Thank you for participating in the NIA and NHLBI Entrepreneur Workshop series. This workshop covers the topic of licensing and partnering agreements. This breakout room, moderated by Don Rose, discusses the topic of startup and university license agreements.
The first thing I'm going to talk about is things that happen before the license is actually negotiated. And so there's some questions about that. We'll talk about the license agreement on a macro scale, and big picture sort of things around a license, around some of the questions that came in. And then we'll dive into some of the specific terms that are in a license agreement.
And I'm actually going to share with you a link later on of a license agreement from the University of North Carolina, where I came from. It's an express license that has terms that are favorable to startup companies in general. Just, again, I spent 10 years at the University of North Carolina doing a program there called kick start. I started that program to help faculty spin their companies out of the university. So I'm very familiar with that side of the business.
And now I work for a venture capital firm, along with NIA. And so I'm on the other side of the table to a large extent, seeing the same sort of negotiations from both sides. So one of the first questions that comes up is how to better engage with the university to be the first to know about any additional IP that comes out in your area of development. And I think that really just comes out of the relationships. And one thing I'll emphasize throughout this is just building a relationship with the tech transfer officer in your specific area, so that they know what you're interested in and can kind of keep you abreast of different things.
Having said that, sometimes they're not always the first to know what's going on. And so having relationships with faculty is another way to help figure out what's coming down the pike in terms of new developments. So those are just, again, it's all about building these relationships and getting to know the people and understanding what their job is and how they do it. But there are things that are not disclosed to the university that may be of interest to you from a business perspective. And so, just knowing the tech transfer officer may not be enough.
Knowing the faculty who are developing those could be part of that. One of the questions that comes up a lot is at what stage should I license the IP, or when in the research cycle is appropriate for licensing the technology from university. So, you know, of course, there's no one answer to that question, about when is the best time to license the technology. What I will say is that tech transfer officers are not interested in spending more money on covering patent costs, if there's nobody interested in the technology. So there's kind of a sweet spot.
For licensing it very early may be a disadvantage, there may be some disadvantages to that. Not really per se, you're going to have to pay typically patent costs anyway. So whether you, if you license and have to have a big bill to pay, and you license it later and you've got the money then that's great. But it may not be the case where there's a big bill that's been run up. But you've got to pay the patent costs at any rate. Again, waiting too long, and the tech transfer office of the university doesn't think or know that you're interested or you haven't made a commitment, means then they may make some decisions about patent coverage that may be to your detriment.
For example, if there's not an interest in a certain piece of IP, the university may not file for foreign protection. And that can be a real detriment. So letting them know and maybe even, we'll talk a little bit later about option agreements, later, that could be a way to, again, engage university in your interest in licensing these. So one of the question is how do you negotiate an equitable deal when the university views every startup as the next Google? Well, what I would say to that is hope springs eternal for everybody, right? Whether you're an investor, whether you're a TTO, but all the reality is that not everything is going to be a Google. So I think understanding the TTO's perspective, that they're a cost center, they're not a profit center, though people think they're a profit center, they're actually a cost center, because they rarely make a profit on their assets that they're licensing out. There are a few, Stanford and a few others.
But overall, most universities lose money. And so understanding the pressures on the budget, from the TTO's perspective, is the best way to really get in their mindset in terms of how they go about it. One question is what is the biggest mistake spinoff companies make when negotiating a license agreement with university? I would say that, for any good negotiation, I think it's kind of a common saying, the best agreements are the ones where everybody thinks they got the worst deal, right? And so leaving something on the table, maybe it's a kind of a failure to not leave anything on the table. And I think, and just not building a good relationship with the TTO folks, that they really-- and I think that, back to Ethel's comment about not listening, I think a big mistake is not listening to what the requirements are from the TTO's perspective in terms of-- and again, they're doing this in the public interest to a large extent, because they have a legal right to get some of this out. And so they really have to do that.
