Frequently Asked Questions
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FAQs are listed in the following categories: CU Startups, Copyright, Patents and Trademarks. If you don't see your question, send us a note on our Contact Us Page.
CU Startups
In most cases, startup companies seek exclusive licenses from the university to the intellectual property needed to form the core assets of the business. However, in nearly all cases, the work performed in the lab to generate the underlying IP continues well after the initial disclosure and subsequent patenting process. Additional discoveries are often more important to the commercialization of technology than the original invention. As a result, companies seek to secure rights to follow-on improvements via an Option to Future Improvements.
Options grant a company a period of time in which to evaluate an improvement for inclusion in the company's IP asset portfolio. If the company elects to exercise the Option, this can be done for a small up-front fee and an agreement to incorporate the new technology into the company's License Agreement under the same terms and conditions as the original. If the company decides not to license the new technology, it is returned to the university for licensing elsewhere.
Two reasons. First, as discussed above, the university's contribution to a startup is usually in the form of an exclusive license to a portfolio of intellectual property assets. As a company grows, so does its need for follow-on financing. Because the university does not have the cash to participate in later-stage rounds of financing, all compensation must be negotiated in the original license with an understanding that whatever the university receives is the maximum it will ever receive. As such, the university seeks to negotiate economic terms that allow the institution to participate fairly in the upside of the company, without unduly hampering the company's ability to raise capital and execute its business plan.
Second, CU Innovations's mission is to determine the best and highest use of the technology, and then to structure an agreement that ensures the technology will be commercialized for the public benefit. Financial terms, such as Minimum Annual Payments and Sub-License Royalties, are mechanisms to discourage companies from either sitting on potentially valuable technologies (not actively marketing) or merely brokering technologies (acting as a middleman and providing little if any development and commercialization value). In most cases, CU Innovations will also include certain diligence provisions in a license agreement that further encourages the licensee to actively commercialize technology licensed from the university.
No. Stock is not received in preference to cash, but as an adjunct to both up-front license fees and future royalty streams. One way to view the university's position is to look at startups from the perspective of opportunity cost.
The University of Colorado assumes right, title, and interest to inventions and related intellectual property created by university employees. As a result of this policy, and certain obligations under the federal Bayh-Dole Act, the university has created CU Innovations and tasked it with commercializing technologies created at the university. This is typically done in one of two ways: Licensing to an existing entity or creating a start-up.
In both cases, the interests of the inventor and the university are aligned: each party seeks to maximize their return on investment. However, when CU Innovations invests intellectual property into a startup, it is deferring compensation that might be received from licensing the technology to an established company. In some cases, this deferred income, otherwise known as opportunity cost, can amount to significant sums over the period of a license. Therefore, to mitigate risk and provide the university with the opportunity to increase its potential return, licenses with equity generally do include cash payments:
Up-front license fees (where applicable and imposing a low cash burden)
Minimum annual and/or milestone payments
Royalties on net sales
Sublicense royalties
Equity is the currency most readily available to startup companies. Since startups usually begin as a concept, they need time to assemble the resources necessary to maximize chances for success. Often, CU Innovations and the faculty inventor wishing to create a startup, are in a kind of "chicken and egg" situation. The startup needs a secure commitment from the university that it has, or will soon obtain, full and exclusive rights to market a particular technology and the University seeks to grant licenses only to entities it believes have the capability of rapidly, and profitably, commercializing the technology.
To bridge this gap, CU Innovations works to create conditions that are ripe for investment in the startup. Financially, this means the university acts as a founder of the company, understanding that startups typically have little cash and no revenues. As a founder, the university typically accepts non-marketable stock in lieu of cash as compensation. Founders stock is viewed as a reasonable business solution to enhance the overall financial package for the technology acceptable to the company and its future investors, while providing an opportunity for the university to participate in the upside of the company.
There are several reasons why CU Innovations works to create startups from university inventions:
Startups translate academic inventions into commercial goods and services that benefit the public. This is consistent with the mission of universities
A track record of successful startups helps during discussions about recruitment and retention of high quality faculty.
Startups are an engine for local economic development and job creation, and success in this area demonstrates value of university research to the broader community.
Startups are sometimes the only alternative. In some cases, individual technologies cannot be licensed piecemeal. A great deal of work needs to be done to identify, package, and present a basket of technologies that cohesively offer a commercialization opportunity.
Startups make money -for the inventor, the university, and the business and investment community.
About 5-10% of inventions meet the criteria necessary to become startup companies. At CU, this translates to 5-10 startups per year.
Patents
With the passage of the America Invents Act (AIA), the United States patent system went from a first-to-invent to a first-to-file system. This means that the first person to file a patent application is considered the inventor and owner of the invention, even if someone else invented first. Good record keeping in the pre-AIA world could have made the difference in claiming inventorship over another. Nevertheless, it is still important to practice good record keeping. This information will help the CU Innovations with assigning inventorship. When collaborating with others on an invention, good record can help determine each person’s contribution to the overall invention.
It is important to note that there are exceptions to the first-to-file rule. Therefore, if you think you have an invention, you are encouraged to contact CU Innovations.
