Donations of Intellectual Property to NC State University
REG 10.00.1
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.
Related Policies:
NCSU POL10.00.1 - Patent Procedures
Contact Info: Associate Director, Research Administration (919-515-7199)
1. Introduction
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 Technology Transfer (OTT) or a faculty "champion"
will be the initial point of contact. OTT, if contacted first by a prospective
donor, will attempt to identify a faculty champion as a requisite first
step in proceeding. OTT will inform the University research community that
OTT should be brought into discussions as early as possible regarding possible
IP donations if OTT 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 OTT as soon as possible after the initial
contact.
2.3 OTT 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 OTT will notify the Office of Legal Affairs (OLA) of the proposed gift
and will copy OLA on all relevant correspondence. OLA will prepare and/or
approve all final documentation, agreements, assignment forms, and other
official or legal documents related to the gift.
2.5 OTT 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 OTT, 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 OTT 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. OTT 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 OTT, with input as needed from OUA and OLA, and the appropriate academic
unit, prepares a recommendation to the Vice Chancellor for Research and
Graduate Studies 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, OTT 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 OTT, 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 OTT, OLA and the Vice Chancellor
for Research and Graduate Studies 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
9. 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.
10. Distribution of Income Generated by Donated IP
10.1 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 Graduate
Studies, with input from the Intellectual Property Committee as needed.
10.2 The Trust Fund will be established under the supervision of the Vice Chancellor
of Research and Graduate Studies 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 Graduate Studies determines, in his/her
sole discretion, that an unequal distribution would be more equitable under
the particular circumstances of the case.
10.3 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 Graduate Studies will negotiate a payment schedule with
the appropriate academic unit(s).
10.4 The remaining Trust Fund monies, 50% of the total net income, may be distributed,
in the discretion of the Vice Chancellor for Research and Graduate Studies,
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 Graduate Studies will seek
input from academic deans and other vice chancellors.