But they have to do it within certain constraints, many of them just budgetary constraints. So listening to them about those budgetary constraints can be important. One of the questions was, as an inventor, what is the best deal structure for negotiating a licensing agreement with an academic institution. Well, as an inventor, typically you're not going to be allowed to be involved in those discussions. Many universities, assuming you're the inventor in the academic institution, you're typically walled off from many of those discussions, to prevent conflicts of interest and things of that nature. One of the questions that comes in, what's the difference between an option and a license.
And what is the best time to switch an option to a license? It's hard to know the best time. Usually the best time is when it is close to expiration. That usually is a driver for the option agreement.
You'll have like a six month option, and at the expiration of that, you have to make a decision about what to do next. But an option agreement is exactly what it says. It gives you some window of exclusivity, typically, to license the technology. You have an option to license.
So it kind of locks up the technology for a certain period of time. And people will use it a lot of times to go and try to raise some money, or do some experiments, or try to apply for a SBIR grant, or whatever. But just it freezes the asset for a moment in time. And there's a cost to that. There's typically a payment, an option fee, that goes to that.
One of the-- what you hope is you can apply that option fee to your license agreement. Sometimes that will be acceptable, sometimes not. But again, an option agreement just allows you a little bit of flexibility, without making a big commitment. It's almost like kind of dating before you decide to get married.
How to negotiate with the university when IP was developed outside the university but using only partial university resource, so that comes down to really kind of the inventorship and the ownership. And so that, if a university resource was used, the question is was that university resource involved in an inventive step. And that's what a patent lawyer is supposed to do. They're supposed to figure out, was this just a contract research exercise, or was there an actually inventive step. So, you know, purifying a protein is one thing, contributing to the design of a molecular entity is another thing. And so those are-- one's an inventive step and one's not.
So a patent attorney will have to sort that out. Do you need to secure a written document from the university stating that you own future ownership of awarded patents? Well, not sure exactly the nature of that question, two ways to answer it. One is that university owns all IP, that has been developed by faculty at universities. So that's just, it goes with the employment agreement. But it could also talk about, sometimes the university will release intellectual property to the faculty inventor, for their own development. That's fraught with all kinds of things we could talk about later.
But universities don't typically like to do that, because it creates other sort of conflicts as they go forward. OK, so that's kind of on a macro scale. So any questions about license agreements and pre-license agreements, option agreements, and that sort of thing? Just raise your hand and I think you'll jump to the top of the screen, and we can answer that.
OK, Bruce, I want you to unmute yourself and ask your question. Yeah, what are your approaches to protecting against the company licensing a technology, in order to kill its development. You can set milestones, but they can monkey around on smoke and mirrors and make it seem as though they are meeting the milestones, when in fact their ultimate goal is to kill it.
Yeah, it's a great question. I think that short term diligence milestones can help. There's not-- I mean, you're right. There are delays that can happen, that can cause it, make it hard to keep them from doing that.
There's no kind of bulletproof answer to that, really. I think that understanding early on what their intent is, and setting out some milestones, especially some significant financial milestones for noncompliance, because everybody has a price, right? And so if the non-compliance milestones get to be really expensive, then it becomes economically not worth it for them to hold on to that. Whether they would agree to those upfront remains to be seen. So I was just looking at the chat here real quick. So the university will own full patent rights, even if development began outside of the university. Not necessarily.
It depends on what the agreement said about the joint development. If something happened outside the university, and then it was a joint agreement with somebody in the university, then it has to be sorted out about, was there any sort of agreement ahead of time. STTRs are the best example, where typically there's a joint sort of ownership of IP through something like that.
OK, well, one of the terms that just popped up in the chat, I'll just speak to right away. And that is the university use of the IP. And oftentimes you'll find in an agreement, a license agreement, the university retains the right for research use only of that intellectual property.
And that can cause some heartburn for some people. But it's hard to get around. I think the university wants to be able to do its research the way it's doing its research.
