Frequently Asked Questions
What is a Material Transfer Agreement (MTA)?
Rolf Herrlinger, Lawyer
Introduction
Scientists at universities, non-university research organizations and research-intensive companies often depend in the course of their work on materials (e.g. cell lines, chemical substances, etc.), which are the property or in the possession of third parties. In many cases, the owner or holder of the material is willing to make the material available to scientist.
When materials change hands in this manner, irrespective of the nature of the material itself there are a variety of different questions to answer:
- What may the recipient do with the material?
- To whom do inventions deriving from the use of such material belong?
- Is it permissible to publish the results of working with the material?
- Who is liable for loss or damage resulting from the use of the material?
The following is intended to provide a brief summary of the essential elements of a MTA, possible areas of conflict and also some potential solutions.
Points to consider in advance
When a potential material provider receives an inquiry, he must first investigate whether he is actually entitled to transfer the material concerned to the party requesting it before proceeding to conclude a MTA. This is particularly the case if he has himself received the material from a third party.
However, even if the material has been developed by the potential provider, the latter may be subject to restrictions on passing it on, for example, if exclusive rights of use have already been granted to third parties.
Precise definition of the material and the purpose of use
Once it is established that the provider of the material is not subject to any limitations on passing it on, it is first appropriate, as part of the MTA, to precisely define the material to be transferred and the specific purpose for which it is to be used.
Should the recipient of the material be a research institution, the use of the material will generally be oriented towards purely scientific purposes. Nevertheless, use of the material for commercial purposes should be explicitly excluded in order to counteract subsequent disputes between the parties. This is all the more applicable if the recipient of the material is a company, in which case use of the material for commercial purposes (as well as scientific) is particularly likely.
If in addition to, or instead of using the material for purely scientific purposes, the recipient (also) wishes to use it for commercial purposes, for example to develop and market products, a MTA is not sufficient. It is recommended to enter into a royalty-bearing license agreement, which permits the recipient to use the transferred material commercially in return for payment of an appropriate license fee.
No release of material to unauthorized third parties
Another important element of a MTA is a commitment imposed on the recipient not to pass on the material to unauthorized third parties. “Third parties” can be both individual persons (e.g. scientists at the same or other research institution), as well as legal entities (e.g. external companies / research institutions). The question as to which third parties are “authorized” and which are “unauthorized” is primarily dependent on the terms of the MTA itself. Generally, the parties to a MTA agree that only the work group that requested the material and to which the recipient belongs shall be authorized to use the material.
If however, exceptionally, a MTA entitles the recipient of the material to pass it on to third parties, it should be specified in the MTA that the recipient must also impose a contractual commitment on these third parties which corresponds with the terms of the MTA.
No liability on the part of the provider of the material
Liability on the part of the provider of the material made available is regularly excluded under the terms of a MTA. In particular, the provider of the material should accept no liability that the material is suitable for the purpose of use intended by the recipient, nor that no third-party rights (especially industrial property rights such as e.g. patents) will be infringed by using the material, nor that use of the material will not cause the recipient to suffer any loss or damage.
Such an exclusion is important above all in the case of materials originating from basic research, since their characteristics will often not have been conclusively investigated.
The exclusion of liability on the part of the provider correlates with a duty on the part of the recipient to indemnify the former against any third-party compensation claims made in association with the recipient’s use of the material.
Inventions made by the recipient of the material
One of the points most frequently discussed when concluding a MTA is the question of which party shall be entitled to inventions made by the recipient when using the material transferred.
Joint ownership is regularly claimed by the provider of the material on the grounds that it is only by transferring the material that the recipient is enabled to make these inventions. However, this claim is contrary to the terms of patent law under which the status of co-inventor can only be considered provided that a creative contribution has been made to the invention. Simply transferring the material cannot by itself be regarded as a creative contribution, unless the invention is already embodied in the material transferred.
Therefore it should be made clear in the MTA that inventions solely made by the recipient by use of the transferred material shall be solely owned by the recipient. Joint inventions, where these are made, should be appropriately covered by a separate agreement.
The provider of the material should in turn take care to ensure that he or she is granted the right to use inventions made by the recipient with the use of the material free of charge for his or her own scientific purposes.
Obligation to maintain secrecy and publications
In addition to the actual material, the recipient is often given access to confidential information concerning the material that is also of considerable economic and / or scientific value to the provider. In this case, it must be ensured that the recipient of the material is also committed to preserving the secrecy of this information. Typically in this context, secrecy should continue to be preserved for a period of five years from the point in time at which the term of the MTA comes to an end. However, longer or shorter periods may be expedient in individual cases and agreed accordingly.
If the recipient of the material is a scientist at a university or non-university research institution, particular attention should be paid to the provisions of the MTA regarding publications. After all, such scientists will regularly wish to publish the research results generated through the use of the material.
This will often conflict with the interest described above on the part of the provider of the material to keep all information relating to the material as secret as possible.
In order to be fair to the interests of both parties, it is recommended that prior agreement should be reached between provider and recipient of the material regarding the content of planned publications. This will give the provider of the material the opportunity to prevent publication of his or her confidential information and avoid applications for industrial property rights being frustrated by prior publications that are detrimental to novelty.
In order to protect the recipient of the material against indiscriminate delays, a maximum period should be agreed upon. After the expiry the recipient shall be entitled to publish, provided that due account is taken of the justified interests of the material provider.
Period of use and obligation to return the material
The MTA should also define the period of time for which the recipient may use the material made available. Upon expiry of this period of use, the recipient should be obliged to return the material to the provider, or at the latter’s request to destroy it. This is the only way to ensure that the material does not afterwards find its way into the hands of unauthorized third parties.
In the past, repeated attempts have been made to define uniform MTA standards in order to simplify and thereby speed up the exchange of materials. For example by the working group on Material Transfer Agreements set up by the Association of University Technology Managers (AUTM). In spite of these efforts, however, time-consuming discussions are by no means a rarity when negotiating a MTA.
To make it easier for the scientists of the Max Planck Society to conclude a MTA our standard MTA is available as a download from our web site: Service for Industry_Download
Rolf Herrlinger, Assessor jur.
Contacts for Scientists of the Max Planck Society:
Florian Beilhack, Lawyer
Rolf Herrlinger, Lawyer
Phone: +49 89 290919-0
