Materials Transfer In Academia
The following information, presented in question and answer format,
has been developed by the Council on Governmental Relations (COGR), for
the benefit of university faculty and administrators across the nation.
of this Brochure
This brochure about transfer of biological materials addresses many
of the issues in the ongoing national technology transfer debate. It is
provided in an effort to create better understanding between scientists
in commercial and academic laboratories, as well as between academic investigators
and their administrative support staff. With improved understanding of
the goals and the process, we believe that the beneficial exchange of materials
will be more timely while avoiding risk to academic principles.
The brochure, much of it in question and answer format, is for faculty
who are or will be involved in the exchange of research materials either
with industry colleagues or with academic colleagues outside the home campus.
It provides explanations for the procedures and agreements that cover transfer
of incoming and outgoing research materials. The brochure points out potential
problems in draft agreements sent by the providers of materials, and it
explains the consequences of accepting agreement terms that are overly
broad or restrictive. While the focus is on biological materials, the issues
discussed are similar for samples of chemical compounds, other types of
tangible research materials and even for some types of software.
Different objectives lead to different expectations.
Institutions involved in the exchange of unique materials include federal
laboratories, industrial research laboratories, and laboratories in universities,
hospitals, or independent research institutes. Given their diverse structures
and missions, these entities are likely to have their own specific expectations
regarding "compensation" for the help they provide. The desired
compensation may range from acknowledgment in a publication to ownership
of inventions made with the aid of the provided material, depending on
the purpose of the providing entity.
Consistent with its mission, industry enhances and defends its commercial
interests vigorously. To reward its investors and be successful, industry
needs to offset risk by acquiring and protecting exclusivity in the market
that either can be obtained under patent law or by use of trade secrets.
Industry's mission is clear and unconflicted.
In contrast, the federal government and its academic grantees have several
missions that are not always consistent. First is a mission to preserve
the flow of ideas for public benefit, primarily through timely publication.
Second is a mission to serve as the public's steward of inventions by preserving
the potential for new knowledge to generate a product from which the public
may benefit. The latter mission was encouraged in law starting in 1980.
There are times when these two missions seem to conflict, making it difficult
for federal labs, universities, hospitals and independent research institutions
to maintain consistency. The most frequent example of the clash of internal
academic goals is found in the material transfer agreement. It is the attempt
to balance these conflicting goals that has triggered the increased care
and rigor in the negotiation of material transfer agreement terms. The
unfortunate consequence of this increased attention is the delay in the
material exchanges that is so frustrating to investigators. The fortunate
consequences are less easy to appreciate, because they manifest themselves
as an absence of downstream problems.
When scientists began warning that the progress of research was increasingly
hampered by lengthy MTA negotiations, universities and the National Institutes
of Health (NIH) took action by joining to develop a standard material transfer
process for transfers between academic entities. There is a discussion
of the Uniform Biological Material Transfer Agreement (UBMTA) in Q&A
The exchange of materials between universities and industrial laboratories
is often difficult, and despite some ongoing efforts, is not likely to
be standardized in the near future. Irrespective of whether or not such
agreements can be successfully standardized, it is critical to realize
that the agreements that cover these exchanges are contractually binding
upon the parties, and that breach of these agreements creates a legal and
financial risk for the institutions and investigators involved.
Twenty Questions and Answers About
Material Transfer Agreements
The recurring questions in this area do have answers, and there are
even some solutions to problems. By and large, all who work with material
transfers in universities want to help investigators acquire materials
to advance research, but they also want to make sure that an MTA agreement
does not foreclose an investigator's freedom to select a future research
problem, and that their institution can live up to its contractual obligations.
The questions below deal with:
what hinders agreement on MTA terms? (Q1-9) timeliness of negotiation
(Q10-12) authorization to negotiate and enforcement (Q13-14) financial
or other costs of transfer (Q15-16) responding to federal regulations on
Why isn't material
transfer informal and collegial, rather than bureaucratic and legalistic?
