Pathway Map
TECHNOLOGY TRANSFER OFFICER
Negotiation overview.
When licensing university-owned IP to an external licensee (excluding spin-outs), the TTO typically leads the negotiation process on behalf of the university, with support from the academic team. The TTO’s primary role is to protect the interests of both the university and the academic originators, ensuring these interests remain aligned throughout.
For larger or more complex deals, negotiations often begin with a Heads of Terms (HoT) – a non-binding summary of key commercial points. In simpler or standard licensing cases, this step may be skipped.
Negotiations generally cover a range of issues, including:
• financial terms (eg upfront payments, milestone payments, and royalties)
• the specific IP being licensed
• any restrictions on the licence or the licensee
• liabilities, warranties, and indemnities that the university is willing to provide.
Beyond external negotiations, the TTO is also responsible for securing internal university approval for the licence agreement. This includes engaging with senior management and obtaining sign-off on the final terms.
Heads of Terms
The HoT is a non-legally binding document that outlines the key licensing and commercial terms of the proposed agreement between the university and the licensee. It is intended to serve as a framework for finalising the full licence agreement.
The HoT typically includes:
-
a description of the university IP being offered to the licensee
-
key commercial terms, such as royalty rates and other fees
-
any restrictions on the use of the IP
-
the licensee’s obligations to ensure the IP is commercialised
-
general terms, including warranties, liabilities, and termination clauses
The HoT should be negotiated and agreed upon in good faith by all parties. If any proposed terms deviate from the standard negotiating positions, appropriate internal approvals should be sought.
It is essential that all IP owners are consulted during the preparation of the HoT. While the HoT is generally signed by both parties, it is essential to note that most of its content is not legally binding.
Draft licence agreement
The licence agreement is usually drafted by the university legal representatives, often following a standard format but with modifications to suit each specific scenario. The licence terms will follow those as presented in the HoT, but will be more detailed and cover the mechanisms of how the activities will be conducted.
Depending on the deal, there might also be a requirement for other agreements, as well as the licence. These may include collaboration/research or consultancy agreements covering research that the university might be undertaking to develop the IP with the licensee.
Export and security approvals
As well as conducting due diligence on the licensee the university will need to follow its export control and other approvals. It will also need to follow any restrictions that the University may have relating to the licensee and its activities. There may also be considerations or approvals required from the funders prior to any licence agreement that may need consideration.