Sponsoring agencies sometimes require the university to disclose inventions that arise from work they fund. If the research that led to your invention was sponsored, give details and a reference to the contract or grant agreement in the Invention Disclosure Form.
Publishing and applying for patent protection are not mutually exclusive: they can be done simultaneously under the proper circumstances. U.S. patent laws allow one to apply for a patent no later than one year after a public disclosure, such as a published paper, a widely available abstract, or an offer of public sale. However, the moment a public disclosure or publication is made, rights to foreign patents are lost unless a U.S. filing has been made within the preceding 12 months. Foreign protection is important to many international licensees, so inventors are urged to use discretion, take advantage of Confidential Disclosure Agreements available from CU Innovations, and file invention disclosures with the university well in advance of presentations or publications.
Inventions include new processes, products, apparatus, compositions of matter, living organisms, and/or improvements to existing technology in those categories. Abstract ideas, principles, and phenomena of nature cannot be patented.
Process: A method of producing a useful result; it can be an improvement on existing systems, a combination of old systems in a novel manner, or a new use of a known process.
Machine: An apparatus from a simple device to a complicated combination of many parts that performs a function and produces a definite result or effect.
Manufactured product: An article that is produced and has a usefulness.
Compositions of matter: Chemical compounds, and mixtures such as drugs and, more recently, living matter.
In the United States, patentability is determined by novelty, utility, and nonobviousness.
- Novelty: An invention is "novel" if nothing identical previously existed. How does your invention differ from what already exists? In what ways might it not be unique?
- Utility: An invention is useful if it produces an effect, if the effect is the one claimed, and if the effect is desirable to society, at least in principle. Who might find your invention useful, and why?
- Nonobviousness: Nonobviousness measures the degree to which an invention differs from the totality of previous knowledge, and the degree to which an invention could not have been anticipated from that knowledge. At the time it was conceived, why might your invention not have been obvious to people reasonably skilled in the field? Are there ways in which it might be an evolutionary step? What is the difference between the proposed invention and what has previously existed?
An inventor is the one who first conceives of an invention, in detail, and with enough specificity that one skilled in the field could construct and practice the invention. Those who translate the concept into practice are not considered co-inventors unless they add to the original concept of the invention. With the agreement of the inventor(s), however, they may share in financial benefits of the invention.
A patent is a 20-year monopoly that allows the patent owner to prevent others from making, using, or selling the patented invention without permission. In return for the monopoly, the inventor must make known the details of the invention so that others can seek improvements or new uses. The inventor gains by exclusive access to the invention, and society gains by using the detailed description of the invention to further advance technology.
Copyright
Copyright is a form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression. Copyright covers both published and unpublished works.
The subject matter of copyright is original works of authorship, including literary and musical works, engineering designs, software source code, graphic works, sound recordings, and works of art. Software programs as well as mask works for computer chips can sometimes be protected by patents in addition to copyrights.
Copyright applies only to an author's original expression, not ideas, since ideas belong to the public and may not be monopolized. The idea-expression distinction explains why an original text on plane geometry may be copyrighted, though earlier copyrighted works presented identical ideas. Similarly, anyone can freely use data from a copyrighted book listing melting points of chemical compounds, since empirical data are considered ideas. Unauthorized photocopying of pages from the same book might be copyright infringement, however, because it appropriates the author's selection and organization of data, and the layout of pages and headings, all of which might be original expression.
See Circular 1, Copyright Basics, section "What Works Are Protected."
To be copyrighted, material must be original and fixed in a tangible medium of expression.
Unlike patented inventions, there is no requirement that a copyrighted work be novel in the sense that nothing identical previously existed. The criterion of originality is met if a work is the author's own, not copied from another source.
Prior to 1978, authors were required to adhere to certain formalities (register works with the U.S. Copyright Office, use © notice on works) to obtain full protection, but since a revised federal statute became effective on Jan. 1, 1978, copyright now exists in an original work of authorship as soon as it is fixed in a tangible medium of expression such as a manuscript, audio tape, or computer file. For works created after 1978, former statutory requirements such as copyright registration and use of the copyright mark, ©, are now useful mainly as prerequisites to infringement proceedings to enforce copyright or recover damages for unauthorized use.
In the case of software, copyrights exist even if the copyright notice is not included in the source code. An author may intend to commit the source code to the public domain by leaving off the copyright notice, but they have not granted any rights to others to modify and copy their code. It is a good practice to search for a license statement or to ask the author’s permission before including their code in a new work.
Ownership of copyrights in works written as part of university responsibilities depends on the nature of the copyrighted work. In keeping with academic tradition, copyrights in textbooks or other works of a primarily pedagogical or scholarly nature vest with the faculty author, as governed by CU's Policy on Intellectual Property that is Educational Material. Copyrights in faculty works of a commercial nature, such as training materials for nurse practitioners, would belong to the university, at least in part, if the works were developed using university resources or developed under a university-managed Sponsored Research Program.
Copyrights in software developed by university employees are owned by the university, as governed by CU's Intellectual Property Policy on Discoveries and Patents for their Protection and Commercialization. Royalty revenue from university licensing of copyrights is shared with faculty authors of the work and their research groups and administrative units.
