UNIVERSITY O F HAWAI'I
JAMES R. GAINES
INTERIM VICE PRESIDENT FOR RESEARCH
MEMORANDUM - September 15,2005
TO: UH Chancellors, Deans, and-Directors
FROM: James R. Gaines
Interim Vice President For Research
SUBJECT: New Distribution Formula for UH Royalties
It has been pointed out by many within and outside UH that our existing distribution formula for royalties from licensed intellectual property doesn't include incentives for Deans, Directors, or Department Chairs to encourage invention disclosures or other activities from their faculty that would generate more licensing revenues. The existing formula splits net royalties between inventors and the UH System. As of October 1, 2005 and until further notice, the UH System will provide a percentage of net royalties to inventors' units. This includes the inventor's department as well as their school, college, or ORU. The total percentage of net royalties to be shared with the units will range between 11 % and 22%, consistent with the sliding scale distribution formula presently in place. The new distribution formula has no impact whatsoever on the existing share of royalties for faculty inventors as stipulated in the present UHPA Agreement. Shares for faculty inventors will remain exactly as they have been.
The attached New UH Licensing Royalties Distribution Formula includes more details about how this arrangement will work.
We hope that new distribution formula helps to increase the number of invention disclosures, provide more administrative support for faculty to be entrepreneurial with their research, encourage academic unit leaders to help find companies to license UH intellectual property, and increase overall licensing income. This approach will be monitored over time to assess its effectiveness.
Attach.
c. David McClain, Interim President
Dick Cox, Director, OTTED
Keith Mattson, Director, UH Connections
J.N. Musto, Executive Director, UHPA
NEW UH LICENSING ROYALTIES DISTRIBUTION FORMULA
In order to stimulate technology transfer at the University of Hawaii, the University Administration has decided to distribute to inventors' academic units a portion of the UH System's net royalties from licensed inventions and discoveries. The portions to be distributed are based on the share of net royalties the University receives under the
current agreement with UH Faculty, and they do not reduce the amount that UH faculty inventors receive. The new Royalty Distribution Formula is shown below.
| Net Royalties |
Inventor(s) |
UH System |
Inventor's Unit(s) |
| <= $100,000 |
66.67% |
22.22% |
11.11% |
| $100,000 - $200,000 |
50.00% |
33.33% |
16.67% |
| $200,000 - $300,000 |
41.67% |
38.33% |
19.44% |
| > $300,000 |
33.33% |
44.44% |
22.22% |
Notes:
-
Net Royalties to each Inventor's Unit shall not exceed $2 million per year, per invention.
-
Royalties in excess of this amount will be retained by the UH System.
- Inventors' share of net royalties remains based on 2003 - 2009 UHPA Labor Contract with the BOR.
- If inventor is a faculty member of an academic department within a school or college, inventor's unit proceeds are to be shared equally between the inventor's collegelschool and hislher department.
- Unit shares for inventors affiliated with more than academic or Organized Research Unit shall be based upon the inventor's FTE% within the respective units.
- If multiple inventors from different departments, schools/colleges, or ORUs are involved, shares of proceeds to these different entities shall be based upon their faculty's pro-rata share of Inventor royalties for the IP concerned.
- Appeals and disputes over Inventor's Unit shares shall be resolved by the UH Vice President for Research or hislher designate.
This new Royalty Distribution Formula will be effective for any licensing agreements signed on or after October 1,2005 and will be effective until further notice from the UH Administration. Royalties from licenses executed prior to October 1, 2005 will not be subject to the new distribution formula. The UH Administration will conduct annual reviews of technology transfer activity at the University to evaluate the impacts of the new distribution formula on the number of invention disclosures, the number of new licenses executed, and other measures.
The new Royalty Distribution Formula is intended to encourage greater support and leadership for technology transfer within individual Colleges, Schools, Departments, and ORUs. Accordingly, it is expected that Deans, Directors, and Chairs will encourage and support faculty to engage in research that produces intellectual property, develop productive relationships with industry, and work closely with the Office of Technology Transfer and Economic Development (OTTED) to increase invention disclosures, and identify prospective licensees. It is also expected that faculty activity with respect to patenting and entrepreneurship that benefits the University and community will be given due consideration in tenure and promotion decisions.