Guidelines to Patenting and Licensing

New Mexico State University

Intellectual Property Office/Arrowhead Center, Inc.

October 1, 2004

I. INTRODUCTION TO THE INTELLECTUAL PROPERTY AND TECHNOLOGY TRANSFER PROCESS

New Mexico State University recognizes that faculty and staff members may create commercially valuable intellectual property as a result of their normal duties of teaching, research, and service. It is the policy of the university to foster the creation and dissemination of intellectual property by establishing a strong motivation to members of faculty and staff, providing advice and assistance to originators of intellectual property, and assuring compliance with agreements between the university and sponsors of university programs.

This document addresses issues related to intellectual property arising from research at the university and the transfer of this intellectual property for economic benefit. As a guide for faculty, staff, and students involved in research activities at the university, the document (a) discusses the nature of intellectual property, (b) provides general information on the university’s policies concerning intellectual property, (c) describes the responsibilities of the Intellectual Property Office in administering these policies, and (d) outlines how intellectual property is put to economic benefit through activities of this office.

II. WHAT IS INTELLECTUAL PROPERTY?

Intellectual property consists of, but is not limited to, books, articles, plays, films, video tapes, works of art, musical compositions, laboratory manuals, demonstration devices, computer programs, chemical compounds, new materials or processes, and instruments.

III. WHAT IS AN INVENTION?

During the course of research an invention may be developed. An invention can be defined as anything new, unobvious and useful. It can be a potential solution to a problem, something that may satisfy a need, or an improvement to an old invention. It can be a product, a process, a composition of matter or an end use; a new plant variety, a new method for testing lead in blood, or a new method of detecting cracks in bridges. Computer software may also be classified as an “invention.”

Additional information on patents and patent law is available from the Intellectual Property Office.

IV. THE UNIVERSITY’S INTELLECTUAL PROPERTY POLICY

The university’s intellectual property policy with regard to inventions, and the rights of its employees, is both important and complex. The entire policy is available in the General Operating, Personnel and Benefits Manual; section 5.94.11 - Intellectual Property and Patents.

A. Equities

All intellectual property will belong to the originator except as follows:

1. Intellectual property developed as a direct written requirement of university employment will belong to the university. The university may share earnings from the intellectual property with the originator according to a written agreement between the university and the originator.

2. Intellectual property developed with the significant use (as determined by the originator and appropriate dean or director) of university facilities by employees, students or personnel, will belong to the university. The university or its agent either will patent or copyright such property and share the earnings with the originator or will return indefeasible rights to the originator.

3. Ownership of intellectual property developed as a result of projects funded by a contract or grant to the university will be determined in accordance with the terms of the contract or grant.

4. Ownership of intellectual property developed as the result of consulting activity by a university employee, and to which the university is a party, will be determined in accordance with the terms of the consulting agreement.

B. Distribution of Earnings From Intellectual Property

Inventors receive a fixed percentage of the net income received by the university for their inventions. Net income is defined as “gross income from royalties or licensing fees received by the university, less patenting and other direct costs incurred by the university in commercializing the invention.” After all university costs* have been paid, earnings shared by the inventor and the university will be divided as follows:

1. Annually, the inventor, or his/her heirs, will receive 50 percent and the university the remainder.

2. Where more than one inventor is involved, the inventor’s share of earnings will be divided among the inventors as agreed upon by them.

3. Earnings received by the university will be used to promote creative endeavor. One-third of the university’s share will go to the inventor’s college or appropriate division; one-third will go to the inventor’s department; and one-third to the Office of the Vice Provost for Research.

* Excluding any cost charged by the Arrowhead Center, Inc.

C. Obligation to Disclose

Employees have an obligation to disclose inventions and other commercially exploitable materials developed under sponsorship of a contract or grant to the university’s Intellectual Property Office.

Disclosure is critically important for all projects, especially where any portion of the funding comes from the Federal Government. Patentable intellectual property developed under the sponsorship of a Federal agency allows grantees/contractors to take title to inventions made in the course of their federally funded research.

D. Sponsors Rights

The university retains title to inventions developed with funds from any federal or governmental agency outside the university. Private sponsors are, however, entitled to negotiate a commercial license to the technology they have funded. Principal Investigators do not have the authority to grant commercial rights, to agree to royalty or other terms of a license, or to otherwise give private sponsors anything more than the experimental results of the research performed.

Occasionally, sponsors request that ownership issues and licensing terms be settled before they fund the research. The basic terms can be outlined in the sponsored research agreement or the Intellectual Property Office can negotiate a licensing agreement prior to the signing of the sponsored research agreement.

