These regulations have been formulated to provide a framework for the successful accomplishment of technology transfer, the identification, protection and exploitation of potentially valuable research results and the exploitation of potentially profitable creative and scholastic work. By identifying possible routes of exploitation and providing financial incentives for individuals and departments, the regulations are intended to encourage researchers and other innovators to identify and to develop commercial projects. The University is recognised by the UK research councils as a competent body to arrange for the exploitation of research council funded intellectual property.
For the purpose of these regulations intellectual property (“IP”) is as defined by the World Intellectual Property Organisation and includes the rights relating to literary, artistic and scientific works, performances or performing artists, phonograms and broadcasts; inventions in all fields of human endeavour; scientific discoveries; industrial designs; trade marks; service marks and commercial names and designations; and all other rights resulting from intellectual activity in the industrial, scientific, literary and artistic fields.
Prima facie, ownership of IP is vested in the inventor (i.e., the devisor) or inventors and it is he/she or they who may be granted a patent. However, when an invention is made by an employee in the course of employment, ownership may instead be vested in the employer. Similarly, other forms of IP such as copyright (covering literary work, musical work, computer programs, video or motion pictures, sound recordings, works of art, photographs, sculpture and other original works), database rights and design rights produced in the course of employment, may be owned by the University.
The intellectual property of which ownership is claimed under section 12.2 of this statute comprises:
For the avoidance of doubt, the University does not intend to assert ownership of copyright in books, articles (including journalism), lectures, or artistic works, other than works specifically commissioned by the University.
Before the University can deal with innovations arising from research, it is necessary to ensure that it does not give away its rights in the arrangements under which research is carried out. Most research carried out in universities which results in commercially exploitable inventions falls into one of four categories:
(i) Research (other than in (ii) and (iii) below) carried out by academic staff as part of their customary activities as members of the academic community. In this category, the exploitation of research results is a matter between the University as employer, and the member of staff, as employee alone
(ii) Research carried out with the support of grants from the research councils. In this category, the member of staff remains the employee of the University but the exploitation of research results is handled under the conditions for research grants which in most cases leave the responsibility for this with the University
(iii) Research carried out with the support of money from bodies other than research councils. In this category, the member of staff remains an employee of the University, and it is for the University to ensure that detailed and mutually acceptable provision is made in the relevant contract or other agreement for patenting or otherwise exploiting the research results, and for the proper sharing of any profit
(iv) Research carried out by students. Such research may also come within any of the three categories previously recited: the student is, of course, not an employee of the University, although the supervisor will be, and where a student is supported under a CASE award or entirely by industry, it is important that the student should be a party to a contract which includes provision for the protection, publication and exploitation of the research results and the proper sharing of any profit;
(v) Similar considerations to (iv) above may apply to holders of certain fellowships. A fellow who is not an employee of the University or any other body is outside the provisions of the Patents Act 1977. The terms of a fellowship should always be checked carefully. Likewise, the terms applied when academic visitors work within the University’s facilities and alongside its employees need to be made explicit at the outset.
It should be noted that the above five categories are not mutually exclusive and there are many cases where, for example, category (ii) is combined with support from industry and/or government departments. The contracts relating to such cases should protect the rights of all contributing parties.
It should be noted that research carried out by University-owned companies and by academic staff acting privately as consultants for third parties are not included. (Section 16 of the University's Academic and Related Staff Handbook sets out conditions on work for outside bodies).
When considering research contracts staff should be aware that there are three major options for the ownership of intellectual property:
(i) The first is where a university is to retain its ownership of intellectual property arising from the research but will report inventions in confidence to a sponsor with the intention of negotiating a licence (non-exclusive, where possible) to enable the sponsor to protect, develop and exploit the invention commercially. (ii) The second is where a university agrees that intellectual property arising from the research which is directly in the sphere of the sponsor's interests will be assigned to a sponsor on payment of royalties to be negotiated bearing in mind the sponsor's investment in the research and the value of the innovative step. (iii) Into the third category will fall those cases where the university is prepared to agree that any intellectual property arising shall belong to the sponsor with provision for the payment of reasonable royalties.
