AI Review for Material Transfer Agreements

What is a Material Transfer Agreement?

Material Transfer Agreements (MTAs) are contracts pertaining to the transfer of materials between organizations for research purposes that set forth the rights of the parties regarding such materials.

These agreements are typically only a few pages in length and address issues such as intellectual property rights regarding the transferred material and any derivatives thereof made by the recipient of the material. They may also limit the use and further dissemination of the material by the recipient, address publication rights, and set forth confidentiality obligations.

While an MTA may pertain to any type of material used for research (e.g., chemical, biological, or even software), the majority of MTAs are for biological materials such as cell lines, plasmids, nucleotides, proteins, transgenic animals, plant varieties, and bacteria. These kinds of MTAs are often referred to as "BMTAs". Additionally, there are MTAs that are for specific types of biological materials such as genetically modified organisms or human materials.

What is the Uniform Biological Material Transfer Agreement?

Cognizant of the delays caused by negotiating MTAs, in 1995 the National Institute for Health (NIH) published the first and only widely accepted model agreements for transfers of materials, the NIH Simple Letter Agreement for the Transfer of Materials (SLA) and the Uniform Biological Material Transfer Agreement (UBMTA), along with guidance for the transfers of research tools. While over 200 institutions have signed on to the UBMTA, there are tens of thousands of academic and research institutions world-wide.

Key Considerations Regarding Material Transfer Agreements

1. Efficient Execution is the Goal: Unlike many other types of contracts, the parties do not typically negotiate the inclusion of terms from the UBMTA, which is why it is an efficient tool. To the extent there is negotiation, it is generally because the UBMTA is being modified by the parties to be used between a non-profit and a for-profit company, in which case IP rights, confidentiality, and the transfer fee may all be the subjects of negotiation. Our customers are generally seeking a quick way to assess that the MTAs they receive include the accepted industry language and no bizarre language, so they can execute as quickly as possible.
2. There are Specialized BMTAs: It is important to be aware that neither the UBMTA nor our model BMTA are appropriate MTAs to be used for the transfer of genetically modified organisms (GMOs) or human materials because they lack language necessary to adequately address those specific types of materials. For example, an MTA for the transfer of GMOs should define the word "gene," which is not a definition included in the UBMTA or our BMTA. Similarly, an MTA for the transfer of human materials must include language addressing the legal protections for humans (e.g., privacy and informed consent) associated with the collection and use of such material.

Key Terms in Material Transfer Agreements

While the terms of an MTA are not mandated by law, there are two widely accepted model agreements that were created by the National Institute for Health. Some of the terms that most MTAs include:

1. Definitions: Key terms, such as "Material," "Modifications," "Progeny," "Unmodified Derivative," "Nonprofit Organizations," and "Commercial Purposes."
2. Ownership of Material: The ownership rights of the provider and recipient with respect to the material and any modifications, derivatives, or other substances created by the recipient through the use of the material.
3. Limitations on Use and Distribution: A prohibition from using the material in human subjects or for diagnostic purposes involving humans, transferring the materials to third parties without consent of the provider, or using it in violation of any applicable laws.
4. Intellectual Property Rights: The recipient acknowledges that the material may be the subject of a patent application and that the recipient will negotiate in good faith a commercial license with provider if it wishes to use the material or modifications for commercial purposes, but that the provider has no obligation to grant such a license. Also, the recipient will notify the provider upon filing a patent application claiming modifications or methods of manufacture or uses of the material.
5. Disclaimer of Warranties: The material is experimental in nature and may have hazardous properties and that the provider makes no warranties of any kind.
6. Publication: The recipient's publication of research resulting from the use of the material won't be prevented or delayed; and the recipient will acknowledge the provider as the source of the material in all publications.
7. Termination: The conditions under which the agreement may be terminated prior to its expiration, including the obligations of the parties on termination.

