Revenue Distribution FAQ
USC Stevens Center for Innovation
Standard Revenue Allocation Practices for Intellectual Property Licensing
Net revenue received by USC from licensing university-owned Intellectual Property (IP) is shared with the university inventors or authors in accordance with the USC Intellectual Property Policy. There are different ways that revenue under a license can be allocated when there is more than one university inventor/author or more than one IP asset licensed. These Standard Revenue Allocation Practices will be applied by USC Stevens in the absence of the inventors/authors agreeing to apply a different allocation procedure.
1. Multiple inventors/authors.
Revenue will be allocated among multiple inventors/authors based on the mutual agreement of the inventors/authors. University approval is required on any sharing arrangement that is not equal between all university inventors/authors. If the university inventors/authors are not able to reach agreement on an allocation, the university will allocate the revenue equally among the university inventors/authors unless the Vice President for Research determines that a different allocation is appropriate in the circumstances.
2. Multiple patents.
If there is more than one patent included in the license, the following principles will be applied in allocating revenue among the patents:
• Revenue will be allocated equally among patents in the absence of a written agreement by all inventors to allocate revenues differently or a determination by the Vice President for Research that a different allocation would be appropriate in the circumstances.
• For revenue that is identifiable to a subset of patents included in a license, the revenue will only be allocated to those patents in the absence of a written agreement by all inventors to allocate revenues differently.
• For purposes of counting patents:
– Both issued patents and pending applications will be counted.
– A patent filed in multiple jurisdictions will only be counted as one patent.
– Continuation applications will not count as separate patents, but divisionals and continuations-in-part will.
• If a license covers both university patents and other IP assets (such as software), then the allocation between the patents and other IP assets will be done by mutual agreement of the inventors and authors.
3. Inventors added or removed during patent prosecution.
Revenue will only be shared with actual inventors/authors. If as a result of patent prosecution university inventors are added or removed from a patent, then all of the inventors will need to come to a new agreement on allocation of revenues unless the inventors had earlier agreed to allocate revenue equally among the inventors. Any added inventors will also have to agree to the method of allocation.
4. Different sharing regimes under IP Policy.
If revenue is allocated equally among inventors, the inventors will not necessarily receive the same amounts because the USC Intellectual Property Policy has two different revenue sharing arrangements for patent license revenues depending on the inventor’s date of employment with USC. Inventors employed before April 3, 2001 receive 50% of the net revenue allocated to them and inventors employed on or after April 3, 2001 receive 28-1/3% of net revenue allocated to them. For example, if there are two USC inventors on a patent one of whom was first employed by USC in 2000 and one in 2002 and the revenue is allocated evenly among the inventors, then the 2000 inventor will receive 25% of the net license revenue (50% of 50%) and the 2002 inventor will receive 14-1/6% of the net license revenue (28-1/3% of 50%).
5. Determinations by University.
If the university inventors or authors are not able to reach unanimous agreement on a matter that calls for their agreement under these Standard Revenue Allocation Practices (including circumstances in which an inventor or author cannot be located), then such determination will be made by the USC Vice President of Research or other university officer designated by the USC Provost to make such decision. In addition, the USC Vice President of Research or other university officer designated by the USC Provost may decide to allocate revenue differently than earlier agreed by the inventors/authors if such other allocation method would be equitable based on circumstances that were not known by the inventors/authors at the time of their agreement or circumstances that developed after their agreement was reached.