Pitt Intellectual Property Policy: Your FAQ Guide

The University of Pittsburgh has an Intellectual Property policy that governs decisions related to intellectual property ownership, the distribution of proceeds, and other matters that arise in the course of managing intellectual property developed at Pitt.

This comprehensive Pitt Intellectual Property Policy FAQ provides clear answers to commonly asked questions about the policy for all University innovators.

INTELLECTUAL PROPERTY AND THE IP POLICY

What is Intellectual Property (IP)?

In general, Intellectual Property (IP) refers to any product of creativity. In a University context, this includes technical innovations, inventions, discoveries, and scholarly works of art and authorship (including software) created in the course of academic pursuits at Pitt.

Intellectual Property is protected by federal government legislation in the form of patents, copyrights, and trademarks. IP can also be protected around the globe via treaties, conventions and/or local country laws.

Why does Pitt have an Intellectual Property policy?

Pitt desires to nurture a culture and infrastructure that creates a thriving innovation community. Pitt’s IP policy describes and establishes the rules, roles, obligations, and responsibilities governing IP matters at the University. It also describes the ownership, distribution, and commercial development of technology created by Pitt faculty, staff, students, and others participating in Pitt programs.

The development of Pitt’s IP policy was guided by the following principles: (1) protecting academic freedom to preserve and advance the educational mission of the University; (2) promoting the dissemination of creative and scholarly works, discoveries, and inventions; (3) encouraging, incentivizing, recognizing, and safeguarding the interests of innovators and the campus community to support the creation and further development of knowledge; and (4) adapting to new, changing, and diverse ways in which knowledge and discoveries continue to be made.

Where can I find a copy of the full IP policy?

The University of Pittsburgh Intellectual Property policy can be found here: https://www.policy.pitt.edu/sites/default/files/Policies/Research-Innovation/Policy_RI_10.pdf

Who at Pitt can create or develop IP?

This policy covers IP developed by full-time or part-time faculty, staff, students, academic visitors, volunteers, postdocs, fellows, trainees, and interns.

In the context of this policy, a student is any individual taking courses at the University. This includes those who are pursuing undergraduate, graduate, or professional studies (seeking a degree or not) as well as individuals enrolled in non-credit courses or programs.

As defined in Pitt’s IP policy, a creator is a University member who creates a copyrightable work of authorship; a developer develops software; and an inventor creates a patentable invention. In this FAQ document, innovator is used to cover all of these terms.

What is considered to be scholarly work?

Scholarly work includes scientific or scholarly writings and/or papers; books, theses, and dissertations; poems and other literary works; graphical works (including films, photography, paintings, etc. ); musical works (including compositions, lyrics, performances, mixing, and recordings); architectural works; databases, datasets, collections, or compilations of data; and artistic works and sculptures.

How does this IP policy impact my previously-created IP at Pitt?

In general, this IP policy only applies to IP covered by licensing agreements with an effective date on or after the policy’s Effective Date.

There are situations, most often occurring with already non-exclusively licensed IP, where new agreements will be treated under the previous policy.

In instances where it is unclear as to which policy governs, the Senior Vice Chancellor for Research will consult with the Office of Innovation and Entrepreneurship for consideration.

What is the Innovation Institute and how can it help me?

If you’ve got an innovation, you need to contact the Innovation Institute.

The Innovation Institute is the unit of the Office of Innovation and Entrepreneurship that protects and manages IP generated by Pitt innovators. This intellectual property may turn into a patent, a copyright or a trademark. It also provides programs, services, and funding to assess the commercial potential of innovations and accelerate their path to market. Coordinating with partners across the University, as well as external partners, the Innovation Institute helps launch innovations into the world through the licensing of Pitt-developed technologies to existing companies and also through the formation of startup companies created to advance the specific innovation.

The Innovation Institute can help with the disclosure process, ownership questions, patent and copyright filing, and a variety of other steps involved in protecting and distributing your IP.

To contact the Innovation Institute, you can email innovate@pitt.edu. For immediate assistance, you can call (412) 383-7670.

PATENTS

What is a patent?

A patent is a grant issued by the United States Patent and Trademark Office that covers an invention and gives its owner the right to exclude all others from making, using, or selling the invention within the United States, its territories, and possessions.

