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July 24, 2025–The practice of using term sheets as a preliminary step is an underutilized tool in university-industry collaborations. Term sheets are efficient decision-making tools that work best when parties agree to use them as a structured means of starting conversations and testing alignment before investing significant time and resources in formal contract negotiations. This approach delivers benefits that extend far beyond streamlining contract drafting—it provides a platform for immediate collaboration, relationship building, and meaningful discussion.

Why Term Sheets Matter More Than You Think

Picture this: You’ve spent months building excitement about a research collaboration. The research teams are engaged, and everyone is ready to move forward. Then comes the contract negotiation—20-plus pages of dense legal language that transforms that initial enthusiasm into a slog through liability provisions, termination clauses, and intellectual property (IP) ownership matrices.

This is where term sheets become game changers. Before diving into the full agreement, a concise one- to two-page document captures the core business components. It’s not legally binding, but it’s powerful for alignment.

What Goes Into an Effective Term Sheet

An effective collaboration term sheet should be no more than two pages and address five core areas:

1. Project scope and deliverables: What specific research will be conducted? What are the expected outcomes? Too many agreements suffer from parties having fundamentally different expectations about the work being performed.
2. IP ownership: Who owns what? Who gets to use what, and how? Background IP, foreground IP, joint inventions—these distinctions matter enormously and should be crystal clear from the start.
3. Commercialization rights: Can the results be used commercially? Are there exclusive licensing opportunities? Field-of-use restrictions? The term sheet should capture not just ownership, but the practical rights each party needs.
4. Financial terms: Not just the funding amount, but payment timing, milestone-based payments, and any cost-sharing arrangements. Include trigger events that might accelerate payments or modify financial obligations.
5. Publication and confidentiality: How do you balance the university’s need to publish with the industry partner’s need for competitive protection? The term sheet should also address the confidentiality of the negotiation process itself.

Making It Practical

Start your next collaboration discussion with a simple question: “Before we draft an agreement, can we align on the core principles?” Then use the term sheet as a structured way to capture those principles. Get your legal team on board—industry clients often say “term sheets are invaluable,” but they’re not often used by in-house counsel. Use plain language. Focus on intent rather than precise drafting. The goal is understanding, not enforceability.

However, certain elements can be legally binding even at the term sheet stage. Consider including binding provisions for confidentiality, IP protection, and basic ground rules like prohibitions on public announcements until a final agreement is reached.

Bookending Your Deal: The Power of Final Term Sheets

While most organizations focus on the front-end term sheet, there’s tremendous value in creating a final term sheet after the agreement is executed. This “bookend” approach captures the key provisions of the final agreement in the same concise format as the initial term sheet.

This final term sheet serves multiple strategic purposes. First, it provides internal teams with a clear comparison tool—showing what they originally wanted versus where they ultimately landed. Second, it becomes an invaluable reference document for both parties. Rather than forcing project managers to reread a 30-page agreement, they can refer to a crisp two-page summary. Finally, when leadership changes occur, the final term sheet helps new stakeholders quickly understand the deal structure and underlying rationale.

Why It Matters

As university-industry partnerships become more sophisticated, contracting processes need to evolve, too. Term sheets—both at the beginning and end of negotiations—represent a small change that can have an outsized impact on both the speed and success of these collaborations.

The goal isn’t just to get to a signed agreement faster. The goal is to create partnerships built on genuine understanding and shared purpose, with clear documentation that serves stakeholders throughout the partnership lifecycle. That’s how we accelerate innovation and create lasting value for all stakeholders.

For those interested in implementing this approach, a sample R&D term sheet template is available that demonstrates the structure and key provisions discussed in this article.

Thank you to Catlan McCurdy, Principal Attorney at McCurdy Laud, LLC, for contributing this week’s 3-Minute Read.

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The 3-Minute Read is a UIDP member information piece and does not represent the opinions of our members or representatives. We welcome your comments on our LinkedIn profile.