2025-32

2025-32

Motion Introduced by: Research and Creative Activities Committee

Date of First Reading: November 4, 2024

Date of Second Reading: December 2, 2024

Title of Motion: Proposed Updates to RSP 604, Ownership of Research Data and Materials & Intellectual Property Management Implementation Policy

Action Requested: This proposal is being presented to the Senate for approval.

Rationale: ASU owns intellectual property (IP) created by employees in the course of their employment (“creators”) as well as IP created by anyone with significant use of university resources. (ABOR Policy 6-908). Federal law (Bayh-Dole Act of 1980) mandates that the university share revenues from commercialized federally funded IP with the creators of the IP. ABOR policy specifies that creators receive a minimum of 25% of revenues net of the university’s unrecovered costs associated with commercialization, licensing, and legal protection of the IP. ABOR Policy requires ASU to use the remaining funds (which ASU distributes among the “Lab Share” and “University Share”) “in support of research, investigation, research fellowships, or other activities relevant to research or the generation of intellectual property at the institution.” As ASU continues to evolve and advance its charter, revision to the current revenue-sharing policy is sought to ensure an equitable portion of the net revenues from intellectual property are designated to support the university’s public research mission while maintaining above-average incentives (relative to peer institutions) for creators to pursue technology transfer opportunities.

Nationwide, only a small percentage (~0.5%) of university IP licenses generate $1 million or more in revenue annually, indicating that while the vast majority of creations generate only modest revenues, institutions must position themselves to maximize the benefits of statistically rare high-revenue creations.

Under the current ASU policy, the annual Creator Share of revenue is 50% for IP that generates $10,000 or less over the commercial lifetime of the IP. Once lifetime revenue exceeds $10,000, the annual Creator Share ranges from 40% (for single-creator works) to 50% (for works with 5 or more creators). The annual Lab Share of revenue is 16.67% for IP that generates $10,000 or less over the commercial lifetime of the IP. Once lifetime revenue exceeds $10,000, the annual Lab Share ranges from 16.67% (for works with 5 or more creators) to 26.67% (for single-creator works). The annual Lab Share is capped at $2MM. Year-to-year rollover of unspent Lab Share funds is capped at $1.5MM. The annual University Share is 33.33%, regardless of the lifetime revenue amount.

Under the proposed policy, the annual Creator Share of revenue is 45% for IP that generates $15MM or less over the commercial lifetime of the IP. Once lifetime revenue of the IP exceeds $15MM, the annual Creator Share becomes 25%. The Creator Share is divided equally across creators, unless the creators agree to a different allocation of revenue in signed notice provided to Skysong Innovations. The Lab Share of revenue is 21.67%, regardless of the lifetime revenue amount. As under current ASU policy, the annual Lab Share is capped at $2MM, and year-to-year rollover of unspent Lab Share funds is capped at $1.5MM. The annual University Share is 33.33% for IP that generates $15MM or less over the commercial lifetime of the IP. Once lifetime revenue of the IP exceeds $15MM, the University Share rises to 53.33%.

The advantages of the proposed updates to revenue sharing are that they would

• Bring ASU more in line with peer institutions
• Maintain generous creator incentives while better supporting the university’s research mission
• Prevent imbalance in rare cases of extremely large revenues
• Still provide more generous combined Creator/Lab Share than comparable institutions

Additional key policy updates

• Confirmation that creators are not entitled to share of revenue from student/learner-related sources (e.g., tuition, lab fees)
• Confirmation that creators with substantial personal equity interest in an ASU startup company are not eligible to receive the Creator Share for any payments received by ASU in connection with a future sale of the company; creators are still entitled to a share of royalties, licensing fees, and other payments from third-party users of the IP
• Going forward, Lab Share will be distributed equally among all creators' accounts unless otherwise agreed
• Clarified creator eligibility
  • Must be a university employee whose principal job duties include research and/or teaching
  • Must hold an academic and/or research appointment or work under the direction of someone who does

The proposed updates are meant to strike a balance among balance fair compensation for ASU creators, incentivizing rapid development of IP by ASU creators, and support for ASU’s broader research and public service missions, while remaining competitive with other major research institutions.