Guide to the Ownership, Distribution and Commercial Development of M.I.T. Technology
PART 4. COMMERCIAL DEVELOPMENT4.0 INTRODUCTION
4.1 COMMERCIALIZATION - GENERAL
4.4 TRADE AND SERVICE MARKS
4.5 MASK WORKS
4.6 TANGIBLE RESEARCH PROPERTY
4.7 LICENSING OF M.I.T. RIGHTS TO
4.8 ROYALTY DISTRIBUTION
4.9 COMMITTEE ON COPYRIGHTS AND PATENTS
4.10 CONFLICT OF INTEREST - LICENSING OFFICE STAFF
COMMITTEE ON COPYRIGHTS AND PATENTS
Table of Contents
It has long been acknowledged
that the primary functions of a
university are education,
research, and public service.
It is in the context of public
service that M.I.T. supports
efforts directed toward bringing
the fruits of M.I.T. research to
public use and benefit.
In many cases, mere publication
of research results will be
sufficient to transfer M.I.T.
research to the public. In
other cases, it is necessary to
encourage industry, by
protection of the intellectual
property and the granting of
license rights, to invest its
resources to develop products
and processes for use by the
4.1. COMMERCIALIZATION - GENERAL
The TLO will pursue the licensing of
technology by researching the market for the technology, identifying third
parties to commercialize it, entering into discussions with potential licensees,
negotiating appropriate licenses or other agreements, monitoring progress, and
distributing royalties to the inventors/authors in accordance with M.I.T.
royalty policy. When it is appropriate to do so, M.I.T. may accept an equity
position in partial lieu of cash royalties.
4.1.1 INVENTOR/AUTHOR ASSISTANCE
- With few exceptions, the support and cooperation of the inventor/author is critical to licensing success.
4.1.2 INVENTOR/AUTHOR OWNED TECHNOLOGY
- M.I.T. faculty, staff, or students who wish
to pursue the development of their independently-owned technology through the
TLO may offer to assign their rights to M.I.T. by submitting a
Technology Disclosure Form.
- Faculty, staff, and students are equally free to
choose some other mechanism for commercializing their independently-owned
technology, but prior to such commercialization should make sure that the
technology is not subject to a sponsored research or other agreement, does not
constitute a work-for-hire, nor results from significant use of funds or
facilities administered by M.I.T. If any of these conditions might apply, the
inventor/author should request from the TLO an appropriate license to the
intellectual property or a waiver of M.I.T.'s rights as set forth in this PART 4.
- M.I.T. will not normally commit future
inventions to licensees, even where improvements to technology are anticipated.
Some very narrowly drawn exceptions may occasionally be appropriate to handle
subordinate patents and well-defined derivative works for licensed software.
4.1.4 CONSULTING CONTRACTS
- The TLO will not negotiate consulting
contracts for individual inventors/authors as part of a license arrangement.
Once a Technology Disclosure Form
disclosing an invention is submitted to the TLO, the assigned Technology
Licensing Officer will begin the process of evaluating the invention for
patentability, commercial potential and obligations to sponsors. The first
step will typically be a meeting with the inventor. The TLO may also
request that one of the inventors participate in a literature search of
4.2.2 SPONSORED PROGRAMS
If the invention arose from a sponsored
research project, the TLO will file for a patent and negotiate an
appropriate license consistent with the terms of the contract.
The TLO can advise about the specific patent
terms of individual research agreements.
4.3.1 COMMERCIALIZATION BY THE TLO
Copyrightable works owned by M.I.T. are normally
licensed through the TLO except where other arrangements are made in accordance
with this policy. Copyrightable material not owned by M.I.T. may be licensed
through the TLO when submitted under a Technology Disclosure Form to the TLO by
its author and accepted for licensing by the TLO.
COMPUTER SOFTWARE: Computer software in
which M.I.T. acquires rights may be either patented or copyrighted and made
available by M.I.T. for commercial purposes through the TLO under various forms
of patent or copyright licenses. Authors and their departments/laboratories will
share in royalties earned from licensing as further set forth in this policy.
If authors desire to distribute software for noncommercial research purposes
which has been commercially licensed by the TLO to third parties, such licensing
must be coordinated with the TLO.
VIDEO WORKS: This policy does not define
commercialization and ownership rights to video works produced through use of M.I.T. facilities or those which may be specifically commissioned by a
department or center within M.I.T. Video works developed pursuant to an
agreement will be subject to the terms of that agreement. The disposition of
rights with respect to other M.I.T.-owned video works will be made on a
case-by-case basis until such time as a policy has been defined.
4.4 TRADE AND SERVICE MARKS
Trade and Service Marks owned by M.I.T. are to
be licensed through the TLO.
4.5 MASK WORKS
Mask works owned by M.I.T. are to be licensed
through the TLO.
In general, mask works royalties will be
allocated as set forth in Section 4.8.
4.6 TANGIBLE RESEARCH PROPERTY
It is M.I.T. policy that any commercial
distribution of M.I.T.-owned TRP be handled only through the TLO.