Who owns a patent?

The innovators are generally the owners of a patent unless they have assigned their ownership rights to another party, such as an employer. An employer can be a for-profit company or a non-profit entity.

What types of IP are patentable?

A patent can only be granted for inventions such as machines, processes, compositions of matter, and articles of manufacture. The invention must be new, useful, and non-obvious.

The Innovation Institute can help you determine if your invention may be patentable.

What is not patentable?

In general, natural phenomena, laws of nature, and abstract ideas are not eligible for patent protection. For example, a new chemical compound may be patented as a new composition of matter, but the discovery of a molecule that exists in nature would not be patentable.

Software typically is not patentable unless it executes a new technical process or improves the functionality of a device.

Also, works of authorship are not eligible for patents.

Is software patentable?

Although most software methods are not eligible for patenting, certain technical software innovations and computer-implemented processes are still patentable.

How long does patent protection last?

A patent is protected for 20 years from the date of filing the nonprovisional (full) patent application.

What is public disclosure and how does this impact the ability to obtain a patent?

Public disclosure is the communication of an idea, either verbally or in written form, to an individual or a group that does not have the contractual obligation to keep that material confidential.

In the United States, a patent application can be filed within 12 months of the first public disclosure of an invention. In most foreign countries, an invention is unpatentable unless the application is filed before public disclosure.

Examples of public disclosure may include:

an abstract that appears in a journal
a presentation at a scientific conference
a Ph.D. dissertation
conversations with third parties without a confidentiality agreement

Can a patent only be granted in the United States?

No. Patents may also be granted in foreign countries.

The procedures for filing a patent, the regulations for patentability, and the terms of a patent grant vary considerably from country to country. The overall cost of obtaining a patent increases dramatically as more countries are selected for patent protection.

If it is decided that a patent is the best way to protect a disclosed invention, what happens next?

When it is determined that patent protection is the most appropriate form of IP protection for Pitt-owned inventions, the University will normally file a provisional patent application.

Filing a provisional patent application establishes a priority date for the invention and gives the Innovation Institute and the innovator time to assess the commercial potential of the invention. The priority date is important given that ownership goes to the first organization to file a patent–which may not be the first one that invented the subject matter in the patent. The provisional application may serve as the basis for a nonprovisional (full) patent application or international Patent Cooperation Treaty (PCT) application if warranted.

In any event, a full patent application must be filed within 12 months of filing a provisional patent application.

For IP that is not owned by Pitt, the pursuit of a patent is the responsibility of the innovator(s).

Who handles the actual filing of a patent application?

Patent applications are filed and handled by patent attorneys outside of the University who are selected and directed by the Innovation Institute. Patent attorneys work closely with Pitt innovators during the process of securing patent protections for Pitt-owned inventions.

For IP that is not owned by Pitt, the pursuit of a patent is the responsibility of the innovator(s).

COPYRIGHT

What is a copyright?

A copyright establishes ownership in a work of authorship. In general, the owner has the exclusive right to reproduce, publish, and sell the work (and allow others to do the same).

What type of work can be copyrighted?

A copyright generally covers items such as a piece of software code, a course curriculum, a play, a painting, a musical score, a film, or an architectural work.

If it is decided that a copyright is the best way to protect a disclosed invention, what happens next?

When it is determined that copyright protection is appropriate for a Pitt-owned innovation, the innovators will be asked to complete a copyright checklist to confirm authorship, sponsorship, ownership, and third-party rights in the work.

Copyright protection is automatically established at the time that a work of authorship is expressed in a tangible form (written, recorded, etc.). Formal registration is not required to establish ownership but is required to enforce the copyright.

For IP that is not owned by Pitt, the pursuit of copyright protection is the responsibility of the innovator(s).

How do I help ensure that copyright protection will be recognized?

The following notice should be applied on Pitt-owned works to protect a copyright and inform the public that the University claims ownership of the work.

The date in the notice should be the year in which the work is first published.

How long does copyright protection last?

For an individual author, copyright protection of a work extends for the author’s life plus 70 years. For employers, copyright protection of a work “made for hire” extends for 95 years from the date of publication or 120 years from creation (whichever is shorter).

