NVCA Produces University Tech Transfer Licensing Term Sheet

The National Venture Capital Association ("NVCA") model legal documents have set the standard for documenting venture capital financings in the emerging companies market for nearly a decade. Since the publication of the initial NVCA model forms (which include a model Corporate Charter, Investors’ Rights Agreement, Voting Agreement, Bylaws, Right of First Refusal and Co-Sale Agreement, and Management Rights Letter, among others), the NVCA has produced a number of other model documents, including Human Resources Policies, Anti-Harassment Policies, and so on.

In late 2022, the NVCA published a new model document, this time a university startup term sheet designed for out-licensing technology (and specifically patents) in the biotechnology sector from an academic institution or tech transfer office to an operating start-up, which would commercialize said intellectual property and eventually monetize it. As with all model forms published by the NVCA, the term sheet seeks to provide a framework to negotiate a balanced and commercial reasonable outcome for licensor and licensee.

Among other things, the term sheet covers territory, patent rights, license to improvements, sub licensing, subcontracting, license fees, equity participation in a licensee, development milestone payments, royalty terms, information and observation rights, dispute resolution, and so on. While the term sheet is not a definitive agreement, it’s intended to expedite licensing negotiations so that counsel may turn quickly to drafting a definitive license agreement. 

Licensors and licensees that are interested in increasing licensing speed and volume, in particular in the biotechnology sector, would be well-advised to familiarize themselves with the new NVCA term sheet. If the NVCA’s history is any indicator, this term sheet will soon become a standard negotiating tool in the academic licensing arena.