From the point of view of advancing science - the process should be
as simple as possible, but providers of materials want to have written
agreements to be sure that there is a common understanding of how the materials
can be used. Unfortunately, some proposed agreements undermine an academic
scientist's ability to carry out future work with freedom, or place investigators
and their universities at unnecessary risk. Since MTAs are actually binding
contracts, both the scientists and the academic institutions are obliged
to live up to the provisions they contain. If the provisions conflict with
academic missions or create unnecessary risk, the institutions usually
feel obligated to remove the conflict by changing "problem" MTA
What MTA terms frequently
- restrict academic freedom
- assert excessive rights of ownership
- ask for inappropriate indemnification by the university
How do agreement terms
restrict academic freedom?
The most obvious restriction on academic freedom is a limitation on
the ability to publish the results of research. Many agreements may require
the investigator to provide an advance copy of any manuscript or proposed
public disclosure of results obtained with the material. The purpose is
not unreasonable. It is to allow the provider to determine whether its
own confidential information (if any) has been improperly disclosed in
the manuscript or presentation, and whether there are new intellectual
property rights that may be important for the provider to know about, and
to protect. When this provision is couched in equitable language, the recipient
investigators and their institutions still need to decide whether they
can comply with such a restriction, and if not, the agreement should not
be signed. In some agreements, the publication provision may be stated
in unacceptable language. The language may give the provider control of
publication, and may assert that nothing is to be published or otherwise
disclosed without provider approval. Other agreements may demand excessive
delays. Typically, universities will not accept language controlling publication
in this way, even if their investigators are, for some reason, willing
to agree. For another type of restriction on academic freedom, see the
next question and answer.
Why is there concern about
While it is quite obvious that the physical materials are the property
of the provider, providers may also assert ownership not only to the physical
material being provided, but also to new materials created by the recipient
or inventions made through the use of the provided materials. Thus, some
agreement terms may cause the recipient to lose control of his/her own
creations, including inventions and intellectual property. This not only
represents a direct loss, but can cause indirect damage by limiting the
freedom of the recipient to continue a line of inquiry because he/she no
longer owns his/her research results.
An MTA may also include a more subtle kind of capture of intellectual
property rights. While an agreement may not claim actual ownership, it
may award the provider an automatic license to resulting intellectual property
for little or no compensation. Nonetheless, when a company makes what it
regards as available materials available for use in university research,
it generally expects some access to resulting intellectual property. This
might be in the form of granting the provider an opportunity to negotiate
a license so that the company can develop the intellectual property into
useful products. However, since the provider of the material is (usually)
not funding the research, the institution needs to ensure that its intellectual
property obligations to those sponsors who are funding the work do not
conflict with the proposed obligations to the provider of the material.
Because so much academic research is federally funded, it may be important
to clearly acknowledge in the MTA the rights of the federal government
regarding inventions that may be made with the material.1 Similar issue
may exist for other sources of sponsorship.
Terms which give the provider licensing rights to resulting intellectual
property must be carefully crafted to ensure that (a) the rights of research
sponsors are protected, (b) the licensee company will diligently develop
the intellectual property for public use, and (c) the university receives
fair compensation for its contribution. Still it must be recognized that
granting the provider licensing rights does limit the investigator's ability
to seek future research funding from competitor companies to continue this
research. The bottom line is that getting the material may open new avenues
of research, but careless acceptance of terms that surrender intellectual
property rights may close them down.
Returning to an earlier point, with biological materials capable of
self-replication, there has been quite extended analysis of the dividing
line between what the provider and the recipient should equitably own,
and this is summarized in the table below. While looking at this table,
bear in mind that in contracts, the usual meaning of words is often changed
by establishing internally "defined terms" with meanings that
are different than those in the table, and which are set by the contract
itself. When a contract is interpreted by the court, it is the internal
definitions that count the most.
Desirable Definitions of Terms in Material Transfer Agreements
The physical substance being transferred, but in a proposed contract
the term may be definitionally enlarged to include other items, including
confidential information about the material, and the forms of the material
which may arise from replication and maintenance in the recipient laboratory
(see: Progeny, Derivatives). Occasionally, the proposed definition of "Material"
in agreement drafts may even include new intellectual property arising
through the use of the transferred material. (see: Modifications)
Usually means the descendant copies of the material that are produced
in the recipient laboratory as a result of replication (e.g. cell division,
DNA copying). The implication is that progeny material is an essentially
unchanged copy of the originally provided material, and thus is provider-owned.
