Contract Accord 10: Material Transfer Agreements
Revision Date: November 2019
Page Updated: January 2020
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OVERVIEW AND BACKGROUND
Material Transfer Agreements (MTAs) are contracts that govern the transfer of tangible materials for use in research. No financial consideration is provided, other than possibly a nominal fee to reimburse the provider for its preparation and distribution costs. Tangible materials may include chemical compounds, living organisms, seeds, devices, and biological materials, such as proteins, antibodies, cell lines and tissues, etc., that may be consumed in the course of the research.
The Uniform Biological Materials Transfer Agreement (UBMTA) provides a commonly used template for transfers of certain biological material between non-profit entities.1 The Association of University Technology Managers (AUTM) has developed guidance and templates for other kinds of materials.2 This Contract Accord is focused on transfers from a Company to a University. There currently are no widely used template agreements for these transfers.3
An MTA serves a number of purposes. Among them, it:
- allows access to materials that are not available for purchase or otherwise available to University researchers;
- enables the Company and University to learn more about their materials;
- provides a description of the materials to be transferred;
- recognizes that the materials are owned or controlled by the Company providing them;
- provides a formal mechanism for the parties to express their expectations; and
- provides a framework for the ownership and handling of intellectual property created using the material during the project term.
Successful negotiation of MTA terms will result in a clear statement of the purpose and limitations on use of the materials. The terms covering access of the Company to results of the University’s use of the material are highly dependent on the type of material provided, the proprietary value of the material to the Company, as well as the extent of Intellectual Property (IP) protection the Company has covering the material and the potential commercial value of the results the University may produce. The higher the value of the materials, the more benefits the University will be expected to provide to the Company in exchange for being allowed to use the materials.
Since MTAs address issues discussed at length in other Contract Accords,4 only those issues that bear specifically on MTAs are addressed here.
INDUSTRY PERSPECTIVE
Companies provide Universities with access to proprietary materials because they expect to achieve benefits from the results, they want to better understand the materials and how they could be used in the Company, or they simply want to facilitate or promote the particular research that the University is pursuing. Many Companies provide materials for use in animal research or in research that requires other kinds of unique facilities or methodologies that are not available in their own Company. Similar to the treatment of results from University research conducted under industry-funded sponsored research agreements (SRAs), the Company expects rights in the foreground intellectual property (FIP) that result from the use of the materials and may require preferred access to the resulting data and material derived from the provided materials. The Company may require exclusive use of the results and FIP, particularly if the proprietary material is being modified, further developed, or a new use for the materials is discovered in the course of the research.
Sharing proprietary materials is rarely seen as a focus of the Company’s main commercial interests, so MTAs with Universities may be a low priority for the Company’s legal department. Companies assume that the University is able to provide sufficient protection to prevent the materials from being used outside the agreed-upon project and within the stated limitations. Companies also assume that the University will not share the materials with others outside the University or even within the University beyond the immediate research team involved in the described project.
Since materials may be covered by existing patent or other rights held by the Company, derivatives, progeny, modifications, and other types of research results dependent on access to the materials may mean that further use or sharing by the University of its results is not possible without a license or authorization from the Company.
UNIVERSITY PERSPECTIVE
University researchers are used to contributing to the development of scientific and engineering innovation that addresses societal challenges through the free exchange of ideas, research materials, and tools. Universities use materials from Companies to prove concepts and demonstrate application of principles expected to apply to classes or categories of materials and to test hypotheses that are related to or can be confirmed by research using the materials. Restrictive MTA provisions, such as publication approval clauses or other restrictions on sharing the results of research using the materials, have the potential to stifle the timely, free exchange of ideas that emerge from use of the materials and the reproduction and confirmation of published results. At the same time, Universities understand the importance of university-industry collaboration and access to proprietary materials in supporting the research and innovation ecosystem. Universities also acknowledge the reality that use of propriety materials is a courtesy offered by Companies and not a matter of right.
MTAs have become complicated contracting vehicles that require substantial effort to arrive at balanced, mutually beneficial terms that are respectful of the existing (and potential future) intellectual contributions of the parties to a material exchange. Universities generally use the materials for research that is not funded by the Company providing the materials. Therefore, the University must be careful to ensure the terms of the MTA are consistent with the terms of any funding agreement that supports the project in which the materials are being used.
If the materials are being used in a federally-funded research project, the government may acquire rights to the resulting FIP and require public or other access to the data and research tools resulting from the project.5 The University must ensure that MTA terms do not violate University policies or create legal obligations that a University may not be able to meet.
