Due Diligence Questionnaire (DDQ) in Licensing

A due diligence questionnaire (DDQ) is the structured set of questions a prospective licensee, investor, or acquirer sends to a university technology transfer office (TTO) to evaluate a technology before committing to a license, an investment, or an acquisition. Where a term sheet or license agreement records what the parties have agreed to, the DDQ is the discovery step that comes before it — it exists to surface everything a licensee needs to know about a technology’s intellectual property status, freedom-to-operate risk, and commercialization readiness so that a deal is priced and structured against real information rather than the TTO’s marketing summary alone. This guide covers what a DDQ typically asks, why each category of question exists, and how a TTO prepares to answer one efficiently and credibly.

Where the DDQ Fits in a Licensing Transaction

Due diligence in a university licensing context is usually triggered once a prospective licensee has expressed real interest — after an initial pitch or non-confidential summary, often under a signed non-disclosure agreement (NDA) that lets the TTO share more sensitive material. The DDQ is the licensee’s (or its counsel’s) formal information request against that background. Its answers directly inform the terms a licensee is willing to accept in the eventual license agreement — exclusivity scope, royalty rate, upfront and milestone payments, and the diligence obligations the licensee itself will accept in return. A weak or incomplete DDQ response is a common reason negotiations stall or a deal is repriced downward before signature.

A DDQ is not unique to universities — the same discovery step happens in corporate IP acquisitions and VC-backed investment rounds — but a university-technology DDQ has a few recurring emphases that a purely corporate one may not: government funding history and the resulting Bayh-Dole Act obligations, single-inventor or small-inventor-team provenance rather than a corporate assignment chain, and a technology that is frequently earlier-stage (lower Technology Readiness Level (TRL)) than what a corporate buyer might otherwise diligence.

What a DDQ Typically Covers

Questionnaires vary by deal size and licensee sophistication, but a university-technology DDQ generally organizes its questions into the following recurring categories.

1. IP Ownership and Chain of Title

The licensee needs certainty that the institution actually owns, or has the right to license, what it is offering. Typical questions ask for:

A complete list of patent applications and issued patents covering the technology, including application/publication/grant numbers and current legal status in each jurisdiction.
Evidence of a clean assignment chain from every named inventor to the institution — missing or defective inventor assignments are one of the most common diligence findings that delay a deal.
Confirmation of inventorship itself: whether all true inventors are named and none are omitted, since an inventorship dispute can cloud title even after issuance.
Whether the technology was developed with any third-party funding, material, or collaborator involvement that could create joint-ownership or encumbrance issues (a sponsored-research agreement, a materials transfer agreement, a multi-institution collaboration).

2. Federal Funding History and Bayh-Dole Compliance

If any federal funding touched the invention’s conception or reduction to practice, the licensee will ask whether the institution properly elected title, met its invention-disclosure and utilization-reporting obligations, and whether the resulting license will need to include the standard Bayh-Dole provisions — the U.S. manufacturing preference for products sold domestically under an exclusive license, and the government’s retained royalty-free license and march-in rights. A licensee cannot contract around these; they are statutory conditions that travel with the invention, so the DDQ exists partly to confirm the institution has actually complied with them, not just to disclose that federal funding was involved.

3. Freedom to Operate (FTO) and Prior Art

Owning a patent on an invention is not the same as being free to practice it — a licensee’s own product may still infringe a third party’s broader patent even where the licensed patent is valid and enforceable. DDQ questions here typically ask the TTO to disclose:

Any known third-party patents or applications that could block commercial practice of the technology, and whether the institution has conducted or commissioned a freedom-to-operate search.
Prior art the institution is aware of that could affect the patent’s validity or the breadth of its claims — including the institution’s own prior publications, since inventor self-disclosure before filing is a common and avoidable cause of narrowed or invalidated claims.
Any prior licenses, options, or field-of-use restrictions already granted on the same technology to another party, which would limit what the new licensee can actually receive.
Any pending or past litigation, interference, opposition, or reexamination proceedings involving the patent family.

A university TTO is rarely positioned to warrant that a licensee’s eventual product won’t infringe someone else’s patent — that determination depends on the licensee’s own product design, which the TTO doesn’t control. Most university license agreements are correspondingly explicit that the license conveys no warranty of freedom to operate; the DDQ is where a sophisticated licensee tries to gather enough information to make that assessment for itself before signing, rather than relying on a warranty the institution won’t give.

