Information for School of Mines Inventors

FOR SOUTH DAKOTA SCHOOL OF MINES & TECHNOLOGY INVENTORS

(For answers to specific questions, refer to “Frequently Asked Questions” ).

Our Process

A Disclosure Form is submitted to Office of Intellectual Property Management & Industrial Liaison (OIPMIL) by the Inventor(s). The Disclosure includes a brief description of the invention, the names of the inventors, who sponsored the work, advantages of and applications for the invention, any public disclosures or publications, and details of any identified relevant prior art. Disclosure Forms (Invention or Software) can be downloaded from www……………………….., or can be obtained by calling OIPMIL (…………….).

When received by OIPMIL, Disclosures are logged in, and given an ID number. A letter is sent to the inventor(s) acknowledging receipt of the Disclosure and advising them of the ID number and the OIPMIL staff member who will be managing the case.

The OIPMIL staff member will meet with the inventor(s). Together they will discuss the invention, review any prior art which has been identified, and make a preliminary evaluation of, amongst other things, manufacturing feasibility, novelty, potential applications, possible markets, and any potential licensees who may have already been identified. It could be that the invention is an appropriate one for a start-up company, and if that is the case the staff member will discuss that possibility with the inventor(s). After that meeting the staff member, after undertaking a more detailed evaluation of the technology and market, will prepare a marketing and licensing strategy which will then be reviewed with the inventor(s). The proposed licensing strategy will cover proposed license terms including exclusivity, territory, duration, fees and royalties, and diligence provisions (see “License” under “Frequently Asked Questions” for more information on license terms and provisions). At that time a decision will be made by OIPMIL as to whether to, if the invention arose from government sponsored research, claim title to the invention, and also whether to seek patent protection for the invention. If the invention arose from industry sponsored research, it is likely that the research contract gave certain IP rights to the sponsor, in which case our discussions with the inventor(s) will be limited to the license terms only.

Different inventions require different licensing strategies. For example, an invention which requires significant investment of resources by the licensee for further development is normally licensed on an exclusive basis. This gives an incentive to the licensee to commit the risk capital investment required to bring the product to market. If it is a basic tool or device likely to be widely used, it would probably be licensed on a non-exclusive basis. Inventions can also be licensed by application or territory.

The South Dakota School of Mines and Technology does not file patent applications on all invention disclosures it receives due to the high cost of filing and prosecuting ($8,000 - $15,000). If we already have a commitment from a licensee or potential licensee to meet patent costs, we will proceed immediately with an application. If significant commercial viability for the technology has been proven, we may also proceed. In many cases, if the invention appears to have apparent commercial viability but this has not yet been confirmed, we will file a provisional patent application. This establishes a priority date and gives us a 12 month window in which to confirm the potential of the technology, during which time we can, if appropriate, seek market interest in the invention. In that case any potential licensee will be required to sign a confidentiality agreement before detailed information on the technology is disclosed to them. Any utility application must be filed within twelve months of the date of the provisional filing to preserve the priority date.

The filing and prosecution of patent applications is undertaken by outside patent attorney firms. Past experience in previous cases, technical competence, and possible inventor preferences, are considered by OIPMIL when making its selection of the appropriate patent attorney.

The inventor(s) cooperation is essential in patent filing. The patent attorney will be knowledgeable in the general field of the invention, but they are unlikely to have the specific expertise of the inventor(s). The inventor(s) interaction with the attorney is essential to obtain meaningful patent protection. (For more information on “Patents” see the “Patents” section below, or go to “Intellectual Property” in the “Frequently Asked Questions” section).

Concurrently with any decision on patent action, OIPMIL will begin marketing the invention. If interest is shown by potential licensees, OIPMIL will begin discussions with those parties. (See “Marketing under “Frequently Asked Questions”). Although the marketing and negotiating will be undertaken by OIPMIL, the cooperation of the inventor(s) is essential to respond to any requests from potential licensees for detailed technical information. This information is normally provided under a Confidentiality Agreement (see “Confidentiality Agreement” under “Frequently Asked Questions”).

Companies which express interest in the invention normally request an opportunity to evaluate the technology. Once again, this is done under a Confidentiality Agreement or possibly, if the company is particularly interested, under an Option Agreement (see “Option” under frequently asked questions). If strong interest has been shown, a draft license agreement will be submitted to the potential licensee as a basis for discussion.

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. For example, 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.