Usually means products of the original transferred material (e.g. monoclonal
antibodies secreted by a hybridoma cell line) and these are also considered
to be provider-owned. When the term "derivatives" is used in
a contract, it should be clarified whether or not this term includes more
than unmodified derivatives.
Usually means modified derivatives (cf. Unmodified Derivatives) of the
original material (e.g. the original provider-owned DNA molecule or a fragment
thereof newly embedded in a recipient-owned expression vector and using
a recipient-owned promoter). Modifications with new utility that include
material from both the provider and the recipient may be inventions with
ownership vesting in both the provider and the recipient, but each individual
case must be well understood for such conclusions to be reached.
What is indemnification,
and what is the importance of limiting indemnification requirements?
Indemnification is akin to releasing the provider from responsibility
to make good on damage occurring as a result of provider action or inaction.
It is a shifting of economic responsibility. An agreement term may require
that the recipient institution indemnify the provider against any damage
that may occur through use of the material, implying that the provider
is not responsible even if the material was provided without proper warnings
as to associated hazards or needed precautions. Some materials are in fact
hazardous to the user, and academic institutions tend to require that such
hazards be disclosed and that the provider take responsibility for negligence
in disclosure of known hazards. This position is aimed at maintaining safety
of employees, not all of whom may be equally knowledgeable about hazards.
In addition, many state universities and the federal laboratories may not
legally agree to indemnifications because of explicit statements in the
laws that govern them.
How is ownership of
combination materials determined when several parties have contributed
the physical materials that are now combined?
Equitable ownership of materials is determined in much the same way
as ownership of intellectual property. Thus the owner of the expression
vector with unique characteristics and the owner of the newly cloned gene
which is to be inserted into that vector are co-owners of the resulting
engineered material. If it is commercialized, all co-owners should benefit,
and this can be managed with the help of the technology transfer office.
Difficulties arise when the academic investigator who does the engineering
has received the two materials from two different providers, or has made
one of the materials under company sponsorship. In such a situation it
is quite likely that the terms of the agreements (MTA agreements or research
sponsorship agreements) covering the two materials are in conflict. This
type of conflict should be avoided, and company providers are now often
requiring investigators and their institutions to state in the agreements
that no such conflicts currently exist, and none will be allowed to develop.
Great care should be exercised in agreeing to such restrictions.
How does loss of control
of intellectual property limit future research paths?
If preemptive MTAs cloud ownership rights, investigators may be restricted
in their ability to interact with a future sponsor. Even when investigators
feel unfettered because their present work is federally supported, they
may eventually need a commercial developer to convert an invention into
a real product from which the public can benefit. Intellectual property
terms in MTAs may prevent the institution from conferring rights on a future
developer, just as a lien on real property may prevent subsequent transfer
of title. No sponsor wants to pay for research benefits that it cannot
have. In addition, the terms of an MTA may make it difficult to collaborate
with other scientists.
Is there an option for
an institution to forego ownership rights?
Investigators may be willing to forego inventor's rights because they
believe it would expedite MTA processing, and intellectual property rights
and commercialization are not that important to them personally. Investigators
who have federal funding should be aware that although the federal government
does not demand active participation in commercialization by anyone, it
does require that its grantees avoid impeding commercialization. Thus,
federally-supported investigators and their institutions are obligated
to report inventions, and if title to inventions will not be claimed by
the institution, the government requires sufficient notice to be able to
take title itself and file patents when warranted [37 CFR 401.14(c)(1-3)].
Thus the institution cannot "give away" rights which it has previously
agreed either to claim itself or waive to the federal government. Obviously,
some judgment must be exercised in deciding what kind of research finding
constitutes an "invention." Investigators can get advice about
what is reportable from the office responsible for invention disclosures.
Why is it useful to
use MTAs when materials are being sent to academic colleagues?
