses at U.S. universities demonstrated that less than 1 percent of all licenses yield over $1 million back to the university to share with the inventor(s) over their entire lifespan.

Despite these relatively low financial odds, it is important to bear in mind that although most licenses do not yield substantial revenues, almost all of them involve the productive connection between the creator of a technology and a commercial development partner that often further advances the value of the discovery or benefits to society. Thus, the rewards of an invention being further developed and potentially reaching the market are often more significant than the financial considerations.

Licenses, particularly exclusive ones, typically include performance milestones that, if unmet, may result in the termination of the license and a return of the technology to Penn. This termination allows for subsequent licensing to another business. Licensees may also choose to sublicense all or a portion of their rights to another company to aid in the commercialization and development of the technology that supersede the original licensee’s capabilities and interests.