A Materials Transfer Agreement (“MTA) sets out the terms under which the “owner of chemical or biological materials is willing to transfer research quantities to a third party. Often this is done to allow the third party to evaluate suitability for licensing. MTAs may include options to acquire rights and/or grant exclusivity for the evaluation period. The evaluation may be paid for by the transferor or the transferee - this is likely to affect ownership of the rights in the results generated by the transferee.
An MTA doesn’t need to be a formal agreement - an exchange of letters will do. The terms of the agreement between the parties should, however, be clear so as to reduce the chance of future disputes about the conditions under which the materials were transferred.
What are the main issues?
Who are the parties? The agreement should identify the name and legal status of the parties. When making transfers to an academic institution the institution and the researcher may need to be signatories. If the materials are of a highly sensitive nature, the transferor may wish to ensure that access is granted only to named individuals.
Define the materials Different issues will arise when the material is a chemical compared to a replicating organism or cell line. In some cases the transferor may be able to decide whether to offer a finite or infinite supply of the material - for example with the transfer of an antibody or its corresponding hybridoma.
will the materials be delivered? well as identifying how this will be done there may be regulatory controls on export/import.
What can be done with the materials? The potential use of the material and the scope of the work permitted need to be clear. The parties should identify the intellectual property and ownership rights in the materials. The definition of the material may include derivatives - if so there is a risk that an acknowledgment that ownership of the intellectual property and other rights in the material vests in the transferor could be an assignment of the intellectual property in the transferee’s work to the transferor. The transferor will want to control the extent to which the material can be transferred within and outside of the transferee’s organisation - this may be backed up by record keeping obligations.
How long is the evaluation period? The parties should consider the length of the evaluation period, whether it may be terminated early and what happens on termination.
Liability The use of the material would generally be at the sole risk of the transferee but this may not be the case if the transferor is paying for the evaluation. Either party may seek an indemnity from the other for damage or injury resulting from the evaluation process.
Intellectual property It may be appropriate for the transferee to acknowledge the intellectual property rights of the transferor in the material. The transferee may be worried about infringement of third party IP and may seek warranties or an indemnity.
Results, know-how, materials and inventions created by the transferee This is the area which causes the most discussion in MTAs. In the absence of express provisions, any work created by the transferee will belong to the transferee. If the transferor wants to acquire rights to such work, it needs to say so - the transferee will want to limit such rights as much as it can. If the transferee is to retain ownership of the rights in the results but would not be able to do so without using the IP or materials of the transferor, it may be appropriate to include a mechanism for agreeing exploitation rights.
Access payments payments for access to the materials and rights in the results should be addressed.
Evaluation, option and exclusivity The transferee may want exclusivity and an option to acquire rights in the material and corresponding intellectual property.
Other provisions Confidentiality, governing law and mechanisms for resolution of disputes should be dealt with.
For further information please contact Richard Connett, Technology Group, richard.connett@cms-cmck.com or +44(0)20 7367 3709.