It is no doubt true that many transfers within academia are still informal,
even though the use of an MTA is recommended so that disputes about use
do not arise. The National Laboratories may have rules that require agreements
in order to transfer materials outside the Laboratories. However, there
is one type of situation that actually requires use of an agreement. If
a material to be transferred includes material that is still owned by a
third party provider, further transfer of that material is almost certainly
contractually restricted by the MTA or other agreement that covered its
receipt. It is improper to transfer material that was received even in
part from another source with obligations attached to it. However, it is
often possible to transfer material anyway, provided that the new recipient
agrees to honor the obligations imposed by the original provider. Providing
the material without such an agreement can provoke litigation.
Even if the material to be transferred is owned free and clear by the
provider, informal transfers done without MTAs confer little protection
on either the provider or the recipient. As more faculty members become
interested in working with industrial sponsors and in developing inventions
that can be licensed to provide income to the inventors and/or to the laboratory,
there is a need to establish the ownership of inventions. Even if investigators
are not personally interested in working with industry, they may still
want to forestall having their inventions commercialized by others without
any compensation to the creator. In addition to intellectual property concerns,
there are also other issues to consider, such as protection of an investigator
and institution against liability arising from potential misuse (whether
unintentional or negligent) of hazardous material by another party.
Can MTA agreements
be expedited through standardization?
Some progress has been made in standardization. For certain transfers
between academic institutions, there is a standardized approach available
called the Uniform Biological Material Transfer Agreement (UBMTA). A group
convened by the National Institutes of Health worked out standard terms
for exchanges in 1995. If a university joins the pact group (now 109 institutions),
it may use the UBMTA when appropriate. When it does, material transfers
only need to be recorded, not negotiated. This helps by making at least
one class of transfers routine.
However, there is another class of transfer between universities that
is more difficult to standardize. When the material was made or will be
used in an academic project supported by industry, it essentially makes
the industrial sponsor a silent third party to the material transfer agreement,
and the UBMTA may not be a usable vehicle. When the academic institution
negotiates an MTA to offer or accept material developed under industrial
funding, it must take into account the relevant obligations to the industrial
sponsor, and sometimes those obligations must be passed through to the
other collaborators. Investigators who feel that a potential sponsor of
their research is making unacceptable restrictions on future material transfers
should enlist the help of their institutional negotiator to deal with the
issue at the time when the sponsorship agreement is negotiated, i.e., when
provisions allowing transfers for research purposes can still be adjusted.
A logical extension of standardization would be to develop some appropriate
form of agreement specifically for academic-industry transfers. This approach
is considerably more difficult, because many companies believe that they
compromise their rights as a result of standardization. Several initiatives
are being undertaken by the university intellectual property community.
In one of these, it is proposed that industry-to-university exchanges be
classified according to the degree of exclusivity needed by the provider
company relevant to a particular material. Lower-risk exchanges could then
be standardized, and higher risk exchanges could occur according to agreed-upon
general principles, with latitude to negotiate. These efforts are continuing,
but are impeded by the varying positions among companies.
Can processing of
MTAs within an institution be streamlined?
Many academic institutions are expediting transfer by collecting a standard
set of data from the intended faculty recipient. These data describe the
material, its properties (including biohazards), its uniqueness (ascertaining
whether the provider is the sole source), the potential to create and develop
intellectual property using the material, and the type of sponsorship for
the proposed research use. By providing such information to the institution
early in the process, the investigator can help make the negotiation process
more informed and expeditious.
What else holds up the
MTA negotiation process?
One factor that is out of control of the university negotiator is the
willingness of the provider to negotiate, and the timeliness of their negotiation.
However, often the university official has enough experience to know which
negotiations may be difficult or slow. Investigators who ask about prior
experience with a source of material may learn of likely problems, and
sometimes may be able to find another source of the material, or use a
substitute that will be easier to acquire.
Who has the authority
to sign MTA agreements?
In almost all cases investigators are required to co-sign the agreement
as evidence that they have read it and will comply with its terms. However,
since MTA agreements are contracts, the official signature can only come
from those in the institution who are charged with the task of reviewing
them, and who have been delegated authority to bind the university contractually.