After execution of the License Agreement, regular contact is maintained with the Licensee and their performance, and adherence to the provisions of the license agreement, monitored by OIPMIL. Income received from the Licensee, including any benefit derived from equity, is distributed in accordance with the School’s Intellectual Property policy (see “Income” under “Frequently Asked Questions”).

Often during the term of a license, circumstances change, and it may be necessary to amend the agreement to take into account new situations. For example, a new competitive technology may enter the market, drastically reducing the market share of the licensed technology, there may have been unforeseen problems in completing development of the product, decreasing its cost effectiveness, or some of the patent claims covering the invention may be disallowed, significantly decreasing the strength of the patent.

Our Policies

OIPMIL adheres to the School’s Intellectual Property Policy, and it’s Conflict of Interest Policy. These can be found at http://sdmines.sdsmt.edu/research/policies. We are also bound by the Federal government Bayh-Dole Act, and the Internal Revenue Service Procedure 97-14, Guidelines for Research Agreements.

The School’s policy requires that all potentially patentable inventions or copyrightable material, other than scholarly works, conceived or reduced to practice in whole or in part by members of the faculty, staff, or students of the School in the course of their School responsibilities, or with more than incidental use of School resources, be disclosed on a timely basis to OIPMIL. Title to such intellectual property is assigned to SDSMT, regardless of the source of funding.

A conflict of interest in technology transfer occurs when the inventor’s activities associated with a licensee will induce or cause a compromise of the inventor’s primary duties to the School. There are many issues which could lead to such a conflict, and these are addressed in the School’s Conflict of Interest Policy. The School actively encourages entrepreneurship and inventors’ participation in start-up companies, and while there are nearly always potential conflicts, these can usually be managed.

SDSMT, 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. SDSMT 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.

Internal Revenue 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.

Public Disclosure

Inventors should be aware that patent rights can be lost by Publication or Divulgation. Many are aware that there is a one year grace period following release of an enabling printed publication in which to file a U.S patent application, but this concession does not apply in foreign countries – any publication or divulgation closes the door on the possibility of obtaining foreign protection. Rights to a U.S patent are forfeited if an enabling printed publication is released more than one year prior to the time a U.S patent application is filed. Enabling means that the publication describes the invention in sufficient detail and specificity to enable a person of ordinary skill in that art at that time to make, construct and practice the invention without an unreasonable amount of experimentation. Divulgation, following which the rights to foreign patents are forfeited, is any non-confidential disclosure of the critical aspects or features of an invention by means of a written or oral description, by use, or in any other way. Displaying the invention where the critical features of the invention are readily discernable, or distributing samples where they could be discoverable by analysis, is divulgation.

Laboratory Notebooks

The U.S. at present grants patents to the “first to invent”, not the “first to file” as is common in foreign countries, although this is about to change. Disputes sometimes arise over who was the first to make an invention, and the issue is usually decided by records kept by the parties. In the past disputes raged over who first invented the telephone, the laser, the electric light, and the automobile, and in all of these cases the availability of records or the lack of records played a deciding role. Recording of ideas and research data is normally a matter of routine for industrial researchers, but this is not always the case for academic researchers. The maintenance of a witnessed laboratory bound notebook, is important. Entries should be made and witnessed daily. Conceptions, a description of how to achieve a particular result, laboratory data and drawings should all be recorded daily on consecutive numbered pages. The entries should be in ink. No erasures should be made, instead draw a line through the text or data to be deleted and enter the material in corrected form. Draw a line through any blank spaces on the page. All entries should be signed and dated by both the researcher and a witness at the time they are made. The witness should be someone who has read and can understand the material, but had nothing to do with producing it.

Inventorship

Inventorship has a strict legal meaning under the laws and regulations of the U.S. patent system. Only those who have made independent, conceptual contributions to an invention are legal inventors. An inventor is one who, alone or with others, first invents a new and useful process, machine, composition of matter, or any other patentable matter. If an invention involves more than one inventor, it is a joint invention; multiple inventors are called joint or co-inventors. Inventorship and authorship are not the same, co-authors may not necessarily be co-inventors.

Patent Searches

Before submitting an Invention Disclosure to OIPMIL, inventor(s) should first carry out a preliminary patent search on the web. This search will help confirm the apparent novelty of your invention, identify any prior art which may obviously anticipate your invention, and assist you to distinguish the advantages offered by your invention over the prior art.

