Policy#: OR-0003

Effective Date: April 4, 2019

Last Revision Date: April 4, 2019

Patent Royalty Income Disposition

(Policy OR-0003)

I. Purpose of the Policy

The creation of patented works is one of the ways University of California Santa Cruz (UCSC) fulfills its mission of contributing to the body of knowledge for the public good.  As per UC Patent Policy, subject to restrictions arising from overriding obligations of the University pursuant to gifts, grants, contracts, or other agreements with outside organizations, following due assignment of inventions and patent rights to the University, 15% of Net Royalties per invention shall be allocated for research-related purposes on the inventor's campus or Laboratory (the “Research Royalty Share”). 

Given that each UC campus has the discretion to determine the distribution of the Research Royalty Share, the purpose of this UCSC policy is a to establish clear and uniform allocation of the Research Royalty Share arising from patent rights assigned to the Regents.

II. Definitions

For the purposes of this Policy, and in accordance with the UC Patent Policy, the following terms have the definitions listed below:

Patent License: Legal contract that conveys a commercial right to use patent rights arising from one or more specific invention disclosures of UCSC Case(s) in return for consideration in the form of fees, royalties, and occasionally equity in the licensee.  An option agreement leading to a future license or bailment agreement is expressly excluded from this definition.

Net Royalties: Gross royalties (total payments received by UC for a license of a particular UCSC Case) and fees received by the Regents, less any administrative costs for UC, UCSC, un-reimbursed legal fees and costs of patenting, protecting, and preserving patent and related property rights, maintaining patents, the licensing of patent and related property rights, and such other costs, taxes, or reimbursements as may be deemed necessary or required by law.  Net Royalties may also include cash realized from the sale of stocks or shares accepted by the Regents as equity as partial consideration for the Patent License.  Net Royalties is not derived from research funds, expense reimbursement or from any other consideration of any kind received by the University, including UCSC.

UCSC Case: A disclosure to UCSC office of Industry Alliances and Technology Commercialization (IATC) of a potentially patentable invention that is subject to the UC Patent Policy and may or may not be patentable.  For disclosures that are potentially both patentable and copyrightable, the UC Patent Policy and this UCSC Policy shall take precedence over copyright policies.

III. Detailed Policy Statement

To establish a clear and uniform allocation of the Research Royalty Share across UCSC, and in recognition of the importance of providing financial support to inventors and their research labs, the Research Royalty Share will be allocated to the UCSC research lab to which the inventor belonged at the time of invention, irrespective of the inventor’s UCSC employment status or research lab membership at the time of revenue distribution.  Additionally, the following special allocation guidelines apply for their respective circumstances:

  1. In the case of income arising from an invention created by multiple UCSC inventors, the Research Royalty Share will be allocated in equal amounts to each of the inventors’ respective UCSC research labs to which each belonged at the time of invention.
  2. In the case where the inventor’s research lab at the time of invention is no longer at UCSC at the time of revenue distribution, the Research Royalty Share will be allocated as follows:
    • If the inventor holds an active research position at UCSC at the time of revenue distribution, to the then current inventor’s UCSC research lab, or
    • If the inventor no longer holds an active research position at UCSC at the time of revenue distribution, to the UCSC Division to which the inventor’s research lab at the time of invention reported into.
  3. In the case where the inventor did not belong to a UCSC research lab at the time of invention, the Research Royalty Share will be allocated to the UCSC Division in which the inventor was employed at the time of invention.

IV. Getting Help

IATC provides training and assistance to campus units (including help with completing forms, carrying out procedures, or interpreting policy).  Contact IATC at innovation@ucsc.edu or (831) 459-5415 with any questions or for help pertaining to this policy, disclosing inventions (patentable, copyrightable, or other tangible research products), patent policies, copyright policies, or other intellectual property management matters.

V. Applicability and Authority

This policy on Patent Royalty Income Disposition applies to all UCSC departments.  It is a new policy and thus supersedes any campus practices in existence prior to its effective date.  

This Policy does not apply to copyrighted works.  For any copyrightable work, the Campus Copyright Royalty Disposition Policy (IATC0001) shall apply.  In a case where the application of the patent and copyright policies conflict, the ownership principles of the UC Patent Policy shall govern

The Vice Chancellor for Research is the campus authority for the Patent Royalty Income Disposition policy, with implementation authority delegated to the Assistant Vice Chancellor for Research-IATC.

This policy was reviewed and approved by the Campus Provost and Executive Vice Chancellor, Marlene Tromp on [_______]. This policy will be reviewed every five years.

VI. Related Policies/References for More Information 

University of California Patent Policy (10/1/97)

University of California Policy on Accepting Equity When Licensing University Technology (2/12/96)

University of California Policy on Copyright Ownership (8/19/92)

University of California Academic Personnel Manual (APM)-020 II.7, APM-028 II. B., APM-670-19 b.3., APM-671.10 b.2.,

University of California policy on International Activities (6/23/17)

VII. Revision History

April 9, 2019: New policy