Management of IP

The primary objective of the IP management process is to transfer technologies from the University to companies with the interest, ability and resources to commercialize them such that the public can benefit from Penn State inventions. Another objective is to capture a fair portion of the value of the invention for the benefit of the inventors, the College in which the invention was developed and the University.

The management of IP from the submission of an invention disclosure to the execution of a license agreement is a complex, non-linear process involving multiple steps. Key elements of the most typical steps of the process are summarized below.

An invention disclosure is submitted to the Penn State Office of Technology Management (OTM). Forms and guidelines are available. The OTM receives approximately 200 new invention disclosures per year.
A two-part invention disclosure number is assigned. The first part of the number is the year in which the invention is disclosed. The second part of the number is a sequential number of all invention disclosures.
A Technology Licensing Officer (TLO) is assigned to manage the invention. The TLO will be the principal point of contact between the disclosers and the OTM. Persons submitting an invention disclosure are called disclosers until inventorship is officially determined by a patent attorney.
The TLO reviews the invention disclosure, discusses the invention with the disclosers and initiates an assessment to address the following:
- Clearly identify the invention
- What is the state of development/reduction to practice of the invention? Is further development necessary? If yes, are the resources (personnel, funding, facilities and equipment) available?
- Is the invention marketable?
- What is a rough estimate of the size of the market?
- Is the invention patentable? Is the invention new, non-obvious and useful? Is there prior art? Is the invention an improvement of an existing invention?
- If the invention is patentable, is the patent enforceable? Will it be difficult to determine if others are infringing the patent?
- Have there been any enabling public disclosures (publications, presentations, thesis/thesis defense or non-confidential discussions outside the University) of the invention? If yes, when. If no, are there plans to publicly disclose the invention? Any enabling public disclosure has an immediate and irreversible effect on patenting.
Based on this initial review and assessment, the TLO will formulate an appropriate strategy to protect the invention, typically involving either patent protection or copyright protection. A typical patent protection strategy is outlined below.
- File a provisional patent application either: 1) immediately prior to the first enabling public disclosure or 2) immediately if there is concern about competing technologies under development. In order to file a fully enabled provisional patent application, the inventors must provide a full and complete disclosure of the invention to the patent attorney preparing the application. Inventors must be available to assist the attorney preparing the application.
- It is important to file a provisional patent application soon enough to fully protect the invention, but not unnecessarily early. A provisional patent application provides one year of protection in both the U.S. and internationally. This allows time for additional research, development, sample preparation, prototype development and assessment of the invention. Filing a provisional patent application unnecessarily early will limit the time available for further development and assessment.
- The next patenting decision is whether or not to convert the provisional patent application to a “full” U.S. patent application and/or a Patent Cooperation Treaty (PCT) patent application. This is a difficult decision due to the expense involved. A typical U.S. patent costs $20,000 or more. International patent protection is highly dependent upon the countries involved, but typically begins at $50,000.
- If the invention is licensed (or optioned) to a company prior to or during the one year of protection provided by the provisional patent application, then the provisional will be converted to a “full” U.S. patent application and/or Patent Cooperation Treaty (PCT) patent application and the licensee (optionee) typically pays all patent expenses.
- If the invention is not licensed during the one year of protection provided by the provisional patent application, then the decision whether or not to convert is made by the Patent Review Committee with input from the inventors, the TLO and the OTM.
- If the decision is made not to convert the provisional patent application, then: 1) the provisional is abandoned and no further action is required, 2) depending upon the date of enabling public disclosures of the invention (if any), another provisional patent application could be filed or 3) the inventors could petition the University to release the invention to them. The inventors should discuss the above options with their TLO.
- If the decision is made to convert the provisional patent application to a “full” U.S. patent application and/or PCT patent application, then it is essential that the inventors cooperate fully and be available to offer their input to the patent attorney preparing the patent application. The inventors’ insights and inputs in response to patent office inquiries and office actions will be required throughout the patent prosecution process.
When appropriate (as determined by a variety of factors) the TLO will begin marketing the invention to potential licensees with assistance from the inventors. Marketing activities may occur before, during and/or after the patenting process as necessary. A marketing strategy may include any combination of the following:
- Pursuing leads and contacts developed by inventors. 75% of university license agreements result from contacts provided by the inventors.
- Focused/directed informational mailings.
- Posting inventions available for licensing on OTM and commercial websites.
- Leads developed from databases and the Internet.
- Publicity from publications, presentations at conferences and newspaper and trade journal articles.
After a company or companies with interest in the invention are identified, discussions begin and it is likely that a series of agreements will be negotiated and executed. These may include the following.
- Confidential Disclosure Agreements allow the parties to share proprietary information under confidentiality.
- Material Transfer Agreements allow one party to share materials, samples or prototypes with another party for evaluation purposes and to determine if there is interest in licensing. This sharing of materials occurs while maintaining control of the invention, ownership and rights.
- In an Option Agreement the owner of an invention grants certain limited rights to another party for a defined period of time for the purpose of evaluating and/or further developing the invention.
- License Agreements transfer well-defined rights from one party to another party for the purpose of commercializing an invention in return for some form of compensation, usually financial benefit. Key elements of License Agreements include:
  - Identification of rights being licensed.
  - Definition of the Field of Use.
  - Type of license – exclusive, non-exclusive or semi-exclusive.
  - Fees – up-front fee, milestone payments.
  - Royalties – running royalty, minimum annual royalty.
  - Equity.
  - Due diligence – licensee’s obligations to make progress toward commercialization of the invention.
  - Reimbursement of all patent expenses associated with the invention.
- After the execution of license agreements the OTM continues to communicate with licensees.
  - To follow up on the payment of fees, royalties and equity.
  - To monitor due diligence requirements.
  - To seek licensee’s input regarding patenting decisions and payment of patent expenses.