Under the third of these categories the University will have no influence on the protection or exploitation of innovative rights and will be in a weak position in revenue negotiations. University policy is to retain ownership of intellectual property arising from research wherever possible. In all cases, a licence back to the University for the purposes of academic research and teaching should be sought.
If (commercial) organisations are to own the intellectual property rights deriving from research commissioned from universities there may be a strong case for their being charged a price which exceeds the full economic cost. Staff should always consider the value of resulting intellectual property in pricing research contracts. When the University is to retain those rights unfettered it is considered unnecessary that the contract price should exceed the full economic cost of fulfilling it.
When provisions as outlined in 12.6 (ii) or (iii) above are agreed it will be more appropriate for the contract price to exceed the full economic cost in order to reflect the value of the arising intellectual property. This excess may take the forms either of a higher contract price or a royalty on exploitation or a combination of both of these. It is worth bearing in mind that the University’s status as a charitable organisation means that it is unable to give away its assets and should also seek a fair return for them.
The following regulations have been drawn up for the guidance of staff.
(i) the retention of confidentiality and strict avoidance of prior disclosure (though the University will as a general rule preserve the rights of individuals to publish material arising from their research and scholarship as they think fit)
(ii) the filing of a UK patent application in the name of the University with the originator as named inventor
(iii) the identification of potential licensees
(iv) the assignment of the rights to a specialist third party exploitation vehicle that will exploit on the University’s behalf and return revenues to it
(v) the formation of a limited liability company for the purpose of exploitation
|Gross Revenue||Originator||Department||Central University Funds||IP Group|
(i) The commitment of time the inventors are required and prepared to devote to the spin-out
(ii) whether the individuals are to be paid for the time and effort, or whether such time is to be reimbursed to the University
(iii) the amount of unrecoverable funding the University has committed to the technology prior to it being licensed or assigned to the spin-out
(iv) the need for the University to keep its exposure to spin-outs below 24% wherever possible, while balancing it potential returns from the results of its work
Other Universities, such as our White Rose partners, Leeds and Sheffield, start with a rule of thumb that the shares as between University and inventors should be 60:40. It is obviously impossible to have a sliding scale as with our revenue sharing of royalties, but this would appear to be roughly in line with the spirit of that formula, so this should be the starting point. Adjustments up or down from this starting point can be made according to the considerations outlined above, always attempting to balance the incentives to academics to take an active involvement where appropriate against the responsibilities of the University as a charitable institution . Thereafter, IP Group receives 25% of the company (or 15% if it declines to invest) – this to be taken from the University’s share, reducing it to 35%. All of these adjustments are prior to any equity being awarded for cash invested in the company, by, for example, IP Group or White Rose Seedcorn Fund – normally to be calculated on a pre-money valuation of £750,000.
As an illustration of how this may work, the following scenario is based on a simple case where all the inventors are based at the University and all the intellectual property belongs wholly to the University (ie with no obligation to research funders for example) and the Spin-out requires £200,000 initial investment, all supplied by IP Group.
It should be stressed that, although equity splits may start according to a formula similar to above, there will be opportunities as the company develops to adjust incentives through mechanisms such as share options for those that make a significant contribution to the spin-out’s success.
As it is generally accepted that most academic staff wish to achieve high quality publications in learned journals, the University will as a general rule seek to preserve the rights of individuals to publish material arising from research as they think fit. In commercially sensitive cases however most universities will be prepared to agree to a restriction on publication for a period of time to allow for evaluation and patent protection. PhD theses may also be withheld from the University library for a limited period, not exceeding 12 months.
Academic originators are not however always alert to the commercial possibilities of intellectual property developed as a spin-off of basic research. Even if an originator does recognise such possibilities, the precedent is often to take them direct to an industrial firm in order to raise funds to sponsor further research.
It must also be recognised that in many cases an academic scientist is more interested in pursuing research than in spending time in the commercial exploitation of inventions which are ancillary to it. Proposals for academic research may often contain the germ of an idea which may be commercially exploitable and which, even at that stage, should be protected. There might be many advantages to all concerned if such proposals were discussed with exploitation staff in their formative phases.