How do copyrights owned by the University differ from copyrights on journal articles covering material that may be owned by the University?

When faculty publish books or articles in journals, the author will typically assign their rights in the copyright to the publisher. This does not cover the material in the article but the form of the article itself. The Innovation Institute can assist a faculty member in this situation to ensure that the assignment of rights is handled properly.

What is the difference between a copyright and a patent?

A patent protects an invention. A copyright covers the actual work of art or authorship but not the idea or concept these works attempt to convey.

Can my IP have both a patent and a copyright?

Yes. It is possible for software to have both a patent and a copyright.

Software code, like a work of authorship, is generally protected by a copyright. However, the software may also be protected by a patent if it executes a new technical process or improves the functionality of a device.

TRADE AND SERVICE MARKS

What is a trademark?

A trademark is a word, name, symbol, or device (or any combination) used by an organization to identify its goods and distinguish the source of the goods from those of others.

Prior to registration for trademark protection, the designation “TM” after a trademark will give adequate notice of a claim of ownership.

The designation “®” for a trademark may only be used after registering it with the U.S. Patent and Trademark Office.

What is a service mark?

A service mark is a word, name, symbol, or device (or any combination) used by an organization to identify its services and distinguish the source of the services from those of others.

Prior to registration for protection, the designation “SM” after a service mark will give adequate notice of a claim of ownership.

What is the difference between © and ®?

® provides notice of federal trademark registration

The use of the ® symbol means that a trademark has been registered with the U.S. Patent and Trademark Office.

What are the requirements of a trademark or service mark holder?

Trademark protection imposes certain obligations on the part of the holder of the mark, such as actual sustained use in commerce. In the case of trademark protection of an innovation, the University’s preference is to rely on use of “TM” or “SM” (i.e., unregistered marks) rather than ® (registered marks) for unlicensed technologies.

Contact the Innovation Institute with any questions about the registration of trademarks or service marks for Pitt-owned intellectual property. If this is for institutional marks – such as the Pitt script name or shield – please contact the Department of Communication or the Office of University Counsel.

For IP that is not owned by Pitt, the registration of trademarks and service marks is the responsibility of the innovator(s).

OWNERSHIP

Who owns intellectual property created at Pitt?

The University is committed to protecting academic freedom necessary to preserve and advance the educational mission of the University. Therefore, ownership of intellectual property defaults to the innovator(s) unless certain conditions require the transfer of ownership to the University.

In general, what are the conditions where the University and not the innovator would own intellectual property created at Pitt?

The University will hold ownership of IP when an innovation:

results from a sponsored activity paid for by a third party (such as a research grant from a federal agency or foundation); or
is directed by a contract, grant, or cooperative agreement with a third party; or
is supported by anything more than an incidental use of University resources; or
is made at the direction of the University for a specific University purpose.

What is incidental use?

Incidental use is defined in the University Conflict of Interest Policy for Research (Policy #11-01-03)

and refers to the limited personal use of University equipment or services that the University is already providing and the University Member’s use of such equipment or services will not result in any additional expense to the University, or the use will result in only normal wear and tear, and uses only small amounts of power and expendable supplies, and such use complies with existing contractual obligations.

I’m a student. Do I own my IP?

A student owns IP that they create within the normal course of their enrollment.

Students typically will also own the copyrights in their dissertations. However, there may be situations where the University will own software code, patentable subject matter, and other intellectual property described in a student’s dissertation depending on how that work was funded.

The University may only claim ownership of that IP created by students as a result of conducting sponsored activities (such as performing work in a laboratory on a project funded by a third party) or who are bound by other written agreement(s), such as a student hired to perform work for the University.

I’m an academic visitor. Does this policy apply to me?

Yes, it does. The application of this policy to academic visitors is available here: https://visitor.pitt.edu.

I’m Staff. How does this policy apply to me?

All full-time and part-time staff are considered to be University members and are subject to this policy. Any inventions or copyrightable works created in your role at Pitt will follow the ownership rules described in the answer to the above question: Who owns intellectual property created at Pitt? Generally, given that staff work is performed at the direction of the University for a specific University purpose this intellectual property will in most cases be owned by Pitt.

