Technology Licensing Can be a Challenge

Newlogic's spin-out company, Newcare Medical, is working to receive a number of SBIR grants from the NIH.  One grant is to develop an active noise cancellation technology for use in NICUs.
The active noise control technology is to be licensed from another startup that we have been advising.  This case is complicated by a number of factors, not least is that the inventor has decided not to continue as a full-time entrepreneur, he is looking for a job.  If he receives one, he will likely not be able to take part in the SBIR Phase 1 program, and potentially future development of his technology as well.  The inventor should be compensated for Newcare's use of his invention,  but his inability to participate in the project should not limit Newcare's ability to complete the grant.


Each party has some specific needs.
Newlogic/Newcare
- The ability to develop the technology in order to complete the terms of the NIH SBIR regardless if the technology's inventor's role in the program.
- The ability to commercialize the technology as funded by the NIH grants.
Inventor of the Active Noise Cancellation Technology:
- Money
- Control

There are some areas that I can project conflicts:

- Who owns the prototype?   By the terms of the SBIR, Newcare has ownership, however, I expect the Inventor will demand ownership.  I think we can work around it by giving the inventor something like a 2 year license of the prototype, by that time it should be obsolete so returning it to Newcare will not be a big deal.
- Ownership of IP developed during the program.  I would expect that we can reach an agreement that the Inventor owns the IP, and Newcare has non-exclusive license to it for the purposes of completing the grant, a Phase II grant and commercializing the technology funded by the grant.  However, Newcare will not agree to a non-circumvent clause, we need the ability to grow and develop the technology independently of the inventor's career path.
- Value of the technology license.  The SBIR Phase I budget is extremely limited. Any licensing fees will have to come out of the salary line item.  This is a good deal for the inventor (who's listed as co-PI) because it guarantees him payment regardless if he works on the program.  However, if he demands cash above his 'salary' budget, we may have to cancel the program because there is no room in the budget for it.
- Timing of legal fees and costs.  If we do not receive this grant, this entire effort is wasted. Thus, I'm not inclined to initiate this dialogue nor accrue legal fees until we are more certain we're receiving funding from the NIH.