After the WARF licensing manager receives approval from the internal Start-up Committee (and, if needed, the WARF Board), he or she will work with you to finalize the license and, if applicable, equity agreements between WARF and your company.
These agreements include, but are not limited to, key financial and non-financial terms. Financial terms include the license fee (which may be paid as cash or equity in the company—see description of the equity agreement below), the royalty rate paid on product sales, patent reimbursement, and critical development milestones.
An often misunderstood non-financial term is the "field of use" restriction, which defines the specific technological applications your company has the right to develop. WARF restricts your company's use of a technology to only those applications it will actively develop so that other businesses can license and develop the technology for other non-competing applications and markets.
The licensing process typically begins with WARF presenting to your company a set of draft license terms. WARF's licensing staff analyzes the value of the technology in the marketplace, and looks at the terms of license deals completed on comparable technologies in the recent past, to make an offer that is as fair as possible to all parties. If your company is willing to accept the terms as they are presented, a license agreement can be quickly executed.
If your company instead wants to make changes to the licensing terms, WARF will work with you until a mutually acceptable agreement is reached. However, each round of discussions will extend the time it takes to execute the final agreement.
WARF's Standard Agreements
Below are short descriptions of WARF's three main licensing agreements:
The Research and Option Agreement
This agreement allows a start-up to perform non-commercial research on its technology to determine development feasibility for the company. It is offered at a lower cost than a standard license agreement for a limited period of time. The company is not required to pay full license fees and patent reimbursement until a standard license agreement is signed.
View WARF's Research License and Option Agreement
The License Agreement
This agreement conveys the rights to use and develop a technology for commercial purposes. The license agreement may go hand-in-hand with an equity agreement, under which WARF agrees to waive the usual cash license fees in exchange for an equity stake in the company (see below).
A few of the common features of WARF's standard license agreement include:
- A term equal to the life of the patent(s)
- Cash license fee or equity in lieu of cash license fee
- Royalty rate on product sales
- Patent reimbursement
- Development milestones
- Due diligence clauses, including assembly of a qualified management team and acquisition of a specified level of financing and capital
The Equity Agreement
In lieu of a cash license fee for a technology, WARF has occasionally either required or accepted, depending on the circumstances, an equity relationship with start-up companies. The equity agreement relieves a business of having to make a large cash payment timed at company launch, allowing it instead to preserve its cash assets for critical research and development efforts. Whether WARF will take equity in a start-up company is determined on a case-by-case basis and will be discussed with you in detail when you begin license discussions with WARF.
View WARF's Equity Agreement
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