I’m a faculty member on a sabbatical. How does this policy affect me?

If your activities during your sabbatical involve IP creation, you should discuss with your Chair and Dean how this policy may apply to you. This is dependent on a number of items (such as if any Pitt resources, funding, or IP will be used during the sabbatical) and can be addressed on a case-by-case basis with your Chair and Dean in consultation with the Innovation Institute.

I’m doing consulting work. How does this policy apply to me?

When you create IP while engaged in approved outside activities with no more than an incidental use of University resources, the ownership rights will belong to you, as long as:

the IP does not constitute or infringe upon any IP (or any associated modifications or derivative works) that is owned in whole or in part by the University;
the IP is not made, conceived, reverse engineered, or reduced to practice using any of the University’s IP or any University resources; and
the IP is not the subject of a research agreement between a third party and the University.

Incidental use is defined in the University Conflict of Interest Policy for Research (Policy #11-01-03) and refers to the limited personal use of University equipment or services that the University is already providing and the University Member’s use of such equipment or services will not result in any additional expense to the University, or the use will result in only normal wear and tear, and uses only small amounts of power and expendable supplies, and such use complies with existing contractual obligations.

Please contact Pitt’s Conflict of Interest Office for any questions regarding such consulting activities.

I’ve written a work of scholarship (book, paper, thesis, dissertation). Who owns it?

In general, you have the ownership rights for any scholarly work that you’ve created in the normal course of your research, scholarship, teaching, or other academic responsibilities.

In the case of scholarly work that was created for a sponsored activity or directed by a third-party contract, grant, or cooperative agreement, the ownership is subject to the terms of the activity or agreement.

Who owns course materials? Who can use them?

Course materials created in the course of teaching responsibilities at the University are owned by the innovator(s).

The University receives a royalty-free, world-wide, non-exclusive, irrevocable license to use the course materials for educational or administrative purposes consistent with the University’s educational mission and academic norms. This license does not include the right to sub-license course materials.

This means that while the University may use the material in courses, they cannot sell it or repackage it to be sold.

What types of software are considered to be patentable IP?

Although most software methods are not eligible for patenting, certain technical software innovations and computer-implemented processes are still patentable.

Who owns software?

In general, software is owned by the developer(s) unless the software:

results from a sponsored activity paid for by a third party (such as a research grant from a federal agency or foundation)
is directed by a contract, grant, or cooperative agreement with a third party
is supported by anything more than an incidental use of University resources
relies upon preexisting Pitt-owned IP
is made at the direction of the University for a specific University purpose

There may be situations where the University will own software code described in a student’s dissertation depending on how that work was funded.

Is there a group at Pitt that can help me identify the ownership of IP?

The Innovation Institute can work with an innovator (faculty, staff, student, or collaborator of the University) to help determine the ownership of any intellectual property.

To contact the Innovation Institute, you can email innovate@pitt.edu. For immediate assistance, you can call (412) 383-7670.

TRANSFERRING OWNERSHIP

Can IP owned by the University be transferred to the innovator?

There are times when the transfer of IP from the University to the innovator makes sense. For example, transferring ownership can allow the innovator(s) to protect or commercialize the IP when the University has decided not to do so.

In such situations, the innovator(s) may request that the University release IP ownership and assign it back to them. Transfer requests must be made in writing to the Senior Vice Chancellor for Research. Keep in mind that the University’s ability to make the transfer may be subject to the rights of any third party involved (such as the federal government).

Innovation Institute staff will provide guidance on the transfer process, which differs based on the nature of the obligations to third parties. Upon transfer, the innovator will be responsible for all costs going forward and for any reporting obligations associated with that invention by the funder.

Note that for federally funded projects, the federal government must approve this transfer (which may take an extended period of time beyond the University’s control). Also, the subsequent reporting obligations to these agencies may be extensive and persist for an extended period of time.

PROTECTING IP

What are the steps I should take to protect my IP?

The first step in protecting your IP is to communicate your invention, discovery, software, or technology to the Innovation Institute. This communication is called invention disclosure, and it is done by submitting an electronic invention disclosure form at https://www.innovation.pitt.edu/invention-disclosure.