E. University Obligations to Inventors

In addition to the sharing of financial benefits outlined above, the university has an obligation to review submitted inventions and to determine patentability or other forms of legal protection. The university normally has the following options: (a) secure patent protection where appropriate; (b) promote the invention to prospective industrial partners; or (c) waive the university’s rights when it has been determined that adequate patent protection is not available, commercial appeal is inadequate, or the university does not have a legal claim to the invention.

V. THE ROLE OF THE INTELLECTUAL PROPERTY OFFICE

The university’s Intellectual Property Office is responsible for managing, protecting, and commercializing inventions arising at the university through the Arrowhead Center Inc. The Office assists faculty, staff, and students in understanding the technology transfer process and complying with its requirements. The Office creates the appropriate forms and procedures for disclosing inventions and assists inventors in completing these forms.

In addition to reviewing invention disclosures and evaluating their legal protectability, the Office, along with the inventor(s), will attempt to license the invention through the Arrowhead Center, Inc. The Office will assist Arrowhead Center in license negotiations.

Authority to enter into agreements for the commercialization of university technology resides only with the Intellectual Property Office and the Vice Provost for Economic Development. All faculty, staff, and students dealing with outside companies expressing interest in commercialization of university technology must refer such companies to the Intellectual Property Office or Arrowhead Center, Inc. No commercialization agreement with outside companies can be honored by the university without prior approval of the Vice Provost for Economic Development. All commercial agreements are made through the Arrowhead Center, Inc.

VI. WHAT TO DO WHEN AN INVENTION OCCURS

Inventions are important. They may lead to new products and processes that benefit the inventor, the university, industry and the general public. The most important thing to do when an invention occurs is to contact the Intellectual Property Office, located in Room 130 in Genesis Center, Building C, MSC 3RES, Las Cruces, NM 88003 or by calling (505) 646-2481.

Prepare an Invention Disclosure Form now, before publishing findings, describing them in an oral presentation, or completing a thesis based on the research. The reason for timeliness is that prior publication of a discovery will bar patent protection in most of the world. The Office can protect the rights of the inventor by making sure that a patent application is filed before public disclosure.

The purpose of an invention disclosure is to define the invention so that it can be considered for patenting in the United States and possibly foreign countries. Patents not only establish the inventor’s claim to the intellectual property, but they make it possible to attract potential licensees, who will invest in developing and marketing the invention.

THE INFORMATION IN A DISCLOSURE FORM IS CONFIDENTIAL. COPIES OF THE DISCLOSURE FORM SHOULD NOT BE SENT TO OTHERS, EVEN TO SPONSORS OF THE RESEARCH. The respective Research Centers are responsible for notifying the sponsors of the occurrence of inventions under a research contract.

The Intellectual Property Office works with the inventors to license their technologies. Companies interested in the technologies should be referred to the Intellectual Property Office or Arrowhead Center, Inc. If the legal process for protection of the intellectual property has not been completed, a Confidentiality Agreement will be prepared which will allow the inventor to discuss the technical aspects of the technology with scientists at the interested companies.

VII. AFTER INVENTION DISCLOSURE

The Intellectual Property Office collects all the relevant documents. Sponsored research agreements are reviewed to determine who has rights to the invention. Dates of any publications are checked to determine if legal protection needs to be expedited. Copies of all relevant documents are transmitted to outside patent counsel for a brief review of the technology and a preliminary opinion as to patentability. If the invention appears to be patentable, a patent application will be filed.

The Intellectual Property Office works with the inventors to locate potential licensees. As a public educational and research entity, the university is prohibited from engaging in commerce. By Board of Regents’ Resolution, the university assigns all rights and title to inventions to the Arrowhead Center, Inc. for commercialization.

Commercialization by the Arrowhead Center, Inc. is normally through a license agreement which is a contract whereby the Arrowhead Center, Inc. retains ownership of the patent or copyright, and a private company obtains the right to use the patent or copyright to make and sell products or services. However, other types of commercialization partnerships are possible.

The Arrowhead Center, Inc. shares in the commercialization process by charging an (a) up-front licensing fee, (b) running royalties linked to actual sales of the products or services, and/or equity in the licensing company. These funds are used to pay inventors’ earnings; department and college earnings; and other research expenditures through the Vice Provost for Research.

VIII. SUMMARY

Inventions and technology transfer play an important part in the dissemination of the results of the research undertaken here at New Mexico State University. If you have questions concerning inventions and patents, please call the Intellectual Property Office at (505) 646-2481.