Industrial Partners

FOR INDUSTRY

(For answers to specific questions, refer to the “Frequently asked Questions” section below).

If you are a company interested in sponsoring research at South Dakota School of Mines & Technology, please see the Office of Sponsored Programs web page.

Our Process

Our aim is to enter into a mutually rewarding arrangement with our licensees. We recognize that most licensees will usually need to invest substantial time and resources before a commercial product or process is ready for market, and our licensing terms take that investment into consideration. Within the legal constraints imposed on us our terms are flexible and are tailored to match market realities. With new invention disclosures regularly coming into our office, our portfolio is constantly changing. We encourage companies to check on our currently available technologies on a regular basis. If you let us know of your specific interests, we’ll let you know about new technologies which may become available in your area of interest.

A typical agenda for our first discussion with a Licensee is:

(1) Licensee’s Objectives and Needs

(2) The South Dakota School of Mines and Technology ’s Objectives and Needs

a. Commercial development for public benefit

b. Share in the financial return

c. Management of potential conflict of interest

d. Conformity to government rules and regulations

e. Indemnification

f. Disclaimer, Warranty and Limitation of Liability

g. Governing Law

(3) License Option

a. Field(s) of use

b. Exclusivity

c. Term

d. Diligence milestones

e. Fees

(3) License Agreement

a. Field(s) of use

b. Exclusivity

c. Term

d. Sublicensing

e. Fee

f. Royalties

g. Diligence milestones

Our Policies

Intellectual Property.

You can read the South Dakota School of Mines and Technology ’s Intellectual Property Policy at http://sdmines.sdsmt.edu/research/policies.

Inventions Funded in Whole or In Part by U.S. government.

the South Dakota School of Mines and Technology , in common with other research institutions, is subject to the Bayh-Dole Act which sets out the disposition of inventions made with Federal assistance. The Act provides that the institution may elect to retain title to inventions conceived or first reduced to practice in the performance of work under a Federal government agreement. Each such invention must be disclosed to the government sponsor. We must grant the U.S. government a royalty free license for governmental purposes, give preference to U.S manufacturers, give preference to small businesses, and share income with inventors. We must also periodically report our licensing activity to the government. We must adhere to these provisions regardless of how little Federal funding was utilized in the conception or development of the invention.

Internal Revenue Service Procedure 97-14, Guidelines for Research Agreements.

This IRS procedure is relevant in those cases where a research sponsor is seeking to acquire intellectual property rights to any invention which might emanate from the sponsored research, prior to the development of the invention. Generally it provides that the sponsor must pay a competitive price for rights to any invention. Potential sponsors can get further information on this procedure from the Office of Intellectual Property Management & Industrial Liaison.

Licensing Faculty-Associated Companies.

The South Dakota School of Mines and Technology must be sensitive to public perception when a faculty member is associated with a potential licensee company. While we encourage entrepreneurship and faculty involvement in start-up companies, we are aware of the faculty member’s potential conflict of interest and must negotiate any such license agreement from an “arms-length” relationship. Full details of relevant conflict of interest issues can be viewed athttp://sdmines.sdsmt.edu/research/policies.

Indemnification.

South Dakota School of Mines and Technology will not normally agree to an indemnification provision either because it cannot keep reserves sufficient to cover any financial liability that might result from granting indemnity.

Warranty.

Giving a warranty is in essence an indemnity in most cases. Therefore, South Dakota School of Mines and Technology cannot agree to provide any type of warranty or indemnify a third party for any breach of representation or warranty. A related issue involving warranty relates to the fact that as an educational institution South Dakota School of Mines and Technology performs research of an experimental nature and is not in the business of developing products, and cannot guarantee that a product will meet specifications or perform in a certain manner.

Governing Law.

As a State Agency, South Dakota School of Mines and Technology does not have the legal power or authority to contractually grant to a third party any right pertaining to potential litigation (such as venue). Therefore we ask that any agreement be governed by the laws of the State of South Dakota.

FREQUENTLY ASKED QUESTIONS

Background Technology

What is Background Technology?

