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University of Wisconsin–Madison

Options for Sponsored Research Agreements

Table 1 outlines options for development of intellectual property terms in industry-sponsored research agreements, their unique attributes, costs to the sponsor, and add-on options to customize these agreements. Decision regarding the most appropriate option should include consultation with and input from the PI.

Table 1. Options for development of intellectual property terms
Model Sponsor option Costs Highlights Add-on low-fee options
License with royalty credit and free time limited internal research license Sponsor receives a free non-commercial internal research license (time limited). Sponsor can select either an exclusive or non-exclusive commercial license to inventions conceived and reduced to practice in the performance of the research (Project IP), with the right to sublicense (if exclusive). Sponsor receives a credit towards future royalty payments in the amount of the research funding provided Cost to exercise option could be a percentage (TBD) of the research budget. Patent costs vary depending on exclusive or non-exclusive license status. Sponsor pays at least a portion of patent costs (predetermined and greater than nonexclusive) when they exercise the option Sponsor has defined access to obtain a license to Project IP. No Project IP uncertainty. No need to decide at the onset of the project/no additional upfront monies at the time of signing. Compatible with federal and many other funding sources with proper respect to rights granted in agreements with potentially similar scopes. Sponsor does not have to pay to access IP before it is developed. Benefit is commensurate with the expenditure. Sponsor recoups their investment and only then begins to owe royalties Extensions of time for the option period if needed (90 days is standard starting point). Extensions of time for a negotiation period (90 days standard). Potential to link to a streamlined license for predictability


The timeline for the “option period” begins when an invention arises and has disclosed to the UW, there are typically provisions that require the UW to notify the sponsor of the invention. The option period gives the sponsor time to consider the invention to decide if it would like to license the invention. The option period is typically 90 days. If the sponsor does not notify WARF by the end of the 90-day period that the sponsor wishes to negotiate a license, the option expires and WARF’s obligations to the sponsor for that disclosed invention end. If the sponsor indicates that it does wish to negotiate a license WARF and the sponsor begin negotiating a license agreement. There is typically a 90-day negotiation period specified in the sponsored research agreement, which may be extended by mutual agreement of the sponsor and WARF.