- d
(Approved by authority of the President)
Purpose
The purpose of this policy is to set the administration, revenue distribution, and disclosure requirements for technology transfer. It is a companion policy to Executive Order No. 36.
Scope
This policy applies to all University employees and students.
Definitions
Direct Costs—Costs incurred by the University in the protection and licensing of intellectual property.
Equity Security—A financial asset that represents ownership of a company.
Innovation—See definition in Executive Order 36.
Invention and Discovery—See definition in Executive Order 36.
Net Licensing Revenue—All collected royalties, equity, equity process, and licensing feed as reduced by deductions allowed under this policy.
Technology Transfer—When an innovation, invention, or discovery in which the University has an ownership interest is turned into and product or service and is commercialized.
Policy Statements
1. License Revenue
1.1. Determination and Allocation of Costs and Division of Royalties, Equity, and License Fees
1.1.1. Determination and Allocation of Costs
Direct costs must be recovered before distribution of income occurs. Direct costs are determined by CoMotion and include:
- Legal expenses incurred by the University in conjunction with either obtaining and maintaining patent or other legal protection for an invention or copyright or negotiating, managing, and enforcing assignments, waivers, licenses, and other contracts associated with acquiring and transferring intellectual property.
- CoMotion or University expenses associated with a given transfer. This includes but is not limited to travel, market research, and costs associated with the management and liquidation of an equity security.
- College, departments, and unit net licensing funds directed to further the development of the technology and determined eligible for reimbursement by the Vice Provost for Innovation or the Vice Provost’s designee.
College, department, or unit expenses will be reimbursed only after recovery of the CoMotion administrative fee and recovery of any direct costs incurred by CoMotion and the Treasury Office. The expenditures and reimbursements will be governed by a memorandum of understanding among the participants and subject to the following restrictions:
- Expenditures made by units prior to disclosure to CoMotion will not be considered.
- No reimbursements may be made for salaries for faculty hired prior to the disclosure.
- All incremental expenses related to the distribution of copies or materials may be recovered from each sale, rental, or license. Post-disclosure expenditures (usually for prototype development, software development costs, or product improvements) may be reimbursed from licensing income only when creators, authors, and departments eligible for a share of the net licensing income give written approval. This approval must be in advance of any expenditure.
Total gross revenue is the total cash consideration (including royalties, equity, and licensing fees) received by the University pursuant to a contract pertaining to particular intellectual property. Licensee-paid cost recoveries are direct costs incurred by the University and paid by a licensee. Adjusted gross revenue is the total gross revenue less licensee-paid cost recoveries.
CoMotion shall retain licensee-paid cost recoveries and shall deduct an administrative fee of 20% from adjusted gross revenue. From the remainder, CoMotion and the Treasury Office (in cases of distribution of equity or equity proceeds) shall deduct amounts necessary to cover incurred and reasonably anticipated direct costs.
1.1.2. Division of Net License Revenue
Net Licensing Revenue derived from the licensing of intellectual property in which the University holds an interest will be distributed as shown in the Net License Revenue Division Schedule table in this section, after:
- Deducting the CoMotion administrative fee;
- Deducting and reserving expenses as provided in policy; and
- Deducting the amount of any grant from research programs that CoMotion administers, including but not limited to gap funding programs if the license revenue was generated from a technology developed using funding from these programs, and reimbursing such amount back to the CoMotion research program.
Net License Revenue Division Schedule
| Net Royalties, Equity, and License Fees | Inventor, Author | Inventor’s/ Author’s Dept/College | University Research Funds |
| 1/3 | 1/3 | 1/3 |
In the event more than one individual is eligible to receive a particular distribution, such share shall be divided in accordance with any applicable written agreement between all of the eligible individuals, or lacking any such agreement, in accordance with procedures determined by the Provost in consultation with the eligible individuals.
Net license revenue distributions will be made annually according to a calendar schedule determined by CoMotion. Such distributions will typically be made within six months of the close of the fiscal year.