If TRP developed by M.I.T. is to be distributed
to outside users for commercial purposes, the distribution agreement must
contain provisions negotiated by the TLO covering the terms under which the
property may be used, limits on M.I.T.'s liability for the TRP or products
derived therefrom, and other conventional license agreement terms including
those relating to any intangible property rights (such as patents) which also
may be associated with the use of the tangible property.
4.7 LICENSING OF M.I.T. RIGHTS TO
M.I.T. faculty, staff, or
student inventors or authors may also request a license to
commercially develop their M.I.T.-owned inventions or
copyrighted materials where such licensing would enhance the
transfer of the technology, is consistent with M.I.T.
obligations to third parties, and does not involve a
conflict of interest. Such license will include the payment
of appropriate royalties and required diligence to develop
and disseminate the technology. Such arrangements will be
subject to M.I.T.'s Conflict of Interest and Commitment
policies at stated in Section 4.2.5.
In the case of copyrighted
materials that relate to major projects that typically
involve multiple authors and long development periods,
determining the most effective course for dissemination will
require discussion and special negotiation with the TLO.
M.I.T. will respond to author
requests made under this policy within ninety (90) days.
However, in those cases where the work, generally software,
is not sufficiently developed to allow proper assessment,
M.I.T. may require additional development prior to
responding to an author request.
4.8 ROYALTY DISTRIBUTION
Net royalty income received
by M.I.T. is distributed in the calendar quarter following
the end of each fiscal year. Recipients are inventors,
departments, and centers and interdisciplinary laboratories
according to the formulae below; remaining royalties, after
TLO office and patent expenses, are retained by the MIT
General Fund. Royalties received by departments,
interdisciplinary laboratories and centers, and by the M.I.T.
General Fund are, by policy and law, to be used only for
educational and research purposes.
Royalty shares are calculated
Calculation of Inventors’ Shares
For each Case (usually
defined as the patents, software, or Tangible Property
derived from a single Technology Disclosure), the
distribution of inventor royalties derived from the Case is
calculated as follows:
1. Deduct 15%
Administrative Fee from Gross Royalty Income
This deduction is
directed toward covering the expenses of the
Technology Licensing Office.
2. Then, deduct
out-of-pocket costs not reimbursed by licensees and,
in some cases, a reserve to arrive at Adjusted
Out-of-pocket costs are direct assignable expenses
to a specific case such as patent filing,
prosecution and maintenance fees and specific
When out-of-pocket costs in the next M.I.T. fiscal
year are forecast and future income unlikely, a
reserve may be deducted. Any excess reserve will be
promptly distributed after forecasted costs are
3. Distribute one-third of
the Adjusted Royalty Income to the inventors/authors (“the
Inventors’ Share”). This distribution shall be contingent
upon the inventors’/authors’ adherence to the obligations of
any applicable sponsored research agreement. The Inventors’
Share will be divided equally among all inventors unless all
the inventors agree in writing to a different distribution.
B. Calculation of Royalty
Shares for Departments and Centers
Royalty income received by
the TLO, net of Administrative Fees; distribution of
royalties to inventors and third parties; and net of the
TLO’s expenses of patent prosecution and maintenance is
distributed to academic departments and interdisciplinary
centers and laboratories pro rata based on the total
net royalty income attributed to cases from each department,
center or interdisciplinary laboratory using the following
of the Elements of Royalty Shares for Departments and
“Case Contribution” for each case = Gross Case Royalties
less Administrative Fee and Inventors’ Share. Also subtract
share of royalties owed to third party joint owners or other
third parties, if any
Case Contributions for each Department or Center =
“Department/Center Case Contribution”
All Case Contributions for all Departments and Centers =
“Total Case Contribution”
“Total Net Patent Expenses” = Total TLO patent expenses for
the fiscal year minus all patent reimbursement payments
received from licenses.
“Total Program Contribution” = Total Case Contribution minus
Total Net Patent Expense
2. Royalty Shares for
Departments and Centers
50% of Total Program
Contribution is distributed among Departments and Centers
proportional to their Department/Center Case Contribution
3. Contribution to the
Remaining net income from
Total Program Contribution and from the Administrative Fees
are first used to cover TLO office and patent expenses, with
the remainder going to the General Fund at the end of the
1: If the Vice President for Research determines that
an inventor or author has caused a material breach of a
sponsored research agreement, he or she may after
investigation, but in his or her sole discretion, deny the
inventor or author all or a portion of the royalty income
from any inventions arising from such sponsored research
NOTE 2: The term “Centers” as used
herein includes both Centers and Interdisciplinary
Laboratories. Only Centers and Interdisciplinary
Laboratories that are formally recognized by the Institute
through access to the Laboratory Director’s Account are
eligible to receive royalty income. Except as might
otherwise be dictated by research contract obligations, the
distribution of Department and Center royalties shall be
based on (i) the organization (Department or Center) that
administered the research contract from which the invention
arose, and (ii) the academic Department affiliation of the
inventors, if any, and shall be calculated as follows.
