17.01.03 Commercial Development of Intellectual Property

17.01.03 Commercial Development of Intellectual Property Page 1 of 5

17.01.03 Commercial Development

of Intellectual Property

Revised March 1, 2023

Next Scheduled Review: March 1, 2028

Click to view Revision History.

Regulation Summary

This regulation describes the process for commercial development of The Texas A&M University

System’s (system) intellectual property (IP).

Definitions

Click to view Definitions.

Regulation

1. LICENSING OF INTELLECTUAL PROPERTY TO THIRD PARTIES

Licensing of intellectual property to third parties, which may include IP creators, is the most

common strategy used for technology transfer. In the case of exclusive licensing, the third

party is given the necessary rights to justify the often significant investment of time and

resources in the commercial development of the intellectual property. Given the breadth of

research taking place within the system and the diversity of the intellectual property created,

each license agreement is somewhat unique to the intellectual property being licensed.

However, there is a need to ensure consistency with respect to certain legal principles in each

agreement.

1.1 Texas A&M Innovation (TI) and the System Office of General Counsel (OGC) will

cooperatively develop model agreements for licensing/granting right to system

intellectual property. All intellectual property agreements are subject to review and

approval by OGC as to form and legal sufficiency. However, OGC at its sole discretion

may designate certain agreements not requiring OGC review and approval if

modifications to such agreements do not alter the normal intellectual property licensing

terms previously approved by OGC.

1.2 Regarding member-owned works for hire and trademarks, the member has the primary

responsibility and authority, with assistance from OGC, for negotiating with third parties

having an interest in using, developing or otherwise commercializing such intellectual

property. OGC reviews all licenses and other agreements related to the

17.01.03 Commercial Development of Intellectual Property Page 2 of 5

commercialization of intellectual property for compliance with state law and system

policy. All intellectual property agreements are subject to review and approval by OGC

as to form and legal sufficiency.

1.3 Commercial distribution of system-owned tangible research property (TRP) is managed

by TI. TI must ensure that the TRP distribution agreements contain provisions which

address proper use, limits on IP creator’s and member’s liability for the TRP or products

derived therefrom and other necessary terms. OGC also reviews any TRP distribution

agreements for legal sufficiency and compliance with state law and system policy.

Sharing of any income resulting from the distribution of commercialized TRP is made in

accordance with System Regulation 17.01.04, Distribution of Royalties, License Fees

and Sale Proceeds from Licensing.

1.4 Licensing of multiple intellectual properties included in a license agreement requires a

multiple IP relative weight (importance/value) agreement between and among the IP

creators currently employed at the system or any of its members. This agreement sets

forth the relative weight of each of the intellectual properties included in a single license

agreement. This multiple IP relative weight agreement for IP creators does not change

the previously agreed upon multiple IP creators sharing agreement for a particular

intellectual property. (See System Regulation 17.01.02, Evaluation and Protection of

Intellectual Property.) However, this multiple IP relative weight agreement for IP

creators affects the distribution of the IP creators’ portion across all of the intellectual

properties included in a single license agreement. (See System Regulation 17.01.04.) In

the event that the IP creators currently employed at the system or any of its members

cannot agree upon an appropriate multiple IP relative weight agreement within 60 days

of the signing of such a license agreement, the chancellor or designee will decide for the

IP creators the relative weight of the intellectual properties included in the license

agreement. Such a decision by the chancellor or designee is final and binding on all the

IP creators for the intellectual properties in the subject license agreement.

2. LICENSING AND AGREEMENT GUIDELINES

OGC establishes legal guidelines to be followed for all agreements for the use, development,

and commercialization of intellectual property owned or controlled by the system, or in which

the system has an interest. OGC may approve exceptions to these guidelines on a case-by-case

basis.

License agreements and other related agreements may contain such other provisions as may be

determined by TI and OGC to be in the best interest of the system and/or member. However,

a member’s interest cannot supersede the interests of the system.

3. EQUITY AND INVESTMENT AS A CONSIDERATION IN LICENSING

3.1. TI may negotiate an equity interest in lieu of or in addition to royalty and/or other

monetary consideration as part of a license agreement that licenses rights in intellectual

property owned by the system, or in which the system has an interest.

3.2. TI and/or a member may invest money or in-kind support with a licensee of such license

agreement described in Section 3.1 in return for an equity interest in such licensee’s

17.01.03 Commercial Development of Intellectual Property Page 3 of 5

company (hereinafter referred to as Investment Equity) through a process defined by

OGC. All Investment Equity is owned and held by the system. If a member(s) invests

money or in-kind support in exchange for such Investment Equity, that Investment Equity

related to the member(s)’s investment is held by the system for the benefit of the

member(s). The system is not restricted in the percentage of equity it may take in a

company as a part of such license agreement. (See System Policy 17.01, Intellectual

Property Management and Commercialization.)

3.3. Except for Investment Equity, the distribution of income from equity received as

consideration for a license agreement is distributed in the same manner as royalties and

license fees as described in System Regulation 17.01.04. The system has sole discretion

of the disposition of the shares of equity, which includes distribution, sell, conversion or

other related transactions

. This may include agreeing to receive the equity interest under

terms that restrict its ability to sell, distribute or otherwise deal with the equity interests.