Now it can be offering that as a service outside the university, that gets a little fuzzy. But doing research is research, and it should not be a commercial concern. But that will definitely be one of the terms that you'll find in there. OK, so in terms of the terms, I want to dive into some of the specific terms.
And we've got about 15 minutes left. So, again, I want to open it up to some more questions as we go through this. Somebody just popped in the chat. Do you have an example of license agreement? Yes, I'll be sharing it at length with you shortly, on that.
Most important terms are license agreement of IP from an academia to start up. So the four most important terms, exclusivity, and you want exclusive, so that just means that the university cannot license this to anybody else but you, so they can't-- so non-exclusive means they can license it to umpteen different parties. So exclusive is almost demanded for a startup company, because, if you don't have exclusive rights, then, when you go to try to raise money, the investor is going to say, well, why would I invest in you, when the university can give this away to license to 50 other companies? So you have to have exclusive. Field of use, you'd like to have all fields of use.
And you may not get all fields of use, which means, for example, am I going to use this drug for Alzheimer's and all other dementia, and also hair loss and everything else? Or is it just going to be Alzheimer's. And so field of use, you'd like to have, again, exclusive, all fields, and you'd like to have worldwide protection or worldwide licensability here. Now, if they haven't filed worldwide, then that may be a moot point. But if you're just starting out, and they're just considering all the international patents, you'd like to have worldwide. And the final is, for a startup company, you'd like to push as many of the fees back as possible.
So no upfront fees. So a lot of times the license agreement that you'll get as a standard license agreement from a TTO office is for a big company. And it'll have some sort of upfront fee of $100,000, or a million dollars, something ridiculous, which, of course, no startup company can do. But a lot of times that's just kind of what they have as their standard opening salvo.
But for startup companies, you'd love to have no upfront payments, and a delay, as far as you can, for paying all the patent costs and things of that nature. OK, so one of the big terms that comes up is equity, from the company. And so there have been various ways this gets sliced. I would say that, for many folks, it kind of varies from, say, 5% equity to, say, 20% equity, that's probably the range that you would see. But there's always caveats associated with that. So, for example, they'll be, OK, we'll take 5% equity, non-dilutive, in other words, we won't go less than 5% equity until you've raised your first million dollars.
So there's a non-dilution clause that'll be stuck in there. And that gives investors real heartburn as well. So that equity number isn't just the only thing to think about. You have to think of what is the equity number, and then what are the other constraints around that, like, non-dilution clauses, that they may put in as part of that. Some people have gotten around this with, so UNC's Express License, I'm going to share that link with you in a bit. They don't have, in fact they just changed it again, but I'll just say in the past, their Express License took a liquidity fee at the end.
And so what they did is they looked through all their different deals they did. And after, you know, full dilution, they still owned about 1% of the company. And so they just said, OK, at the end, when you go public or you are acquired, simply give us 1% of the acquisition or the IPO. So that was their solution. One could argue both ways about whether that was a good thing or not.
But that's the way they got around having to negotiate equity, which is it's not worth much right now. Who knows what it's going to be worth in the future. So it's hard to negotiate what's the right number. Is it 5% or is it 15%? That's probably one of the biggest ones out there. OK, so that, I'm going to stop there for a minute. Any questions about just equity as part of a license agreement? Travis, you can unmute yourself.
Hi, thank you very much. I was wondering, so with your contract with the university, there is the inventor owns so much, the university owns so much. But then you as the inventor do your startup company. So then you're talking equity between the university and the startup company.
Is that-- that's what you mean, so the share that the inventor gets for the university, that's a moot point because the equity you're talking about is between the company and the university? Yeah. So the equity is part of the license agreement. So the university will own part of that company. Now, as a founder, if you're a founder in the company, you own, obviously, probably a bigger chunk than the university owns. And what typically happens is the university will make you declare one over the other. And most typically, you'll say, well, I'm going to keep my founders shares, as opposed to participating in the liquidity of the smaller piece of equity that would come from the university.
So that's-- yep, and usually they make you choose one or the other because they don't allow double dipping, in a sense. Absolutely. OK.
