Working with OTCNV
During this phase the startup company will primarily be working with the Licensing Associate from OTCNV that is assigned as the case manager for the technology that is to be licensed. To find out who your case manager is you can use the Who Should I Contact? tool and look under “I have questions about Invention Disclosures”. The case manager that is responsible for invention disclosures for the given technology type, will also be the licensing contact.You will have to have an approved Notice of Intent disclosure (typically approved by your Department Head and Associate Dean for Research) before the license or option agreement can be executed by OTCNV.
How does the flow of money work from the startup to the university to the inventors?
- Milestone fee at acquisition
- Milestone Payments
- Running Royalty
- Patent costs
Venture Innovation Partner (VIP) Services
NC State startups have the ability to work with OTCNV or more of our Venture Innovation Partners.
NC State University Resources
The OTCNV staff is your primary resource for this phase.
Additional Resources – Videos
- USPTO YouTube Channel
- USPTO Videos
- USPTO Trademark Information Network
- How to use the USPTO Website
- Basic Facts About Trademarks Videos
Additional Resources – Web Links
Additional Resources – Books
- Dead on Arrival: How to Avoid the Legal Mistakes That Could Kill Your Start-Up
Written by: Roger Royse
- Start Your Own Corporation: Why the Rich Own Their Own Companies and Everyone Else Works for Them (Rich Dad Advisors)
Written by: Garrett Sutton
Additional Resources – Documents
- Startup Template License – this template license is available for your review to learn about the legal language but does not contain financial terms, due to the vast differences in technology types emerging from NC State.
Frequently Asked Questions
- What does the licensing process look like?
- Typically a startup license can be completed through three meetings. The first meeting will be to hear from the inventor/startup team what technology they are looking to license and why are they interested in creas well as orient the team to OTCNV’s process, the second meeting will be to discuss terms of the license, the third meeting is usually to answer any final questions about terms and finish negotiations.
- The meetings usually involve the inventor(s) and any startup company team members, the licensing associate responsible for that college, and a representative from Venture Development.
- What is typically licensed?
- Can be exclusive or nonexclusive rights to patents, know how, tangible property, trademarks, and/or copyrights.
- What should I pay careful attention to int the licensing language?
- Make sure that you understand and agree with the definitions section (i.e. “Goods and Services”, “Net Revenue”, etc.)
- What will reporting look like?
- When and how do you submit reports and payments will be detailed in the license agreement under the “Reports” section, in addition TCNV makes an extra effort by holding a post-license meeting with the staff from the office that you will be engaging with (reporting, financial, license, venture development) and provides a condensed “cheat sheet” summarizing the important reporting and financial obligation dates.
- How long will the licensing process take?
- If TCNV decides that the company is the best possible licensee, negotiations with OTCNV for a license could take several weeks to several months. However, some negotiations may only take a few days if both parties can agree to terms easily. OTCNV strives to complete the licensing process within 45 days from the date of the first meeting.
- Can you share an example license/option agreement?
- After the initial meeting with OTCNV and discussing the startup company,
- What are the typical terms of the startup license?
- Upfront fee/License fee
- Under current UNC policies, inventors who are cofounders are not eligible to share in the University portion of liquidated equity
- Ghost Equity, promise to pay, major transaction fee, milestone fee
- Running royalty
- Minimum Annual Royalties
- Designed to incentivize commercialization
- Patent costs
- Ongoing Patent Costs – Ask for approximate schedule
- Past patent expenses – Can be deferred one year and then broken up into a structured repayment plan to conserve the critical early cash of the startup
- Sales Milestones
- Development Milestones
- Company Milestones (e.g. Series A Funding, SBIR/STTR Award,
- Should be tied to milestones that will generate cash flow for company
- What are the sections of the license agreement?
- Due Diligence
- Use of Licensed Marks
- Infringement of Third-Party Rights
- Term & Termination
- Indemnity & Insurance
- Export Controls
- Use of Other Party’s Name
- Severance & Waiver
- Survival of Terms
- Governing Law
- Entire Understanding
- Electronic Copy
- Force Majeure
- Legal Counsel
The key consideration is the relationship between the licensee and the OTCNV (licensor). Securing technology rights is simply the first step as you begin down the path of building a startup company, potentially licensing additional technologies, sponsoring research back to the University, needing to amend a license term or date for any number of reasons, filing reports, making financial payments in accordance with the licensing terms, or any number of other requests that the startup might engage with OTCNV about. The relationship between the startup and OTCNV should be viewed as a long-term one. It is important to keep this in mind and act accordingly.