This is a follow-up to the article in the last issue of The Pulse. In that article we introduced the topic of technology transfer, generally; and now in this article I will highlight some particular issues to consider in the structuring and negotiation of industry-university sponsored research collaborations.
A sponsored research agreement between an industrial company and a university describes and specifies the research to be performed at a university, for which an industrial sponsor provides consideration in the form of research funding. Although the terms and conditions of any particular research agreement are tailored to govern the interactions between the parties, there are several general “flavors,” or types, of research arrangements. For example, industrial sponsors can provide unrestricted research grants under one type of agreement, whereby a university conducts research with little or no input from the sponsor. At the other end of the spectrum are more detailed sponsored research agreements, or laboratory funding agreements, focused on a specific scope or body of work, under which the funding sponsor’s researchers may actually collaborate with university researchers, and the sponsor can have a greater say in the direction and scope of the research. In addition to governing the conduct of the research, sponsored research agreements also define the parties’ respective rights in the results and any intellectual property (IP) that is created or developed during the course of the research. Although universities and industrial sponsors have differing fundamental perspectives regarding such collaborations, a better understanding of the other party’s perspectives, the issues that frequently arise, and the related legal landscape, will help you plan and structure university-industry collaborations, streamline your negotiations, and facilitate the conduct of the research.
Since different types of IP are treated differently under the law, and utilized in different ways, an important issue to consider is the type of IP that is anticipated to result from the project, and the rights desired therein. For example, biomedical-related inventions, often subject to protection under the patent laws and related patent licensing, may require a different approach than, say, software inventions, which may be protected by copyright, and/or subject to “open source” license considerations. If patentable inventions are anticipated, it may prove beneficial to discuss and agree, in advance, on invention disclosure procedures and timing, identifying which party will direct and pay for the prosecution of patents, and, also, the parties’ rights in “improvements” and their respective “background IP.” In addition, defining a “field of use” for practicing (and licensing) an invention can “create value” for the parties by providing for rights that align with a party’s respective competencies, and its research and business goals. This can go a long way toward resolving a difficult negotiation.
In addition, when determining the allocation of rights in IP arising out of sponsored research projects, it is important to consider the goals, direction, and mindset of the other party. The pursuit of theoretical scientific inquiry and the traditional mission and objective of a research university has been the development, building, and the dissemination of knowledge “for the public good” have long been hallmarks of the traditional research university. In contrast, industrial companies generally are focused on developing competitive advantages and delivering shareholder value. Accordingly, the parties may have differing perspectives on ownership, license rights, length of exclusivity, option periods, control and funding of patent prosecution and maintenance, and the like. Depending on the anticipated project output, it may be helpful for the parties to consider and address, during agreement negotiations, the treatment of IP developed by the university, the sponsor, and IP developed jointly.
Another issue that frequently arises in industry-sponsored university-based research relates to confidentiality and publication rights, again due to the differing perspectives of the participants. Universities often retain rights in their own research results and methods, and negotiate to reserve the first and unrestricted right to publish these. On the other hand, sponsors seeking a competitive advantage may be in no hurry to publicly disclose a new technology that provides a competitive advantage in its market, and may wish to preserve some portion of a discovery in confidence, at least until a patent application is filed. A balance potentially can be achieved by specifying a mutually-agreeable “pre-publication” review period, during which publications are screened for confidential information and “potentially patentable” inventions. In fact, such provisions can result in a mutual benefit, particularly to the extent that such “pre-publication” review would prevent an enabling public disclosure that may disqualify an invention from eligibility for patent protection.
In addition to publication rights, the issue of “export control” regarding research technology has become increasingly important in university-industry research agreements. Various U.S. government laws and regulations, including the International Traffic in Arms (ITAR), Export Administration Regulations (EAR), and others, classify certain technologies as “export controlled,” meaning that even the disclosure or discussion of such technologies with nationals of certain foreign countries is deemed an “illegal export.” The fines and sanctions for noncompliance with export control laws can be particularly severe. Although a discussion of the various laws, classifications, and exceptions is beyond the scope of this article, issues can arise where information/technology provided by a sponsor, or developed during the course of a research project, meets the criteria for being “export controlled.” Before providing information to a university researcher, an industrial sponsor would be well-served to consider whether the information may be controlled for export. If such information is to be shared or generated during the course of the research, both parties should consider whether and how the restrictions on its dissemination can be managed, of course, in compliance with applicable U.S. laws and regulations.
The issues discussed here represent a few of the points that can come up when negotiating university-industry collaborative research agreements. In addition to understanding the legal landscape, putting “standard” or “template” agreements in place with frequent research partners has the potential to streamline future negotiations. The key terms and “boilerplate” provisions, which are not anticipated to change from project to project, may be agreed-upon in an initial negotiation, with the understanding that such terms can be used with respect to future projects, with little or no negotiation. For example, each future project would have its own scope of work, and the parties could proceed to agreement more efficiently by focusing any required negotiations on the project-specific terms. This process has the potential to become smoother as the parties and the key individuals on each side develop a good working relationship over time.
University-industry research has the potential to yield positive results and be a good experience for both parties. Success stories abound regarding technologies that have emerged from industry-sponsored research at universities, and which have found life as commercial products. In addition, such collaborations provide company representatives with an early look at nascent technologies in need of funding and further development to reach the commercial market. On the other hand, university students can gain exposure to potential employers and industry contacts through these types of collaborations. By attracting research investment in the form of research sponsorship dollars and other industry contributions to local economies (i.e., facilities, jobs, engagement of local businesses and service providers, and so forth), universities can fulfill their research mission and provide an economic benefit to their local communities.
This article is a part of the April 2007 edition of The Pulse, a newsletter for leaders in the Medical Device Industry.