--Negotiating non-exclusive or co-exclusive licenses whenever possible. This allows more than one company to develop products using a particular technology, products which may ultimately compete with each other in the marketplace. PHS recognizes that companies typically need an exclusive market position to offset the risk, time, and expense of developing biomedical diagnostic or therapeutic products, however, companies do not necessarily need to achieve that position by exclusively licensing a government technology used to develop that product. Instead, they frequently are able to add their own proprietary technologies to the technology licensed from the government to ultimately achieve some level of uniqueness and exclusivity for the final product.
--Negotiating and awarding exclusive licenses for specific indications or fields of use, based on the license applicant's commercial development ability at the time of application. This prevents one company from tying up license rights to applications that could be concurrently developed by another company.
--Negotiating provisions for mandatory sublicensing by exclusive licensees, particularly where a broad exclusive license is granted, as under a CRADA. CRADA exclusive licenses are granted to patents arising under the CRADA based on the scope of the CRADA research. The research, and therefore the patents, can be broad. Because CRADA partners obtain options to exclusive licenses at the onset of the CRADA, it is usually not appropriate to narrow the field of use to such licenses beyond the original scope of the CRADA research. Thus, PHS requires exclusive licensees to grant sublicenses to broaden the development possibilities when necessary for the public health.
--Negotiating requirements for continuing availability of the technology for further research. Although a technology has been licensed for commercial development, PHS seeks to maintain the availability of that technology for further research uses only by non-profit and for-profit entities. This advances science and stimulates further commercial development.
--granting license rights only to fields of use for which the company has submitted an acceptable commercial development plan to bring the technology to practical application. PHS typically does not grant license rights to venture capitalists, brokers, or other entities that are not in a position to develop the technology directly.
--negotiating specific commercial development milestones and benchmarks with proposed licensees so that development can be assessed and monitored;
--negotiating license execution fees, minimum annual royalty payments, milestone payments, and reimbursement of patent expenses in addition to earned royalty payments. Requiring a company to pay royalties "out of pocket" to acquire and keep the technology ensures that a company is committed to developing the technology and has not licensed the technology merely for competitive advantage.
--Negotiating specific grounds for modification or termination of the license. The PHS model exclusive license specifies nine grounds, including failure to meet commercialization benchmarks, failure to keep the licensed technology reasonably accessible to the public, and failure to reasonably meet unmet health care needs.
--Monitoring the commercial development activities of the licensees to determine compliance with the terms of the license agreement.
--Initiating administrative action to modify or terminate license rights where necessary.
D. EFFECTIVE DATE
The policies and procedures set forth in this Manual Chapter are effective immediately.
E. ADDITIONAL INFORMATION
Questions about this Manual Chapter may be directed to the Deputy Director, Office of Technology Transfer, Ms. Barbara McGarey, on (301) 496-7057.