Distribution of Royalty Income Procedure

Effective Date:

February 1, 2017

Function:

Commercialization

Contact:

Matthew Mroz

518.434.7061

Basis for Procedure

Pursuant to Section (e) of SUNY’s 2016 Patents and Inventions Policy ("Policy"), Inventors and/or Creators of Intellectual Property that is disclosed to The State University of New York ("SUNY") on or after November 23, 2016 are entitled to receive a portion of the Net Royalty resulting from the management and licensing of that Intellectual Property.

Procedure Summary

This procedure outlines the steps an administrator will use to determine if a Royalty distribution should be made pursuant to the Policy, and the steps an administrator will use to process Royalty distributions to Inventors and/or Creators of Intellectual Property disclosed on or after November 23, 2016. This procedure applies to all transactions involving campus Royalty awards, Royalty receipts and payments received from third parties related to the commercialization of Intellectual Property.

The Policy enables campuses to subtract reasonable out-of-pocket expenses incurred but not reimbursed by licensees for the evaluation, marketing, development, protection, maintenance, and enforcement of Intellectual Property from Royalty prior to making distributions to Inventors or Creators. These expenditure types are further defined in the RF’s Policy for the Distribution of Royalty Income.

Section (e) of the Policy shall not govern the distribution of income related to Intellectual Property that was disclosed prior to November 23, 2016. Royalty income resulting from Intellectual Property that was disclosed prior to November 23, 2016 shall be distributed in accordance with the SUNY Patents and Inventions Policy that was effective prior to November 23, 2016 ("Former Policy"). Further, as articulated in the Former Policy, 40 percent of the gross Royalty paid to SUNY shall be distributed to the Inventor(s) and 60 percent of the gross Royalty paid will go to the campus at which the Intellectual Property was developed.

Procedure Steps

The table below outlines the steps an administrator will take to: (1) determine if royalties should be distributed, and (2) how to process a distribution if one should be made.

Location Code

Campus Name

References or Tips

Royalty income Received by Central Office or Campus

Campus Technology Transfer Office, Innovation & Partnerships, Finance

Receivable information is entered into appropriate Inteum file and processed through Oracle.

Royalty receivable is applied or posted to appropriate Campus Royalty Award

Campus Technology Transfer Office, Innovation & Partnerships, Finance

Instructions are given to Finance by the Technology Transfer Office or Innovation & Partnerships.

Technology Transfer Office matches receivable to the Technology Transfer Docket Number and agreement

Technology Transfer Office

Technology Transfer Office uses Inteum to correlate the royalty receipt to the appropriate Technology Transfer Docket Number.

Technology Transfer Office calculates Net Royalty

Technology Transfer Office

Technology Transfer Office determines Net Royalty by subtracting the receivable from the total number of expenses incurred for the Technology Transfer Docket Number identified in the preceding step pursuant to the RF’s Policy for the Distribution of Royalty Income. RF Report Center and Inteum support the calculation of Net Royalty.

Technology Transfer Office determines whether income is distributable or not (i.e., if all expenses have been recovered then a distribution is made)

Technology Transfer Office

RFAIR and RF Report Center enables Technology Transfer Docket Number expense search by category and disclosure number.

Technology Transfer Office determines if $45,000 has been distributed, otherwise 45% of Net Royalty is distributed to inventors until $45,000 has been distributed then 40% of Net Royalty will be distributed

Technology Transfer Office

The RF Report Center enables expense search by category and disclosure number, and indicate the value of all Royalty distributions made.

If a distribution should be made the Technology Transfer Office (or appropriate campus office) will obtain the appropriate IRS form (W-9 or W-8BEN) from the Inventor or Creator, and complete a RF Technology Transfer Check Request Form and submit it to the appropriate office for processing.

Technology Transfer Office, Finance (or appropriate campus office)

The use of the OTR Royalty Payment expenditure type must be used to process all Royalty distributions and the use of the OTR Royalty Payment expenditure type requires entry of the Technology Transfer Docket Number related to the royalty distribution. Absent extraordinary circumstances, IRS forms only need to be obtained if the Royalty distribution is to an Inventor or Creator that does not already have a Supplier in Oracle AP. Please email vendcheck@rfsuny.org for any questions regarding this process step.

Supplier is created in AP system with appropriate taxation and reporting rules based on IRS tax residency status and IRS form.

Technology Transfer Office, Finance (or appropriate campus office)

Residency status impacts how the supplier is setup in the AP system, whether RF withholdings are required, and how payments are reported at year end. Potential RF tax withholdings only exist if a nonresident alien. Please email vendcheck@rfsuny.org for any questions regarding this process step.

Payments are disbursed according to Section (e) of the Patents and Inventions Policy

Technology Transfer Office, Finance

 

Related Information

Royalty Receipts

If a royalty check is received at Central Office, the Finance Office at Central Office will work with the Office of Innovation & Partnerships to identify which campus the royalty payment belongs to and then post the payment to the appropriate royalty award (see chart below). If a check is received at a campus location, the campus must either forward the check to Central Office or deposit the check with campus daily deposits. If the check is deposited at the campus, the campus must notify the Finance Office at Central Office that the royalty has been included as part of the day's deposit.

