Community Forum – Handling University Intellectual Property

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Survey (Community Forum)
Innovation Research Interchange
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How do you handle IP when collaborating with universities?

How do organizations work through the complexities of IP ownership when collaborating with universities in an open innovation environment? Are some universities easier to work with than others relative to IP? – Vice President, Large consumer products company

Community Responses

Senior Technology Scout, Consumer Products Company
I have found that it is important, before engaging in any open innovation, to understand the IP rights and control needed for the specific technology area. Most potential open innovation sources are attractive because they already have discovered or developed technology, so they already have background patents and/or applications filed. If an area requires that the company “own” patents then open innovation usually doesn’t work.

When looking at working with a university I want to understand the background IP the university has and any limitations on a potential license. Often our company will want to fund sponsored research to confirm that the university invention will translate to the needs that we have and in most cases universities feel they must retain IP ownership (this is often influenced by IRS regulations, state law and university policy). For my company’s core technologies this is usually not acceptable so we will do the research internally. For supporting technologies we can often meet company needs through exclusive or non-exclusive rights to use the technology. A concept that has often helped me is to consider the “invention space” between where the university work will end and where we actually use it in the product. When there is significant development required to take what we get from the university into a commercial product then there is likely to be company owned IP that will often provide good protection for my company’s product.

Yes, some universities are easier to work with around IP than others and recently that variation started making some big changes. Penn announced that in many cases they will let companies own IP that comes from work they fund, Univ. of Minnesota will give a royalty-free exclusive license for IP from sponsored research where the company pays an additional 10% when the research begins. Other universities are seeing this and changing and/or allowing more flexibility in their sponsored research terms. I have found it very valuable to participate in UIDP (University Industry Demonstration Partnership, sponsored under The National Academies, ) an organization where university and industry people with jobs in university-industry relations work to develop guides, webinars and other tools to improve collaboration. Participation in this group has helped me stay current with how universities are looking at these relations and also to have some influence by having a forum to present industry needs and concerns. I’ve found it valuable to combine UIDP participation with active participation in IRI’s External Technology Network (ETN) which often includes university-industry collaboration topics from a more industry centric position. 

Director, Large oil and gas company​
Very interesting and current question.  I have worked with 5 universities as partners in technology development and commercialization. The first task is to establish what type of IP ownership model will be used for any new IP.   Examples include ownership by inventorship (a.k.a. “yours, mine and ours”), joint ownership of all new IP, ownership by business interest or area, single party ownership of all, and “pay to play” (ownership of new IP is left undecided and when IP is discovered, the discovering party notifies the other party and requests their election to participate (own) and fund the patent prosecution.  If the notified party does not elect to participate, they forfeit IP ownership rights.   If they elect to participate, then the new IP is jointly owned.) are a few types.

And most universities will look to the other party to fund any patent prosecution and maintenance fees, but this is negotiable. The biggest challenge arises when trying to value IP and universities tend to have limited practical experience out-licensing their IP and have an unrealistic expectation as to the value to be realized from the market.   As a result, it’s best to formalize the royalty structure in advance of discovering the IP, otherwise you may never agree. 

Bruce Merrifield, IRI Emeritus
The Limited Liability Corporation was set up to handle such issues. Register an LLC with your company and the University as Limited Partners…each with an agreed-upon equity in the LLC. (LLC’s pay no taxes but when profits are distributed your company pays taxes on your share, but the University’s profits are tax free). The LLC model protects the non-profit nature of the University, but you run the business that results. If the University decides later to cash out at say 10 times earnings, it gains a tax free windfall. You can have a first option to buy them out… 

George Coulston, VP Global RD&E, Kennametal​
At Kennametal, we have multiple approaches for dealing with IP matters encountered in OI projects with Universities.  For example, projects that are directed toward “scouting” and improved understanding of a technology domain are often handled with a simple NDA.  These projects are typically of short duration, e.g. 3 month undergrad projects, and are not expected to break new ground.  Other projects, which involve research directed toward solving a problem, and which are of greater intensity and longer duration than the aforementioned variety, are typically handled with a JDA, and include specific definition of IP rights.

I often find the negotiations for IP rights, especially with US Universities, to be protracted.  To reduce this transaction cost, we have negotiated master agreements with a few universities.  This allows project teams to focus their efforts on defining scope, budget, and execution rather than haggling over terms for months.   Of course, if the best place to conduct the research is at a University where we have no such agreement, then we must negotiate the terms.  In some cases, projects have been cancelled over inability to reach agreement on IP rights.

I am interested in hearing what others have to say on this complex topic.  It’s been discussed many times; I suspect because nobody is really happy with current the situation.  Thanks for bringing this back to the forefront. 

Randy Schiestl, VP, R&D, GlobalTechnology, Boston Scientific Corporation
One progressive construct can be viewed by googling MN-IP to see the process put in place by the University of Minnesota.  MN-IP facilitates collaborative research through an agreement whereby industry owns IP up to the point where significant revenues are achieved and royalties apply. 

Paul Nowatzki, Innovation Manager, Bayer MaterialScience LLC​
IP ownership is a major obstacle in establishing university collaborations. We do it case-by-case. Universities’ policies vary widely. Notably, Penn State University and the University of Minnesota have recently adopted more accommodative IP terms for industry-sponsored research. 

Ron Taylor, Intellectual Assets, Inc. & IRI Emeritus
The UIDP, University Industry Demonstration Partnership, is a great place to start. Here’s a link to their website: . In addition to major universities and national academies (Academy of Science, Academy of Engineering and Institute of Medicine), many major IRI members participate in this initiative. Intellectual Property management and standards are important topics for this organization, and proceedings of many of their workshops and symposia have been published and are available. 

Sharon Donald, Director, Internal Research and Development, Draper Lab​
We have a variety of models for working with universities, and the way we handle IP varies, but in general the party paying for generation of the IP owns the IP. Some efforts are joint, and the IP can be owned jointly, sometimes there are negotiated restrictions on how each party can use the technology. 

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