Thank you very much. Absolutely. Any other questions about equity? Alan.
Yes. Unmute yourself. Yeah. I was just wondering about how damaging the non-dilutive equity would be. I've heard from VCs that, when they see the university has a non-dilutive equity share, that they get very worried, or scared, or it scares them off.
So when negotiating an agreement, there's all these different pieces to manipulate. How hard should one try to remove the non-dilutive equity from the equation? Yeah, that's a tough question. It's a good question. I think that, if you could, maybe, if they wanted 5%, or they said they wanted 10% with non-dilution, if you say, well, we'll give you 12% with the dilution clause and there are 15, you may ask the question, how much would you take to take that non-equity piece out? I mean, just throw the non-dilution piece out. So there's got to be a threshold where they would say, OK, well, there's going to be 5% with non-dilution, now we'll take 10% with dilution. Maybe they'll go for that.
What they're trying to prevent, and this is just to try to understand their perspective, they're trying to prevent taking a 5% equity position, and then you hire a CEO and a CFO and a CIO and a CTO and a CSO before you even raise any money, and you've already given away a ton of equity. Now the university went from 5% to 1%, without any money going into the company. And so, from their perspective, they just got robbed of a bunch of equity, that where there's no real value added to the company. So that's kind of their perspective. Does that makes sense? Yeah, yeah.
How did VCs view that 1% of the final IPO purchase price? Did that go over well with VCs? Yeah, I think so, because it was just fairly straightforward. The only issue with that is that that term, from the university's perspective, has to survive the agreement, if and when the agreement is terminated. So let's say the company said, we're not going to use that technology anymore. We terminate it. Well, somehow you've got to make that one clause survive for the next 10 years. And that's always, that's the problem that makes it difficult for everybody, to not-- so the company goes public.
And there's a gotcha because they have to pay 1%, and no one knew about it, because it was buried somewhere, you know, in some document like that. Thanks very much. OK, Richard. Yes, I'm wondering if you could give any advice on a difficult circumstance wherein the university managed to persuade an inventor to pay $70,000 for all of his patent expenses, and now is coming back and creating unreasonable terms for licensure. Is there any appeal that's possible to the federal government or anyone else for what, it seems to me, like pretty unreasonable behavior? Yeah, I wish I had an easy answer for you.
I think many times universities will say to faculty, take some money out of your account, you know, your royalty account or whatever you have, and show us that you're committed to this. If you put in x, we'll put in y. And we'll proceed with this, and-- They put nothing in. Yeah. OK, well. Yeah, I don't know, it sounds like a raw deal.
I can't rule out-- I don't know what kind of appeal you can make to that. Yeah. So, yeah, it's unfortunate, probably, that they-- I mean you can't appeal to the federal government, as an arbiter, since the federal government has often paid for the whole shooting match, and I just don't understand why the Bayh-Dole agreement legislation gave authoritarian rights, with no ability to call into question anything. It just seems to me like it's created a monster.
Yeah. And my observation is the terms, over the years, are getting worse, not better, because a lot of these tech transfer office professionals go to meetings, and lawyers keep giving them clever terms to put in the agreement, you know, for more and more payouts. Yeah, I can't argue that.
I think it has, like anything created 20, what, 40 years ago, I guess-- it was all created with good intentions. And things don't always end up the way they are. But, yeah, the repercussions or the options are limited, because the university is assigned the IP from the government, with very few things that the government can do, other than March-In rights. And that's-- Right, right.
OK, let's go to Ellen. You're muted, Ellen. Ellen, can you-- Ellen, you're muted.
Ellen, can you unmute yourself? Sorry about that. There you go. No worries. And I'm late to this, because I was in a different chat room, or breakout room, and I realized they weren't going to answer my question. But my question is, if you find there's infringement on the patent, who's responsible for enforcing that? And how do you actually do that? I'm a small business, and I have IP, and I'm finding it very difficult to get a law firm that wants to fight that, or university that is interested in taking it on, because it's not their IP, even though I work with them.