Patents (see “Intellectual Property” under “Frequently Asked Questions” for more information on Patents, Copyright, Trademarks, and Mask Works)

A patent is a grant from the Federal government that allows the patent owner to prevent others from practicing an invention for a limited period of time, in the case of U.S utility patents, 20 years from the date of the patent application. In return for the granting of the patent, the law stipulates that the invention be made public. Thus, by reading the patent, others are able to practice the invention if given a license by the patent owner. The owner has the right to prevent others from practicing the invention covered by a patent, but they may be inhibited from practicing it themselves if it infringes a dominating patent owned by another party. In that event they would need themselves to obtain a license from the other owner. To be patentable, an invention must meet three criteria – it must be novel, useful and not obvious, that is, non-obvious to someone of ordinary skill in the art.

A patent has two parts:

- the specification. This is a narrative presentation of the invention, including the prior art which preceded it. It must include the best mode of practicing the invention known by the inventor.

- the claims, which describe the essential elements of the invention.

The specification starts by briefly describing the field of the invention. Then there is a background section which describes the work done in the past (prior art) and its shortcomings. All known prior art must be disclosed. If needed to aid in understanding the inventions, drawings are included. This is followed by a disclosure of the invention, setting forth in general terms what the inventor considers to be the invention and its advantages. Then the summary of the invention details the theory on which the invention rests and full details of the way the invention can be implemented. Each implementation is called an embodiment and the best one is the preferred embodiment of the invention. Next the industrial applicability section describes the applications in which the invention will be used.

The claims circumscribe the legal bounds of the invention. They describe the essential elements of the invention, firstly as broadly as possible, and then more narrowly. Although it is generally easier to obtain a patent with narrow claims, if they are too narrow then others can possibly work around the patented invention.

Working With A Patent Attorney

As mentioned earlier, cooperation between the patent attorney and inventor(s) is essential if a strong, effective patent is to be obtained. To prepare for the interview with the attorney you should collect and briefly summarize all relevant printed materials, publications and prior patents; prepare rough sketches, graphs and tables describing the invention; list all alternative ways you can think of as to how your invention can be implemented; draft a description of the preferred embodiment of the invention; prepare a description of the advantages and uses of the invention; and prepare a glossary of terms pertinent to the invention.

Don’t assume the patent attorney knows the subject matter in detail. During the interview develop the theory behind your invention from a very basic level; don’t jump any steps; explain all possible embodiments and applications of the invention; have your files and any materials readily available; and if possible, show the attorney a physical embodiment of the invention.

Marketing

If the research leading to an invention was sponsored, then the sponsor would usually have intellectual property rights under the terms of the research contract, in which case our action is limited to negotiating the license terms and conditions with the sponsor. Often the inventor is aware of companies operating in the field of the invention, and with that knowledge we can identify other companies operating in the same field, and identify appropriate contacts in those companies. OIPMIL also has a data bank of companies and contacts and their areas of interest, and has access to trade and industry publications.

If we consider that the technology has particular commercial potential we send targeted mailings to possible and potential interested companies, including personal contacts we have developed. We will also phone those personal contacts.

Other marketing strategies we follow may include:

- a catalog of currently available technologies which can be accessed on our web page.

- Publicize in technology licensing journals and technology data banks.

- Distribute our portfolio at appropriate professional or trade meetings.

- Distribute the portfolio to companies known to be interested in licensing from universities.

- Issue press releases on specific technologies.

Start-Ups (see “Start-Ups” under “Frequently Asked Questions” for answers to specific questions pertaining to Start-Ups).

The South Dakota School of Mines and Technology actively encourages entrepreneurship and the involvement of its faculty inventors in start-up companies. 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. To review the South Dakota School of Mines and Technology ’s procedures on conflict of interest issues go to http://sdmines.sdsmt.edu/research/policies.

Start-up companies can be risky, they often fail. Included among the reasons for failure are poor planning, lack of management ability, insufficient capital, misreading the market, and emotional rather than logical decisions. So why license a start-up?

- They frequently enhance the probability of successfully bringing embryonic technology to market.

- They are flexible, can make quick decisions, and this is their top priority.

- They give a commonality of interest with the faculty.

- Equity offers the possibility of superior financial returns to compensate for the risk.

- They contribute to the local economy.

- They may become a significant sponsor of research at SDSMT.

When licensing to a start-up SDSMT 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.

Contact: South Dakota School of Mines and Technology

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Last Modified: 06/02/2006