The share for University Research Funds is used to promote research across the whole institution. The college/departmental share is allocated to the dean of the college for distribution. It is expected that at least 75% of this share will go to the inventor’s or author’s department (or other unit) for promotion of research according to departmental (or other unit) and college goals.
For purposes of applying the net license revenue division schedule, income from improvements and updates of inventions (e.g., computer software updates) is considered as an addition to the net income on the initial technology. Special arrangements may be approved by CoMotion when such updates are done by the employee on an outside consulting basis.
This net license revenue division schedule will be used to distribute revenue received by the University on technologies disclosed on or after July 1, 2003. This net license revenue division schedule will also be used for revenue from licenses that combine disclosures made to CoMotion before and after this date, and revenue from licenses derived from equity or equity proceeds where the equity is liquidated after July 1, 2025. No adjustments of prior division or distributions will be made. With regard to license revenue from cash royalties and cash license fees solely from disclosures prior to July 1, 2003, the determination whether a distribution is appropriate and the amount, if any, to distribute shall be governed by the policy in place at the time of the disclosure.
Notwithstanding the foregoing, in appropriate circumstances, the University may enter into a sponsored research agreement (SRA) with a corporate sponsor where the sponsor is to pay an up-front licensing fee in exchange for pre-negotiated, University intellectual property terms (referred to hereinafter as “pre-negotiated IP fee.”) As of the date such an SRA is executed, where there is no existing University intellectual property covered by such SRA, then the net of such pre-negotiated IP fee will be distributed according to the following alternative distribution schedule.
| Net Pre-Negotiated IP Fees |
Lab Budget for Future Projects |
PI’s Dept/ College |
University Research Funds |
| 1/3 | 1/3 | 1/3 |
In the table under this alternative for pre-negotiated IP fees, if specific IP is later developed within the project subject to the SRA, the inventors/authors of such IP and their respective departments and colleges will not receive any portion of the pre-negotiated IP fee. Instead, those portions are allocated respectively to a budget under the control of the PI for future projects in that PI’s laboratory, and to that PI’s department/college. Any other PI-related revenue, including revenue derived from the licensing of specifically identified IP, will be distributed using the schedule in this section titled “Net License Revenue Division Schedule.”
1.1.3. Waiver/Match
Subject to approval by the Provost or the Provost’s designee, a University employee prospectively may waive the receipt of a portion or all of the employee’s share of annual revenue received by the University under a license. The following conditions apply:
- The employee, at the time of the waiver, may designate the employee’s laboratory or research program, department, or other University unit as the recipient of the waived amount. The waived funds will be regarded as regular University funds subject to all of the usual and customary legal and administrative requirements of the University.
- In order to ensure that the use of the funds is consistent with the broad mission of the University, or to avoid financial imbalances or hardships within or among University units, the Office of the Provost, in consultation with the dean or deans of the involved units, may request a plan for the designation of funds be submitted by the employee for Provost approval, and, thereafter, may review the use of the funds at any time. It is expected that the waiver plan will be approved only with the concurrence of the dean of the receiving unit.
- The waiver must be executed prior to the end of the fiscal year in which the revenue was generated. The waiver will continue until the end of the fiscal year in which the employee requests the waiver to terminate and will be irrevocable during this period. No adjustments of prior distributions will be made
- Funds directed to the employee’s research laboratory or program pursuant to a waiver under this policy may only be used to support research and educational expenses associated with the employee’s research laboratory or program. Such funds cannot be used for the employee’s travel (including transportation, lodging, meals, and attendant costs), salary for the employee or a family member, or other similar purpose.
- The funds waived by the employee may be matched by the University subject to the following conditions:
- The match will be on no greater than a 1:1 dollar basis.
- The maximum match by units of the University will be proportionate to the revenue distribution formula. For example, if the formula allocates equal shares of net revenue to the college/school/department and to University Research Funds, each may match up to half the amount waived by the employee.
