Prototyping Licenses: Another Angle on Evaluation Licenses for Technology Transfer

Laura Schoppe is the founder and president of Fuentek, LLC. She is currently chair of the AUTM Foundation. For AUTM, she formerly served as vice president of strategic alliances and chair of the Global Technology Portal Committee.

A few months ago, the IP Marketing Blog discussed the OpenUlster program at the University of Ulster in Ireland and its evaluation license. It caught my attention for its efforts to streamline licensing and help mitigate the risks that potential licensees may feel when contemplating a new technology. Here’s how the blogger described it:

To take out an evaluation license, which costs just one Pound, the visitor just clicks on the link to download the documents, fill out two forms and return them both to Ulster. “When the license is countersigned by one of our commercialization team, the firm has exclusivity to evaluate that technology,” says [technology commercialization manager Dr. John] MacRae… At the end of the evaluation period… the evaluation license can be converted into a full commercial license.”

I double-checked with John MacRae, and sure enough my interpretation was correct: The OpenUlster evaluation license provides companies with a quick, easy, inexpensive way to test a new technology, and then the company (if it likes the tech) comes back to negotiate a full license. BTW, this is very similar to the program offering $1,000 license options that the U.S. Department of Energy launched last summer.

Giving potential licensees the chance to get their hands on a technology for a while so they can decide if it really meets there needs is a great idea, and I think more tech transfer offices should consider following Ulster’s lead.

If your TTO is thinking about offering evaluations licenses, let me mention yet another angle to consider for certain situations.

Several years ago we helped a client develop a Prototyping License, which allowed a company to license a technology for the express purpose of making prototypes for other potential licensees. Note that this was a very restrictive license. The licensee couldn’t sell the technology commercially. In fact, the agreement specified that the licensee could sell the prototypes only to those organizations approved by our client.

This might sound like a strange license to offer, but in certain situations it’s exactly the right way to go. Some companies might be interested in your technology but either can’t (because they’re too small and/or lack the facilities) or don’t want to (because they’re too big and/or too busy) make the prototype themselves for evaluation.

There are plenty of small prototyping shops that are set up to do one-offs quickly and cost-effectively. In fact, there is one “down the road” from Fuentek called Laut Design that does just this kind of work. (Thanks for the photos, Michael!) So there’s no reason for you to be in the business of making prototypes for potential licensees. The Prototyping License lets potential licensees pay the third party for the cost of building a prototype to their specifications (which BTW might be very different from yours). Then they can test it and revise as needed to confirm it meets their needs, reducing the risk associated with obtaining a full license.

This arrangement worked out great for our client for certain technologies. I can recall one particular instance where a small shop prototyped our client’s technology for a huge government contractor, which eventually licensed it. In another case, the prototyping licensee later became a commercial licensee.

The keys to success with a Prototyping License arrangement are:

Find a good shop: In a sense, the rapid prototyper is your representative, so be sure the shop does good work and will keep your potential licensees happy. It also helps if the shop can handle different types of prototypes, such as foam for early tests all the way up to limited runs of production-quality pieces.
Establish an umbrella license: You don’t want to have to execute individual licenses for each technology that the shop will prototype. Simply add amendments or appendices so that it’s legally appropriate but you don’t have to go through the task of getting all the signatures.
Help the licensee be successful: Early on in the relationship, the inventor will need to provide technical support to the licensee to ensure accurate prototyping of the technology. Once the prototyping licensee is familiar with the technology, the inventor probably won’t need to spend much time and you all can rest assured that the quality is to your expectations.

Do you have experience with these types of licenses? What was your experience? Submit a comment below or send us a private message.

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