Checklist for a Good Material Transfer Agreement

To ensure that your Material Transfer Agreement is effective, comprehensive, and appropriate for the type of material being transferred, use this checklist:

•  Include key definitions specific to the material being transferred
•  Clearly define ownership rights of the provider and recipient
•  Include limitations on use and distribution of the material
•  Address intellectual property rights and potential commercialization
•  Include a disclaimer of warranties
•  Address publication rights and acknowledgement of the provider
•  Specify termination conditions and obligations
•  Tailor the agreement to the specific type of material (e.g., GMOs, human materials)
•  Ensure the agreement aligns with the UBMTA or other widely accepted models
•  Have the agreement reviewed by legal counsel familiar with MTAs
•  Ensure the agreement is signed by authorized representatives of both parties
•  Securely store executed copies of the agreement

AI Contract Review for Material Transfer Agreements

To give you a sense for the benefits of leveraging contract review services trained by lawyers, we’ve selected some sample language our software presents to customers during a review. Keep in mind that these are static in this overview, but dynamic in our software - meaning our AI identifies the key issues and proactively surfaces alerts based on importance level and position (company, 3rd party, or neutral) and provides suggested revisions that mimic the style of the contract and align with party names and defined terms.

These samples represent a small sample of the pre-built, pre-trained Legal AI Contract Review solution for Data Use Agreements. If you’d like to see more, we invite you to book a demo.

PROVISION OF ORIGINAL MATERIAL

For: Both

Alert: May be missing a clause regarding the cost of shipping the original material.

Guidance: To ensure transparency and avoid potential disputes, it is essential to incorporate clear language regarding the cost of shipping the original material in a Material Transfer Agreement. This enables both parties to understand the financial implications, make informed decisions, and ultimately benefit the relationship between the parties.

Sample Language:

PROVISION OF ORIGINAL MATERIAL

1. “Original Material” means the material being transferred from PROVIDER to RECIPIENT, as further described in [●●] attached hereto and incorporated herein.

2. Subject to the terms and conditions herein, PROVIDER will ship the Original Material to RECIPIENT within [●●] ([●●]) calendar days of the execution of this Agreement to the address set forth in [●●], attached hereto and incorporated herein.

3. The Original Material is provided at no cost, but RECIPIENT will reimburse PROVIDER for its preparation and shipping costs. PROVIDER shall provide RECIPIENT with an estimate of the preparation and shipping costs for the Original Material.

LIMITATIONS OF USES OF MATERIAL

For: Provider

Alert: May be missing an article regarding limitations on the use of the material. 

Guidance: To protect the provider's interests and intellectual property rights in a Material Transfer Agreement, it is essential to establish limitations on the use of the transferred material. By incorporating a clause that explicitly outlines these limitations, both parties can agree on the specific terms and conditions governing the material's usage.

This recommendation is particularly crucial for the provider, as it helps prevent unauthorized or unintended uses that may lead to legal disputes or financial losses. A clear and legally enforceable framework for the material's use minimizes the risk of misunderstandings, disputes, and potential liability.

For example, when a provider transfers a proprietary chemical compound to a research institution for specific experiments, the Material Transfer Agreement should include a clause outlining limitations on the compound's use, such as prohibiting use in human subject, use for commercial purposes, use for anything other than educational purposes, legally non-compliant uses, or transfer to third parties. This ensures that the research institution uses the compound solely for the agreed-upon experiments and does not exploit the provider's intellectual property for unauthorized purposes.

Relevant statutes or laws to consider include the Uniform Trade Secrets Act (UTSA) and the Bayh-Dole Act, which govern the protection of trade secrets and the ownership and use of inventions arising from federally funded research, respectively.

Sample Language:

LIMITATIONS ON USES OF MATERIAL

RECIPIENT agrees, on behalf of itself and RECIPIENT Scientist (defined below), that the Material: 

(a) shall only be used for teaching and academic research purposes;

(b) shall not be used for “Commercial Purposes” such as (a) the sale, lease, license, or other transfer of the Material or Modifications to a for-profit organization, or (b) uses of the Material or Modifications by any organization, including RECIPIENT, to perform contract research, to screen compound libraries, to produce or manufacture products for general sale, or to conduct research activities that result in any sale, lease, license, or transfer of the Material or Modifications to a for-profit organization;

(c) shall not be used in human subjects, in clinical trials, or for diagnostic purposes involving human subjects without the prior written consent of PROVIDER;

(d) shall only be used by RECIPIENT, at RECIPIENT’s location, and only under the direct supervision of [●●] (“RECIPIENT Scientist”); 

(e) shall not be transferred to any other person employed by RECIPIENT without the prior written consent of PROVIDER; and=

(f) shall only be used in compliance with all applicable statutes and governmental regulations and guidelines such as, for example, those relating to research involving the use of animals and recombinant DNA.