- Each involved unit of the University reserves the right not to approach the match, the right to terminate the match, and the right to reduce or cap the amount that it will match at any time.
- It is expected that the college/school/department share of a match will be approved only with the concurrence of the dean(s) of the unit(s) in which the innovation was created.
1.2. Equity in Business Ventures
The University may take an equity position in a company whether or not license fees or royalties are paid to the University as part of a negotiated agreement. A typical circumstance under which the University might receive equity would be as part of an agreement licensing a University developed innovation to a start-up or developing business venture. (A business venture includes corporations, partnerships, or other commercial enterprises.)
To ensure a balance of interests for the business venture as well as for the University, the University will generally require that it receive an equity position in such circumstances. This equity interest is managed and disposed of by the University in accordance with investment guidelines prescribed by the Board of Regents and the policies and procedures stated in this and the following section.
If the proceeds to the University Research Fund from the disposition of a particular equity interest are unusually large, the Provost shall confer with Finance, Planning and Budgeting and with the Research Advisory Board on alternative uses for amounts in excess of $5 Million.
1.3. Disposition and Distribution of Equity Interests
1.3.1. Summary
This section describes the University’s policies and procedures governing the disposition and distribution of equity interests received by the University as the result of the commercial licensing or other transfer of University developed intellectual property rights for commercial use. Where equity interests are received for licensing an innovation or intellectual property, the same persons eligible to share in net licensing revenue are also eligible to participate in a distribution of equity interests received by the University, to the extent that the amount realized by the University from the disposition of those equity interests exceeds the University’s costs. These policies and procedures also provide that when the University makes a decision to publicly sell an equity interest, a prospective recipient may request to receive the distribution in either cash or marketable securities or a combination of both. Pending a distribution, the University shall be considered the sole legal and beneficial owner of and shall manage the securities. Prospective recipients have only the right to receive the net proceeds (if any) realized by the University from a liquidation. Under certain circumstances, the University may allow the distribution of an equity interest prior to sale by the University. All distributions of equity interests must be conducted in accordance with all applicable securities laws and in accordance with University policies and procedures.
1.3.2. Distribution Policies
1.3.2.1. Individual Receipt of Net Licensing Revenue
An individual shall be eligible to receive the same percentage of a distribution of Net Licensing Revenue derived from equity interests as they are eligible to receive under the Net License Revenue Division Schedule. In the event more than one individual is eligible to receive a particular distribution, such share shall be divided in accordance with any applicable written agreement between all of the eligible individuals, or lacking any such agreement, in accordance with procedures determined by the Vice Provost for Innovation in consultation with the eligible individuals.
1.3.2.2. College, School, and Department Receipt of Net Licensing Revenue
The college, school, and department (or other comparable University organizational unit) shall receive the same percentage of a distribution of Net Licensing Revenue derived from equity interests (if any) as the percentage they are eligible to receive under the University’s Net License Revenue Division Schedule. Such share shall be distributed to the unit or units in which the research or other activities giving rise to the applicable intellectual property rights were performed in the same proportion as would be distributed to the employees performing such research or other activities, subject to any adjustments deemed equitable and appropriate by the Provost.
1.3.2.3. Equity Securities Distribution
Any cash or other dividends previously paid by a company on equity securities and accumulated by the University is distributed on the same basis as the equity securities upon which such dividends were paid.
1.3.2.4. Early Distribution of Equity Securities
Recipients may be provided, in certain circumstances, a single opportunity to irrevocably request to receive (in whole or in part) an early distribution of equity securities in accordance with the procedures described herein.
1.3.2.5. Liquidation Authority
The University has the sole and exclusive authority to determine the timing of a Liquidation. Recipients, including prospective recipients, have no rights to participate in the management of equity securities, and in particular, have no right to approve, consent to, or receive notice of any securities transactions.
