Royalty Income Sharing | Research

Royalty Distribution for License Agreements signed on or after July 1, 2008

WARF’s Royalty Revenue Sharing Program

WARF shares the royalty revenue generated by a licensed technology with the technology’s inventor(s), the inventors’ academic departments, and the UW–Madison Office of the Vice Chancellor for Research and Graduate Education. The following is a general description of how royalties are divided among these entities.

Inventor/Author Share

For licensing income resulting from patents and non-copyrightable technologies, the inventor or inventor group receives 20% of the royalty revenue generated.

For licensing income resulting from non-patented copyrightable works, specifically computer software, the author or the author group receives 40% of the gross royalty income generated for the first $100,000 per license; for income over $100,000 per license the author or the author group receives 20% of the gross royalty income generated.

In the case of multiple inventors/authors, the share is split equally among all inventors/authors. Payments are made to the inventors/authors in the month following the receipt of the royalty payment.

WARF’s Annual Grant to the UW–Madison

WARF’s grant to the university is unrestricted, meaning the university can spend the gift as it sees fit. The following is a general description of how different portions of the grant are allocated.

Department Share of the Annual Grant

The inventors’ academic departments receive a grant equaling 15% of the gross royalties generated by the licensed technologies. If applicable, department share can be split among multiple departments.

Office of the Vice Chancellor for Research and Graduate Education Share

After the inventor and department shares have been allocated, the remainder of WARF’s annual grant is distributed by the UW–Madison Office of the Vice Chancellor for Research and Graduate Education to support a variety of projects and programs each year, including:

The Office of the Vice Chancellor for Research and Graduate Education Research Competition

The Romnes Early Career Awards

Kellett Mid-Career Awards

Named professorships

Graduate fellowships

Campus building projects

Royalty Distribution for License Agreements signed before July 1, 2008

Revenue generated from licenses signed before July 1, 2008 is shared with the technology’s inventor(s) or author(s), their laboratories, their academic department(s), and the UW–Madison. Revenue distributions differ for patents and non-copyrightable technologies, vs. non-patented copyrightable works (which includes copyrighted computer software.)

Below is a general description of how licensing income is distributed. For a more detailed explanation of the revenue sharing program see Determining Eligibility to Receive Lab Share Distributions.

Licensing Income Sharing Program: Patents and non-Copyrightable Technologies

First $100,000 of Income per license (Laboratory Share distributions)
20% to Inventor(s)
70% to Research Program of Inventor(s) through a quarterly Laboratory Share Distribution
10% included in the WARF gift to campus

Income over $100,000 per license (Department Share distributions)*
20% to Inventor(s)
15% to Department/ Center through an annual Department Share Distribution
65% included in the WARF gift to campus

Licensing Income Sharing Program: Non-Patented Copyrightable Works, Specifically Computer Software

First $100,000 of Income per license (Laboratory Share distributions)
40% to Author(s)
50% to Research Program of Author(s) through a quarterly Laboratory Share Distribution
10% included in the WARF gift to campus

Income over $100,000 per license (Department Share distributions)*
20% to Author(s)
15% to Department/ Center through an annual Department Share Distribution
65% included in the WARF gift to campus

Licensing income resulting from licenses signed prior to October 1, 1997, and for licenses signed on or after July 1, 2008, for both patents and non-copyrightable technologies, and non-patented copyrightable works, is distributed using the department share distribution formula. Starting with the first dollar of licensing income, 20% goes to the inventor/author, 15% to the department, and 65% is included in the WARF gift to campus.

*Once royalties for a patentable, non-copyrightable work, or for a non-patentable, copyrightable license exceed $100,000 per license, the distribution changes as shown. New income received at WARF is then distributed using the “Income over $100,000″ formula.

When authors leave, retire or become inactive in research, there will be no new quarterly Laboratory Share Distributions. New income received at WARF is then distributed using the “Income over $100,000″ formula. At that time, any balance in the Graduate School assigned Laboratory Share Account (135-D..) reverts to the Graduate School.

A few additional conditions apply, e.g., for Laboratory Share Distributions there is a limit of $100,000 per laboratory/research program for each license and an annual cap of $200,000 per inventor’s or author’s research program per laboratory share account.

It is important to note that UW/WARF distributes royalties independent of expenses, whereas most universities divide royalties on a net basis after deduction of patent/copyright costs and administrative fees; the UW/WARF approach yields increased returns to the author/inventor.

Eliminations of Lab Share from Royalty Sharing Program

After an assessment of the 10-year practice of allocating a portion of initial royalty revenue to inventors’ laboratories, the WARF Board of Trustees has decided to eliminate “lab share” from the foundation’s income distribution structure. Read the full announcement: Elimination of lab share from royalty sharing program