So how does, like, what are the mechanics of that? You can't really file a cease and desist pro se, that where any company is really going to take it seriously. Yeah. Yeah, I mean in the agreement itself, it gives the right to the university to do the infringement. But everybody knows the university has no deep pockets, and that they're not going to go after an infringer. So that's where it comes down to kind of a relationship with the TTO office and asking for their amendment or just permission to do that. Now, if you're, of course, startups don't have deep pockets either.
No. Which puts most people in a rough position to not be able to go after an infringer like that. So there's no easy answer, unfortunately. I think that, again, the legal answer is the university has the rights, but many times they don't exercise those because they don't have the money to exercise them.
And there are patent trolls out there, that will take on a case like this, on a contingency basis. And they will go, if they think they've got a good case, go and fight it. But they're going to want a significant amount of return from the case on a contingency basis.
So its-- Investors do not like those people. No, no, not at all. No. So, as you are a small business, you don't really have the clout to go after some of the very big companies that are all infringing on your IP.
Yeah, yeah. Really caught between a rock and a hard place. Right, right. OK, I just shared a link to the investor document.
So let me hang on on second, real quick while I change that. But while I'm doing that, let's hear from Amanda. You had a question. Oh, my question was, I'd like to understand the range of, for each of these parts of the terms, like, for example, if you're talking with a company-- if you're talking with the university and a company about the royalty fees they might collect on a diagnostic, what's sort of the typical ranges you might see. And I was thinking that if you had some example documents of other licensing agreements between tech transfer and small business, that would be useful.
And I think your document, your link that you just posted may be that, correct? It is. It's got some-- it's got some things in there. Perfect.
So let me pop it back into, there's a new link in here. And let me know if that one works. But, yeah, that's royalty, single digits, typically, depending on whether it's FDA approved or not FDA approved. And those are typical 1%, 2%. I think that universities are trying to keep those numbers down, because, many times, there's other royalties that get stacked onto those royalties. And so something along royalty stacking, that can happen.
So that's a typical range, it's kind of single digits. I mean anything over 5% is probably out of line, for a royalty agreement, in general. So-- OK, City Labs. Hi, Don.
We recently received an NIH phase II award. And we have a subcontractor university. And we're about to interact with them and ask them to perform the work. And we wanted to understand what will happen with the resultant IP. What should we negotiate? What should we be shooting for? Do you have any general advice that you can give us? Yeah, I think that it's unlikely you're going to be able to own it all if the university is contributing significantly to the invention of the IP. So I think that, because of the nature of the collaboration, you know, if you're just using a DNA sequencing lab, and they're doing that for you, then they shouldn't own any of that.
But what you're talking about is probably more of a research collaboration where you're going to have joint ownership. So then it comes down to who's going to pay for what. And are they going to pay for half of it, you're going to pay for half of it? I mean the thing about joint ownership is that it's unlikely they would ever, you know, they can't license it out to anybody else. So in a sense it has some exclusivity to it, because you are joint owners, and you both have to agree to it. So I think, what I've seen typically is just joint ownership. So we should approach from a joint ownership, that's what we should pitch to them for starters, and see where it goes? Yeah, and just get a feeling of what's going to happen with terms of payment, and who's going to file the patents.
I mean, who takes the lead on it is going to be a big question. They're probably going to ask you to take the lead on it, which may be OK, because you've got your attorney filing it, as opposed to somebody else's attorney, to their attorney. So that's probably your best bet. That'll be fine with us.
I mean, we've gone that patent route several times. We have that all set up within our company OK. So we'll start that process.
Should-- as far as the negotiations, should I just approach them? Should I bring our contracts administrator into this, or our patent attorney? Is there any-- I would just start out very open-ended to say we're going to test TTR. How do you want to handle any sort of IP that's generated? OK. And just see what they come back with. I wouldn't prescribe it too much.
