FAQs
Q - What is a Sponsored Research Agreement?
A - A Sponsored Research Agreement (SRA) is a formal arrangement where a company or investor (“sponsor”) agrees to provide funding to researchers to pursue specific discoveries. The sponsor receives preferential rights to use and license any resulting intellectual property, while maintaining appropriate boundaries between commercial interests and academic independence. The research institution retains its fundamental mission and can disseminate the research findings through academic channels. Both parties establish clear parameters regarding deliverables, timeframes, and the allocation of rights to any valuable discoveries that emerge from the collaboration. This mutually beneficial partnership enables companies to access cutting-edge research expertise while providing academic institutions with vital resources to advance scientific knowledge through research.
Q - What’s a Principal Investigator/Professor’s share of IP in a SRA?
Most universities have formal IP policies that require professors to assign their research inventions to the university. However, professors generally[AZX1] retain several important rights:
1. Academic Rights
● Right to publish results (after sponsor review period)
● Right to use findings for future research
● Right to share materials with other academic institutions
● Freedom to use knowledge in teaching
2. Financial Rights
● Share of licensing revenue (typically 25-40%)
● Sometimes escalating percentages based on total revenue
● May get larger share for startups they found
● Additional compensation if personally involved in development
3. Control Rights
● Often serve as principal contact for licensees
● Usually consulted on licensing decisions
● May have right to approve/reject exclusive licenses
● Can typically continue research in same area even if licensed
4. Exceptions/Special Cases
● Books, lectures, and course materials usually belong to professor
● Software sometimes has special treatment
● Consulting work usually covered by separate agreements
● Student thesis/dissertation rights usually protected
The exact split varies by institution.
At one university in Tokyo, for professor rights under a SRA, the university handles in the following way. The professor retains the right to publish and use research results for academic purposes. The professor generally receives 40% of licensing revenue. An additional 10% goes to their laboratory/department. The remaining 50% goes to the university. For outside consulting, there are restrictions. Professors must declare consulting activities to the university, the consulting cannot interfere with primary academic duties, is limited to certain number of days per year, and must avoid conflicts of interest with university work.
At Stanford University, revenue sharing follows the "Stanford Model" which is widely copied by other universities. For a net revenue distribution: 1/3 to inventor(s), 1/3 to inventor's department, 1/3 to inventor's school. The first $100K of gross royalties has preferential inventor share. Meanwhile, as special rights, professors retain rights to publish freely (with limited delay for sponsor review), to use research in teaching, share materials with other academic institutions, can generally pursue consulting work with industry, and there is strong faculty input in licensing decisions.
Q - How do universities deal with IP of SRAs?
A - Technology Transfer Offices (TTOs) (or Technology Licensing Organization TLOs. For the avoidance of doubt, “TTOs” hereafter include TLO.)[AZX2] : Universities have established specialized offices staffed with distinguished professionals who translate academic brilliance into commercial viability. These intermediaries serve as the bridge between academia and industry.
TTOs These specialized departments serve as the university's IP management hub, staffed with professionals who understand both academic research and commercial potential. TTOs evaluate inventions, handle patent applications, market technologies to potential licensees, and negotiate licensing agreements. They also provide guidance to researchers about protecting their innovations and help bridge the gap between academic discovery and commercial application.
Clear IP Policies Universities maintain detailed policies that specify ownership rights, revenue sharing formulas, and disclosure requirements. These policies typically outline when the university claims ownership (usually for work using significant university resources or funding), when researchers retain rights, and how student-created IP is handled. They also address collaborative research arrangements, consulting activities, and the use of third-party intellectual property. These policies are designed to be transparent and consistent across all departments.
Tiered Rights Structure Universities implement a hierarchical system of rights and responsibilities for different stakeholders in the IP process. This includes defining primary rights holders (typically the university for funded research), secondary rights holders (often the inventors), and tertiary beneficiaries (departments and colleges). The structure also determines how rights are shared in collaborative projects, particularly those involving multiple institutions or industry partners. This tiered approach helps clarify decision-making authority and benefit distribution.
Standardized Processes Universities establish consistent procedures for handling all aspects of IP management, from initial disclosure to commercialization. This includes standardized forms for invention disclosure, clear timelines for university review, established procedures for patent applications, and templated agreements for licensing and technology transfer. These processes also cover appeal mechanisms for disputes, regular review periods for existing licenses, and protocols for updating IP policies as needed. This standardization ensures efficiency, fairness, and transparency in IP management.
