Negotiating Access To University IP17/02/2017 by Guest contributor for Intellectual Property Watch 1 CommentShare this Story:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)(Written by Owen Nicholson, Head of Growth at IN-PART Publishing, and Operations Manager at the Dyson Robotics Lab at Imperial College. The content in this article builds upon a webinar delivered by Owen for Patsnap on the 27th of January 2017)There are a vast amount of ways in which you can structure an intellectual property collaboration between a university and business. This article looks to provide guidance and points for consideration by both sides.(Raul Petri / Unsplash)Disclaimer: I should say from the start, that I am not legally trained, so please do not take anything I say as legal advice. Always make sure you get guidance from a qualified expert before signing anything.University patentsThere are well over 10,000 universities around the world, with hundreds of thousands of academics working within them. They spend hundreds of billions of dollars each year on research, which in turn generates a plethora of ideas, insights and innovations.Over the last decade, universities have increased their efforts to generate revenue from their research. In order to do this effectively, robust protection is put in place. The number of university-held patents has been steadily increasing over the last few decades:Graph 1: The number of patents filed by the near-100 universities from Europe, the USA, Australia and Japan who use IN-PART to publish the latest innovations and collaboration opportunities from researchers. (Y – numbers, X — year) There are hundreds of thousands of active patents held by universities, many of which are available for licensing. Companies are increasingly looking for access to these patents through licensing agreements and this article looks to provide guidance to both sides when negotiating access to a specific piece of IP.Be aware of the stringsUniversity-held intellectual property may come with certain conditions that you should be aware of:Reserved rights for teaching and research purposesIn the UK and US, universities are classed as Registered Charities. To maintain this status, they must not do anything which restricts their ability to deliver their primary purpose. This is to educate and perform research to further scientific understanding. As a result, many university IP deals will have a non-negotiable clause which states that even if exclusively licensed, the contents of the IP must still be available for research and teaching purposes.Restriction of IP for certain applicationsMany universities will have policies in place that will not allow their research outputs to be used for purposes that they or their student population do not agree with. It is quite common to see restriction on the use of university IP in fields such as Arms or Tobacco products.Conditions on the money that funded the researchThe majority of university IP is generated through research funded by third parties i.e. by government or industry. It is also very common for this IP to have been generated through collaboration with academics from multiple institutions. Much of this third-party funding comes with conditions which must be applied to the resulting IP. This may mean that multiple universities hold the rights or certain rights to commercially exploit the IP could already be assigned.Do your checksMost universities will perform comprehensive and robust due diligence before making their IP available, but as with all licenses, you should always perform your own due diligence. There are a number of points unique to university IP that are worth checking:Has information within the patent been disclosed prior to the filing date?Publications are what academics live for. When a new breakthrough occurs, most academics will want to shout about it from the rooftops. This can create a tension with the patenting process, although most universities manage this process very well. It would be extremely rare for a patent to be made available which was invalid due to an early disclosure, but it is worth checking. If there were any key papers or presentations of the research around this patent then you should have a look at the dates. If these came before the filing then you should seek legal advice on validity of the patent.What is the status of the background and foreground IP?All research builds on ideas and insights that have come before. This means that the IP in question may require access to additional IP — i.e. Background IP. This access should be negotiated alongside access to the IP in question, otherwise the company may not be allowed to create a commercial product without the need to return to the table for further negotiation.It is also worth checking to see if the research that led to the IP in question continued and if so, did it lead to additional patents or are there any planned patents in the pipeline.(Olu Eletu / Unslpash)Negotiation timeOnce you are happy with your checks, you can now enter negotiations for access. Every negotiation will be different. As a framework, here I have identified five key points that you should make sure are agreed in principle before you start drafting the legal documents,Which part of the patent is to be accessed?It is in neither parties interest for a patent to not be fully exploited. A license can be given for all rights to a patent but it is also possible to exclude certain areas. This would normally reduce the cost of access as the university would be free to license the bits remaining to other companies. There are three main ways in which rights to access can be carved out:Territory — A company may have a business strategy where they know they will only operate within the a certain geographical area. They could agree a license that only gives them the rights in the territories they wish.Sector/Field — Another company may only wish to use the IP within a well defined sector e.g. oil and gas or automotive. A license can be agreed for rights to use the IP in these fields.Product Type — Another way of limiting access could be to restrict the rights to certain types of product e.g. drones, domestic heaters, trucks over 1 tonnes.Rights can be ‘permissive’ (company has the rights to use it in an area) or they can be ‘restrictive’ (company does not have the rights to use it in area).What type of access do you require?There are three types of access to consider:Full ownership (where patent is transferred entirely to company)Exclusive accessNon-Exclusive accessMost of the time, a company will want to have exclusive rights to use the IP, otherwise their competitors could come along and create a rival product. Non-Exclusive rights may be appropriate if the company just wants to make sure that they have freedom to operate. The cost of access will normally be lower for non-exclusive access although not always by much. The granting of a non-exclusive license will stop a university’s ability to offer an exclusive license to other companies in the future, and therefore stop them realising its true value.How will the costs of access be calculated?There are various ways in which the cost of access can be calculated. The two most common are fixed payment (single or recurring) or royalty based. As long as the payment is made, the company will get the access under the terms agreed.Fixed payment access is the simplest approach. This is when an agreed amount is paid either once or at an agreed interval — i.e. monthly or annually.‘Royalty access’ is when the licensor pays the licensee every time they sell a product that contains the licensed IP. This type of deal can be a very effective way of ensuring both parties get a fair deal, as both share in the success or failure of the product. That said, royalty deals are considerably more complicated and extreme care should be taken to make sure the actual legal wording that is used, accurately reflects the intentions of both parties. Points to consider are:Will the royalty be a set price per unit sold or a percentage of the sale price?What happens if new IP is integrated into the product independently from the university? Does the royalty apply to the entire product or just the proportion of the product that is made up from the licensed IP?What happens if the IP is licensed to a third party who in turn creates and sells a product? Does the royalty reach through and if so what exactly does it apply to?What will the actual cost of access be?Finally, after negotiating all of the previous points, you are in a position to start negotiating the actual cost of access. It can be very difficult to value IP, especially if the target product is still a long way from being released but the following points may help:How much work has been put into the creation of this IP? Was it the result of decades of research using expensive equipment or did it come from a small theoretical project?How much more work is required to commercialize the IP? Will the company need to put millions into getting this product ready for market and who is taking on the risk in this investment?How strong/defensible is the patent?How much value to the end product does the IP bring?All of these questions will influence the ultimate cost of access.Finding University IPAt IN-PART, we specialize in helping companies connect with universities and the innovations created within them. We work with nearly 100 universities around the world to capture, articulate and market their licensing and collaboration opportunities. If you are interested in university IP and are in a position to commercialize it, you can register for free access at: in-part.com/register________________________________________________________________IN-PART Publishing Ltd — 2017All rights reserved unless otherwise agreed.Share this Story:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)RelatedGuest contributor may be reached at email@example.com."Negotiating Access To University IP" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.