Additional Information
How the Technology Transfer Process Works
OTD is responsible for managing the intellectual property assets of the University for the public good. The University takes the financial risk in patenting and licensing Harvard-owned intellectual property. When successful, the cash rewards are shared among the University and the inventors, their labs, departments, and schools. Although we take into consideration the interests of inventors, departments and schools, ultimately OTD's licensing decisions are made on behalf of the University. Thus, notwithstanding the financial interest of inventors, departments and schools in the outcome of licensing decisions, OTD is charged with making decisions that, in the exercise of its professional judgment, best serve the public, result in the efficient and effective transfer of the technology, and are consistent with University policy and procedures.
Neither OTD nor the members of OTD's staff have a financial stake in University licenses. OTD's budget and the compensation of the OTD staff are not based on the amount of licensing income generated. As a result, OTD is in a position to function as an unbiased agent serving the goals and interests of the public and can balance the interests of the University, schools, departments and individual inventors.
OTD's relationship with inventors is multifaceted. Inventors are the source of our inventions; they are the producers of the technology that OTD is trying to market and license. We work closely with our inventors because we need their input and participation in the patenting and marketing process. We encourage inventor input – as a source of leads for potential licensees, for giving us a professional assessment of the technical and market feasibility of the invention, and for suggestions on how best to the license the technology. We also feel it is important for inventors to know what is happening with their technology. Inventors do not, however, participate in the actual negotiations of license agreements with potential licensees. Although we give careful consideration to the inventors' input and strive to keep them informed throughout the process, it is our belief that the conflicts that may arise from an inventor's multiple potential roles and relationships – University researcher, royalty recipient, company consultant, company board member – make such participation unwise.
For Harvard inventors, OTD will notify inventors when we are in the process of negotiating an agreement with a specific company before signing an exclusive license agreement. If several inventions are being included in a license agreement, the inventors will be informed if the inventions are not being valued equally and how resulting income will be divided among the various inventions.
For inventors who have a significant affiliation with a potential exclusive licensee, either as a consultant, stockholder, board member or otherwise, OTD must be particularly conscious of conflict of interest issues. Harvard has a specific conflict of interest policy which deals with these situations and which generally requires that the invention be marketed to other potential licensee companies before the "related" company receives an exclusive license. However, to give inventors and venture capitalists a period of time to form a new company this marketing requirement may be waived provided the new company can demonstrate that it has sufficient financing and management to be an effective licensee.
At times, OTD may conclude that the cost of pursuing a patent application is not justified either to induce a company to invest in development or by the expected return from licensing. OTD may also decide not to pursue patenting when there is extensive prior art, the resulting patent protection would be narrow, enforcement of the patent would difficult, or the applicable industry is unlikely to be receptive to licensing. In those cases, rights to sponsored inventions are handled according to the provisions of the sponsored agreement (e.g., for government sponsored inventions, rights are returned to the government). Alternatively, if the inventor is interested in developing and commercializing the technology, OTD may agree to release the invention to the inventors or to license the invention to an inventor or inventors on reasonable terms and conditions.
One of OTD's goals is to generate royalty income. Because we are part of a university and are a service-oriented organization, we can never be (nor do we strive to be) a pure business entity that focuses entirely on maximizing income. Nonetheless, we strive to be business-oriented within the University context. We believe that license agreements are the beginning of long-term relationships for the University and thus strive for fairness, reasonableness and consistency in our dealings with industry. We seek to generate fair royalty return for Harvard without negatively impacting the rapid development and availability of products utilizing the licensed technology or negatively impacting Harvard's research and educational mission.
While we generally want to receive cash payments from licensees, equity is sometimes accepted as partial consideration for a license. In the case of start-ups or small companies where cash flow is tight, equity may be the preferred means of compensation from the company's standpoint. From OTD's viewpoint, taking equity represents greater risk and thus when equity is part of license consideration, OTD focuses on obtaining the best overall financial package, taking into account the risk factors.
Under Harvard's current policy on royalty sharing (which is presently under review), net royalties are shared with the inventors, the inventors' department and school, as well as with the university. Half of the department share is made available to the inventing laboratory. In the case of multiple inventors, OTD will divide the inventors' share equally among all inventors. When there are multiple patent filings for a single invention, the inventors' allocations are generally weighted by the number of times each inventor appears on the active US applications and patents. The inventors may, however, agree among themselves on a different allocation method. When multiple technologies are licensed as a portfolio, the inventions are generally regarded as having equal value, although OTD may determine relative values when it is clear that treating the inventions equally would be unfair. The inventors may, of course, agree among themselves on a different allocation.
Frequently, inventions are co-owned with other institutions and Harvard and the other institution will enter into an Invention Administration Agreement under which expenses and income will be shared and responsibility for patenting and licensing will be assigned. In addition, foundations supporting research sometimes require that licensing income be shared with the foundation. Occasionally, OTD may use a third party to license technology if the third party has special expertise and the third party may be allocated a share of the royalty income, if any. In each of these instances, the remaining Harvard share of royalties will be distributed according to the University's normal royalty sharing policy.
Industrial sponsors sometimes wish to support research related to existing University inventions and patents. Occasionally, inventors may wish to use intellectual property rights to encourage research funding. While OTD takes these possibilities into consideration, license agreements are separate and distinct from sponsored research agreements. As noted in Harvard's royalty sharing policy, sponsored research funds are not considered royalties (even if tied to a license agreement) and are not shared with inventors.
OTD has signature authority on behalf of the University for license/option agreements and other agreements that pertain to intellectual property. University faculty and other University staff are not authorized to sign agreements that obligate the University to assign or license intellectual property rights to another entity.
The management of University intellectual property is complex because there are often many competing interests. OTD works at the interface of science, business and law within the contexts of University and government policy. We know that the key to our success is our ability to work well with our diverse constituencies – inventors, departments, schools, industry, the US Government, and other sponsoring organizations.
If you have questions about OTD's role or the responsibilities of inventors under Harvard's policies, feel free to contact one of the licensing professionals within OTD.