CoMotion is responsible for the licensing and collection of revenues for University intellectual property. Revenue received by CoMotion from the licensing of University Intellectual Property rights is distributed to inventors, departments, schools, and provost research funds. Revenue directed to UW units are reinvested into additional research and education, thus fostering the creation of the next generation of research, researchers, and entrepreneurs.
The Inventors share of royalties is split in accordance to the Revenue Management Plan that is determined by the inventor group. Inventor shares are processed by Innovation. If multiple innovations are included in one license agreement, CoMotion will develop an appropriate allocation plan. CoMotion will document the Revenue Management Plan prior to any royalty distributions.
The split of royalty distributions is governed by the policy in place at the time that the Innovation is disclosed to CoMotion. After a 20% Administration Fee to CoMotion, the remaining eighty percent of proceeds from a license are shared equally among the inventors of the technology (26.67%), their departments and schools (26.67%), and the Provost (26.67%). The CoMotion Administrative fee funds CoMotion’s patent budget and the commercialization services that provide assistance to UW researchers. If there are direct costs for the commercialization of the innovation, these are reimbursed before any proceeds are distributed. This includes the repayment of CoMotion awards including Innovation Gap Fund. Typical examples of direct costs are the expenses for patent prosecution and legal fees.
In situations where software or biological materials are licensed directly to the user there may be costs incurred with fulfilling the license by the developing unit. The inventor team may choose to forgo their share in proceeds and direct it instead to a qualified Project Budget to cover the costs or continue support of the program and license fulfillment. In this case, upon approval, departments, schools, and Provost will match the proceeds to the Project Budget.
Proceeds from equity
CoMotion may receive proceeds from equity as part of the license consideration. Any inventors that hold Founders Equity in the company are excluded from the division of revenue received upon liquidation of the UW’s equity position. The ineligible inventor’s share will be incorporated into the remaining inventors’ shares. If all inventors are considered Founders, the full inventor share is allocated instead to the appropriate departments. For clarity, inventors with a personal equity stake are still eligible to partake in proceeds related to equity liquidation.
Taxation of inventor distributions
Royalty payments to inventors are considered taxable income for the individual. Tax forms are sent annually by the Tax Office. Typically royalties are reported under “Other Income” in Box 3 of Form 1099-MISC. Please consult a tax advisor for specific advice. For replacement tax forms, contact the UW Tax Office at firstname.lastname@example.org.