Licensing Agreement

After the WARF licensing manager receives approval from WARF management (and, if needed, the WARF Board of Trustees), he or she will work with you to finalize the license and, if applicable, equity agreements, between WARF and your company.

These agreements include, for example, 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.

Licensing is a complex area and WARF encourages you to work with an attorney who is qualified to work on these types of agreements.

WARF's Standard Agreements

Below are short descriptions of WARF's three main licensing agreements:

The Research and Option Agreement

This agreement allows a startup 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

View WARF's Exclusive Startup Company License agreement

The Equity Agreement

In lieu of a cash license fee for a technology, WARF may either require or accept, depending on the circumstances, an equity relationship with startup 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 startup 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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