Authority: Issued by the Chancellor. Changes or exceptions to administrative regulations issued by the Chancellor may only be made by the Chancellor.
History: First Issued: November 20, 2000.
NCSU POL10.00.01 – Patent and Tangible Research Policy
Contact Info: Assistant Vice Chancellor, Office of Research Commercialization (919-515-7199)
More and more major corporations are seeking opportunities to donate patents and related assets to universities. Donations of intellectual property (“IP”), often packaged with cash, equipment, and expertise, are becoming a popular form of philanthropy for some leading U.S. companies. Indeed, many of the largest contributions that corporations have made to higher-education institutions in the past year have been in the form of patents for technologies, most of them valued at tens of millions of dollars. Companies began giving patents and associated IP to universities some years ago, but the number and scale of such donations have increased markedly. This regulation governs the manner in which NC State University (“University”) will review proposed donations of IP to determine whether or not to accept them and will establish the method for handling such donations and their proceeds if and when they are accepted.
2. Procedure for Reviewing Proposed Donations of Intellectual Property
2.1 In most cases, the Office of Research Commercialization (ORC) or a faculty “champion” will be the initial point of contact. ORC, if contacted first by a prospective donor, will attempt to identify a faculty champion as a requisite first step in proceeding. ORC will inform the University research community that ORC should be brought into discussions as early as possible regarding possible IP donations if ORC is not the potential donor’s initial point of contact.
2.2 In some cases, faculty member(s) will be an initial point of contact for a company interested in making an IP donation to University. Faculty champions will be key components in any proposed IP donations; however, if faculty or other university employees are contacted first by a prospective donor, the person contacted should notify ORC as soon as possible after the initial contact.
2.3 ORC will notify the Office of University Advancement (OUA) of the proposed gift and will provide OUA with the donor company’s name, contact information, and copies of all relevant correspondence.
2.4 ORC will notify the Office of General Counsel (OGC) of the proposed gift and will copy OGC on all relevant correspondence. OGC will prepare and/or approve all final documentation, agreements, assignment forms, and other official or legal documents related to the gift.
2.5 ORC will prepare a brief summary concerning each potential gift, including the patent number(s) and date(s), and a brief description of the patent portfolio. The summary statement should also include information regarding the projected maintenance costs on a yearly basis for the patents, which are the subject of the proposed gift.
2.6 ORC, in collaboration with the academic unit most closely involved with the technology in the potential gift, will evaluate the proposed gift based on the criteria identified below in Section III of this Administrative Regulation. If the results of this due diligence process are negative, the prospective donor is informed that the University is not interested in accepting the gift. If the results are positive, the evaluation process continues.
2.7 ORC determines whether it can allocate, if necessary, the financial resources necessary to maintain the patent(s) for a period of at least two (2) years following the donation. ORC may also seek commitments from other University units willing to support such costs. This step may be skipped if a business partner is identified which is willing to undertake this financial responsibility.
2.8 ORC, with input as needed from OUA and OGC, and the appropriate academic unit, prepares a recommendation to the Vice Chancellor for Research and Innovation regarding whether to accept the gift. The Vice Chancellor makes the final decision.
2.9 If a technology development proposal is requested by the donor, ORC will work in concert with the faculty champion and/or the relevant department or college administration to prepare the proposal. The proposal will include, inter alia, sections documenting the University’s capability to manage the IP portfolio and to undertake a diligent effort to further develop the technology and/or to commercialize the technology in partnership with a third party. The proposal will make no promises or representations regarding specific outcomes that may be achieved if the University accepts the gift.
2.10 The Director of ORC, working with the Director of Corporate and Foundation Relations in OUA with input from the appropriate unit will prepare letters and any other documentation necessary to forward a proposal, to accept the gift, and/or to provide a receipt for the gift. The University will play no part in establishing or confirming the value of the gift; rather, it simply acknowledges receipt of the valuation of the gift provided by a third party retained by the donor for this purpose.
2.11 If the donor requests a written contract of some type governing the donation, the contract is reviewed and approved by ORC, OGC and the Vice Chancellor for Research and Innovation with input from the appropriate academic unit.
3. Criteria That Must Be Considered in Determining Whether to Accept a Proposed Donation of IP
3.1 Relevance and fit with an ongoing research program within the University
3.2 Willingness of the relevant researchers and their unit(s) to carry out further research involving the donated IP
3.3 Willingness of the relevant unit(s) to provide financial support for further research and development of the donated IP, especially in cases where the donor does not provide funds for that purpose
3.4 Relevance and fit with current patent portfolios held by the University
3.5 Availability of resources to evaluate the portfolio, maintain the patents and meet diligence obligations
3.6 Strong opportunity identified for immediate license or other arrangements with business partner; or strong opportunity identified for creating a start-up company likely to attract venture capital
3.7 If applicable, assessment of proposed parallel donation of related research equipment (including requirements for renovations, maintenance, upkeep, etc., associated with the equipment)
3.8 If applicable, assessment of proposed parallel donation of know-how (e.g., via on-site company personnel transferring know-how)
3.9 Classroom/educational value
3.10 Revenue potential
4. Valuation of the Donated IP
All donated IP, whether held by the University or by the Board of Trustees of the Endowment Fund of NC State University, will be valued initially at $1.00. If and when the donated IP is commercialized through licensing or other means, its value will be determined by the most appropriate means available to the University, including use of market studies and valuations provided by potential licensees or other users of the IP.
5. Distribution of Income Generated by Donated IP
5.1 All cash generated after deduction for all approved expenses, including university and unit, by the commercialization of donated IP will be distributed as follows: 10% (of this total net income) to the Board of Trustees of the Endowment Fund of NC State University and 90% (of total net income) to a university trust fund (“Trust Fund”). If donated IP is “bundled” with other University IP in the transaction that led to the generation of income, the apportionment of the income between the donated IP and other University IP will be made by the Vice Chancellor for Research and Innovation, with input from the Intellectual Property Committee as needed.
5.2 The Trust Fund will be established under the supervision of the Vice Chancellor of Research and Innovation to promote research and graduate programmatic development across the university. Trust Fund monies will be used as follows: The college(s) directly involved in the commercialization of the donated IP that generated the money will receive 40% (of total net income) of the funds generated by that venture. If more than one college participated in such commercialization, they will share equally in the distribution, unless the Vice Chancellor for Research and Innovation determines, in his/her sole discretion, that an unequal distribution would be more equitable under the particular circumstances of the case.
5.3 If 40% of the net total income from commercialization is $1 million or less, then the unit will receive the full payment in each fiscal year where there is income. For the amount greater than $1 million, the Vice Chancellor for Research and Innovation will negotiate a payment schedule with the appropriate academic unit(s).
5.4 The remaining Trust Fund monies, 50% of the total net income, may be distributed, in the discretion of the Vice Chancellor for Research and Innovation, to any of the colleges for the purpose of enhancing existing research and graduate programs and/or developing new programs that are important to the university. The Vice Chancellor for Research and Innovation will seek input from academic deans and other vice chancellors.