We understand that startup founders want to have a fair license that positions them well for success, and we want the same for our startup partners. Venture Partners utilizes databases with license terms from over 1,000 university licensing deals, and we offer terms that are startup-friendly and significantly below market average.
Within the Licensing with EASE® program for startups, licensing terms have been vetted and pre-negotiated with startup investors and law firms that represent university startups. Our independent partners have validated that the terms are investible and fair.
The startup accelerator Y Combinator has advised university spinout founders to seek a royalty rate of <5% and 3-5% equity position to the university. Our license terms are considerably more favorable to the startup than even these founder guidelines.
Because Licensing with EASE® terms have been vetted by startup investors and used to successfully streamline licensing with so many startups, the terms are non-negotiable. If a startup does not wish to use the Licensing with EASE® terms, the university is willing to enter into negotiations but will seek market rate terms. The latter process includes less favorable terms to the startup and a longer process. We therefore strongly urge startups to take advantage of the unique Licensing with EASE® program.
- Licensing with EASE® is available to founders who want to spin out university technology.
- The invention must have been disclosed to Venture Partners at CU Boulder via the online Invention Disclosure Form or the Copyrighted Material Submission Form.
- There is consensus among inventors/authors to use Licensing with EASE® when a company is founded or co-founded by inventor/s.
- The invention’s rights are available for licensing, the university is not precluded from granting such rights, and there are no active negotiations with a third party for an option or license.
- An individual with relevant business experience has joined startup’s executive leadership or advisory board.
- University employees with roles in the startup have 1) executed employment/consulting agreements with the company to formalize their respective roles, and such agreements include the university’s standard third party employment/consulting addendum, and 2) have filed an updated Disclosures of External Professional Activity (DEPA) form and finalized their Conflict of Interest Management Plans.
- The startup was specifically founded to commercialize a CU Boulder innovation, is incorporated in the United States and has raised a preliminary amount of capital (equity investment, convertible debt, grant funding, etc). If the startup has not yet secured capital, a Startup Option Ageement will be a more appropriate first step than a license.
- The invention has not previously been licensed to the company requesting LIcensing with EASE®, or to a company which was under the direction of the individual(s) who now direct(s) the company requesting LIcensing with EASE®.
Net Sales: University calculates “Net Sales” as the total gross receipts for sales arising from the licensed products by or on behalf of licensee and sublicensees. Net Sales typically excludes returns, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced and paid), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted. Net Sales include the fair market value of any non-cash consideration received.
Sublicense Income: If sublicensing is permitted, Sublicense Income includes any and all consideration received by licensee from a third party under any agreement or transaction that includes a grant for the grant of a sublicense to the intellectual property rights except for royalties on Net Sales by a sublicensee. Sublicense Income also includes the fair market value of any non-cash consideration paid to licensee for sublicense rights. On sublicenses made in other than arm’s-length transactions, the value of the Sublicense Income is that which would have been received in an arm’s-length transaction, based on a like transaction at that time.
Royalty: University does not charge multiple royalties on Net Sales when a product is covered by multiple patents licensed from University. University also does not reduce royalty owed when products are covered by non-University patents. In addition, Royalty on Net Sales passes through to any sublicensees.
Equity: In the case of a license that includes upfront Equity, the shares carry limited anti-dilution protection. All licenses include 10% participation rights in future investment rounds. Such participation rights expire with the first non-participation once anti-dilution protection is exhausted.
Milestone Fees: Depending on the innovation, University may require milestones fees.
Retained License: As part of University’s mission to create and disseminate knowledge, University must retain a transferable right to practice the licensed intellectual property/patent rights, for non-profit research, educational, or other non-commercial purposes, including sponsored research.
Bayh-Dole Act: When Intellectual Property Rights have been developed using federal funds, the license granted by University will be subject to the Bayh-Dole Act, 35 U.S.C. §§ 200-212, and 37 C.F.R. § 401.
Colorado Open Records Act: University is subject to the Colorado Open Records Act (“CORA”), which requires that all public records be made available to citizens for review upon specific request. While University can contractually agree to maintain confidentiality, University is compelled to disclose most non-proprietary information under CORA.
Due Diligence Reporting Requirements: As a state university receiving government funding that supports research, University has institutional reporting obligations under both state and federal law. University’s licensees are expected to provide requested information and reports in support of these obligations. These due diligence and reporting requirements are typified by, but not limited to, the reporting requirements of the Bayh-Dole Act.
Patent Prosecution Costs: University is to be reimbursed in full for all historical and on-going patent prosecution costs. The costs are prorated in the case of multiple licensees, for example, when intellectual property rights are licensed in different fields of use.
Enforcement: University has first right to institute suit against any suspected infringement of the intellectual property rights by a third party. In cases when all fields of use and intellectual property rights were licensed to one party, the University may agree to grant such first right to the licensee.
Infringement: University recognizes the right of licensee to defend (in its own name and at its own expense) any claim of infringement brought by a third party.
No Warranty: University does not extend any warranties of any kind, either express or implied, regarding the intellectual property rights.
Indemnification: University requires that all licensees indemnify University for claims and liability arising out of the use of the products or services which utilize University’s intellectual property. Further, University is prohibited from providing any indemnification to our licensees in accordance with Colorado Constitution at Article V, Section 33 and at Article XI, Section 1.
Insurance: University requires that its licensees obtain general liability insurance as part of any intellectual property licensing agreement, including product liability insurance, on such terms and in such amounts as are reasonable and customary within their particular industry, and that such insurance coverage lists University and its respective regents, employees, students, officers, agents, inventors, affiliates, and representatives as additional insureds.
Assignment: University permits our licenses to be assigned under certain conditions or upon prior written approval by University, such approval not to be unreasonably withheld or delayed.
Choice of Law: Any licensing agreement entered into by University must be governed by and construed in accordance with the laws of the State of Colorado. Likewise, University must require that licensees consent to Colorado jurisdiction and venue in the event of legal proceedings.
Right to Publish: University must retain the right to publish research results, including research that University licenses. University shall take reasonable steps to avoid the loss of any patent rights.
Export Prohibition: Licensee must agree to export or re-export of university intellectual property and information per the laws and regulations of the United States.
1. Amount of investment capital raised by startup through which equity percentage does not dilute.
2. Begins year four from license execution.
3. 0% sales royalty on sales up to $20M. 0.5% royalty for sales >$20M.
4. Semiconductor licenses eligible for a 50% reduction.
- Includes three years of improvements at no additional cost.
- 10% participation rights for startup financings, such rights expiring upon non-participation in a post-license financing that occurs following the latter of anti-dilution exhaustion or over $3M total equity financing.
- Where an innovation has multiple applications or fields of use, for example a platform technology, Venture Partners and the startup will discuss the most appropriate field(s) to include in the license.
- Licensee pays patent costs (pro rata if multiple field of use licensees).
- Therapeutic and vaccine licenses also contain fees totaling $3M for late clinical ($1M) and regulatory ($2M) milestones.
1. Amount of investment capital raised by startup through which equity percentage does not dilute.
- 10% participation rights for startup financings, such rights expiring with non-participation in the first financing after anti-dilution exhaustion.
- In the case of Software Patent licenses, Licensee also pays patent costs (pro rata if multiple field of use licensees.)