The Institute can then guide you in any other steps appropriate for your IP. Generally, you will work with the Institute to appropriately protect the IP (via patents, copyrights, etc.), determine its potential for commercialization, and identify potential partners for the innovation.

How are new inventions communicated to the Innovation Institute?

All innovations developed at Pitt should be disclosed to the Innovation Institute using the electronic invention disclosure form available at https://www.innovation.pitt.edu/invention-disclosure.

Innovators with appointments at other institutions (e.g., visiting scholars, Veterans Administration, etc.) must declare this on the invention disclosure to Pitt and must also satisfy any reporting obligations they may have with those other institutions.

When submitting an invention disclosure, an innovator may request that the Innovation Institute determine or confirm whether the University has any claim to IP rights. For Pitt-owned innovations, the invention disclosure form includes an assignment of IP rights to the University.

Who can help me with the Invention Disclosure form?

The Innovation Institute can help you with the Invention Disclosure form (https://www.innovation.pitt.edu/invention-disclosure).

You can contact the Institute using the contact form at https://www.innovation.pitt.edu/contact/.

For immediate assistance, you can call (412) 383-7670.

What happens after the invention disclosure is submitted?

The invention disclosure form will be assigned to a licensing manager in the Innovation Institute who will evaluate the technology and the available options for protecting the intellectual property.

Note that the terms of grants and sponsored research agreements normally create obligations with respect to the reporting of disclosed inventions, technical data, and copyrightable works such as software.

What if I have already talked about the innovation before submitting the invention disclosure?

It is very important to understand that any publication or verbal public disclosure that describes an invention prior to filing a patent application may preclude patenting.

After this type of public disclosure:

patenting outside of the United States may not be possible, and
patenting within the United States may be prohibited unless a patent is filed within 12 months of the public disclosure.

If you plan to submit an invention disclosure, please do so before public presentation.

I’m presenting my work at a conference or submitting my paper to a journal. What steps should I take to protect it?

Before you present your work publicly, you may want to submit an invention disclosure to the Innovation Institute if it contains an innovation. This invention disclosure is a key first step toward appropriately protecting your IP so that your rights to the discovery are not forfeited.

So, you may want to meet with a licensing manager at the Innovation Institute to discuss the implications of publication upon your patent rights. A decision on patent filing can typically be reached promptly so that publication will not be delayed.

COMMERCIALIZATION

Why do we protect intellectual property and commercialize University inventions?

Commercialization is a key form of research impact. The ability to move research results into new or improved products and services in the marketplace creates the direct societal impact a university-based innovator intended the work to have. Further, these investments made in academic research are one of the greatest sources of regional and national economic growth given the new industries they create, the existing organizations they support and the large number of additional jobs they create.

Intellectual property must be protected so that the University and its innovators can provide access to the innovation to a third party. Without the exclusivity afforded by patent/copyright protection, many companies will not make the significant investments necessary to commercialize University IP.

What is a licensing agreement?

Pitt, like all other universities, uses legal contracts called option agreements and license agreements to provide third parties with access to its intellectual property.

An option agreement provides a third party a set amount of time to evaluate the technology. During this time period, the third party cannot commercialize the innovation (i.e., they cannot make, market, and sell it).

A license agreement includes a grant of rights to intellectual property, which the licensee needs to commercialize an invention. In exchange for these rights, the University will typically receive some form of remuneration.

The option or license agreement will contain a collection of legal obligations related to what the third party can and cannot do with the intellectual property.

How do I license my innovation to a company?

The Innovation Institute can help you find an industry partner and guide you through the process of licensing your technology.

Can Pitt faculty, staff, and/or students commercialize the Pitt-owned IP?

Pitt faculty, staff, or student innovators may request a license to commercially develop their Pitt-owned inventions or copyrighted materials (for example, to create a startup company). Typically, this request is appropriate when licensing would enhance the transfer of the technology, is consistent with Pitt obligations to third parties, and does not involve a conflict of interest.

Such agreements will include all customary licensing terms such as technology development milestones and requirements to disseminate the technology.

What is a startup company? How is it affected by this policy?