Q - Do professors get the IP from the SRA?
A - This depends on whether the IP refers to IP created before (background IP) or after (foreground IP) the SRA is signed. Typical IP treatment includes:
1. Background IP
● Each party typically retains ownership of IP they developed before the agreement
● The sponsor usually gets a license to use background IP if needed for the research
● The research institution often needs explicit permission to use sponsor's background IP
2. Foreground IP (new IP created during research) Common arrangements include:
● University ownership with sponsor getting first right to license
● Joint ownership between sponsor and university
● Sponsor ownership of specific defined inventions
● Field-specific rights (sponsor gets rights in their industry, university keeps rights for other uses)
Merito solves the problem that many professors have created IP yet not formed a company. By putting a research idea on Merito’s marketplace, that can reveal if there’s potential to start a company. IP-NFT helps test the market and assess IP values. Right now, TTO farms this out, and they don’t do a good job at it.
Q - Do Merito users buy the IP in a SRA transaction?
A - No, typically in sponsored research agreements, companies don't "buy" the intellectual property (IP) outright - instead, they negotiate specific rights to the IP that may arise from the research. Here's how it usually works:
1. IP Ownership: Generally, the research institution (university/lab) retains ownership of any IP created during the sponsored research.
2. License Rights: The sponsoring company usually negotiates for specific rights, which might include:
● First right of refusal to license the technology
● Option rights to negotiate a license
● Sometimes an automatic license to use the research results
● Different rights for different fields of use
3. Publication Rights: Research institutions typically retain the right to publish results, though companies may negotiate:
● Review periods before publication
● Rights to remove confidential information
● Delay periods to file patents
4. Revenue Sharing: If the research leads to commercialization, the SRA document usually contains an agreement on how to share any resulting revenue.
Q - What due diligence will be in place to ensure the researcher has rights to sign a SRA?
A - This is the burden of the researcher.[AZX3]
Q - Is the Sponsored Research Agreement (SRA) like a Simple Agreement for Future Equity (SAFE)?
A - Yes, they are quite similar in that they exchange current funding for future upside. Yet there are differences in these two funding instruments:
1. SRA (Sponsored Research Agreement):
● Company funds specific research projects/activities
● University retains IP ownership but grants rights to company
● Focused on research outcomes and knowledge generation
● Payment is for services/research, not investment in equity
● Usually includes detailed work plans and deliverables
2. SAFE (Simple Agreement for Future Equity):
● Investor provides funding now for future equity
● Converts to equity at a later financing event
● Used primarily for startup fundraising
● No immediate ownership rights granted
● Simple document with few terms beyond conversion of equity
The key difference is that an SRA is a service agreement for research work, while a SAFE is an investment instrument for future company ownership. Think of an SRA like commissioning an artist to paint (you get rights to the painting but don't own the artist's talent), while a SAFE is more like buying a seat ticket that converts to a building owner’s shares when a venue opens.
Q - Does the SRA offer equity in a new company?
A - While possible, on Merito this feature is not yet enabled.
Q - Who retains Publication Rights from research created through a research partnership?
●. Universities typically insist on right to publish research results
● Sponsors usually get 30-90 days to review publications for confidential information
● Patents may need to be filed before publication
Q - What are key differences between upfront and milestone-based payments in sponsored research?
Upfront Payments:
1. Structure:
● Large initial payment at contract signing
● Regular fixed payments (often quarterly or annually)
● Usually covers all basic research costs
● May include overhead/indirect costs
2. Advantages:
● Predictable cashflow for research institution
● Simpler to administer
● Lower monitoring/reporting burden
● Research team has more flexibility
3. Disadvantages:
● Higher initial risk for sponsor
● Less leverage if project underperforms
● May overpay for unsuccessful research
● Limited incentive structure
Milestone-Based Payments:
1. Structure:
● Smaller initial payment
● Larger payments tied to specific achievements
● Common milestones include:
Proof of concept demonstration
Successful prototypes
Meeting performance metrics
Patent filings
Regulatory approvals
2. Advantages:
● Lower initial sponsor risk
● Built-in progress tracking
● Incentivizes specific outcomes
● Can accelerate timeline
3. Disadvantages:
● More complex to administer
● Higher reporting/documentation burden
● May create cash flow challenges
● Can lead to disputes over milestone completion
Most agreements actually use a hybrid approach:
● Base funding provided upfront
● Bonus payments for key milestones
● Additional funding unlocked at specific stages
● Success fees for major achievements
Q - Where does the IP reside after a deal on Merito?