1.3.3. General Rules and Conditions
1.3.3.1. Equity Security Ownership
Only such persons who are expressly eligible to receive a distribution, as provided in applicable University policies and procedures and under any applicable law, may be a recipient. Prior to any distribution, the University is considered the sole legal and beneficial owner of and has the sole right and authority to manage all equity securities.
1.3.3.2. Distributions
Distributions are made in accordance with all federal, state, and other applicable securities laws, including the rules and regulations of the SEC, and all distributions are made on condition of compliance by the recipient and the company with all such laws.
1.3.3.3. Establishment of Procedures, Conditions, and Limitations for Distributions
The University may establish such procedures, conditions, and limitations that it deems proper and appropriate with respect to distributions, including any required tax withholding, restrictions on resale (including holding periods or other measures ensuring the restriction of transfer of equity securities in appropriate circumstances), and the filing of appropriate SEC notices and forms.
1.3.3.4. Restriction, Suspension, or Disengagement of Distribution
The University reserves the right to restrict, suspend, or not engage in a distribution if at any time it determines that:
- The recipient and the company are not in material compliance with this policy and any relevant agreements with the University;
- The distribution cannot be effected in compliance with all federal, state, and other applicable securities laws, including the rules and regulations of the SEC; or
- A distribution would not be in the best interests of the University.
1.3.3.5. Authority to Manage Equity Securities
The University has the sole and exclusive authority to manage equity securities including, without limitation, to make all decisions pertaining to liquidations, sales of equity securities, distributions, and early distributions, including timing, manner, and method.
1.3.3.6. Distributions Net Cost
All distributions (whether in the form of cash, marketable securities, or equity securities) will be net of University costs, including but not limited to the costs to acquire, manage, transfer, or liquidate such securities.
1.3.3.7. Treasury Office Administration of Liquidations
The Treasury Office will administer all liquidations and will ensure that the proceeds of liquidations (whether in the form of cash or marketable securities) will not be released to recipients until received and cleared by the Treasury Office, including making deductions for University costs.
1.3.3.8. Treasury Office Administration of Early Distributions
The Treasury Office will administer all early distributions and will ensure that equity securities distributed as part of an early distribution will not be released to recipients until authorized under all applicable arrangements governing the early distribution.
1.3.3.9. Waiving a Distribution
A recipient may waive (in whole or in part) the right to receive a distribution in accordance with the policies and procedures relating to waivers of rights to receive royalties.
1.3.3.10. University Sole Discretion
The University shall have the sole and final right and discretion to make decisions reserved to it under these policies and procedures and to construe, interpret, and apply these policies and procedures, including the making of any factual determinations necessary for their implementation. The University reserves the right to change at any time its policies and procedures regarding distributions.
1.3.4. Distribution of Cash and/or Marketable Securities Upon Liquidation
1.3.4.1. Authority
Liquidations may arise out of one or more of the following circumstances:
- The sale for cash of marketable securities in a public market;
- The sale of equity securities or marketable securities for cash or marketable securities in a private transaction (including as part of an acquisition or merger of the company);
- The redemption by the company of equity securities from the University for cash or marketable securities; or
- The conversion of equity securities to marketable securities (including the exercise of stock options or warrants or the conversion of other convertible securities).
- Dividends, profit-sharing, or other revenues received based upon University ownership of securities.
1.3.4.2. Procedures
Upon the closing of an agreement (or as soon as may be practicable) pursuant to which the University will receive an equity security, CoMotion will notify the Treasury Office of such an agreement and provide the Treasury Office with the following information:
- The anticipated delivery date of the equity security to the Treasury Office;
- The exact description and identification of the equity security;
- Copies of such additional supporting documentation as may be requested by the Treasury Office.
