Inventor Share Policy

UC is currently working under two patent policies. The Current (1997) Policy is in effect. However, some long-term UC employees can choose whether to have their inventions administered under the Old (1963/85) Policy or under the Current Policy.

For inventions disclosed on or after Oct. 1, 1997, the invention disclosure date and the inventor hire date will determine which policy is applicable. If an invention is disclosed on or after 10/1/97, but the inventor was hired before April 16, 1990, the inventor can choose between the two policies. The choice is a one-time, irrevocable decision that will affect the distribution of royalties from all inventions disclosed after 10/1/97 for that inventor. If an invention is disclosed on or after 10/1/97 and the inventor was hired after 4/16/90, the invention will be administered under the current policy. Inventions disclosed before 10/1/97 are administered under the Old (1963/85) Policy.

The full text of each policy can be reviewed on the Research Policy Analysis & Coodination (RPAC) site. Please review policy differences in both the royalties paid and the money paid to campuses for support of further research. While the percentage of royalties paid to the inventor is larger under the Old Policy, there are subtle differences in calculations that may result in some inventors receiving smaller royalties if they choose to be administered under the Old Policy.

Summary of Policy Differences

Below is a summary of the differences between the Old and Current Inventor Share policies. The full text of each policy can be reviewed on the Research Policy Analysis & Coodination (RPAC) site.

Old (1963/85) policy Current (1997) policy
Research share None 15% of net income as defined under the Current Policy
Royalties 50% of net income as defined under the Old Policy 35% of net income as defined under the Current Policy
Net income Total income, less 15%, less direct case expenses for each invention Total income, less direct case expenses for each invention
General pool 15% of total income + 50% of net income 50% of net income

Net Income: The definition change of “net income” is crucial to understanding the differences in the policies. In the old policy, 15% is taken off the top as a general pool "administrative fee". Expenses are then deducted from the remaining 85%, with the balance divided equally between the inventor and general pool. In the current policy, only expenses are taken out before dividing the inventor shares three ways - between inventor, research share, and general pool.

Total Income: All income received from royalties, fees and equity cashouts.

Research Share: Designated for research-related purposes at the inventor's campus and allocated based on plans developed at each campus and UC-managed DOE Laboratory. The research share only exists under the Current Policy.

General Pool: This income accrues to individual campuses or UC-managed DOE Laboratories based upon income for all inventions made by inventors at that location. The Pool is used to cover:

  • Program costs - unreimbursed direct expenses of patenting and licensing inventions, costs of operating technology transfer program
  • General Fund Share - the University General Fund supports activities and programs across the UC System
  • Any residual income above program costs - Chancellor or DOE Laboratory Director discretionary use in accordance with UC policy and law

Policy Choice Considerations

This is a one-time irrevocable decision that will apply to all your inventions disclosed on or after October 1, 1997 onward.

Unless you and your co-inventors have made a separate disposition of the inventors’ allocation, your decision will not affect funds available to co-inventors on any past, present, or future inventions. The applicable policy in the case of any co-inventor will depend only upon that person’s date of employment and, for inventors hired before April 16, 1990, whether or not they have chosen to have their post October 1, 1997 cases governed by the Current Policy.

As noted in the Summary of Policy Differences section (see above), the Current Patent Policy inventor’s share is 35%, (after deduction of all unreimbursed case expenses) while the Old Patent Policy inventor’s share is 50% (after deduction of a 15% administrative fee and all unreimbursed direct case expenses). Although an invention disclosed under the Old Policy will normally result in a greater cumulative payment to you as an inventor over the life of the invention, in any year when unreimbursed expenses exceed more than half of income, an inventor will receive a higher payment under the Current Policy.

The percentage of the inventor’s share under the Old Policy is not subject to change. If you choose the Old Policy, there will be no possibility of a future change in the way your inventor shares are calculated. The inventor’s share in the Current Policy is, however, subject to change. Although UC has no current plans to make any change in the inventor share, this could change in the future. Any future change would only occur after appropriate consultation within the UC community, including the Academic Senate.

If you decide to choose the Old Policy, be aware that no 15% research share (part of the Current Policy formula) will go to your campus or Laboratory. 

Register Policy Choice

If you are an eligible inventor who has not yet been paid royalties, you will be contacted before your first royalty distribution payment is made. The letter sent to inventors contains an election form. If you want your inventions to be covered by the Current Policy, sign and date the Election of Current Policy Form and return it as soon as possible in the stamped, self-addressed envelope provided. If IAS does not receive this form by the required deadline, your inventions will automatically be reverted to the Old Policy.

Once you elect which royalty distribution formula you want to apply to your inventor share income, you cannot change that election.

Sample Calculations

Example #1: The invention below earns $1000 and inventor shares are to be shared equally between two inventors. Inventor A is under the 1963/1985 "Old" (50%) Policy and Inventor B is under the 1997 "Current" (35%) Policy. These calculations demonstrate that when Net Expenses < 50% of Gross Income the inventor under the "Old" (50%) Policy receives more than the inventor under "Current" Policy.
Entire invention Inventor A: Under Old Policy
50% 
Inventor B: Under Current Policy
35% 
Gross income
15% admin fee
$1000
 
$500
($75)
$500
---
Net income $1000 $425 $500
Direct expenses
Reimbursements
($1000)
$600
($500)
$300
($500)
$300
Net expenses (A) ($400) ($200) ($200)
Net available for distribution $225 $300
Inventor share $112 (50%) $105 (35%)
Research share None $45

Example #2: The invention below earns $1000 and inventor shares are to be shared equally between two inventors. Inventor A is under the 1963/1985 "Old" (50%) Policy and Inventor B is under the 1997 "Current" (35%) Policy. These calculations demonstrate that when Net Expenses > 50% of Gross Income the inventor under the "Current" (35%) Policy receives more than the inventor under "Old" (50%) Policy.

Entire invention Inventor A: Under Old Policy
50% 
Inventor B: Under Current Policy
35% 
Gross income
15% admin fee
$1000
 
$500
($75)
$500
---
Net income $1000 $425 $500
Direct expenses
Reimbursements
($1000)
$400
($500)
$200
($500)
$200
Net expenses (A) ($600) ($300) ($300)
Net available for distribution $125 $200
Inventor share $62.50 (50%) $70 (35%)
Research share None $30