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Royalty Distribution Policy

If there is more than one Inventor, the applicable royalty percentage will be divided equitably among the Inventors. Their departments and schools or centers will also divide the applicable percentage equitably.  The Vice President for Research, or a designate of the Vice President for Research, retains the right to review the distribution and mediate among the parties. For the avoidance of doubt, to the extent a difference exists between the Inventor(s) identified in the Invention disclosure and the Inventor(s) identified in any resulting patent application, the latter shall control.

The allocation formula recognizes all forms of cash payments, including royalties and various fees from licensing. After recoupment of legal costs, and subtraction of certain costs outlined below, a percentage of the proceeds that the University receives from the licensing of Inventions and Discoveries will be paid to the Inventor, the Inventor's department, and the Inventor's school or center, as specified below. The Vice President for Research, or a designate of the Vice President for Research, will oversee the distribution of such funds according to a plan developed in consultation with the Inventor and will provide an accounting to the Inventor and the Inventor's department and school or center on an annual basis.

A deduction of 15% to cover operating expenses incurred by INVO will be taken annually from the gross license revenue, with funds exceeding the annual INVO budget moving into a quasi-endowment earmarked for INVO operations, entrepreneurial activities, and research operations as determined by the Provost and Vice President for Research. Income then remaining is the net income, which is distributed as set forth below.

To limit administrative costs, if the net income in any year is less than $10,000, then no distribution will be made in that year to the schools, departments, or centers; rather, such net income will be tracked until either (1) the dispersible net income (i.e., the net income summed over several years) exceeds $10,000 or (2) five years passes, at which time a distribution will be made as set forth below.
So long as the cumulative net income (i.e., the net income from all years) is less than or equal to fifty million U.S. dollars ($50,000,000), then the distribution will be allocated as follows:

  1. Thirty-three percent (33%) of the net income to the Inventor.
  2. Seventeen percent (17%) of the net income to the department or departments in which the Inventor serves.
  3. Seventeen percent (17%) of the net income to the school in which the Inventor serves.
  4. Thirty-three percent (33%) of the net income to the Central Administration.

When the cumulative net income exceeds fifty million U.S. dollars ($50,000,000) but is less than or equal to five hundred million U.S. dollars ($500,000,000), then any further distribution will be allocated as follows:

  1. Thirty-three percent (33%) of the net income to the Inventor.
  2. Ten percent (10%) of the net income to the department or departments in which the Inventor serves.
  3. Ten percent (10%) of the net income to the school in which the Inventor serves.
  4. Forty-seven percent (47%) of the net income to the Central Administration.

When the cumulative net income exceeds five hundred million U.S. dollars ($500,000,000), then any further distribution will be allocated as follows:

  1. Thirty-three percent (33%) of the net income to the Inventor.
  2. Five percent (5%) of the net income to the school in which the Inventor serves
  3. Sixty-two percent (62%) of the net income to the Central Administration.

If there is more than one Inventor, the applicable income will be divided equitably among the Inventors.  If there is more than one school, department, or center in which the Inventor(s) serves, the applicable income will be distributed to the school, department, or center that administered the academic year salary at the time of the disclosure. The University will review the proposed distribution plan, in light of the declarations of department, school, and center affiliations declared at the time of Invention disclosure to the University as well as the sources of salary support at the time of disclosure. A priori, income will be split equally among all Inventors (unless otherwise stipulated on the disclosure form) and, where necessary, will be split among the departments, schools, or centers according to the source of salary support (unless otherwise stipulated on the disclosure form and agreed upon by all the affected unit heads). In the case of student Inventors, distributions to departments and schools will be split according to the source of salary support for the student at the time of disclosure. In cases where students receive no salary, distributions will go to the department and school that housed the student’s work. When multiple disclosures are used to develop a single patent or license, then the income is split equally across the disclosures unless a different distribution is agreed upon by all those affected (Inventors, unit heads, etc.). In cases of dispute, the Vice President for Research, or a designate of the Vice President for Research, will mediate among the parties and, if necessary, propose a distribution plan for approval to the Provost. Distributions to Central Administration are invested on an endowment basis for strategic initiatives of high priority to Northwestern as allowed by the Bayh-Dole legislation.

If the Invention or Discovery is the result of sponsored research and the sponsor regulates the distribution of income, such specific regulations shall take precedence over University policy with respect to distribution of the license revenue.
With respect to any patent matter in which another institution or an outside agency shall share in the income derived from the patent rights, distribution of income shall be made first to the other institution according to agreed-upon terms, and then to the Inventor according to this Patent and Invention Policy.

In the case of Inventions made by undergraduate or graduate students at the University to fulfill class assignments, the University has the right to ownership rights in such Inventions that are:

  1. conceived or developed with substantial or essential contributions of the University, such as funds, space, materials, or facilities; or
  2. developed in the course of or pursuant to a sponsored research or other agreement the University has entered into with a third party; or
  3. created as a "work made for hire"; or
  4. developed in collaboration with faculty members not responsible for teaching the class.

For purposes hereof, a "work made for hire" will include a work or Invention created by a student as part of the student’s employment responsibilities owed to the University, or a work or Invention which the University has in writing commissioned the student to create for the University.

In the event students elect to develop or improve, as their class assignment, ideas or Discoveries that are assigned to the University, or that are otherwise subject to the Patent and Invention Policy, the University shall assert ownership rights in those projects. The University does reserve the right to assert ownership rights, if the Invention is made as a class assignment and further pursued as an independent project using significant resources of the University and that of a faculty or staff advisor employed by the University.

Inventions voluntarily assigned to the University by students shall be owned by the University and are subject to the remaining provisions of the Patent and Invention Policy.

Please visit the patent and invention policy page for the full details of our policy.