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  Distribution of License Income

Licensing of University inventions may take the form of an exclusive license, a non-exclusive license or a field-of-use license to either an established business or to a new business entity. In addition, the licensed invention may be for a patentable invention, a copyrightable invention or for know-how. Regardless of the type of technology or the type of licensee, the primary goal of the University is to make the invention available for the greatest public benefit.

Exclusive License
An exclusive license provides the licensee with the exclusive rights in an invention. This means that the University may not grant these same rights to another entity without prior written approval of the licensee. Exclusivity is not all inclusive. For instance exclusive rights may be restricted to a geographic area, to a particular field of use, or for a limited period of time, as defined by the license agreement.

Non-Exclusive License
A non-exclusive license allows the University to grant rights to make, use, have, made or sell the invention to more than one business entity. Typically, non-exclusive licenses have lower financial terms than exclusive licenses.

Field of Use License
A field-of-use license grants rights in the invention only to specific fields identified in the license agreement. For instance, it is possible to provide an exclusive field-of-use license for an educational tool to a company whose market interest is primary schools, while granting another field-of-use license to a different business entity for higher education markets. This effectively allows the University to grant a license to several different companies, each with an expertise in a different niche market, thus expanding its public benefits to a larger audience.

Know-How License
A know-how license grants the licensee the right to practice the unpublished knowledge necessary to make a given product, even if that product isn’t protected by patent coverage. For instance, the University may license an unpatented monoclonal antibody for sales in a research regent catalog but the knowledge required to make the antibody must be conveyed separately under a know-how agreement.

License Terms
License terms vary with each license agreement. In particular, financial terms vary according to the target market, industry, stage of development of the invention, and financial wherewithal of the licensee. However, to assure the University that the licensee will practice the invention with diligence and good faith, certain terms are universally required. Typical license terms include:

  • Exclusivity: defines whether the license is exclusive, non-exclusive or restricted in some other manner;
  • Definition of the license product or rights conveyed to the licensee;
  • Financial Terms may vary on type of licensee and may include any or all of the following:
        1. Established Licensee: license fee, milestone payments, annual fees, royalties based on         net sales; minimum annual royalty, etc.
        2. Start-up Business Entity: Typically start-up businesses have fewer financial resources         available for licensing. Consequently equity in lieu of licensee fees are generally         considered in addition to milestone payments, annual fees, royalties based on net         sales; minimum annual royalty, etc.
  • Diligence Milestones: to assure that the licensee is actively developing the product for commercialization, diligence milestones are provided as incentives. Milestones generally require the licensee to achieve a milestone by a pre-defined date; payment of fees is also typically associated with the milestone.
  • Reporting requirements: usually involve annual, semi-annual or quarterly reports

In addition to the above, license agreements typically preserve the right of the inventor to perform continuing research in his/her field and to publish accordingly. The University should also preserve its right to use the invention for its own research, scholarship or clinical activities.

Distribution of License Income
Distribution of all royalties and other income from intellectual properties owned by the University shall take into account all direct expenses related to prosecuting and maintaining a patent, including fees for outside legal counsel, which shall be reimbursed to the Office of Technology Transfer from the gross receipts related to the invention. Remaining income (net receipts) shall be distributed as follows:

1st $1000
(Gross Receipts)
Next $100,000
(Net Receipts)
Greater Than $101,000 (Net Receipts)
Invention Management Fund
Division of Research & Graduate Studies

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East Carolina University
Office of Technology Transfer
Greenville Centre, Room 2400
2200 South Charles Boulevard
Greenville, NC 27858-4353 USA