The installment for the campus’ royalty award will be increased by Central Office by the total amount of the royalty receipt. With direction from the appropriate campus administrator, Central Office will split the funding between the appropriate projects (i.e. campus and inventor projects), if applicable, and then Central office will then increase the project budget(s) accordingly.

How Inventors are Paid

Payments to the Inventors and/or Creators should be drawn out of the campus royalty project or inventor royalty project (if it exists), by an authorized campus administrator. Royalty checks will be mailed directly to the Inventor(s) or Creator(s), whichever applies. Recipients of Royalty checks are sent either a 1099-MISC tax statement or 1042-S tax statement depending on the recipient’s citizenship. United States citizens and resident aliens will receive a 1099-MISC statement, and nonresident aliens will receive a 1042-S tax statement.

Recapture of Expenses from the Commercialization of Released Technologies

In addition to ten (10) percent of proceeds SUNY would receive if a release is granted pursuant to Section (f)(3) of the Policy, campuses may require that Inventor(s) or Creator(s) of Intellectual Property reimburse any of the allowable deductions articulated in the RF’s Policy for the Distribution of Royalty Income (link). As noted in the Policy, any ambiguity involving the eligibility or allowability of these deductions must be referred to RF Central Office, with ultimate responsibility for resolution resting with the RF President who may, in his or her sole discretion, refer the matter to the SUNY Innovation Policy Board.

Revenue Received from the Commercialization of TAF-supported Intellectual Property

Pursuant to TAF program guidelines and TAF award funding agreements campuses are required to pay ten (10) percent of the gross revenue received by the campus from the licensing or other commercialization of TAF-supported intellectual property to the TAF. When providing details to Central Office regarding the appropriate royalty split the campus administrator will also instruct Central Office to increase the budget on the RF Central Office – TAF Income award by the appropriate amount. The RF’s TAF Managing Director will be notified when any changes to the RF Central Office – TAF Income award are made by emailing TAF@rfsuny.org.

Campus Royalty Awards

Campuses that are receiving income from third parties for their commercialization of intellectual property have one royalty award assigned to them (see below). Unless otherwise requested, each campus royalty award has two projects: one for the Inventor(s) and/or Creator(s) share of Royalty revenue and one for the campus' share of Royalty.

Royalty Award and Project Numbers

The following table lists the award and project numbers established for campuses actively receiving royalty payments from licensees.

Location Code

Campus Name

Royalty Award

Campus Project

Inventor Project

Inventor Holding

010

University at Albany

000075

1008629

100862

 

011

SUNY Poly

000648

1079805

1127427

 

020

Binghamton University

000076

1006599

100660

 

030

University at Buffalo

000077

1024907

102490

 

050

Stony Brook University

000079

1025664

102577

 

100

Downstate Medical Center

000080

1073222

1073223

1066376

110

Upstate Medical University

000081

1005423

1005423

 

190

College at Geneseo

38717

1053091

1053091

 

200

College at Old Westbury

000087

1012749 task 3

1012736 task 2

 

250

College at Potsdam

000092

1009069

1009069

 

550

College of Environmental Science & Forestry

000099

1004606

1004606

 

580

College of Optometry

40833

1057952

1057952

 

650

RF Central Office – TAF Income

65313

 

 

 

Definitions

Created – Having conceived, authored, reduced to practice, designed, developed, or otherwise having contributed to the making of Intellectual Property.

Creator – One who has Created Intellectual Property, in whole or in part.

Intellectual Property – Patentable Inventions, tangible research materials, computer software, and any unique or novel innovation in the technical arts or any new and useful improvements thereof, including methods or processes for creating an object or result (a way of doing or making things), machines, devices, products of manufacture, product designs, or composition, mask works or layout designs for printed circuit boards or integrated circuits, compositions of matter, materials, any variety of plant, and any know-how essential to the practice or enablement of such innovations and improvements, whether or not patentable.

Inventor – One who contributes to the conception of a Patentable Invention under the patent laws of the United States or other relevant jurisdiction.

Net Royalty – Royalty less reasonable out-of-pocket expenses incurred by SUNY and not reimbursed by licensees for the evaluation, marketing, development, protection, maintenance, and enforcement of Intellectual Property.

Patentable Invention – Any art or process (way of doing or making things), machine, manufacture, design, or composition of matter, or any new and useful improvement thereof, or any variety of plant which is or may be patentable under the patent laws of the United States or other relevant jurisdiction, and the patent applications or patents that embody them.

Royalty – Cash, equity, or other value received by SUNY as consideration for use of rights to SUNY Intellectual Property.

Related Information

RF’s Policy for the Distribution of Royalty Income

SUNY Patents and Inventions Policy

Forms

RF Technology Transfer Check Request

W-9

W-8BEN

Change History

Date

Summary of Change

February 1, 2017

Updated to align with SUNY's new Patent and Inventions Policy and complement the existing business practices of SUNY's technology transfer offices across the enterprise.

August 31, 2015

Update to Royalty Award Numbers table.

April 4, 2014

Update to provide current information for distributing royalty income, include information related to TAF-supported intellectual property, update procedure name, and update account numbers.

Name changed.

March 18, 2004

Updated to provide current information on the process for royalty awards and current award and project numbers.

 

 

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