It is the top of the hour. So I'd just like to get some feedback from somebody who's clicked on that Google Drive link, that they actually got it. That would be great. Yes, works fine.
OK, awesome. Thank you. And folks don't have to hang out. We're going to stay here probably another 10 or 15 minutes, maybe answer any questions that you come up with. I think I've covered most of the terms in the license agreement.
Again, the two big terms are the grant, which is what are you getting for your license, in terms of the field of use, exclusively, and that sort of thing. And then the consideration back to the university, those are the two big ones. And then everything else is kind of gravy on top of that.
But Monica, you had a question. Go ahead. Unmute yourself. Monica, Monica Serban from Montana. OK, now you're muted. Can you hear me now? Yeah, you're great.
Go ahead. OK, perfect. So from a university perspective, how do you approach the licensing process of an IP, when you have several companies interested in the same IP? Well, from the university's perspective, they're going to be looking at the one that has what they think has the best opportunity for commercializing the technology.
That's what they should be looking at. They may not be looking at it, depends on the university and what's motivating them. If they are incredibly over budget on their patents, then they may be looking for the best and biggest upfront payment and the biggest deal. If they're more interested in the commercialization of the technology, then they may be looking at the team, and the company that has the greatest potential for commercializing the technology. Does that get at your question, or is it a different question? Yes, it's getting there.
And, actually, kind of a follow up on that, you mentioned that you always want to have full field of use, or all field of uses. In this context, we are looking at human versus veterinary use. So, from a university perspective, again, would you want to split it up and license it out based on field of use, or-- Yeah, I think so. I think that those are pretty separate fields, different companies, different economics, different regulatory approaches, different funding mechanisms, and investors that are looking at those two different fields. So that's certainly a reasonable split.
Now, within human use, splitting into different therapeutic areas, that's where it gets a little more difficult, perhaps, depending on how big the opportunities are. OK, thank you. Mm-hmm. OK, any other questions? Anybody have a question about the Carolina express license that I just posted? Raise your hand and I can get the question answered. Look back at my sheet, and see what other questions we haven't covered. How to get funding for a clinical trial, that's a big one, of course.
That's the million, the $10 million question. And there are some government opportunities, and NIA specifically has some grants that can fund clinical trial development. So you can certainly reach out to NIA, if you have interest in that. And other agencies will fund clinical trials, if it's an appealing project, appealing company.
OK, lots of questions coming in. So I don't know about data sets, negotiating data sets. I've seen that question come up a couple times. So access to data sets, I guess it comes down to how proprietary they are. Patient information and things of that nature, are you going to be using them for long periods of time or short periods of time.
Those would be the kind of things that I would be thinking about. All right, other questions, raise your hand if you have a question. That would be best if we hear it verbally, because sometimes they're hard to pick off the chat room here.
OK, is it Shahar? Hejar, yes, sir. Hejar, OK, what's your question? Hey, I made a grant application with NIH, but it got stuck. It was my first time with the Data Safety Monitoring Board. And I'm not sure, how do you get one of those? Who do you talk to about that? And if you're a small business startup, then how can you work with the institutions to make that happen. It's not easy to work with the hospital or university. Yeah, unfortunately, I had no idea.
That's not, that's a license, we've been talking about licensing, and if you reach out to your program officer, and they can probably give you some hints on that. So sorry I can't help you there. OK, no worries, thank you.
OK, Alan? Yeah, I received the download and thank you very much for posting that. That's really helpful. But I haven't had a chance to really look at it and ask you intelligent questions about it. But one of the things I'm concerned about is the fee structure.
Could you summarize that quickly for us? Like what kind of fees to expect, what kind of fees are reasonable? So the upfront fees are the first thing that you want to not have. And you can argue that startup companies don't have any cash, so they can't pay that. Then there'll be the fees for patent reimbursements. So there'll be a big bill that's been run up all of a sudden, for all the patents. And there'll be future patent costs that the university will incur on your behalf, that have to be paid. So the question is, how do you structure that.
