NIH Offers Licensing Agreements to Commercialize Technologies - NIH makes available a full range of licenses for commercial evaluation and for the sale of commercial products and services. - BioPharm

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NIH Offers Licensing Agreements to Commercialize Technologies
NIH makes available a full range of licenses for commercial evaluation and for the sale of commercial products and services.


BioPharm International
Volume 20, Issue 3

Policy and market dynamics influence which type of license is used to grant commercial access to a given technology. The NIH uses exclusive licensing as a market incentive when a higher degree of investment and risk are required to commercialize the technology. As with any exclusive license to a federally funded invention, there is a preference by law for small US companies (no more than 500 employees).3 Yet, there are still many opportunities for large, non-US companies to obtain licenses. Among the portfolio of approximately 1,600 active licenses, about half are with small companies, and 15% are with companies outside the US. Another legal requirement for licenses of government-funded inventions is that any product sold in the US must be "substantially manufactured" in the US.4 If a licensee desires a waiver from this requirement, it must submit the request to the funding agency, in this case the NIH. Such waivers are granted only when the licensee provides sufficient justification that it would be in the best interest of the US public to grant the manufacturing waiver. For example, one company's request for a waiver for its biologic was granted based on the company's justification that a requirement to build a new manufacturing plant in the US, instead of using the existing one in Europe, would have added costs to the product and delayed the introduction of an important new product in the US.

THE LICENSING PROCESS

The licensing process begins when a company identifies a technology of interest.5 There are many ways of learning about technologies available for licensing. There is an email list-serve that one can subscribe to from selecting "Join the OTT Listserve" from the main web site ( http://www.ott.nih.gov/). There are also licensing opportunities listed on the OTT web site (by selecting "Licensing & Royalties" and then "Licensing Opportunities") and published in the Federal Register.6 The licensing specialist listed with each licensing opportunity may be contacted for more information about that or related technologies. Or, marketing specialists are available to assist potential licensees in conducting a guided search of opportunities.7

The next step is to complete a formal license application, which can be found online and contains submission instructions. A Confidential Disclosure Agreement is required to review unpublished patent applications. License negotiations begin with the model agreements found on the web site. Whereas the grant of an exclusive license requires publication of the intent to grant, usually for 60 days, to allow for public comment, nonexclusive licensing is more straightforward. A company that does not require an exclusive license to NIH technology to adequately protect the product can save time and money by electing a nonexclusive license.

Following public notice of the intent to grant an exclusive license, it is unusual for the response to public comments to lead to a substantial alteration in the proposed license. Even when another potential licensee responds to the notice, separate fields of use often can be negotiated to accommodate the second request. In some cases, the licensees may agree to coexclusive licenses. There are times, however, when OTT will have to decide whether to grant one applicant a license for a particular field of use based on the development plans submitted, before any discussion begins about the financial terms of a license.

While competition for the same field of use of a license is uncommon, when it does occur, the outcome will not be resolved by an "auction" for who will offer the highest royalty payments. The process focuses on the technical and business development plan, because the goal of licensing at the NIH is to promote the development of new products and services to benefit the public. NIH expects a reasonable financial return under a license, but these royalties are secondary to the public benefit garnered through the availability of a new technology to improve public health. Licensees that are willing to extend their normal risk and expense in a manner that has the potential for greater public health benefit may be granted more favorable terms that reflect this higher risk and greater public benefit.


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