(a) If a research contract
was not administered by a Center, the Department/Center
share shall be allocated to the Department(s) with which the
inventor(s) and research grant(s) are affiliated.
Distribution to the Departments shall be pro rata based on
the number of inventors affiliated with each Department.
(b) If a research contract
was administered by a Center, the Department/Center share
shall be split between the Center and the Department(s)
with which the inventor(s) are affiliated. The distribution
shall be according to the following algorithm per invention:
(i) Each M.I.T. inventor on
the invention is allocated 2 points.
(ii) If an M.I.T. inventor
has a Department affiliation, then the Department receives 1
point and the Center receives 1 point for that inventor. An
M.I.T. graduate student inventor’s Department affiliation is
the Department in which the M.I.T. graduate student is a
(iii) If an M.I.T. inventor
(such as a Research Associate) does not have a Department
affiliation, then the Center receives 2 points for that
(iv) If the M.I.T. inventor
is an undergraduate student, the Center receives 2 points
for that M.I.T. inventor
(v) All of the points for the
M.I.T. inventors on each invention are then totaled for each
Department or Center.
Attribution to the
appropriate Department or Center for each Case is made in
proportion to the points allocated.
4.9 ROYALTIES - SPECIAL CASES
4.9.1 Impractical or
In some cases distribution of
royalties to individuals will be impractical or
inappropriate; for example, where the material was developed
as a center project or where the authors/inventors are not
easily identifiable. The Director of the TLO, in
consultation with the principal investigator (or
Center/Department head if not under a sponsored agreement)
will review the circumstances of development when such
situations have been identified. Generally in such cases,
royalties will be split equally between the Department or
Center and the M.I.T. General Fund. In any situation when
royalty distribution to individuals is not recommended,
distribution of income is subject to the approval of the
Vice President for Research.
4.9.2 Distribution of Equity
If M.I.T. does acquire equity in lieu or partial lieu of
royalties for intellectual property, any inventor/author
receiving an equity position in the company from the company
will not share in MIT’s equity. For all other
inventors/authors, M.I.T. will, upon occurrence of a
liquidation event, distribute cash (corresponding to the
inventors’/authors’ equity shares) to the inventors/authors
according to the formula outlined in Section 4.8(A).
4.10 CONFLICT OF INTEREST OR COMMITMENT
4.10.1 Conflict of Interest in Waiving Technology
Any of the following factors may
signify a conflict of interest which will be taken into account prior to waiving
or licensing M.I.T.'s rights to inventors
(1) an adverse impact on M.I.T.'s educational
responsibility to its students;
(2) an undue influence on the employment
commitment of the inventor/author to M.I.T in terms of time or direction of
(3) a detrimental effect on M.I.T.'s obligation
to serve the needs of the general public;
(4) potential conflict of interest as defined in
M.I.T.’s Policies and Procedures.
4.10.2 Conflict of Interest and Commitment - Startup Companies
If the inventor/author holds
or will shortly acquire an equity or founder's stock and/or option position in a
small, tightly-controlled company to which the invention is licensed, M.I.T. may
accept equity in lieu of royalty only with the prior approval of the Vice
President for Research. If the inventor/author will remain an employee of M.I.T.
after formation of the company in which he or she will acquire an equity
position, the inventor/author will be required to sign a Conflict Avoidance
Statement (see Form No. 4 in Appendix A)
M.I.T. will not accept
research funding from a licensee in which M.I.T., through the TLO, or an M.I.T.
inventor has an equity interest (including stocks, options, warrants or other
financial instruments convertible into equity) unless:
(i) the research is not likely to result
in inventions dominated by the claims of the licensed patent or in software that
is a derivative work of the licensed software; and
(ii) the research will not be conducted in
the inventor's laboratory group; and
(iii) the inventor's students will not
participate in any project funded by the licensee.
When an inventor/author desires to avoid
equity in order to obtain research funding from a small company, M.I.T. will
generally also avoid taking equity through a license agreement. In such cases,
the TLO will require in its license agreements that the inventor not make any
arrangements to obtain equity at a later date and avoid negotiating for equity
until at least two years following the termination of the research agreement.
4.10.3 Conflict of Interest—Licensing Office Staff
In order to assure no present or
potential future conflict of interest, an individual Technology Licensing Office
staff member should not personally invest in non-public companies that have
licensed M.I.T. intellectual property. If a staff member is a partner in a
venture fund, that staff member should not engage in licensing negotiations with
any company in which that fund is invested, and those who are voting partners
should not recommend M.I.T. companies to that fund. TLO staff members also have
a special responsibility to assure that their knowledge of a TLO license to a
public company is not disseminated in any way that could affect the company's
stock price, and that the knowledge is not used for investment purposes by
themselves, their families, friends or business associates.
4.11 COMMITTEE ON COPYRIGHTS AND PATENTS
A standing Presidential Committee will
oversee the operations of the TLO. The committee will include representatives
from those fields of technology generally served by the TLO. This committee
may, from time to time, elect to create a subcommittee of experts in a specific
technology whose function is to recommend policy that relates to the
exploitation of that technology.