Could you put together a payment plan that shows, that puts it out over several months or over a year, or something of that nature. Again universities want their money, but they are also trying to keep you engaged, and keep you paying your fees on a monthly basis. So just because they ask for $10,000 or $100,000 for patent reimbursement, you can always say, can we put that into a payment plan, that can be used for payment over a period of time. And then the other fees that are going to come are milestone fees, so that you have, if you file an NDA, for example, you may owe the university a certain fee. Or if you complete phase I clinical trials, you may have a fee that goes to the university.
So those are fees that will be there, that have to be budgeted for in the future. And if you're at that stage where you're going into clinical trials, then likely you've got money to do that, and you can cover those sort of fees. OK, but for the patent, that there's been several patents and the bill is, say, $100,000, and you want to go for a clinical trial, so you want to include an investor, that $100,000 is a big, big horse in front of your cart. How do you get started with paying out $100,000 before you have an investor to help you run a clinical trial? Well, that's where you, you know, if you've made a good argument that you're the right person to do this, and you've got a team together to do it, you've got the background and the experience, and you've got a plan in place, and they believe it, and they believe in you and what you're doing, then they should be open to some sort of deferment.
So let's put this out six months, and then, or let's put this out on a monthly basis, so $10,000 a month for the next 12 months. And that may be a way they could structure that sort of thing. OK, thanks.
OK, Jean. Hello. So I have a question about the royalty for the licensed technology, or in another, what the technology know-how. I saw in the agreement that I'm negotiating with the tech transfer office, there is a non-exclusive right for the licensing technology, or the know-how. And I'm still paying a royalty for that.
Can you talk more about the usual structure that you see for non-exclusive license know-how? Well, if you can get it exclusive, you're in a much better position. But maybe that's too expensive. I don't know. I mean, yeah, the term should drop off dramatically, from, I mean, I don't know, a factor of 5, factor of 10, perhaps, from exclusive to non-exclusive, because it gives them the option to license to multiple parties. So just assuming that they can license the five additional parties or three additional parties, then that's more revenue for them, for that.
I assume that's what you're talking about when you say, non-exclusive, correct? No, we have an exclusive license patent, but for the know-how, what they propose is to make it non-exclusive. Do you see that arrangement, like normal? And how are they defining know-how? They haven't, that is, leave as blank right now, and they would update it. But for now it's blank. Well, it could be that know-how is applicable across other fields and other licenses, or other areas. And it could be that the faculty wants to consult in that area to another company.
It's hard to know exactly, without seeing the agreement, what the know-how is they're talking about. But sometimes, even though you licensed the technology, you just still want to have access to the faculty, or graduate students or postdocs, to get some of the nuance around the technology. Or how do you set up the assays, and how do you do some of that? And maybe that's what they're referring to. It's hard to know, right off the bat.
But that, I would just ask questions, you know, A, how are you defining it, and B, why is it non-exclusive, and C, what would it take to make it non-exclusive? Everybody has a price. And I'm just curious what it would take. OK, great, thank you. OK, other questions, raise your hand, or raise your hand button down there, so I can see the 50 participants, I can't see everybody.
Yes, Elleron Hamburger. Let me do that. Hi, thank you. I popped over from a different breakout session, and had a follow-up question. But I think it's appropriate here. I'm on the gerontology know-how side, but I have an institute, and the app development, I'm paying for mostly out of pocket.
It's in e-health. But the university is going to provide research, design the approach component, like I know how to develop an app. They're going to try to figure out what they think is a winnable strategy for the NIA, in terms of the research design, and the ongoing feedback thereafter. So my question is, I think it's a contractual relationship with the university. But the university is interested because they see big dollars, and the deans need big dollars to stay deans, and all of that kind of stuff. I'm happy so long as I'm like building the app, and there aren't that many apps out there that are based in science, let's just say it that way, in the general marketplace.
