The National Venture Capital Association ("NVCA") model legal documents have set the standard for documenting venture capital financings in the emerging companies market for nearly a decade. Since the publication of the initial NVCA model forms (which include a model Corporate Charter, Investors' Rights Agreement, Voting Agreement, Bylaws, Right of First Refusal and Co-Sale Agreement, and Management Rights Letter, among others), the NVCA has produced a number of other model documents, including Human Resources Policies, Anti-Harassment Policies, and so on.
In late 2022, the NVCA published a new model document, this time a university startup term sheet designed for out-licensing technology (and specifically patents) in the biotechnology sector from an academic institution or tech transfer office to an operating start-up, which would commercialize said intellectual property and eventually monetize it. As with all model forms published by the NVCA, the term sheet seeks to provide a framework to negotiate a balanced and commercial reasonable outcome for licensor and licensee.
Among other things, the term sheet covers territory, patent rights, license to improvements, sub licensing, subcontracting, license fees, equity participation in a licensee, development milestone payments, royalty terms, information and observation rights, dispute resolution, and so on. While the term sheet is not a definitive agreement, it's intended to expedite licensing negotiations so that counsel may turn quickly to drafting a definitive license agreement.
Licensors and licensees that are interested in increasing licensing speed and volume, in particular in the biotechnology sector, would be well-advised to familiarize themselves with the new NVCA term sheet. If the NVCA's history is any indicator, this term sheet will soon become a standard negotiating tool in the academic licensing arena.
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