Universities prefer a standardized approach for the timely exchange of valuable materials, such as the UBMTA cited above, but realize the unique nature and proprietary value of materials from Companies can make that an elusive goal.
Terms and Conditions in MTAs
MTA’s include many of the same sections that SRAs6 include, but the following sections require particular attention:
1. Preamble, Recitations. These are often inserted before the actual terms of the MTA. They set the stage and explain any background that helps to understand the significance of the project, cite any related agreements (such as the funding agreement covering the University’s research), and explain the applicability of the terms.
2. Definitions. The original material should be described, or a reference to an attachment in which the material is described should be included. If the original material is a biological or chemical material, other definitions of progeny,7 unmodified derivatives,8 and similar possible results of the research should be included. Defining materials, as inclusive of “derivatives” and “improvements” without further definition, should be avoided due to the lack of precision of those terms.9 New materials created by the University that contain the original material should not be included within the definition of “material” because rights and obligations relating to those new materials will vary from those related to the original material. These rights and obligations should be addressed under sections of the MTA dealing with the Company’s rights to FIP and other results.
3. Proposed Use/Statement of Work. MTAs generally include a SOW or a description of how the transferred materials are to be used. The SOW is considered a limitation on the University’s permitted use of the Company’s materials. Often, these descriptions are relatively brief compared to SOWs in SRAs.
4. Restrictions. If the Company wishes to place restrictions on how the materials may be used, the restriction should be stated clearly. Some common restrictions are no use in humans or animals, no use in research that is subject to third-party license rights license, no use in commercial research, no reverse engineering, no transfer of materials to a third party.
5. Control of Material and Disposal of Material. It should be described if the materials require special handling or transport (e.g., refrigeration) and how the remaining materials will be handled once the project ends.
6. Confidentiality. The Company may provide information about the materials that it considers and treats as confidential. A standard confidentiality clause may cover both the information as well as the materials. If the University expects to publish the results of its use of the materials, the publication clause needs to be consistent with and recognize the effect of the confidentiality obligations. This may mean that the University, practically speaking, is unable to publish its results if understanding the results is dependent on the reader’s access to the confidential information provided by the Company about the materials.10,11
7. Results and Intellectual Property. In some cases, the University may agree to grant a non-exclusive royalty-free license (NERF) to FIP discovered by the University that is dependent upon the material provided by the Company as defined—e.g., FIP that necessarily uses or incorporates the original material, is a new use of, improvement to, or is a new formulation of the material. If the scope of the Company’s rights in the University’s results of the research is dependent on the connection between the materials and the results, that connection should be clearly stated.
8. Use of Material Outside the Scope. In some cases, when proprietary materials are of high value or in active development by the Company, a University’s work outside the scope of the MTA can damage or destroy the commercial value to the Company. If this use outside the scope would be considered a breach of the conditions provided in the MTA, additional provisions, often involving penalties or liquidated damages, may be discussed to mitigate these concerns or to encourage the University to ensure use outside the scope is not attempted.
9. Compliance. Federal and state laws and regulations may apply to both the Company’s transfer and the University’s use of the materials (i.e., privacy, hazardous materials, import/export, animal use). Terms may expressly require both parties to comply with applicable laws.
10. Warranties. Since the materials are likely not available to be purchased and the characteristics of the materials and potentially related hazards may not be known, the Company often disclaims any warranties covering the materials. The University typically disclaims any warranties on any results, intellectual property, and any revised or modified materials that it returns to the Company.12
PRINCIPLES
1. In general, Companies and Universities are under no obligation to share their proprietary materials. When they do, however, they should recognize that any constraints they put on the use of the materials should be consistent with their mutual objectives and expectations.
2. Publications by Company and University scientists describing results, which are dependent upon unique materials, create an obligation, or at least an expectation or desire, on the part of the authors to make those materials available to other researchers. Thereby, the integrity of published research is maintained by allowing other scientists the opportunity to reproduce reported results. In some cases, the materials may be limited in supply or consumed in the research so that further supply to other scientists is not practical.
3. The University’s freedom to publish results should not be compromised by use of a Company’s material in the research. Terms in the MTA that limit disclosure of the material or associated Company information to the extent that publication of the research would be precluded are not appropriate should be omitted, time limited, or mitigated to enable open publication.
4. The parties should recognize that there may be cases in which the material is considered so valuable to the Company that it cannot be provided for use in University research.