4. Commercialization Readiness

Beyond legal status, a licensee wants a realistic picture of how far the technology is from a marketable product. Typical questions ask about:

Current TRL or an equivalent stage-of-development description, and what data (in vitro, in vivo, prototype, pilot-scale) supports that assessment.
Remaining technical, regulatory, or manufacturing work needed to reach a commercial product, and any known technical risks or failed approaches already tried.
Availability of materials, data, know-how, and biological or physical samples needed to reproduce the results — and whether any of those are subject to separate confidentiality or material-transfer restrictions that would need to be resolved alongside the license itself.
Regulatory pathway considerations where relevant (e.g., an anticipated FDA or equivalent approval route for a life-sciences technology), since this materially affects both timeline and the milestone schedule a licensee will accept.

5. Prosecution, Cost, and Maintenance Status

Because most university licenses pass ongoing patent prosecution and maintenance costs through to the licensee, the DDQ commonly asks for a cost history and forward budget: filing and prosecution costs to date, upcoming maintenance fee deadlines, which jurisdictions the institution intends to pursue or has already abandoned, and who currently controls prosecution strategy. A licensee weighing whether to reimburse past costs or take over future filing decisions needs this laid out clearly before it can price the deal.

How a TTO Prepares to Respond

Because most of the categories above recur across nearly every deal, TTOs that license actively generally maintain a standing data room or invention-disclosure file per technology — the underlying patent family status, inventor assignment documentation, prior sponsored-research or MTA history, and any prior license or option history — rather than reconstructing it from scratch under negotiation-stage time pressure each time a DDQ arrives. Good invention disclosure and TTO operations practice treats this as a byproduct of normal case management, not a special project triggered only once a licensee asks.

Two practical points matter for how an institution should respond:

Answer under an NDA, and distinguish what’s known from what’s unknown. A DDQ answer that honestly states “no freedom-to-operate search has been conducted” is more useful, and more defensible later, than a vague reassurance that implies certainty the institution doesn’t actually have. Licensees generally expect to run their own independent FTO analysis regardless of what the institution discloses — the DDQ response is a starting point, not a substitute for the licensee’s own counsel doing that work.
Coordinate with sponsored programs and legal counsel before answering funding-history and title questions. Bayh-Dole election-of-title timing, sponsored-research IP clauses, and inventor assignment records often sit with different offices than the TTO’s own case file; a DDQ answer that’s wrong on funding source or title has downstream consequences well past the current negotiation, since it can surface in a later audit or a dispute over the license’s validity.

Related CASRAI Resources

Frequently Asked Questions

Who typically sends a DDQ — the licensee or the university?

The prospective licensee (or its counsel or an investor evaluating a spinout) sends the DDQ to the TTO. The TTO is the responding party, drawing on its invention-disclosure file, inventor records, and (where applicable) sponsored-programs and legal-counsel input to answer.

Is a DDQ legally binding?

No. A DDQ and its responses are an information-gathering exercise, typically exchanged under an NDA, not a binding commitment by either party. The resulting license agreement, once negotiated and signed, is what actually creates binding obligations — though inaccurate or misleading DDQ responses can still create liability exposure separately, particularly if representations from the DDQ are later incorporated into the agreement’s representations and warranties.

Does a university TTO warrant freedom to operate as part of a DDQ response?

Generally no. Most university license agreements explicitly disclaim any warranty that practicing the licensed technology won’t infringe a third party’s patent, since that depends on the licensee’s own eventual product design. The DDQ is where the institution discloses what it knows (or doesn’t know) about third-party blocking patents, but the licensee is expected to run its own independent FTO analysis before relying on that disclosure.

How is a DDQ different from a term sheet?

A DDQ is a question-and-answer discovery exercise that happens before or alongside early negotiation; a term sheet is a (usually non-binding) summary of the deal terms both sides have tentatively agreed to. DDQ findings directly shape what ends up in the term sheet — a freedom-to-operate concern or an incomplete assignment chain discovered during diligence, for example, commonly changes the royalty rate, exclusivity scope, or representations the licensee will accept.