Licensing: #7 in the 8 steps of technology commercialization

Whether commercialization is accomplished through an existing company or a startup, a license or other agreement is needed to grant the rights to use the university invention.

A license is a permission to use intellectual property granted by the owner or controller to another party. A license agreement defines the rights of the licensee to use the technology and the responsibilities of the licensee to bring the technology to market and to compensate the university and inventor(s). In the technology commercialization context, the licensed intellectual property is usually one or more patents, but it can also be know-how, trademarks, or copyrighted materials such as software.

The deal may include other important elements besides the license agreement. For example:

  • There may be a sponsored research agreement or material transfer agreement entered into at the time of the license.
  • Deals involving an invention jointly developed with another institution may need an Inter-Institutional Agreement before the license is completed.
  • Startups may also involve preparation of corporate documents or agreements regarding equity ownership.

Yes, an invention can be licensed to multiple licensees, either non-exclusively or exclusively, each for a unique field of use (application) or geographic territory.

University compensation can take various forms but is usually some combination of a cash fee, patent expense reimbursements, royalties, and equity in the commercializing entity. As set forth in Board of Regents’ Rules, Series 90000, 50% of the revenue received by the university after recovery of expenses is generally shared among UT inventors. Distribution of royalties to inventors is described in more detail in the "Revenue and commercialization" section of this website.

In the event of the death of an inventor, his/her share of licensing income will be paid to the inventor’s estate.

The license agreement is between the university and a licensee. The inventor is not a party to that agreement. The inventor will have ongoing obligations to participate in patent prosecution activities and may be asked by the licensee to assist with commercial development activities under separate arrangements with the licensee.

OTC assists inventors and authors in determining the appropriate strategy for distributing software and other copyrighted material owned by the university. Distribution mechanisms used by the university for software fall into three main categories:

  • Commercial licensing - Commercial licensing by the university can be done directly to end users or through distributors. Payment forms vary from product to product, but will generally either be on a fixed fee basis (one-time or annual) or on a royalty basis. OTC maintains templates for commercial software licenses, including an Evaluation License that is used in circumstances where a firm wishes to gain access to the software for evaluation purposes for a limited period of time before purchasing a license.
  • Open source licensing and publication - In accordance with the policy of the Board of Regents of The University of Texas System, OTC supports open source licensing and publication of university-owned software and assists creators in determining the best method of distribution.
  • Dual Licensing - Under dual licensing, one software program is made available under the two different distribution mechanisms described above. Under the open source/publication mechanism, source code for the software is made available at no cost under license terms that allow third parties to study the software and use it for research purposes, but contain restrictions on use or distribution that may make commercial use unfeasible. Under the commercial licensing mechanism, the software is licensed for a fee on licensing terms that permit the use of the software for commercial purposes. Examples of UT software that have been distributed under dual licensing include iRecommend and HOARD.

OTC suggests the following as appropriate open source or source-available licenses:

OTC can assist software creators in selecting the appropriate form of open source license or other method of publication based on:

  • The goals of the creators
  • The perceived commercial value of the software
  • Third-party restrictions applicable to the software

Creators who wish to publish or open source license software owned by the university should take the following steps:

  • Complete the software disclosure form and return a fully-signed copy to OTC, together with copies of any open source licenses applicable to any third-party open source software included in the software.
  • Select an appropriate license.
  • Upon submission of the invention disclosure form, OTC will work with the creators to understand any limitations on distribution. For example, sponsored research encumbrances, joint ownership, or incorporation of third-party open source software can all limit the university’s ability to license the software on an open source basis.
  • Obtain department chair approval for open source release. In accordance with UT System policy, creators should obtain approval for the proposed method of distribution from their department chair or unit head.
  • The creators can then post or distribute the software under the chosen open source license. OTC can help you determine the appropriate copyright notice and license text to include with the posting. If the software is also being made available for commercial licensing through OTC as described under “Dual Licensing” above, then notice of appropriate OTC contacts for licensing can be provided on the website. Keep OTC informed of the website URL at which your software is posted.

NOTE: Inventors interested in open source licensing may wish to consult Open Source Toolkit for Technology Managers.

Open-source software is not necessarily free of licensing encumbrances; third-party components may grant academic rights only or have other restrictions. If you plan to use third-party contributions to the software, it is important to obtain necessary rights from the third-party contributors at the time the contribution is made, so that the university may continue distributing the software. OTC will help with this process.

Regardless of the mechanism of distribution of the software (commercial, open source, or dual licensing), creators wishing to distribute software should fully complete, sign, and submit to OTC a Software Disclosure Form. N.B. OTC will not review Software Disclosure Forms for patentability. If the creators believe that the software may incorporate patentable inventions, they should also complete, sign, and submit a Disclosure Form (Physical Sciences). If both disclosure forms are used, they should reference each other. OTC will discuss licensing strategies with the principal investigator or unit head responsible for the creation of the software.

OTC also manages licensing of all University of Texas at Austin-owned copyrights. To distribute or license copyrighted material owned by The University of Texas at Austin, contact OTC.

Contact Bob Villwock for any questions on licensing of software or copyrightable material.

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