Typically this authority will reside in a central office at the school
or institution level, e.g. an office of sponsored projects or a technology
transfer office. The validity of MTA agreements signed only by investigators,
department chairs, or other individuals who do not have delegated institutional
signature authority is questionable. Delegated authority is usually recognized
in an explicit written internal institutional document that names the authorized
individuals and defines the scope of authority. Many company attorneys
verify authenticity of signatures on MTA agreements.
Are MTA agreements ever
The short answer is that they will be enforced when the stakes are highest,
and the stakeholders care about them the most. The corollary is: It is
impossible to predict which transfers will become a focus of concern. The
academic institution cannot view some agreements as "more important"
than others, or more worthy of correction by vigorous negotiation. When
important commercialization opportunities arise, they can have significant
impact on small company value, or can critically affect the value of risk
investments by large companies. Under such circumstances, there is a strong
likelihood that any investigator or university activities that have an
adverse effect on commercial interests may trigger lawsuits. Such lawsuits
are as likely to involve MTAs as any other contracts with the university.
Ignoring detrimental MTA provisions places both investigators and their
institutions at risk. Even if an institution is exonerated in court, the
costs of defending against such actions are very large.
Is there any way to
recover cost of transfers?
Some materials can be very costly to make, and it can be financially
unreasonable to supply them to multiple investigators, or even prohibitively
expensive to send them out just once. If this is the only deterring factor,
the MTA can include the proposal of a one-time fee to allow cost recovery.
Such a fee can reasonably include the cost of materials, the extra labor
required to make them, and shipping or other fees. If the material arose
under federal sponsorship, such revenue may be considered "Program
Income", and may, therefore, be reportable as such. NIH information
on Program Income can be found in the NIH Grants Manual. Other federal
agencies employ similar concepts. If the material was developed under federal
funding and title is established by reporting it to the agency as an invention2
(patented or not patented), it can be licensed for fees that will be accounted
for as income from intellectual property. As such, like royalty income,
it is distinguished from other kinds of program income and sheltered under
current federal policy (OMB Circular A-110, .---24(h)), and thus may be
distributed according to university policy.
Is there a way to supply
materials when the obstacle is time and effort?
There are two ways to handle this problem, neither involving an MTA.
(1) The materials may be suitable for deposit in a publicly-supported or
user-fee-supported facility. For example, some cell lines may be accepted
for maintenance and distribution by the American Type Culture Collection.
(2) The right to make and distribute the materials may be licensed to a
company that sells reagents to the research community. For example, a unique
hybridoma cell line producing monoclonal antibodies important for research
could be licensed. The licensee company would agree to sell the antibodies
to researchers, and in return for the license, would share revenue from
sales in the form of royalty payments to the provider. Investigators may
even be able to solve their own internal supply problems by negotiating
a cost-free return supply of the reagent as part of the license agreement.
It is not necessary to report royalty income as "Program Income"
and thus it can be distributed according to university policy, benefiting
the creator(s) and their research. If the material was produced under NIH
funding, licensing is allowed upon proper reporting of the material as
an invention and election of title.
What can be done
to expedite receipt of materials subject to U.S. Department of Agriculture
Overseas suppliers of materials may employ agreements like the MTAs
that are so common in the U.S. but in addition there may be USDA import
regulations covering biological materials. Importation of many biological
materials to the U.S. requires USDA permits. If the proper documentation
does not accompany packages, they may be quarantined or otherwise delayed,
and they may suffer damage in the process. Many departmental administrators
have experience with this issue, and occasionally there is a designated
institutional staff person to help. One place to check is the office that
manages biohazardous materials for your institution. It is better to determine
early whether such permits will be needed. USDA forms are available on-line
Likewise, export from the U.S. to other countries may require analogous
permits (sometimes called export licenses, not to be confused with intellectual
property licenses) and import permits from the receiving country. Occasionally,
brokers are employed by the recipient to expedite such deliveries.
Are there special requirements
for importation of biological materials from developing countries?
Developed under United Nations auspices, the Convention on Biological
Diversity of 1992 is principally concerned with the conservation of diverse
ecological systems. However, it also contains certain provisions relating
to the commercialization of genetic materials obtained from developing
countries. The treaty adopting the Convention was signed by President Clinton
in 1994, and awaits ratification by the U.S. Senate. There are some objections
to the treaty in the Senate. Nevertheless, other countries have expectations
that the treaty represents an international norm of conduct. Thus, researchers
obtaining materials from developing countries may be asked to find a mechanism
to compensate the country of origin, should the materials be commercialized.