Licensed startup companies (LSCs) are new companies that have an Option or License agreement for Pitt technology. In some cases, the University and/or one or more of its employees, students, or members of their immediate families may have an ownership interest in the company.

Guidance on the Conflict of Interest approval process for new licensed startup company formation can be found here: https://www.coi.pitt.edu/outside-activities/licensed-start-companies.

HOW ARE PROCEEDS OBTAINED FROM LICENSING IP SHARED?

If the University obtains remuneration for commercialization of intellectual property developed on campus, what happens with those dollars?

If proceeds are obtained from IP licensing activities, the proceeds will be distributed to the innovator(s) as specified in the Pitt IP policy. The distribution formula for patented and copyrighted IP is described in questions below.

What happens if Pitt obtains equity as a form of remuneration as part of this transaction?

Pitt may obtain equity as part of a licensing transaction for intellectual property. If the company has a liquidity event, Pitt will distribute these proceeds to the innovators/authors according to the distribution formula in the IP policy.

A liquidity event can include, for example, the sale of the company, an IPO, or the dissolution of the company via an asset sale.

If Pitt transfers IP to a third party and receives some form of remuneration for it, do the innovators get a share of the proceeds?

Yes. The proceeds from licensing of intellectual property rights are distributed to innovators according to the appropriate distribution formula in the IP policy.

How is the amount of proceeds determined?

Revenue received by the University is first used to recover any outstanding administrative, patent prosecution, and legal fees.

Second, any financial support received from a University Development Fund may need to be reimbursed if this was originally specified.

After these financial requirements are met, these net proceeds are distributed to the various parties according to the distribution formula in the IP policy. The distribution may include innovators, units (typically the department, division, institute, or center), Schools, Provost, Senior Vice Chancellor for Health Sciences, and Senior Vice Chancellor for Research.

How are proceeds distributed for patents (i.e., what is the distribution formula for patents)?

Where the University has an ownership interest in patents (or groups of related patents or technology rights) and revenue results from licensing that work, the following distribution of the net proceeds will apply per the IP policy:

Recipient	Amount	Description
Innovator(s)	45%	There is an option to set aside up to 10% to support the research of the innovator(s). The innovators determine how this amount is split among the innovator group, and it is documented in a Proceeds Distribution Agreement (PDA) that the innovators will need to execute.
Unit(s)	7%	This will be divided by the units (typically the department, division, institute, or center) that supported the creation of the IP. The funds received are to be used at the discretion of the units. The percentages to the units are distributed pro-rata based on the percentages to the relevant innovators, as defined in the PDA. Each innovator can specify only one department, division, institute, or center. This will be used in both the up to 10% transfers for support and 7% transfers to the units.
School	5%	This will go to the School of the innovator. The relevant School is determined by the department of the lead innovator on the license or other agreement. The funds received are to be used at the discretion of the School.
Provost and Senior Vice Chancellor	3%	This will be divided by the Provost and Senior Vice Chancellor and/or Senior Vice Chancellor for Health Sciences. The relevant recipient is determined by the department of the lead innovator on the license or other agreement. The funds received are to be used at the discretion of the Provost and appropriate Senior Vice Chancellor.
Senior Vice Chancellor for Research	40%	This will go to the Senior Vice Chancellor for Research to provide resources to obtain and maintain patents, which includes covering administrative expenses associated with these activities.

How are proceeds distributed for copyrights (i.e., what is the distribution formula for copyrights)?

Where the University has an ownership interest in a copyright and revenue results from licensing that work, the following distribution of the net proceeds will apply per the IP policy:

Recipient	Amount	Description
Innovator(s)	50%	The innovators determine how this amount is split among the innovator group, and it is documented in a Proceeds Distribution Agreement (PDA) that the innovators will need to execute.
Unit(s)	15%	This will be divided by the units (typically the department, division, institute, or center) that supported the creation of the IP. The funds received are to be used at the discretion of the units. The percentages to the units are distributed pro-rata based on the percentages to the relevant innovators, as defined in the PDA. Each innovator can specify only one department, division, institute, or center.
Provost and Senior Vice Chancellor	10%	This will be divided by the Provost and Senior Vice Chancellor and/or Senior Vice Chancellor for Health Sciences. The relevant recipient is determined by the department of the lead innovator on the license or other agreement. The funds received are to be used at the discretion of the Provost and appropriate Senior Vice Chancellor.
Senior Vice Chancellor for Research	25%	This will go to the Senior Vice Chancellor for Research to provide resources to obtain and maintain copyrights, which includes covering administrative expenses associated with these activities.