3.4. As stated in Texas Education Code, Section 153.007, and except as otherwise provided by

law, the system Board of Regents, the system, members and employees of the system do

not owe a fiduciary duty to any person claiming an interest in consideration received by

the system or a member in exchange for intellectual property.

3.5. Individuals subject to this policy should also refer to System Regulation 31.05.01, Faculty

Consulting and/or External Professional Employment, regarding equity ownership.

4. RESEARCH SUPPORT AS CONSIDERATION IN LICENSING

If TI, with the concurrence of a member or the system, accepts research support in a license

for the member or the system in the form of a sponsored research agreement or unrestricted

grant as part of a licensing agreement relating to rights in intellectual property owned or

controlled by the system in addition to or in lieu of royalties, license fees, equity and/or other

monetary consideration, the IP creator(s) has no entitlement to receive a share of the research

support or grant as personal income.

5. APPROVAL AND SIGNATORY FOR INTELLECTUAL PROPERTY AGREEMENTS

All intellectual property documents concerning intellectual property owned or controlled by

the system, or in which the system has an interest must be approved and signed by the

chancellor or designee who is delegated the power to sign for the system for commercializing

system intellectual property.

6. ASSIGNMENT OF EXISTING INTELLECTUAL PROPERTY

The assignment of existing intellectual property to third parties (non-system or members) must

be approved by the chancellor or designee through a process defined by OGC.

Approval from a member(s) CEO may be required if such shares of equity are held on behalf of one or more members.

17.01.03 Commercial Development of Intellectual Property Page 4 of 5

7. WAIVER OR RELEASE OF SYSTEM RIGHTS

At its sole discretion, TI may waive or release the system’s rights in specific intellectual

property to all the IP creators of such intellectual property, clearing the way for the IP creators

to seek ownership and pursue commercialization on their own. At any time, an IP creator(s)

may request a waiver or release of the system’s rights in such intellectual property in writing

to TI. TI is not obligated to grant such a waiver or release. In addition, TI may not be able to

waive or release such intellectual property due to federal and/or state research agreements or

sponsorship agreements. If TI grants a waiver or release, such waiver or release may be subject

to restrictions set forth in the above agreements. The following provisions apply to any waiver

or release of the system’s rights in such intellectual property.

7.1 The system must retain a perpetual, royalty-free license to use the intellectual property

and any corresponding patents, copyrights, trade secrets, service marks or trademarks for

research and educational purposes.

7.2 The system requires that the cost of legal protection that has not been reimbursed by a

licensee be paid back to the system from commercialization proceeds at a rate determined

by TI at the time of waiver or release.

7.3 In the case of significant use of resources as set forth in System Regulation 17.01.01,

Ownership of Intellectual Property and Tangible Research Property, the system may

elect to receive a share, to be negotiated at the time of waiver or release of the system’s

rights, of proceeds generated from commercialization of the intellectual property after

the IP creator recovers documented out-of-pocket cost of legal protection for the

intellectual property. If there was not a significant use of resources, no such share of

proceeds will be sought. The use of significant resources will be resolved by TI.

7.4 In the case of a waiver or release of the system’s rights to the IP creator(s), the IP

creator(s) will not receive a share of the proceeds received by the system in consideration

of the waiver or release of the system’s rights. If there are multiple IP creators, such

waiver or release of the system’s rights will be to all IP creators and not to any individual

or group of IP creators.

7.5 In the case where IP creator(s) are owners or officers of an entity that previously licensed

the specified intellectual property, such waiver or release of system rights to the IP

creator(s) requires system approval in a process defined by OGC.

7.6 All waiver or release agreements must be approved by OGC.

7.7 Any IP creator(s) receiving a waiver or release of the system’s rights must review

potential conflicts of interest with the IP creator(s)’s department head. For additional

information on conflicts of interest, see System Policies 07.01, Ethics, and 07.03, Conflict

of Interest, Dual Office Holding and Political Activities, and System Regulations

15.01.03, Financial Conflicts of Interest in Sponsored Research, and 31.05.01.

17.01.03 Commercial Development of Intellectual Property  Page 5 of 5 
 
8.  TECHNOLOGY COMMERCIALIZATION FUNDS 
 
The chancellor or designee may establish one or more funds to support the discovery, creation, 
authorship, development, protection and/or commercialization of system intellectual property.  
 
Related Statutes, Policies or Requirements 
 
Tex. Educ. Code § 51.912 
 
Tex. Educ. Code Ch. 153 
 
System Policy 07.01, Ethics 
 
System Policy 07.03, Conflicts of Interest, Dual Office Holding and Political Activities 
 
System Regulation 15.01.03, Financial Conflicts of Interest in Sponsored Research 
 
System Policy 17.01, Intellectual Property Management and Commercialization 
 
System Regulation 17.01.01, Ownership of Intellectual Property and Tangible Research Property 
 
System Regulation 17.01.02, Evaluation and Protection of Intellectual Property 
 
System Regulation 17.01.04,  Distribution  of  Royalties, License Fees and  Sale  Proceeds from 
Licensing 
 
System Policy 31.05, External Employment and Expert Witness 
 
System Regulation 31.05.01, Faculty Consulting and/or External Professional Employment 
 
Member Rule Requirements 
 
A rule is not required to supplement this regulation. 
 
Contact Office 
 
Research 
(979) 458-0243