- They frequently enhance the probability of successfully bringing embryonic technology to market.
- They are flexible, can make quick decisions, and the technology 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 Georgia Tech.
- 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.
- What is being licensed
- Is it exclusive or non-exclusive
- Does it cover all uses of the invention or is it restricted to specific applications/uses
- Does it cover all regions or is it restricted to a specific territory (e.g. USA)
- Consideration (up-front payments, royalties, benchmark payments, payment of patent costs, equity)
- Does the licensee have the right to sub-license to another party
- Who owns any improvements
- Performance benchmarks/criteria (investment requirements, time to market, sales, etc.)
- Governing law
- Indemnification
- Term of the license
- Limitation of liability
- Termination criteria
FAQs for Startups
(see also Frequently Asked Questions for Inventors)Q: Does Georgia Tech encourage faculty or student start-ups?
A: Georgia Tech 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. (For information of the Georgia Tech's conflict of interest policy click here.)
Q: Are there any risks in Start-Ups?
A: 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?
Q: What factors does GTRC consider when considering licensing a start-up?
A: When licensing to a start-up OTL must ensure:
Q: Do you write or help to write business plans?
A: No, but we work closely with VentureLab who will help you with this.
Q: What is VentureLab?
A: VentureLab is part of Georgia Tech's Office of Economic Development and Technology Ventures. It helps provide a clear pathway from laboratory to market, with guidance along the way from entrepreneurs who have already made the trip. VentureLab helps faculty who want to be involved in a start-up to evaluate the potential of their technology, provides connections to attract outside funding, and offers pre-seed awards to help move innovations to the commercial stage (see www.venturelab.gatech.edu).
Q: Does GTRC take any management role in a start-up?
A: No, nor any Board position.
Q: Are students subject to Georgia Tech's Intellectual Property Policy?
A: Yes. The Student Handbook states that any student enrolled at Georgia Tech is subject to the Institute's Intellectual Property Policy. If any intellectual property is conceived or developed by a student during the performance of their course work, title to the intellectual property resides with GTRC. Student inventors enjoy the same rights and benefits as do faculty and staff inventors.
Q: What is conflict of interest?
A: "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 institution". 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 Institute duty or responsibility or in the conducting or reporting of research. The bias that such conflicts may conceivably impart can adversely affect many Institute 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.
Q: What are considered conflicts of interest?
A: You would be considered to have a conflict of interest when you, or any member of your family, has a significant financial interest in an activity that involves your responsibility as an Institute employee. In addition, it would be considered a conflict of interest if, without Institute approval, you conducted research in the field of your Institute responsibilities externally and in competition with the Institute when that research is within the scope of your Institute employment.
Q: What should I do to minimize any potential conflict of interest?
A: Unless any potential conflicts are being managed in accordance with the Institute's Conflict of Interest Policy, your outside activities and financial interests should be arranged so that they do not affect the Institute's interests, do not compromise objectivity in carrying out your Institute responsibilities, or do not otherwise compromise the performance of your Institute responsibilities. It should be remembered that nearly every licensing arrangement will have the potential for conflict of interest, particularly in the case of a start-up in which you and/or your family hold equity, but these potential conflicts can normally be managed without detriment to the interests of both the faculty or staff member and the Institute. You can contact the director of OTL, or the associate managing your disclosure, who would be happy to refer you to the appropriate person to discuss any potential conflict of interest situations with you.
Q: What is a license?
A: A license is an agreement granting a company permission to use an invention for commercial purposes, subject to certain terms and conditions that include fair compensation to the Institute based on the estimated value of the invention.
Q: Is there a standard fee and terms for a start-up company license?
A: No. The initial consideration 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.
Q: What issues are covered in a license agreement?
A: The issues covered in a license agreement include:
Q: What is GTRC's major aim when proposing a license agreement?
A: 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 Institute and the Licensee.
Q: What happens after a license agreement has been signed?
A: 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 the associate. In many cases the company will fund further research at the Institute to help in its further development of the technology. Income received from the Licensee, including any benefit derived from equity, is distributed in accordance with the Institute's Intellectual Property policy. However in most cases relating to start-ups, inventor shareholders, to avoid any conflict of interest, waive their right to share in any income received by GTRC, and this is reflected in the license terms.
Q: If the inventors have ownership in the company, or are involved in the company's management, can they perform research for the company at Georgia Tech?
A: Not as a principal investigator (PI) if their ownership or management involvement is significant. The company can support research with another faculty member as PI. If the inventor is involved in the research, not as a PI, their participation must be approved by the Provost and there must be a plan to manage any potential conflict of interest (see GaTech's Conflict of Interest Policy).