Background Technology (or Underlying Technology) is pre-existing technology which is essential to practice an invention. It can also include technology which it is desireable to have in order to best practice the invention.

Bayh-Dole Act

What is the Bayh-Dole Act?

South Dakota School of Mines & Technology, in common with other research institutions, is subject to the Bayh-Dole Act which sets out the disposition of inventions made with Federal assistance. The Act provides that the institution may elect to retain title to inventions conceived or first reduced to practice in the performance of work under a Federal funding agreement. South Dakota School of Mines and Technology must disclose each invention to the government sponsor in a timely manner, and comply with other regulatory actions. In addition, we must grant the U.S. government a royalty free license for governmental purposes, give preference to U.S manufacturers, give preference to small businesses, and share income with inventors. We must also periodically report our patenting and commercialization activity to the government. We must adhere to these provisions of the Act regardless of how little Federal funding was utilized in the conception or development of the invention.

Conflict of Interest

What is conflict of interest?

“Conflict” can be defined as “any outside activity or financial interest which interferes with the full and faithful performance of the employee’s responsibilities or obligations to the School.” The term “conflict of interest” refers to situations in which financial or other personal considerations may directly and significantly affect, or have the appearance of directly and significantly affecting, a faculty member’s or staff member’s judgment in exercising any School duty or responsibility or in the conducting or reporting of research. The bias that such conflicts may conceivably impart can adversely affect many School activities, including decisions about the supervision or evaluation of students, collection, analysis and interpretation of data, sharing of results, choice of protocol, use of statistical methods, and restrictions on publication.

Governing Law

Will South Dakota School of Mines & Technology accept our State of incorporation as governing any license agreement?

Not normally, unless your state of incorporation is South Dakota. As a State Agency, South Dakota School of Mines and Technology does not have the legal power or authority to contractually grant to a third party any right pertaining to potential litigation (such as venue). Therefore we ask that any agreement be governed by the laws of the State of South Dakota.

Income

What do we mean by “Income”?

When we use the term “income”, we mean income derived by South Dakota School of Mines & Technology from the commercialization of intellectual property. This income is distributed in accordance with South Dakota School of Mines and Technology’s Intellectual Property Policy. It includes up-front option and license fees, royalties, benchmark payments, and the realization of equity held by South Dakota School of Mines and Technology as part consideration for the grant of a license.

How is the income received by South Dakota School of Mines & Technology from technology licensing distributed?

Net income, that is gross income less patenting and any other direct costs, is shared between the School and the inventor(s). The share of the income retained by South Dakota School of Mines and Technology is first used to meet the costs of South Dakota School of Mines and Technology’s intellectual property management operations, including patent costs on those inventions which are not successfully commercialized, and any balance is used to further the Institute’s research activities.

Indemnification

Will South Dakota School of Mines & Technology, in negotiating a license, agree to indemnification of the licensee?

South Dakota School of Mines and Technology will not normally agree to an indemnification provision because it cannot keep reserves sufficient to cover any financial liability that might result from granting indemnity.

Internal Revenue Service Procedure 97-14, Guidelines for Research Agreements

What is IRS Procedure 97-14?

Internal Revenue Service Procedure 97-14 is relevant in those cases where a research sponsor is seeking to acquire intellectual property rights to any invention which may emanate from the sponsored research, prior to the development of the invention. Generally it provides that the sponsor must pay a competitive price for rights to any invention. Further information on this procedure can be obtained from the Office of Sponsored Programs.

Inventors

If we seek to license a technology from South Dakota School of Mines and Technology, are the inventors involved?

The active collaboration of the inventor(s) is essential in the marketing and licensing process. They can help determine the apparent value of the invention, and they respond to companies’ technical questions on the invention and demonstrate its uses and advantages. However, although the inventor(s) are consulted and advised during the negotiating process, they are not usually directly involved in the negotiations.

License

Why is South Dakota School of Mines & Technology involved in technology licensing?

