1. Intellectual Property and Technology Transfer Ron Huss, Ph.D., Associate Vice President of Research and Technology Transfer Michael Brignati, Ph.D., J.D., Associate General Counsel

2. What is Intellectual Property? Intellectual Property is: Copyrights Patents Trademarks Trade Secrets

3. Intellectual Property 101 Copyrights Protects works of authorship that is fixed in a tangible medium Examples: Articles, books, software code, music, works of art, engineering drawings and schematics Term: Life of the author + 70 years Patents A patent secures for a limited time the right to exclude others from making, using, or selling an invention in the US A patent DOES NOT give the inventor the right to make and sell his invention Contract between the US government and an inventor – NOT A MONOPOLY What can be patented? “Anything under the sun made by man.” Process, machine, article of manufacture, or a composition of matter Term: 20 years from filing date Trademarks Word, name, symbol, or device that identifies the source of good or services Term: Lasts as long as the mark is continuously used in commerce Trade Secrets Any type of information that: is not commonly known or available to the public; derives economic value from not being generally know; and is the subject of reasonable efforts to maintain its secrecy Term: Trade secrets do not expire so long as they remain a secret

4. How Does Penn State Define Intellectual Property? Policy IP01 “Research intellectual property” is the term used to describe the discoveries, inventions and creations with potential commercial value that result from research activities. Most research intellectual property developed at the University can be protected by patents, but some University research intellectual property (i.e. software) is more appropriately protected by copyright. Although some research intellectual property may be protected by trademark or trade secret, it is rare for the University to utilize these methods of protection. Subject to the Intellectual Property Agreement “Instructional intellectual property” is the term used to describe materials produced for instruction in any format, including (but not restricted to) print materials, video recordings, audio recordings, and digital materials. “Scholarly intellectual property” is the term used to describe materials resulting from scholarly, literary, and artistic work such as journal papers, books, essays, poems, paintings, sculpture, musical scores, etc. in any format, including (but not restricted to) print materials, video recordings, audio recordings, and digital materials. Sponsored Research Agreement ¶ 1.2 “Intellectual Property” shall mean those inventions and/or discoveries conceived or reduced to practice in performance of this Project and resulting patents divisions, continuations, or substitutions of such applications and all reissues thereof, upon which a University employee of agent in the named inventor.

5. Sponsored Research Agreement ¶ 9 Sponsor has the right to take ownership of Intellectual Property. University reserves the right to file a provisional patent application to protect Intellectual Property in circumstances where University has an expedited need to publish or present results. University will promptly disclose Intellectual Property to Sponsor in writing. Sponsor has ninety (90) days from the receipt of the disclosure to request University to assign ownership to Sponsor. In consideration for assigning ownership, Sponsor shall reimburse University for any patent protection costs incurred. Sponsor agrees to pay a 1% royalty on net sales of products or processes utilizing Intellectual Property when annual sales of such products or processes exceed $20 million. University retains the right to use Intellectual Property for non-commercial research and educational purposes. In the event University background intellectual property is required to practice Intellectual Property, University will negotiate an option or license to the extent such rights are available.

6. Sponsor has the right to take ownership of the IP All researchers must agree with this approach It is OK for researchers to disagree with this approach It is OK for researchers to ask questions and discuss this approach There is a process for assigning IP to Sponsor Assignment is transfer of ownership Need to clearly define IP being assigned to Sponsor Do not accept “Penn State hereby assigns” language in research agreement IP has not been clearly defined Consequently, Penn State does not own IP at this point Sponsor has choice AND researchers have a choice Researchers should be aware that assigning IP to the Sponsor will most likely preclude using this assigned IP as a basis for future research projects with other companies

7. University reserves the right to file patent applications Why would Penn State file a patent application if we intend to assign ownership to Sponsor? If Penn State files a patent application, then Penn State will offer to assign patent rights to Sponsor. How many times has Penn State filed a patent application under these circumstances? If Penn State does not file a patent application, then Penn State will offer to assign the invention disclosure to Sponsor.

8. University will promptly disclose IP to the Sponsor in writing Researchers prepare and submit an invention disclosure to college research office College research office forwards invention disclosure to Office of Technology Management (OTM) OTM contacts Sponsor to discuss assignment of IP OTM collaborates with the Office of General Counsel (OGC) to assign IP to Sponsor

9. Sponsor has 90 days to request assignment of ownership Sponsor has choice: To take ownership of IP from Penn State To decline to take ownership of IP – then Penn State will continue to own IP and treat it like any other invention disclosure The process for assigning IP to Sponsor Researchers help to clearly define IP by completing/submitting an invention disclosure to college research office Intellectual Property Agreement - researchers promise to assign IP ownership to Penn State Researchers assign IP to Penn State Penn State assigns IP to Sponsor How many times has Penn State assigned IP to Sponsors?

10. If assigned, Sponsor shall reimburse patent costs If Penn State filed a patent application and it is assigned to the Sponsor, then Sponsor will reimburse Penn State for its out-of-pocket patent expenses Out-of-pocket patent expenses are typically $2000 - $3000 Can be as high as $10,000 to $15,000

11. Sponsor agrees to 1% royalty on sales exceeding $20M If the Sponsor is wildly successful in commercializing IP assigned by Penn State (i.e., net sales in excess of $20 million), then the Sponsor will pay a 1% royalty in these sales share filed a patent application, which will shared among Penn State and the inventors The “Bonanza” clause Normally, Penn State and its researchers will not benefit financially form the Sponsor’s use of the assigned IP. How many times have Sponsors shared financial benefit with Penn State and its researchers?

12. University retains rights for non-commercial research & education Penn State always retains these rights in all of its agreements. This is accomplished in the Assignment Agreement

13. Sponsor has option to license “background” IP Sponsor has the right to know upfront if any Penn State “background” IP will be required for the Sponsor to practice new IP developed during the research agreement If available, Penn State will license background IP to Sponsor on favorable terms How many times has Penn State licensed background IP to Sponsors?

14. Penn State Industry and Private Research Expenditures

15. Feedback on Penn State’s IP Sponsored Research Policy Feedback from Sponsors? Feedback from Faculty? Feedback from Negotiators?