A - Users can access completed SRA documents by entering their accounts on Merito.
Q - What’s the lifecycle of an IP Token Deal on Merito?
1. IP Identification & Preparation
Before tokenization, the scientific intellectual property (IP) must be:
● Chosen – Promising scientific IP could be a research paper, dataset, protocol, compound, or early-stage biotech innovation.
● Verified – Ensuring the IP is novel, properly documented, and has clear ownership (institutional, individual, or collective).
● Governance Setup – Establishing how decisions over the IP will be made (DAO governance, researcher control, institutional involvement).
2. Tokenization
● Structuring the IPT – Defining tokens’ privileges, including access rights, licensing rights, revenue-sharing, and governance in IP utilization.
● Smart Contract Development – Encoding terms for IP usage, revenue distribution, and automated
3. Distribution & Fundraising
● Initial Allocation – IPTs may be distributed to researchers, institutions, DAOs, or investors
● Fundraising Mechanisms – Crowdsourced funding, grants, research DAOs, or industry partnerships to support further development.
● Regulatory Considerations – Ensuring compliance with scientific and financial regulations based on jurisdiction.
4. Utilization
● IP Licensing & Access – Token holders may gain access rights to use, develop, or commercialize the IP.
● Trading & Liquidity – IPTs may be exchanged within the DeSci ecosystem, subject to governance rules.
5. Governance
● DAO Governance & Voting – Token holders may influence research directions, licensing decisions, or reinvestment strategies.
● Compliance & Ethical Oversight – Ensuring research integrity and preventing misuse of IP.
6. Exit, Evolution, or Dissolution
● Further Development or Commercialization – IP may be licensed, integrated into biotech/pharma, or lead to spin-off ventures.
● IP Transfer or Redefinition – Governance may vote on repurposing the IP, selling rights, or redistributing tokens.
● Token Dissolution – If research is obsolete or IP ownership changes, IPTs may be restructured.
Q - IP Challenges to be aware of on Merito?
1. IP Rights Complexity
● Disagreements over ownership of background IP vs new discoveries
● Conflicts with existing IP obligations to other sponsors
● Challenges determining what falls within scope of sponsored research
● Complex negotiations over licensing terms and commercialization rights
2. Publication Tensions
● Company desires for confidentiality vs academic need to publish
● Delays in publication for patent filing
● Restrictions on sharing data with other collaborators
● Impact on students' ability to present/publish their work
3. Timeline/Deliverable Misalignment
● Different expectations about research pace
● Company pressure for quick results vs scientific process
● Changes in company priorities affecting ongoing research
● Uncertainty of research outcomes conflicting with company deliverable needs
4. Administrative Burden
● Complex contract negotiations
● Detailed reporting requirements
● Documentation of expenses/time
● Tracking multiple obligations across different agreements
5. Academic Freedom Issues
● Restrictions on research direction
● Limitations on collaborations
● Pressure to focus on commercial applications
● Potential conflicts with educational mission
6. Financial Challenges
● Insufficient overhead coverage
● Budget inflexibility
● Late payments
● Currency exchange issues for international agreements
Q - How to Address the IP Rights Complexity?
A - The IP rights complexity is typically the most critical challenge in sponsored research agreements since it directly impacts both the commercial value for companies and academic freedom for scientists. To overcome this challenge, both parties can have detailed upfront discussions to clearly define and document what constitutes background IP (existing IP brought to the collaboration) versus foreground IP (new discoveries), including specific examples and boundary cases. The agreement should establish a clear framework for IP ownership and usage rights, with flexible mechanisms for handling unexpected discoveries and innovations that fall into gray areas. Finally, maintaining open communication channels throughout the project and establishing a joint IP committee that meets regularly can help address IP questions as they arise, preventing disputes from escalating and ensuring both parties' interests remain protected while fostering productive collaboration.
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