Researchers may encounter proposed conditions including sharing of commercial
revenue, participation in research using the materials, or sharing of the
new technology. This is an area that is still evolving, and not many institutions
or countries have either experience or mechanisms in place to handle such
arrangements. Researchers should call on the resources of their technology
transfer offices, and for the immediate future, it will probably be useful
to have the technology transfer professionals consult their experienced
colleagues3 for assistance in this area. It would not be realistic to expect
that agreement on such transfers will be rapid.
Are there regulations
to take into account when transferring hazardous biological materials within
the United States?
Yes, there are regulations covering the methods
used to package and transport hazardous biological materials. In addition,
these regulations4 have recently been modified to require that senders
and recipients of such materials be pre-registered with the Centers for
Disease Control and Prevention (CDC), and that the individual transfer
be registered with that agency. It is recommended that when you plan to
transfer any agent covered by the regulations, that you or a staff member
from the office handling your MTA should begin early to work with your
institutional biohazard control officer to perform the necessary registration
and to ship correctly.
When is a U.S. export
license needed to transfer biological materials outside of the United States?
Under U.S. export control laws, automatic licenses can apply to most
biological materials. In some cases, however, a license may be required
from the Bureau of Export Administration of the Department of Commerce.
There are, for instance, controls on the export of materials that could
possibly be used in chemical or biological weapons. Examples given of such
materials include human pathogens, zoonoses, toxins, animal pathogens,
genetically modified microorganisms and plant pathogens5 An investigator
planning to transfer materials, which are controlled by the Export Administration
Regulations, outside the United States should work with the appropriate
institutional staff person to obtain the required license. There are civil
and criminal penalties for violating the Export Administration Regulations.
Please also note that some highly hazardous biological materials may require
multiple permits, e.g. for export from the U.S., and for import into another
- The widely cited Bayh-Dole Act and follow-on legislation addresses
management of intellectual property developed under funding from any federal
agency. The law is implemented in the Code of Federal Regulations at 37
- Discussed in the May 17, 1996 issue of the NIH Guidelines.
- Two potential sources of assistance are the Office of Technology Transfer,
University of California, and the University of Illinois at Chicago, where
an institutional policy has been developed [published by S. Bertha in Journal
of Ethnopharmacology 51: 59-73 (1996)]
- The regulation is found at 42 CFR Part 72, "Additional Requirements
for Facilities Transferring or Receiving Select Agents." Available
on-line at <http://www.cdc.gov/od/ohs/biosfty/biosfty.htm>
- The Export Administration Regulations are at 15 CFR Parts 768-799.
The section covering the scope of materials covered is 15 CFR Part 742
Supplement No. 1(12).
Council on Governmental Relations
The Council on Governmental Relations is an association of leading research-intensive
universities. COGR's primary function consists in helping to develop policies
and practices that fairly reflect the mutual interest and separate obligations
of federal agencies and universities in federal research and training.
COGR deals primarily with policies and technical issues involved in the
administration of federally sponsored programs at universities. It keeps
under continuing review the problems potentially inherent in the development
of federal policies, regulations and other federal initiatives.
This booklet does not claim to be a manual of university technology
transfer, nor does it offer model policies. It attempts, however, to inform
the debate about transfer of biological materials in academia.
For the preparation of the material, the COGR Technology Transfer and
Research Ethics Committee gives credit and thanks to Dr. Susan Cullen,
Washington University. Other members of the COGR Committee are: Joyce Brinton,
Harvard University, Chair; Terrence Feuerborn, University of California;
Ann Hammersla, Syracuse University; Karl Hittelman, University of California,
San Francisco; Mary Ellen Sheridan, University of Chicago; Francis Meyer,
University of North Carolina; Julie Watson, Indiana University; and Kate
Phillips, COGR. In addition, the Committee gratefully acknowledges the
assistance of many of its member universities.
Reproduction for the sake of sale or profit is prohibited. Otherwise,
reproduction is encouraged.