TT Tip: License Income Distribution

What is license income?

License income is income derived under a license agreement negotiated by the Technology Transfer (TT) Division with an outside entity for rights to Los Alamos patents or copyrights.

Is an employee eligible for a portion of the license income from his or her technology?

If an employee has intellectual property (IP) that has been disclosed, patented or copyright asserted and has shown potential for commercialization, IP can be licensed. If the Laboratory is successful in licensing this IP, the inventor or author are eligible for a portion of the license income as described in the LANS License Income Distribution Policy (pdf).

What is the UC policy on distribution of license income?

For those hired before Oct. 1, 1997, the distribution split is 42.5 percent to the inventor/author, 42.5 percent to the originating division and 15 percent remains in TT.

For those hired on or after Oct. 1, 1997, the distribution split is 35 percent to the inventor/author, 50 percent to the originating division, and 15 percent remains in TT.

Distribution of these funds is made annually at the Patent & Licensing awards reception, which takes place in February. To receive a distribution of license income, an individual must have IRS form W-9, "Request for Taxpayer Identification Number and Certification", on file with TT Division. In addition, the individual must provide a current address for payments to be made. Licensees who leave the Laboratory or retire are still entitled to their license income. License income is paid out until the license expires or no longer generates income. If an inventor dies, license income is paid to the inventor's estate.

Individuals who move or retire should contact TT Division to update their mailing information to avoid delays in receiving license income.

Are there restrictions on how this money can be used?

The inventor/author receives the money as personal, taxable income, and tax concerns are the responsibility of the inventor. TT Division and the division in which the invention originated must use their funds for research and development, technology transfer or education at the Laboratory. These funds are exempt from Laboratory overhead and have been used for various activities, such as division scholarships, technology maturation projects, marketing, patent infringement actions, etc. Note that funding used for research and development activities cannot be used to augment existing, funded programs.

Questions or concerns about using the funds?

Contact Dave Swavely, TT Business Team leader, at 5-7363 or Susan Brockway at 5-7677.

For more information about license income, see the TT Division Web site or contact Brockway via phone or e-mail at sbrockway@lanl.gov.

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