In the process of commercializing programs brought to Technology Commercialization under the Administrative Policy: Reporting Inventions or Software Arising from Research, either Technology Commercialization or the department may initiate External Sales (Selling Goods and Services to External Customers) and incur project development costs associated with preparing for external use. This appendix addresses how to recover those project development costs from commercialization proceeds, in alignment with Board of Regents Policy: Commercialization of Intellectual Property Rights.
For any project to be eligible for recovery of project development costs from commercialization proceeds, all of the following criteria must be met.
- The program must be reported as an invention to Technology Commercialization as specified in Administrative Policy: Reporting Inventions or Software Arising from Research.
- The program must begin externalization as a formal project under External Sales as specified in Administrative Policy: Selling Goods and Services to External Customers. The External Sales phase of the project must apply External Sales revenue directly to project costs incurred.
- The program must be commercialized under University policy as specified in Administrative Policy: Commercialization of Intellectual Property Rights.
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 includes 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, College, Chancellor or Vice Presidential unit or Technology Commercialization investment in the commercialization of the program. Occasionally, direct discretionary funds are used to further the development of specific programs 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 Department/College/Chancellor or Vice Presidential unit 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 will be distributed as specified in Section VI.