University of California, San Diego

May 12, 1997
SUBJECT: Proposal for Revision to the Patent Policy
The current royalty distribution formula for University of California inventions was adopted in an April 1990 revision to the patent policy. Since that time, there has been ongoing discussion regarding alternatives for the allocation of patent income.
Inventions are subject to the royalty distribution formula in effect when they are reported. Under the pre-1990 policy, inventors received a more generous share than that provided by most other major universities. The primary rationale for the 1990 policy change was that individual inventors should not become enriched as a result of performing publicly funded research. However, concern has been raised in various forums that the current formula is perceived by faculty as a disincentive for participation in the technology transfer program. There has been substantial support for changing the royalty distribution formula to: (1) establish the inventor's personal share at a rate somewhere between that of the pre-1990 policy and the current policy and (2) add a direct research allocation as further incentive for faculty participation.
The current proposal, which addresses the above concerns and also supports other administrative objectives, is the result of several years of discussion and review involving the Technology Transfer Advisory Committee, the Academic Senate, and the Council of Chancellors. Accordingly, the university proposes to revise the Patent Policy, effective October 1, 1997, as summarized below:
* Rescind the current policy and revert all inventions reported
before the new policy's effective date to the pre-1990 policy. This would prevent the need to administer three separate formulas over many years and would eliminate a formula that is unpopular with many faculty members.
* Remove the 15% administrative assessment (used in the pre-1990
policy and current formulas) from the new formula and define net income as total income less direct case expenses. This would simplify the royalty distribution formula by consolidating the portion of income available to cover program costs (currently the 15% assessment against gross income plus the university's share of net income) into one general pool of net income.
* For inventions reported on or after the effective date of the new
policy, distribute net income by invention as follows:
35% to the inventor's personal share. This would establish the
inventor's share at a flat rate between that of the pre-1990 policy and the current policy.
15% to research at the inventor's campus or laboratory. This
would require that a minimum 15% of net income from each invention be designated for research-related purposes and allocated based on plans developed at each campus and laboratory.
50% to the general pool at the inventor's campus or laboratory.
This pool would continue to support program costs, including the State share, operating expenses, and direct expenses of inventions not earning income. Any residuals would be available to chancellors and laboratory directors for educational and research purposes.
Proposed language changes in the Patent Policy and Patent Agreement incorporate the above elements as well as other revisions needed to more accurately reflect university organization and practices. The new policy would apply to inventors at all nine campuses. Because of the unique nature of the three laboratories, and their relationship with the Department of Energy, these sites would each be permitted to submit alternative royalty distribution proposals to the President for consideration.
Further details and a brief comparison of formulas regarding this policy proposal are available on-line at:
Hard copies of the proposal and comparison formulas are also available in the Human Resources Office of Policy Development and Quality of Work/Life.
Comments regarding the proposed Patent Policy changes should be directed to Jonnie Craig-Winston, Director of Policy Development and Quality of Work/Life, either at extension 49659 or via electronic mail at jcraig@ucsd.edu. All comments received no later than close of business, May 27, 1997 will be summarized and forwarded to the UC Office of the President.
Rogers Davis
Assistant Vice Chancellor -
Human Resources