Copyright notice can be added to a work as soon as it is written. Formal copyright registration is not necessary. Add the notice below to your copyrighted materials.
Proper copyright notice for University of Colorado software: Copyright <Year> Regents of the University of Colorado. All rights reserved.
For software, it can be included in source code files and/or a separate license text file and/or documentation. It is recommended that the copyright also be included on the website. CU Tech Transfer can provide advice on copyright and licensing of software.
To begin this process, download the Copyright Submission Form. Return the form to CU Innovations located at the Anschutz Health Sciences Building, 1890 N. Revere. Ct., Suite 6202, Aurora, CO 80045, or email the completed form to your CU Innovations case manager or cuinnovations@cuanschutz.edu.
For works with commercial applications (such as software), CU Tech Transfer can assist with the copyright registration process, help identify potential licensees, and negotiate licenses.
Although copyright allows authors to prevent unauthorized use of an original work, there are exceptions. Limited copying for the purpose of criticism, comment, teaching, scholarship or research is usually not infringement of a copyright. For more information on fair use, see the CU Health Sciences Library website on the subject.
All members of the project team should agree on common goals for the software and the roles of group members. As the developer community grows, it may beyond the research group, or even the university. It is very important that the copyrights are managed so that the project team has the rights to distribute the project to future collaborators and users. We recommend asking all contributors to agree to the Contributor License Agreement which is based on the Apache Software Foundation's agreement.
University software is subject to the royalty distribution formula in CU's Policy on Discoveries and Patents. If a software project grows to include many CU staff and students over time, each individual may be entitled to a portion of the 25% inventor's share of royalties. Some groups choose to direct the inventors' share into a pool of funds to support the project itself. It is necessary for all CU contributors to sign a Project Participation Agreement to make that possible.
How do I copyright and license my creative/scholarly/pedagogical works?
For information on copyrighting your creative/scholarly/pedagogical works, see the CU-Health Sciences Library website on the subject.
Trademarks
When an allegation of trademark infringement arises, the case can be tried in federal court if the contested mark is registered, or in state court if not. In federal court, the registered owner is presumed to have the right of ownership and to exclude others from use of the mark. In the absence of a federally registered trademark, state courts will examine factors such as how long each merchant has used the contested mark, how distinctive the mark is, whether the merchants maintained control of their marks, and whether they do business through similar channels of trade and in overlapping geographical regions.
State courts will particularly focus on public policy interests, and estimate the likelihood of confusion by the average consumer. For example, although a law firm database had for many years done business under the name "Lexis," an automaker was subsequently permitted to use the name "Lexus." The court reasoned that, as lawyers, Lexis customers are presumably sophisticated enough to avoid confusion, and that buyers of a luxury automobile are unlikely to be surprised when they do not receive a database report.
In order to receive federal protection for a trademark, merchants must apply for federal registration at the U.S. Patent and Trademark Office (PTO). This is the broadest trademark protection available as it is nationwide protection. The process to obtain a federal registration takes approximately nine months. Once federal registration is granted, notification to the public and other merchants that the trademark is federally registered may be accomplished with the symbol ®. If no other merchants file objections to the registration within five years, the applicant may file an affidavit with the PTO claiming continued and uninterrupted use and then the registration would be incontestable. Federal trademark registrations are renewed every ten years, as long as the trademark is still in use.
To receive protection under state law and within the regions where a company does regular business, a merchant need only use a mark consistently and maintain control of its use. Notification to the public and other merchants that the symbol or phrase is being used as a trademark may be accomplished with the superscript symbol TM. The price for a merchant's failure to maintain control of a mark is that words or phrases that were once trademarks may fall into the public domain, at which point they are no longer protected under the law. "Aspirin" is an example of such a lost trademark. A State Registration may be obtained for a trademark through the Secretary of State’s Office for a nominal fee.
Protection is proportional to distinctiveness. Whether a trademark is a symbol, word or a phrase, it should be easy to recognize if it is to serve as a quick identifier. Depending on the likely ease of recognition, courts sometimes classify trademarks into three loosely defined categories:
- Distinctive trademarks: Made of a coined word or specially designed symbol, these trademarks are unique and are afforded the strongest protection under the law. Examples of distinctive trademarks are "Xerox," the silhouette of a buffalo overlaid with the interlocking letters C and U, and the musical notes G-E-C of the NBC network motto.
- Suggestive trademarks: These trademarks describe a product but also hint at an origin or characteristic, typically with an unusual twist or combination of words. Examples in this fuzzy category might be "Ivory Soap," "Mister Donut," and "Wheat Thins."
- Descriptive trademarks: This category is the least distinctive in that they are composed of common words used in a common way. To receive any protection, these merely descriptive trademarks must have acquired a secondary meaning, for example through the public's long association of the phrase with a particular merchant. "Park & Fly," "Builder's Warehouse," and "The Country's Best Yogurt," are examples.
CU Innovations
CU Anschutz
Anschutz Health Sciences Building
1890 N Revere Ct
Suite 6202
Mail Stop F411
Aurora, CO 80045
303-724-6653
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