The University has a central record of research being undertaken with the aid of outside funding whether industrially, research council or charitably funded and the researchers involved in such work should be visited at least once every session (or invited to discuss their activities with an experienced evaluator informally so that any development of possible commercial interest may be identified as early as possible by those responsible for its protection and exploitation). Funds are available through the Innovation and Research Priming Fund Committee and Proof of Principle scheme to carry out modest developments, say, to first prototype stage. This procedure should establish an interface between research staff on the one hand and the Enterprise & Innovation Office on the other which will embrace research work funded out of departmental, faculty or other University resources.
It is most important that any researcher employed by the University, should consider the possibility that his/her work may have commercial value and, if so, contact the Intellectual Property Manager or the relevant Business Development Manager prior to making any public disclosure of the results. Staff need to be aware that public disclosure has many forms, such as an entry on a web site, an abstract in conference proceedings, or a poster on a laboratory noticeboard, as well as the most obvious publications of articles in journals, approaches to industrial sponsors etc. In the latter case, if she knows about such proposed approaches, the Intellectual Property Manager can either oversee patent filings or provide confidentiality agreements to ensure that the intellectual property is protected from premature disclosure.
Once intellectual property has been identified by or notified to the University administration it is essential that its scientific validity, its commercial potential and its protectability are properly evaluated. The originator should be required to describe the innovation briefly but clearly so that its validity is apparent and the advice of a patent agent may be obtained if appropriate.
Academic staff are often aware of industrial concerns involved generally in their research areas and details of existing commercial products which the innovation will improve or with which it may compete can often be obtained from them. If discussions take place with third parties (other than patent agents) care should be taken to see these are protected by confidentiality agreements.
The nature of the innovation; the ownership of rights; the possibility of protecting them; the capital required for developing it for its commercial market as well as its competitive life and the market potential all affect the method of exploitation to be adopted and must be carefully considered by experienced commercial staff at this stage and before further time and money is invested.
In practice, two groups of university employees need to be distinguished - (i) academic staff (both teaching and research), and (ii) technicians. The question of inventions made by students who are not employed is also discussed below.
Most universities have ensured that, as advised by the Committee of Vice-Chancellors in 1977, contracts of academic staff impose an obligation to undertake research. The nature of university research is such that an invention or other forms of IP may reasonably be expected to result from the carrying out of such duties, so that any IP made by a member of the academic staff in the course of such research will belong to the university by virtue of section 39 of the 1977 Act.
The legal position of technicians (and, indeed, of any other employees) in relation to the university is in general the same as that of academic staff. There are, however, three practical differences:
The status of inventions made by students is liable to arise particularly in the case of graduate students. If they are actually employed by the university, for example as demonstrators or research assistants, and make inventions while so working, what is said above applies to them. The difficulty arises in other cases: where the student is supported by a studentship from a research council, similar conditions are imposed as those attaching to their research grants and it may be considered that a university should impose similar requirements where research students are supported by the university's own scholarships. In other cases, for example where the student is self-supported or supported by some outside body which does not lay down any such conditions, it is difficult to see how a university can justify any claim to ownership of an invention which a student may make arising out of an independent research project.
In practice, the situation most often arising is one in which a research student is a member of a team whose efforts have resulted in an invention. In these circumstances, the fairest procedure is for the university to continue to treat that person in the same way as the members of its staff who constitute the rest of the team and to allow the student to participate in any revenue sharing arrangements which are worked out. Similarly a student is often happy to assign an invention to the university for the same reward as would fall to a member of staff in return for the university bearing the cost of protection and exploitation.
Similar reasoning may be necessary in the case of holders of fellowships who may not be employees and may or may not be conducting research as part of a team. Usually such fellowships do not also provide for recovery of all the associated research costs and so, although the university may have no automatic claim to ownership of inventions, it will be able to justify a claim to some share of profits from exploitation if this is pursued by the fellow independently.
Employees have a duty of confidentiality to their employer, but it should be borne in mind that the same does not apply automatically to students or visitors to the University. Where it is proposed that a person who is not employed by the University is to be involved in research that could lead to commercial exploitation, and particularly where it is hoped that patent protection might result, it is good practice to ensure that all participants are covered by obligations of confidentiality, for example by signing a simple confidentiality agreement that can be supplied by the Intellectual Property Manager. This may also be necessary or advisable where the results of work where the University has an obligation of confidentiality to a third party are to be presented to groups of students, for example at laboratory meetings.