How are the proceeds divided when IP is both copyrighted and patented?

In this case, revenue will be distributed according to the patent distribution formula.

How are proceeds shared when IP is owned jointly with another institution?

The proceeds from jointly owned IP are distributed first with a portion going to the partner institution as defined in the inter-institutional agreement between Pitt and the partner institution and then according to the appropriate distribution formula per the IP policy.

What is a Proceeds Distribution Agreement (PDA)?

The first step in calculating the split of proceeds amongst innovators is the completion of a Proceeds Distribution Agreement, or PDA, which is required for any distribution.

The PDA is a written document that defines how the innovator portion of proceeds (i.e., the 45% due to the innovators under the patent distribution formula or the 50% due to the innovators under the copyright distribution formula) is to be split among the innovator group.

Who determines how the innovators split the proceeds?

The innovators themselves decide how to split the proceeds. While the PDA is routed to the lead innovator listed on the licensed intellectual property, all innovators must sign off on the agreed-upon split.

In the draft PDA, why does the innovator split show an even distribution across all innovators?

In the template PDA that is initially routed to the lead innovator, the innovator share is divided equally among all innovators. However, this is for template starting purposes only and the innovator group can agree in writing to a different distribution if circumstances warrant a revised allocation.

When do we have to sign the PDA?

A PDA is generally executed once a license agreement is signed (and not at the option agreement stage). This is the stage when net proceeds are typically at levels that exceed the internal investments required for outstanding administrative, patent prosecution, and legal fees in addition to any financial support received from a University Development Fund that may need to be reimbursed.

Further, if the license agreement provides for an “installment payment schedule” for the licensee to reimburse the University for past patent expenses over time, the PDA is executed only after all these installments have been paid by the licensee, again reflecting the point at which net proceeds are likely to be positive.

What happens in the unfortunate event of the death of an innovator on a licensed technology?

If this innovator is entitled to receive proceeds, such payments will continue to be paid to the individual’s estate and subsequently to those parties lawfully granted such rights in a court-approved proceeding.

What about innovators who work on the IP but are not University members?

These innovators will not share in any commercialization proceeds unless a contract, grant, or agreement specifies a distribution, which is not something that typically occurs.

What happens if an innovator leaves the University?

If an innovator entitled to proceeds leaves the University, either voluntarily or involuntarily, they will continue to remain entitled to receive payments as an innovator, but they will not be entitled directly or indirectly to continue to receive or transfer any other rights or benefits to the unit of the innovator.

Proceeds that would otherwise be paid to the research of that innovator will instead be divided by the units, departments, centers, or institutes that supported the creation of the IP. This approach is also taken with the proceeds intended for the units, departments, centers, or institutes when the innovator dies.

What if an innovator does not want to receive any of the proceeds that are due to them?

In this case, the innovator must provide a disclaimer that is in writing, irrevocable, and in perpetuity, and the disclaimer must be signed prior to any licensing event.

The innovator should consult with their personal legal counsel and/or tax accountant before executing such a disclaimer. After such a disclaimer, the innovator cannot then control or dictate how the proceeds will be distributed. Rather, the proceeds the innovator has disclaimed will be split pro-rata among the remaining pools for distribution.

What happens if an innovator changes departments after the PDA is signed?

In this case, the amounts distributed to the department, division, institute, or center will continue to be distributed as agreed to in the original PDA since they were the locations that supported the development of the original innovation.

Is there a threshold of proceeds where the distribution formula changes?

If net proceeds exceed $10M, the distribution formula may be changed in accordance with a plan approved by the Chancellor of the University but in no event will this potential change reduce the innovator’s share below 45%.

If Pitt received equity as part of a transaction, how do innovators share in that aspect of the transaction?

A liquidity event can include the sale of the company, an IPO, or the dissolution of the company via an asset sale.