Agriculture Reference
In-Depth Information
experience. in. commercialization,. and. marketing. expertise.. Public. institutions,. in.
return,.offer.preferential.access.to.academic.resources.and.assistance.in.navigating.
bureaucracies..The.objective.of.the.contract.is.to.combine.each.partner's.assets.in.the.
most.productive.combinations.
The.governance.structure.of.the.partnership.must.be.determined.in.the.irst.stage..
Fundamentally,. it. deines. each. partner's. front-end. control. rights. and. back-end.
property. rights.. This. assignment. of. control. will. determine. how. the. partners. will.
interact,.make.decisions,.resolve.conlicts,.and.terminate.the.agreement.if.necessary..
The.most.important.consequence.of.the.governance.structure.is.that.it.determines.
how.the.project.will.be.evaluated,.and.the.governance.structure.speciies.how.the.
agreement. will. be. administered. and. if. the. scope. will. be. changed. (i.e.,. the. agree-
ment. extended. or. terminated).. At. the. conclusion. of. the. partnership,. the. back-end.
options.in.the.agreement.determine.how.beneits.are.disseminated.and.the.process.
for.establishing.ownership..Each.of.these.issues.is.crucial.in.determining.how.both.
the.pecuniary.and.nonpecuniary.beneits.of.the.project.are.shared.by.the.partners.
and.by.the.public.
In. the. case. of. partnerships. that. involve. research,. licensing. options. are. impor-
tant. when. the. PPP. generates. a. new,. marketable. product.. Currently,. it. is. common.
for. the. industry. partner. to. be. given. a. irst-to-negotiate. licensing. option. for. some.
subset.of.the.innovations.generated.under.the.partnership..Generally,.these.options.
must.be.exercised.within.a.speciied.time.period,.or.else.the.option.is.extended.to.
third. parties.. In. response. to. public. outcry. over. poorly. structured. agreements. and.
concern. about. blocking. patents,. right-of-irst-refusal. options. evolved. into. right-to-
negotiate.options..If.the.industry.partner.is.granted.the.more.limited.option.of.right-
to-negotiate,.a.public.institution.should.have.greater.control.over.licensing.rights.and.
can.prevent.blocking.patents.from.being.awarded.
Other.aspects.of.licensing.agreements.receive.less.attention.but.are.also.critical..
One. such. aspect. is. the. percentage. of. the. total. innovation. for. which. the. indus-
try.partner.holds.an.option.to.negotiate.an.exclusive.license.or.access.option..For.
example,. in. some. partnerships,. the. private. partner. can. exercise. this. option. for.
an.“allowable.percentage”.of.patents,.equal.to.the.percentage.of.the.funding.that.
came. from. private. partner.. Under. other. agreements,. the. industry. partner. holds.
this. option. for. all. patented. discoveries. generated. by. the. agreement.. Third-party.
options.are.also.a.critical.aspect.of.licenses.options..These.options.are.the.rights.
that.parties.outside.the.agreement.have.to.innovation.generated.by.the.agreement..
In.some.agreements,.third.parties.hold.open.options.on.patents.not.included.in.the.
allowable.percentage.and.on.patented.innovations.either.covered.by.nonexclusive.
license,.or.for.which.the.irst-to-negotiate.option.has.expired.for.private.partner..
In. this. case,. the. private. partner. has. no. recourse. once. their. licensing. option. has.
expired,. and. the. public. partner. is. free. to. enter. licensing. negotiations. with. third.
parties..In.contrast,.other.agreements.give.third.parties.only.a.conditional.option..
The.private.partner.has.right-of-irst.refusal.on.any.licensing.arrangement.between.
the.public.institution.and.third.parties,.even.if.their.original.licensing.option.has.
expired..Thus,.private.partner.is.guaranteed.an.option.of.irst.refusal.on.any.third.
party.offers.made.to.the.public.partner..This.severely.limits.the.options.available.
to.third.parties.
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