Royalty Policy Regarding Licensed Inventions
July 9, 1998
Under current legislation, Congress included economic incentives for Government
researchers participating in the patenting process. These incentives result
in inventors receiving a share of the Government's royalty payments under
the licensing agreement. The National Technology Transfer and Advancement Act
of 1995 (NTTAA) specifies the distribution of royalty payments as follows:
[t]he head of the agency or laboratory, or such individual's designee,
shall pay each year the first $2,000, and thereafter at least 15 percent of
the royalties or other payments to the inventor or coinventors. (Section 14(a)(l)(A)(I)
of the Stevenson-Wydler Technology Innovation Act, 15 U.S.C. 3710c, as amended
by section 5 of Pub. L. 104-113.)
- The Government seeks to obtain a fair financial return on the public's
investment through the negotiation of royalty-bearing licenses with licensees.
Further, royalties or other payments received under licenses are distributed
to inventors and other laboratory employees who substantially increase the
technical value of the particular inventions.
- Royalties may be received by FDA for technologies developed in FDA laboratories
or from extramural sources who have waived title of the technology to FDA.
- Royalties from licensed technologies will be received consistent with the
terms and conditions of the licensing agreement.
- Progress reports are submitted by the licensee under the terms and conditions
of the licensing agreement.
- Royalty payments, including inventor royalties, are distributed periodically,
currently twice yearly. Usually, inventor payments are distributed in late
winter (March) and early fall (October). The royalties are received by NIH
on behalf of FDA and then transferred to FDA's Office of Financial Management
(OFM) for distribution.
- All royalty payments are distributed by the Office of Financial Management
(OFM). No royalties are ever paid directly to any inventor(s) by any licensee.
- A formal review and approval process is followed in receiving and administering
- Overall, FDA will allocate royalty income on the basis of income received
and each inventor will be given:
- a share of the first $2,000.00 of royalties or other payments received
on a licensed invention for each fiscal year the agreement is in effect,
provided sufficient royalties are received;
- a share of fifteen percent (15%) of the license royalties received between
$2,000 and $50,000; and
- a share of 25% of license royalties in excess of the first $50,000 received.
The sum of these, as appropriate, will be the inventors' share in the
royalties received by the Government. The maximum amount of royalties which
can be received per inventor is $150,000 per year. Any amount above that requires
After patent prosecution and any other costs are recovered, the remainder of
the royalty income will be distributed to the laboratory in which the invention