A patent is a grant issued by a patent office giving an inventor the rights to exclude all others from making, using, or selling the invention within the country within which it is granted for a period of up to nineteen years from the grant. Patents may also be granted in foreign countries. Procedures for filing, regulations for patentability and the period of patent protection vary considerably from country to country.
To be patentable in most countries, an invention must be new, useful and non-obvious. In the United Kingdom and in most foreign countries, an invention is not patentable unless the application is filed before public disclosure. Once an application has been filed in the UK prior to disclosure, the applicant has twelve months to file in most foreign countries without losing filing rights.
The exploitation of a patented invention may be undertaken by:
(a) straight licensing
(b) joint exploitation and marketing
(c) independent exploitation and marketing (cf 12.7.5 above)
(d) the establishment of a spin-out company
In the preparation of a licensing agreement the University must avoid the position where it has to ask a third party for permission to use or sell some unexpected development of its own invention. Hence "improvement clauses" within the licence should be carefully drafted and made as wide as possible. Where an invention relates to a marketable end product the licence can provide that the licensee will supply "licensed products" to the patentee or to the patentee's nominees at near cost price. The licensing agreement may also be tied up with a trade mark agreement and/or service mark agreement.
As provided by the Copyright Designs and Patents Act 1988, copyright gives legal rights to the creators of certain kinds of material, so that they can control the various ways in which their work may be exploited. Copyright protection is automatic and there is no registration or other formality. Copyright is defined as a property right which can be exploited, used, bought and sold like other property. It may subsist in any of the following categories of work:
(a) original literary, dramatic, musical and artistic works
(b) sound recordings, films, broadcasts and cable programmes
(c) the typographical arrangement or layout of a published edition
There are special rules for the first ownership of copyright in the case of employed authors but in general it is the author who is the first owner of copyright in a work. The owner of copyright may use it to stop others exploiting the work or to license them to do so. The producers of records and films, broadcasters and publishers are regarded as authors of the relevant description of work.
For individual authors, copyright in a work extends for the author's life plus fifty years. For institutions, copyright in a work extends for seventy-five years from the date of publication. In contrast to a patent, which protects the "idea", copyright covers the "artistic expression" in the particular literary work, musical work, computer program, video or motion picture or sound recording, photograph, sculpture, etc., in which the "expression" is embodied, illustrated or explained.
Although under the international copyright convention no formalities are necessary to establish a copyright, it is suggested that to avoid doubt a copyright notice be affixed on the material to be protected. If materials are published (in the United States of America for example) without a copyright notice, the copyright may be lost and the work may enter into the public domain.
The following notice should therefore be placed on the front page of all university-owned works to assert the copyright: "Copyright C 20xx University of York . All rights reserved". The date in the notice should be the year in which the work is first published. No notice other than the foregoing should be used for works owned by a university.
A database, that is a collection of data or other material that is arranged in such a way so that the items are individually accessible, may be protected by copyright and/or database right. For copyright protection to apply, the database must have originality in the selection or arrangement of the contents and for database right to apply, the database must be the result of substantial investment. It is, of course, entirely possible that a database will satisfy both these requirements so that both copyright and database right apply.
Database right is in many ways very similar to copyright so that, for example, there is no registration for database right - it is an automatic right like copyright and commences as soon as the material that can be protected exists in a recorded form. Database right can apply to both paper and electronic databases. However, there are three main differences between database right and copyright:
It is important to remember, that many databases are a collection of copyright works, such as an on-line database of poetry from the last fifty years where each poem will be protected by copyright. So people compiling databases need to make sure that they have permission from the copyright owners for use of their material and people using databases need to be aware of the rights of copyright owners as well as database right owners.
It is possible to apply to the UK Patent Office to register a new or original design (i.e., features of shape, configuration, pattern or ornament not dictated solely by function) under the Registered Designs Act 1949 as amended by the Copyright, Designs and Patents Act 1988, Registered Designs Regulations 2001 and the Registered Designs Regulations 2003. Registration gives exclusive rights in the UK to make, import for sale, use for the purpose of any trade or business, sell or hire any article in respect of which the design is registered for a period of up to 25 years from registration.
Application to the Patent Office may also be made for registration of a trademark in respect of goods and services under the Trade Marks Act 1994.
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