INTELLECTUAL PROPERTY RIGHTS

For: Recipient

Alert: May be missing an article regarding intellectual property rights.

Guidance: In the context of a Material Transfer Agreement, the primary legal principle centers on the protection and management of intellectual property rights. It is vital to incorporate a clause addressing them within the Material Transfer Agreement to clearly delineate and safeguard the rights and obligations of the parties involved in the transfer of materials. This recommendation is essential for the parties involved, as it protects their intellectual property rights, averts potential disputes, and ensures that the value of their innovations and research is acknowledged and safeguarded. 

For example, when a research institution creates a novel compound and enters into a Material Transfer Agreement with another institution for further research and development, including a clause addressing intellectual property ensures that the rights to the compound and any resulting innovations are protected while allowing both institutions to benefit from the collaboration.

Relevant statutes or laws to consider in this context include the Bayh-Dole Act, which governs the ownership of inventions made with federal funding, and the America Invents Act, which provides a framework for patent law in the United States. These laws can guide the development of the intellectual property rights clause within the Material Transfer Agreement and ensure that the parties' rights are protected in accordance with applicable regulations.

Sample Language:

INTELLECTUAL PROPERTY RIGHTS

1. RECIPIENT acknowledges that the Material is or may be the subject of a patent application. Except as provided in this Agreement, no express or implied licenses or other rights are provided to RECIPIENT under any patents, patent applications, trade secrets, or other proprietary rights of PROVIDER, including any altered forms of the Material made by PROVIDER. In particular, no express or implied licenses or other rights are provided to use the Material, Modifications, or any related patents of PROVIDER for Commercial Purposes. 

2. If RECIPIENT desires to use or license the Material or Modifications for Commercial Purposes, the Parties shall negotiate in good faith to establish terms of a commercial license, subject to any pre-existing rights held by others and obligations to any governmental entity. 

3. RECIPIENT is free to file patent applications claiming inventions made by RECIPIENT through the use of the Material, but agrees to notify PROVIDER upon filing a patent application claiming Modifications or methods of manufacture or uses of the Material.

Best Practices for Using Material Transfer Agreements

To make the most of your Material Transfer Agreements and ensure their effectiveness, follow these best practices:

1. Use MTAs Consistently: Whenever you transfer materials for research purposes, ensure that you have an MTA in place. Consistency in your material transfer practices is key to protecting your intellectual property and limiting your liability.
2. Tailor to the Specific Material and Purpose: Each MTA should be specific to the material being transferred and the intended research use. Avoid using generic agreements that may not adequately address the unique considerations of the material.
3. Align with Widely Accepted Models: When possible, use the UBMTA or other widely accepted model agreements as a starting point. This can help expedite the negotiation process and ensure that your MTA includes standard terms.
4. Engage Legal Counsel Early: Involve legal counsel familiar with MTAs early in the process. They can help identify potential issues, negotiate terms, and ensure that the final agreement is legally sound.
5. Educate Researchers: Make sure that the researchers who will be using the transferred materials understand their obligations under the MTA. Provide training or educational materials if necessary.
6. Keep Good Records: Maintain signed copies of all MTAs, along with any related correspondence or documentation. Good recordkeeping is essential for tracking your material transfers and enforcing your rights under the agreements.
7. Monitor Compliance: Regularly monitor the use of transferred materials to ensure compliance with the terms of the MTA. This may involve requesting reports from recipients or conducting audits.

Conclusion

Material Transfer Agreements are essential tools for organizations that transfer materials for research purposes. By clearly defining the rights and obligations of both the provider and recipient, MTAs help to protect intellectual property, ensure appropriate use of materials, and facilitate the sharing of materials that is critical for scientific progress.

To ensure the effectiveness of your Material Transfer Agreements, it's important to include key terms addressing ownership, use restrictions, intellectual property rights, publication rights, and termination. The agreement should be tailored to the specific material and research purpose, aligned with widely accepted models when possible, and reviewed by legal counsel.

By following best practices for executing and managing MTAs, research organizations can streamline the material transfer process, mitigate legal risks, and support the advancement of scientific research through responsible sharing of materials.