As a public institution, South Dakota School of Mines and Technology has an obligation/responsibility to make its research results available for the benefit of the community. Entering into commercial arrangements for the further development of technology is often the only way by which the School is able to ensure that the technology is made available. The School’s technology is usually at an early stage, and will require a substantial investment in its further development before a product is ready for market. No company would normally commit to the support of that further development without an agreement in place to ensure that it will receive commercial benefit from its investment should the further development be successful. Also, the School has specific obligations under the Bayh-Dole Act to protect and seek to commercialize any invention arising from government sponsored research, as well as other obligations under that Act.

Is there a standard fee and terms for a license?

No. License fees and royalty rates, and other terms and conditions, are determined on a case by case basis because every technology, and the circumstances of the proposed commercialization arrangement, are unique.

What issues are covered in a license agreement?

The issues covered in a license agreement include:

- What is being licensed;

- Exclusivity or non-exclusivity of the license;

- Coverage of all uses of the invention or restrictions to specific applications

- Coverage of all regions or restriction to specific territory (e.g. USA);

- Consideration (up-front payments, royalties, benchmark payments, payment of patent costs, equity);

- Inclusion of the right to sub-license to another party;

- Ownership of improvements;

- Performance benchmarks/criteria (investment requirements, time to market, sales, etc.);

- Governing law;

- Indemnification;

- Term of the license;

- Limitation of liability and

- Termination criteria.

What is South Dakota School of Mines & Technology’s major aim when proposing a license agreement?

The goal in any negotiations is to enter into a license agreement which is fair and reasonable to both parties, and will ensure a long-term mutually rewarding relationship between the School and the Licensee. Within the legal constraints imposed upon us, flexibility is the key word. Most licenses have circumstances that require special consideration. A few examples include the investment to be made by the Licensee to bring the invention to market, competitive technologies, whether the technology is a stand-alone invention or needs another technology to enable it to be utilized, and the patent position. If the Licensee is a start-up company, they normally cannot afford significant up-front payments, but can offer equity or payments to be made when certain benchmarks are attained.

Materials Transfer Agreement

What is a Materials Transfer Agreement?

A “Materials Transfer Agreement” (MTA) is an agreement that provides that any materials being made available by one party to another, are being made available for scientific work only and not for commercial use. No right of ownership or commercial use is transferred to the recipient of the materials.

Office of Sponsored Programs

What is the Office of Sponsored Programs (OSP)?

OSP is a division of the Vice-President for Research’s Office. OSP’s mission is “To promote efficient and effective administration of sponsored research projects and grants”. Key features of OSP include:

- A “One Stop Shop” for industry, commerce and the professions;

- Dedicated “Cradle-to-Grave” Contracting Officers;

- Fast Track Project Initiation;

- Ability to Quickly Resolve Intellectual Property and Other Contractual Issues D

- during the Negotiation Process; and

- Ongoing Project Review to Ensure Project Deadlines and Budgets are met.

Option

What is an option?

An option is an agreement which grants a company, for consideration, an exclusive right for a limited period of time to evaluate the technology and/or negotiate a license on agreed upon terms and conditions.

Policies

What are South Dakota School of Mines & Technology’s Policies that I should be aware of?

Like any other institution or organization, we have to work within the parameters of certain laws, regulations and procedures. These include:

1. South Dakota School of Mines and Technology’s Intellectual Property Policy. Full details of this policy can be viewed at http://sdmines.sdsmt.edu/research/policies.

2. The Federal Government’s Bayh-Dole Act

South Dakota School of Mines and Technology, in common with other research institutions, is subject to the Bayh-Dole Act which sets out the disposition of inventions made with Federal assistance. The Act provides that the institution may elect to retain title to inventions conceived or first reduced to practice in the performance of work under a Federal government agreement. Each such invention must be disclosed to the government sponsor. We must grant the U.S. government a royalty free license for governmental purposes, give preference to U.S manufacturers, give preference to small businesses, and share income with inventors. We must also periodically report our licensing activity to the government. We must adhere to these provisions regardless of how little Federal funding was utilized in the conception or development of the invention.

