Printed on: 08/18/2018. Please go to http://policy.umn.edu for the most current version of the Policy or related document.

APPENDIX TO POLICY

Recovery of Project Costs for Commercialization

Objective

In the process of commercializing technologies brought to the Office of Technology Commercialization (OTC) under the Administrative Policy: Reporting Inventions or Software Arising from Research, either the OTC or department unit may initiate External Sales (Selling Goods and Services to External Customers) and incur project development costs associated with preparing the technology for externalization.  This appendix to policy covers how to recover those project development costs from commercialization proceeds, in alignment with the Regent’s Policy Commercialization of Intellectual Property Rights.

Projects Covered

For any project to be eligible for recovery of project development costs from commercialization proceeds, all of the following must be met:

  1. The technology must be reported as an invention to the OTC as specified in Reporting Inventions or Software Arising from Research.
  2. The technology must begin externalization as a formal project under External Sales as specified in Selling Goods and Services to External Customers. The External Sales phase of the project must apply External Sales revenue directly to project costs incurred.
  3. The technology must be commercialized under University policy as specified in Commercialization of Intellectual Property Rights.

Cost Recovery

Under the policy Commercialization of Intellectual Property Rights, certain costs and expenses may be deducted from gross monetary payments received by the University, as described in Section III, Subd. 6. Net Income part (a).  This would include all of the following:

  • Direct costs for legal expenses incurred by University in obtaining IP protection and negotiating, managing, and enforcing contracts
  • University out-of-pocket expenses associated with technology transfer (e.g. marketing fees, management of equity)
  • Department or OTC commercialization investment. Colleges, departments, and other units will occasionally direct discretionary funds toward the further development of specific technologies as part of an External Sales project. If those projects meet all of the criteria listed above, these expenditures may be treated as direct costs and may be reimbursed as follows:
    • Upon commercialization through a University license agreement, any remaining deficits in the External Sales account for this project as of the date of the agreement may be reimbursed from gross monetary payments.
    • Any additional project expenses incurred after commercialization (license agreement) must be covered by the College/Department via their share of Net Income, as defined in Commercialization of Intellectual Property Rights.

After deductions as described above and the administrative fee in Section III, Subd. 6. Net Income part (b), remaining Net Income shall be distributed as specified in Section VI.

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