Whether the University has ownership or not, you received the income and should report it for Federal purposes. Since the OK provision is unclear, even though you are one of the inventors and the manufacturer is the University, I would just call the state with a hypothetical and have them clarify.
Report it on Schedule E.
A royalty property is a right to income from natural resources like oil, gas, or mineral properties.
This might also include royalty payments you'd get from copyrights and patents, but only if you are not in the business of creating such works.
An example of this might be a patent you purchased in order to collect fees by licensing the patent.
If you regularly create intellectual property such as a copyright or patent (for example, you're a professional author), you should report income from this self-created property as Business Income, not as investment royalties.