3. Internal Revenue Service Procedure 97-14, Guidelines for Research Agreements.

This IRS procedure is relevant in those cases where a research sponsor is seeking to acquire intellectual property rights to any invention which might emanate from the sponsored research, prior to the development of the invention. Generally it provides that the sponsor must pay a competitive price for rights to any invention. Potential sponsors can get further information on this procedure from Office of Sponsored Programs.

4. Licensing Faculty-Associated Companies. South Dakota School of Mines and Technology must be sensitive to public perception when a faculty member is associated with a potential licensee company. While we encourage entrepreneurship and faculty involvement in start-up companies, we are aware of the faculty member’s potential conflict of interest and must negotiate any such license agreement from an “arms-length” relationship. Full details of relevant conflict of interest issues can be viewed at http://sdmines.sdsmt.edu/research/policies.

Right of First Refusal

What is a Right of First Refusal?

A right of first refusal is an agreement wherein a company is given the first right, for a limited period, to seek to negotiate a license for an invention. It does not set pre-determined terms and conditions and does not preclude us from seeking interest from other parties. However, if another party makes an appropriate proposal for license rights, then we must first offer the right of first refusal holder a license on the terms offered to us by the other party.

Start-Ups

Does South Dakota School of Mines & Technology encourage faculty or student start-ups?

South Dakota School of Mines and Technology actively encourages entrepreneurship and the involvement of its faculty inventors in start-up companies if they so choose. However we must be sensitive to public perception when a faculty member is associated with a start-up company. There is always the likelihood of conflict of interest, but these conflicts can usually be managed. The School’s Conflict of Interest Policy outlines procedures we follow in dealing with this matter. To review this policy go to http://sdmines.sdsmt.edu/research/policies.

What factors does South Dakota School of Mines & Technology consider when considering licensing a start-up?

When licensing to a start-up South Dakota School of Mines and Technology must ensure:

- That the technology being licensed is appropriate for a start-up (for example, a process for the production of ethanol would not be appropriate due to the capital resources required).

- That a sound management team, with business experience, is in place.

- That they have a realistic business plan with appropriate cash flow projections.

- That the license agreement includes milestones for bringing the technology to market.

- That any potential conflicts of interest can be managed.

Do you write or help to write business plans?

No, but we work closely with others who will help with this.

Does South Dakota School of Mines & Technology take any management role in a start-up?

No, nor any Board position.

Students

Are students subject to South Dakota School of Mines & Technology’s Intellectual Property Policy?

Yes. If any intellectual property is conceived or developed by a student during the performance of any assigned research work, title to the intellectual property resides with South Dakota School of Mines and Technology. Title to Scholarly Works resides with the student. Student inventors enjoy the same rights and benefits as do faculty and staff inventors.

Technology Transfer

What is Technology Transfer?

Technology may be transmitted through the intangible process in which any body of knowledge is diffused, or it may be the subject of a specific communication, enshrined in a particular transaction. Technology transfer, in this latter sense, conventionally takes the form of an integrated sequence of commercial transactions. This sequence includes the grant or assignment of industrial property rights; the communication of technical know-how in a documentary form; and the communication of technical; or other know-how in a documentary form; and the communication of technical or other know-how in the supply of services. It is the grant of industrial property rights to which we are referring when we use the term, in a generic sense, of “technology licensing.” In practice, we are referring to any means adopted for the commercialization of technology, whether it is licensing, joint venture, distribution or any other appropriate arrangement.

Underlying Technology

See “Background Technology”.

Warranty

Will South Dakota School of Mines & Technology provide a warranty to a licensee?

No. Giving a warranty is, in essence, an indemnity in most cases. Therefore, South Dakota School of Mines and Technology cannot agree to provide any type of warranty or indemnify a third party for any breach of representation or warranty. A related issue involving warranty relates to the fact that as an educational institution South Dakota School of Mines and Technology performs research of an experimental nature and is not in the business of developing products, and cannot guarantee that a product will meet specifications or perform in a certain manner. However we will make representations “to the best of our knowledge”.

Contact: South Dakota School of Mines and Technology

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http://sdmines.sdsmt.edu/research/industry

Last Modified: 06/02/2006