5. The material to be transferred should be defined in terms that are clear and relevant to the research that is being conducted in the MTA, since terms allowing access to FIP, ownership of and accompanying rights to new materials created by the University are often dependent on the way the material is defined.
6. It is reasonable for the University to accept liability for claims brought against the University based on the University’s actions while using the material and for the Company to accept liability for any damages caused by the Company’s negligence or subsequent use of data or results provided by the University.
7. The allowed uses of the material should be defined in a scope of work, and a termination date or event specified, upon which the material and any confidential information provided by the Company is either returned or destroyed.
8. The University should ensure that funding or Sponsored Research Agreements used to support the work do not contain obligations that conflict with the terms of the MTA.
9. If the material or use of the material is subject to laws or regulations, the parties should agree to assist each other on complying with those regulations. The Company should provide information necessary to enable the University to comply with all applicable laws and regulations.
10. Companies should be aware that a University may not be able to effectively protect trade secrets, so companies should be wary of providing materials that are protected by trade secrets.
OUTLIERS
The following topics are not addressed by this Contract Accord:
- Software (see UIDP Contract Accord 16: Software);
- Clinical Trials (see Accelerated Clinical Trial Agreement),
- Gifts of Material (see UIDP Contract Accord 15: Gifts);
- Loaned Equipment; and
- Student Involvement.
FOOTNOTES
[1] Uniform Biological Material Transfer Agreement (UBMTA)
[2] https://autm.net/surveys-and-tools/agreements/material-transfer-agreements/mta-toolkit/autm-mta-templates
[3] See a sample Industry to University template from the UK that is linked from the Lambert Agreements website but is not officially one of the Lambert Agreements, https://www.gov.uk/guidance/university-and-business-collaboration-agreements-lambert-toolkit#history.
[4] Statement of Work is covered in UIDP Contract Accord 1: Statement or Work. Potentially patentable inventions are covered in UIDP Contract Accord 6: Foreground Intellectual Property. Inventions outside the scope of research described in a statement of work are covered in UIDP Contract Accord 5: Background Intellectual Property. Copyrightable materials are covered in UIDP Contract Accord 8: Copyright. Potentially patentable inventions that have been conceived but not reduced to practice are covered in UIDP Contract Accord 4: Other Research Results.
[5] NIH Grants Policy Statement 8.2 Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources, https://grants.nih.gov/grants/policy/nihgps/HTML5/section_8/8.2_availability_of_research_results_publications__intellectual_property_rights__and_sharing_research_resources.htm
[6] Note that when the transfer of material occurs in a project financially sponsored by the Company providing the material, these issues will usually be addressed in the Sponsored Research Agreement (SRA), so an MTA for the same project wouldn’t be necessary.
[7] “Progeny,” as defined in the UBMTA, pertains to unmodified descendants from the originally provided material, such as virus from virus, cell from cell, or organism from organism.
[8] “Unmodified derivatives,” as defined in the UBMTA, are substances created by recipients that constitute an unmodified functional sub-unit or an expression product of the originally provided material. Some examples include subclones of unmodified cell lines, purified or fractionated sub-sets of the originally provided material, proteins expressed by DNA/RNA supplied by a provider, monoclonal antibodies secreted by a hybridoma cell line, and sub-sets of the originally provided material, such as novel plasmids or vectors.
[9] See a discussion of the use of these terms in material transfer agreements in “Principles and Guidelines for Recipients of NIH Research Grants and Contracts on Obtaining and Dissemination Biomedical Research Resources, Federal Register Vol. 64, No. 246, p. 72090.
[10] Note that the International Committee of Medical Journal Editors (ICMJE) guidelines require disclosure of sources of support for the research results described in a manuscript. “Source(s) of support. These include grants, equipment, drugs, and/or other support that facilitated conduct of the work described in the article or the writing of the article itself”, Section IV A.3.a., retrieved from http://www.icmje.org/icmje-recommendations.pdf
[11] See Science Journals: editorial policies, “Materials/samples used in the analysis must be made available to any researcher for purposes of directly replicating the procedure. Authors are also expected to honor reasonable (consistent with community standards) requests for research materials/samples to the extent feasible, so that other research groups can extend and advance the results. Any restrictions on the availability of samples or special permit requirements that restrict use or sharing of samples should be discussed with the editor no later than at the manuscript revision stage and spelled out explicitly in the acknowledgments.” Section RESEARCH STANDARDS, 4. Research materials transparency, retrieved from https://www.sciencemag.org/authors/science-journals-editorial-policies
[12] See UIDP Contract Accord 2: Liability, Indemnification, and Warranties.