News | Aug 15, 2017

How to license technology from defense laboratories

This guide will help you understand how to license technology from a defense laboratory from start to finish

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Capt. Brian Durant and Amit Kapoor sign an exclusive license agreement, facilitated by TechLink, authorizing First Line Technology LLC to manufacture Navy patented lifesaving decontamination technology for warfighters and first responders. (John Joyce/Navy)

Are you an entrepreneur or business wondering how to license technology from defense laboratories? If so, you’re in the right place.

The Department of Defense invests over $70 billion on research and development every year, which accounts for about half of the federal government’s spending on basic and applied research.

The research and development takes place in defense laboratories and centers located around the United States. If a scientist or engineer develops or discovers a new technology, then the laboratory will file for a patent to secure rights to the technology for the federal government.

The good news is that DoD makes its patented inventions available to the public through a process called technology transfer. This enables businesses to commercialize the technology, sell it in the private sector and potentially back to the Department of Defense.

This licensing process is a primary method for the public to access technologies from the defense laboratories. Businesses large and small use technology transfer and patent licensing to leverage the government’s investment to improve their products or create new ones.

But there are still plenty of small businesses and entrepreneurs, wondering how to license technology from defense laboratories.

That’s why TechLink is here.

TechLink is the Department of Defense’s national partnership intermediary in technology transfer and supports the transfer of new technologies from DoD labs to businesses and entrepreneurs.

And TechLink’s licensing professionals say these steps will help you to license technology from defense laboratories.

1. Find your opportunity in the database of technologies

The first thing you need is the technology. If you haven’t already, search TechLink’s online database of over 5,000 available technologies.

The database is keyword searchable, but there are also buttons that allow you to search the technologies by 11 technology areas, e.g., medical, materials, software, or by the laboratory.

You’ll also see filters labeled summaries, patents, and express licensing.

By clicking the summary filter, you will see technologies that TechLink has dived a bit deeper into, often by interviewing the inventor. These summaries contain more information that is helpful to understand what the technology’s applications might be.

Express licensing is a new feature from some defense laboratories. Technologies listed in the express licensing category have pre-negotiated terms and an online application form, which allows the public to access the technology faster.

The technologies listed under the patent filter have the least amount of information available, but that doesn’t mean the technology isn’t great.

And if you still don’t find what you’re looking for, remember you can always reach out to TechLink’s staff; they may have more information than what’s posted online.

2. Read the patent

After you’ve found a technology by searching TechLink’s website, the next step is to read the patent front and back. This will allow you to identify the branch (Army, Navy, Air Force) that owns the patent rights.

A patent or patent application will almost always identify the branch in the “assignee” category, and will also include a date the application was filed, a summary of the invention, and other helpful information.

This information from the patent helps potential licensees start building a picture of what problem the defense laboratory was trying to solve when it began the research that led to the invention and what other inventions are out there. That information can also sometimes be gleaned from a patent’s “background of the invention” section and the drawings.

Understanding the research problem can be useful in your re-imagining of the technology for non-military use.

The patent might also include test results. Not only are these valuable to finalizing a product, but it’s also an early hint at whether the invention has matured to the prototype stage and how much the DoD has invested in the idea.

3. Contact licensing professionals (that’s us)

The third step is simple, straightforward, and will be a big step forward on your path to success. After you’ve read the patent and decided you still want to know more because you’re serious about the opportunity, you should contact TechLink.

Many of TechLink’s staff hold advanced degrees and are certified licensing professionals. Remember, TechLink helps to facilitate over 60 percent of all license agreements between businesses and the Department of Defense.

And TechLink is a non-profit organization, funded by the DoD, which does not charge for its services and does not take a cut of the deal. TechLink helps both sides reach a win-win agreement and can offer support throughout the licensing process.

The contact information for a technology manager is included alongside each technology in the database.

An email to a technology manager is a great way to start and often leads to a telephone call to get better acquainted. Then, TechLink’s staff will gather information for the applicant and give in-depth answers to the questions surrounding how to license technology from defense laboratories. They can also answer more questions about how to license technology from defense laboratories.

