Chapter 11 The anatomy of contracts in licensing: The context of Bayh–Dole

This chapter explains the structure of two contracts commonly involved in university licensing: the license granting a company (or companies) outside the university rights to make, sell, or lease products or processes based on a university invention, and the nondisclosure agreement (NDA) that plays a role in the license negotiation process. In the context of the Bayh–Dole Act, the chapter explains that license contracts often contain a complex combination of payment terms intended to provide sufficient incentives for licensees to undertake the (often risky) development of embryonic research. The authors relate the intent of the Bayh–Dole Act to the concerns of university licensing professionals who often negotiate licensing agreements. The chapter then examines the same incentive issues (and the universal contract issues of money, risk, control, standards, and endgame) in the context of NDAs, used by potential licensing partners to protect their respective interests while sharing information about a licensable technology. The chapter concludes with an assignment that provides students with an opportunity to evaluate a license, not from the university's perspective but from that of a client interested in licensing an invention owned by the university.