1.3.5. Early Distribution of Equity Securities
1.3.5.1. Authority and Conditions
An early distribution is allowed only if the University finds in its sole discretion that an early distribution would:
- Be lawful and consistent with University policies and procedures;
- Not be contrary to any securities laws, including the rules and regulations of the SEC, nor likely to create an unacceptable risk of a violation of any such securities law;
- Not be in breach of or inconsistent with any agreements to which either the University, the company, or the recipient is a party;
- Be manageable, if necessary, through implementation of measures limiting the transfer of unregistered or restricted equity securities (including obtaining physical possession of stock certificates and/or having restrictive legends placed on stock certificates); and
- Not create an undue administrative burden, as determined by the sole discretion of either the Treasurer or the Vice Provost for Innovation, or designees.
1.3.5.2. Procedures
In the event the University makes a decision to allow an early distribution (whether at the time of the closing of the agreement to acquire an equity security or thereafter,) CoMotion will notify all recipients in writing of the opportunity to request to receive all or part of the distribution as an early distribution. Whenever any equity securities to be included within an early distribution are under the control of the Treasury Office, CoMotion will provide the Treasury Office with the following information:
- Instructions for dividing the shares in the case of multiple Recipients;
- The exact description and identification of the particular equity security, or portion thereof, subject to an early distribution;
- Appropriate instructions regarding the release and delivery of the equity security; and
- Copies of such additional supporting documentation as may be requested by the Treasury Office.
1.3.5.3. Request to Receive Early Distribution
No early distribution will be made to a recipient unless:
- A properly completed and executed, irrevocable, written request on a form prescribed by the University is returned by the recipient to CoMotion within the time period specified therein;
- The recipient executes any written agreements required by the University and/or the company, which may include custodial agreements, restriction-on-transfer agreements, and agreements containing appropriate indemnification provisions in favor of the University;
- Arrangements, satisfactory and acceptable to the University, are made for payment, including reimbursements to the University, of any required taxes or tax-withholding obligations; and
- Information, satisfactory and acceptable to the University, has been provided to enable the University to fulfill any tax reporting obligations, including information regarding the fair market value of the particular equity security subject to the early distribution.
2. Confidentiality and Public Disclosure
2.1. Public Disclosure/State Exemptions
In general, academic innovations developed at the University become known to the public when the results of research are published. It becomes known to the public that innovations are being reviewed for intellectual property protection and/or dissemination through commercial channels when patent applications publish and/or a product based on the innovation becomes available for sale. To the extent permitted by applicable laws and regulations, including the Washington Public Records Act, the University may exempt certain details of innovations from being reviewed for intellectual property protection and/or commercial dissemination from public disclosure. Such exemptions include trade secrets and certain valuable formulae, designs, drawings, computer source code, and research data.
2.2. Safeguarding Confidentiality of the Innovation
The inventor’s or author’s disclosure is handled in strict confidence by the University (or its patent administration agent). If it is necessary to reveal the details of the innovation to a prospective licensee prior to public disclosure, the prospective licensee may be required to sign a confidential disclosure agreement to protect against unfair appropriation of the innovation.
Employees wishing to provide information or materials such as cultures, compounds, etc., to outside researchers should protect their rights and those of the University by a written agreement before releasing the information or material. A form for this purpose is available from CoMotion.
2.3. University Testing or Development of Privately Owned Technology
In general, University facilities should not be used to further developmental work related to innovations already conceived and belonging to students or employees (the result of independent activity outside the University or because the University has returned rights to the student or employee). However, in some cases it may be in the best interest of the University to allow its facilities to be used in a collaborative effort even though the innovation belongs to the student or employee. In such cases, approval for such use must be obtained through applicable University policies and procedures. Any intellectual property created through such use will belong to the University unless otherwise agreed to in writing, or the facilities are being provided in a documented service agreement at market rates.
Responsible Office and Additional Information
For further information, contact CoMotion.
History
December 20, 2000; October 27, 2003; December 27, 2008; RC, October 24, 2013; February 13, 2015; July 31, 2025.
For related information, see:
- Executive Order No. 36, “Inventions, Discoveries, and Copyright”