4. Prepare questions about the technology

The fourth step is preparing questions, basic and technical, that will help you make the decision to license the technology. Each technology will have different questions, but it’s a good practice to review the patent and make sure you’re clear on what the license will make available in addition to the right to practice the invention, like test data, prototypes, or technical assistance from the inventor.

For physical inventions, it’s good to ask about materials and manufacturing processes. For software, you might ask about current development or updates, but generally, there’s not a wrong question, and your questions will help TechLink help you.

And it’s good to ask a lot of questions. They can be specific or as simple as “Is there a prototype?” TechLink’s staff will answer these questions or help you find the answer. Remember, we’re here to help businesses and defense laboratories be successful in forming partnerships.

5. Draft a license application for a technology

Receiving from the federal government the rights to practice its patented technologies requires a formal license application.

TechLink’s staff of certified licensing professionals will get the process started by collecting information from the applicant (you) as they discuss the technology and the opportunity. After so many years of facilitating patent license deals with federal laboratories, they know what will be needed for the application.

Attached to the application is a commercialization plan. This document breaks out the minimum federal requirements into a coherent narrative that everyone can understand. Drafting the commercialization plan also helps applicants to think about how they will make the product or service, how much it will cost to produce, and what the market will look like.

A key question in writing the commercialization plan is how long does the applicant want the license, how big is the market for the new product or service, and/or how many units will be produced.

Some, but not all federal labs, want the license application to also include the first offer of financial terms.

6. Negotiate terms

It is common in a patent license agreement for the lab to get an upfront payment and a percentage of future sales. And the license application and commercialization plan often contain the applicant’s opening bid.

This can seem daunting, but TechLink’s experience as a neutral third party is a big help to small businesses who want to access technology from defense laboratories. The expert staff at TechLink can explain financial terms in a way that anyone can understand.

And once the license application is submitted, it will be reviewed by staff in the laboratory’s Office of Research and Technology Applications. You might hear these staffers referred to as the ORTA, and they’re great people who are excited to help businesses grow with technology developed in DoD labs.

A preliminary decision is made to accept the offered terms and move forward with granting the license, or to continue discussing the needs of both sides.

Small businesses and startups understandably want to limit costs, and there’s not a strict formula for financial terms. TechLink’s staff are experienced in this process and can help the business and the lab understands each other.

The applicant will also need to decide if they want exclusive or non-exclusive rights to the technology.

To receive exclusivity, a company might demonstrate for the laboratory that it can sell the invention in all of its potential markets, otherwise, the lab may negotiate to limit the license to certain fields, e.g., allow a company to use a DoD laser technology for telecommunications, but not medical devices.

And remember that federal law encourages non-exclusive licenses, a policy designed to promote healthy competition.

To receive an exclusive license, companies might also be required to provide justification for why it’s necessary. This could include the amount of investment capital required to commercialize the technology and other reasons. And the level of exclusivity granted will affect the license agreement’s financial terms.

An exclusive license will also be publicly noticed in the Federal Register.

7. Signatures

After the terms are negotiated, with the lab and the applicant in agreement, the ORTA generates a draft license agreement for review by the applicant. This is often the first time the contract’s legal language is available for review.

When both the applicant and the DoD concur on the language, the lab prepares an executable license. The executable license is frequently sent to a legal office serving the defense laboratory. During this step in the process, a government attorney will review the license for the legal sufficiencies required by federal law.

Once it’s been approved by the laboratory’s attorney, the license will be signed by the entrepreneur or small business and sent to laboratory director or their delegated authority for the final signature.

How long does licensing a technology take? The process of licensing technology from a defense laboratory, from start to finish, usually takes six months but can be as short as one month. TechLink’s staff stay involved to keep the process moving forward and to provide updates.

Now that you know how to license technology from defense laboratories let’s get started. Start by searching the database of available technologies.

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