1.11.1 Confidentiality and Non-Disclosure Agreements
Confidentiality Agreement (also called Confidential Disclosure Agreement or CDA) and Non-Disclosure Agreement (NDA) are different names for the same thing: a contract that binds one or more parties to keep certain information private and not to disclose it to any other party without some form of approval. These agreements are used at various stages of the Tech Transfer process. In some cases, they are necessary to protect IP; for example, an CDA is necessary before a disclosure of an unfiled (patent) invention, otherwise most potential patent rights are lost forever. The need for an CDA diminishes significantly after filing of a patent application; however, it is still wise to have one in place prior to sharing sensitive information such as the claims of the application before it is published by the patent office.
In the case of trade secrets, a very strict and explicit CDA is always required before the owner discloses anything to anyone outside the ownership circle. However, the TTP must know when an CDA is essential, and when disclosure without one is worth the small risk. The inexperienced TTP will require CDA too soon and too often, even for trivial or non-proprietary information. This is off-putting to potential partners and is unnecessary. There are standard CDAs that are universally accepted as the norm.
The TTP should know these standard agreements and their elements, which are listed here.
1.11.2 Material Transfer Agreements
A Material Transfer Agreement (MTA) is important whenever there is tangible material related to the IP (see Topic 7: Intro to IP Management, Section 1.7.6). Legally speaking, an MTA is a “bailment” contract. A bailment is a contract in which the owner of tangible material grants another party the right to possess (and possibly use), but not own. Examples include the bailment in effect when a car owner gives the right of possession to the car-mechanic for a few days; when clothes are given to the laundry, when you lend your tools to a friend. In each case, the ownership does not change – only the right to possess.
By using an MTA, the owner of IP will retain ownership of the material but allow the recipient to possess it – usually for a limited period, and for a defined purpose. A typical example would be putting an MTA in place before the TTO and inventor provide a sample of a cell-line to a potential Licensee of an IP that uses that cell-line. The provider retains ownership while the recipient is allowed to test the material. The MTA is often the precursor to a later License Agreement. Similarly, the MTA can be used with an Option Agreement (see Section 1.11.4 below), and the two agreements can be merged into a single contract. Since Bioproperty is often of significant value and central to the Tech Transfer process, it is good practice to require an MTA for the transfer of any Bioproperty from the PRSI to any other party, including other research institutions and certainly for-profit companies. The PRSI should have a Tangible Property or Bioproperty policy that defines such rules.
Much more detail on MTAs is provided in this presentation.
1.11.3 Joint IP Agreements
Joint IP Agreements, also called Joint Invention Agreements (JIAs), refer to those contracts between co-owners of IP. Co-ownership of IP occurs when researchers from more than one entity (e.g., two PSRIs or a PSRI and a company) co-invent an invention with potential for IP. A JIA spells out which party will do what, how rights are to be managed and how costs and revenues will be shared. Jointly owned IP is best managed when the co-owners have a defined structure and process for managing all aspects of the IP, including the patenting (or other IP) process, tech marketing, and licensing. Whenever joint research programs are entered into, it is preferable that the parties enter into a research agreement which describes how joint inventions and joint IP will be managed.
Elements of Joint IP Agreements can be found in this presentation.
1.11.4 Option Agreements
An Option Agreement is a precursor to a License Agreement. It is useful when two parties are seriously engaged and interested in entering into a contractually based agreement in the future. The Option is a useful contract when the parties are ready to seriously investigate a License Agreement but are not quite ready to negotiate and finalize a License Agreement. Typically, a potential Licensee may desire an Option Agreement if they are investing significant time and/or money to investigate the potential for a license in the future. The IP owner may wish to use an Option Agreement if the potential Licensee will take months, rather than days to evaluate the IP. The owner may also be willing to enter into an Option Agreement if the potential Licensee is willing to conduct meaningful de-risking (i.e., lowering of risk the technology might fail by conducting certain tests that confirm assumptions and prove hypotheses through empirical evaluation/data) and validation testing of the IP/invention – and if so, to provide all test results to the IP/invention owner as part of the Option Agreement. In addition, the Option Agreement typically requires some form of compensation (e.g., to pay for ongoing IP costs during Option period).
Examples of Option Agreements are provided in this presentation.
1.11.5 License Agreements
License Agreements are the primary means of IP-based Tech Transfer. They are the IP equivalent of rent agreements in real estate. In both license and rent agreements, the property owner retains ownership of the property and grants certain rights of possession and use to the Licensee/renter. The License Agreement is the key goal for the TTP and TTO. It is the primary mechanism by which concrete transfer of an IP/invention takes place – everything else is talk and preparation.
License Agreements take various forms. The basic types include exclusive and non-exclusive, exclusive field-of-use, exclusive by territory, exclusive consortium, etc. Typical elements of any License Agreement include:
- defined licensed IP
- grant of commercial-use rights
- definition of territory
- license fee
- royalty structure and amount
- IP management, and others
The experienced and capable TTP will use all the Licensing tools available to arrive at a win-win agreement between Licensor and Licensee.
Here’s a more detailed description of license types, structures, and elements, as well as examples.