So I think it's all worth it, but I was going to be the PI. Maybe we should be joint PIs. Do they own the data, but I own the IT technology? How do I, how should I be thinking about this, so that I go in, I guess, reasonably. And the one term that I haven't embarked with them, but had issues with the technology folks, is the length of the NDA. Like so the NDA is not the end-all be-all, but as a starting point, let's have an NDA.
So I said 10 years, and they're like, no way. I mean 3 years max. And I'm like, well, why? I mean I know things change, but if it changes then it's irrelevant if it's more than three years, fine. That'll be, so, I don't know, maybe I'm just being unreasonable, because I haven't been in this position, and I don't know better. But I just feel like I'm coming with critical knowledge, but I'm not the only Joe in town with a degree in gerontology to be able to come to these conclusions. So I'm trying to figure out how to make this work.
Sure, so five years is typical for NDAs, so I think that's where your compromise position is there, in terms of kind of negotiating the terms of this agreement. I think the starting point is what value are they bringing to the table, versus what value you're bringing to the table. So looking at your scope of work, try to at least delineate some level of value between the two of you. And that's where you need to differentiate, first of all, is there value on the database, and things that they're bringing to the table. And that's perhaps one of the things.
Is there value in the design of the research? That's one thing. And what you're bringing to the table, I think if people can define, at least, delineate what the value is, then that's good, as opposed to just being a contract research organization. We're going to take, we're going to purify some protein for you, or we're going to sequence some DNA for you. That's valuable, but not high value. That's commodity sort of value, right? So you really need to understand, what is the intellectual value, intellectual input, that each of you is bringing to the table. And that would be where I would start on that.
OK, thank you. Yeah. Giancomo. Yes, thank you, Don, and thank you for an amazing session today for real. So what are the typical issues emerging when a startup tries to license technology out from a university? I'm not talking about the negotiation, but the actual issues, trying to understand the issues from the past, the main form.
I think the biggest issue is a lack of communication after the agreement has been signed, and not knowing what's going on and not reporting back, and not staying in touch with the university and kind of keeping them engaged. You know they have a typical one year every year, you've got to give us a report of what's happened, and that kind of stuff. But, you know, you do yourself a ton of favors by sending them a monthly update on where the company is, challenges you've had, funding, scientific progress, so on and so forth.
They love that kind of stuff. They love knowing that you're making progress, or if you're not making progress, why you're not making progress. So when they haven't heard from you in two years, and they have to send you that breach letter, no one likes to do that.
They don't want to have to do that. They love, they really want to be a partner to a certain extent. So I would say communication is-- lack of communication is probably the biggest issue that I've seen between the startups and TTOs. Thank you. Thank you so much. OK, we're going to run this out a few more minutes just to make sure everybody gets-- And so if some people have dropped in late, I dropped into the chat a link to a university express license from UNC that has some terms built into it.
Not all the terms are in there, of course, but you can have a look at that. It's the second PDF link. The first one didn't work. So have a look at that.
So Shajar again. Yes, have a question. Yes, I'm sorry. So you were talking about licensing technology from the university.
But let's say you're the inventor, could you license your technology to the university instead of from them? Well, if you're an inventor employed by the university, per-- No, no, I'm independent, not a student, not a-- Oh, no, the university is not interested in licensing. They got enough technology on their own to deal with. Unlikely they would license something. Now, I have heard of a few universities that have done that, in very special cases where they want to license something in, because they think it is really additive. But very, very, very rare. OK, all right, that's all my question was.
Thank you. OK. OK, last call for questions before we shut this thing down. All right, so we have a question here. If the university students end up working on the research project, does that introduce additional problems? Yes, it does.
First of all, they're inventors, and that does create a conflict in the event that the university licenses the technology out, and trying to navigate the faculty-student relationship. It's a little tricky, not impossible, but it happens all the time. OK, with that, thank you very much for attending, and please fill out the survey forms for the workshop, to let us know what you thought of this. And there's another workshop coming up in August, where we're going to talk about value proposition, and how do you differentiate yourself from the competition. So with that, have a great day.
We'll talk to you later.
2021-08-21