Intellectual Property Rights in Industry-Sponsored University Research: Guide to Alternatives for Research Agreements (1993)

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appropriate. When included, it is usually as an appendix to the research agreement. This allows the appendix to be easily modified without affecting other provisions of the agreement. Discussion of terms to be included in the full license is beyond the scope of this document. It should be noted that some states require disclosure upon request of information in research agreements under provisions of their Freedom of Information Act. If a license agreement is appended to the research agreement, it may become publicly available and, therefore, subject to such disclosure. Scenario 2: The sponsor owns the intellectual property When the sponsor owns the intellectual property through contract or assignment by the university or the investigators, the university should reserve the right to continue to use the intellectual property for internal, research and teaching purposes, and may retain the right to sublicense to investigators for research and teaching purposes. Scenario 3: The university and sponsor jointly own the intellectual property Under this scenario, both parties can use and license the jointly owned intellectual property without obtaining permission from the other party, unless they have signed an agreement to the contrary." If the sponsor wants exclusive rights to commercialize jointly-owned intellectual property, the decision to include option and license terms in the research agreement should be made based on the same considerations discussed above in Section IV., Scenario 1. V. Procedural Issues A. Delay of Publication University researchers must be able to publish and make presentations on the results of sponsored research. Sponsors usually obtain the right to review manuscripts prior to submission for publication or oral presentation. This is done Contract language for "Rights to use when the sponsor owns the intellectual property"—University reserves for itself a royalty-free, irrevocable license to make and me such University Intellectual Property within the University for internal non-commercial purposes only. As mentioned previously, for copyrights, and for patents in many foreign countries, the ability to license without accountability to or permission of the other party may be limited. Contract language for "Delay of publication"—Sponsor shall be furnished copies of any proposed publication or presentation at least 45 days before submission of such proposed publication or presentation. During that time, Sponsor shall have the right to: (i) review the material for confidential information provided by the sponsor and (ii) assess the patentability of any invention described in the material. If the Sponsor decides that a patent application should be filed, the publication or presentation shall be delayed an additional seventy-five (75) days or until a patent application is filed, whichever is sooner. At Sponsor's request, confidential information provided by Sponsor shall be deleted. 13

to insure that no confidential information of the sponsor is released and to assess the patentability of any invention described in the material. Commonly, sponsors have 45 days to review the material, and another 30 to 75 days to prepare and file a patent application. Thus the period allowed for review and patent application filing is generally less than 120 days.12 Periods of time are negotiable, however, and in certain rapidly moving fields shorter periods may be appropriate. B. Procedures for patents 1) The university owns the invention It is customary for the university to file the patent application, and most companies are willing to reimburse the university for reasonable patenting costs if they wish to obtain a license to the patent.13 The sponsor usually has the right to review and comment on the application and subsequent prosecution of the case including patent expenses. When a sponsor pays for filing a patent 12There are two possible ways for giving the sponsor time to review research findings to be reported in the publication or presentation of dissertations, theses, and their oral defense without interfering with the student's matriculation: (1) Dissertations, theses, and their defense may be considered separate from other publications and presentations. The presumption would be that the university and the sponsor arc working together to assure an adequate dialogue—particularly when a graduate student is participating in the research—so that, at the time of defense and publication, the sponsor has already had adequate consultation on the material. This is especially true if the student has been giving public seminars on the matcrial as part of a job-hunting process. (2) The research agreement may spell out that, at the completion of the thesis, the major professor will request that the thesis be sequestered at the library until the sponsor has completed its review. This approach allows time for sponsor to review the thesis, but it docs not take into account the fact that the thesis defense often is considered a public presentation, and therefore, it too would be subject to review. "in many instances, the sponsor and the university may want to establish a procedure for reimbursement costs. Some procedures include: consultation and review of costs; sponsor monitoring of the preparation, filing, and prosecution of the patent application; sponsor pre- approval of outside patent counsel or of all costs; or sponsor carrying out the patent application filing and prosecution task in the university's best interest. Usually, sponsors are closely involved in the process so that consultation and review or monitoring are typicalty acceptable to both parties. Some companies, however, as a matter of policy, require pre-approval of costs to be reimbursed. In the absence of such a policy, the paperwork and time associated with pre-approval can require more effort than either the university or the sponsor may want to undertake. Lastly, on occasion, the sponsor is better able to prepare and file a patcnt application, and it will take the lead for the university. This procedure can create difficulties, however, because of the potential for liabilities and conflict of interest. Contract language for "Patent procedures when the university owns the invention"—University shall promptly notify Sponsor of any University Intellectual Property disclosed to it by the researcher (s). Such disclosure shall be provided and maintained in confidence. Sponsor shall have up to forty-five (45) days from lhe receipt of the disclosure by Sponsor in which to request the filing of patent application(s). University shall promptly file and prosecute patent applications, using counsel of University's choice after due consultation with Sponsor. University shall keep Sponsor advised as to developments with respect to application(s) and shall promptly supply copies of all papers received and filed in connection with the prosecution in sufficient time for Sponsor to comment. Sponsor's comments shall be taken into consideration. Sponsor shall reimburse all reasonable out-of-pocket costs incurred in connection with such preparation, filing, and prosecution of patent applications. Such applications shall include all items considered by Sponsor to be of commercial interest and importance. Within nine (9) months of the filing date of a U.S. patent application, the Sponsor shall provide to the University a written list of foreign countries in which applications should be filed. u 14Once a patent application has been filed in the United States, the patent applicant has 12 months in which to file corresponding foreign Convention patents, if the U.S. filing predatcs any public disclosure. (Some countries, Taiwan, for example, do not allow Convention filing). [Contract language continued on next page.] 14

application, such costs may be considered a credit toward future royalty payments. Absent an agreement by the sponsor to pay patent costs, the university should be under no obligation to file a patent application or to continue prosecution. The research agreement may include language to allow the sponsor to discontinue paying patent costs. The consequences of such action should be addressed in negotiations. In the case of a non-exclusive, royalty-bearing license, the patent costs may be paid by the initial licensee, who may be reimbursed on a pro raia basis from revenues obtained from other licensees. In the case of a non-exclusive license when the sponsor does not reimburse patent costs, the university retains the right to decide whether to apply for or maintain patents without further obligation to the sponsor. Contract language for "Patent procedures when the university owns the invention," continued— // Sponsor elects to discontinue the financial support of any patent prosecution, in any country, University shall be free to continue prosecution at University's expense. In such event, University shall have no further obligation to Sponsor in regard to such patent applications or patents in such country. In the event University does not file in a reasonable time an application on the invention, as directed and paid by Sponsor, or intends to discontinue prosecution of any patent application or maintenance of any patent, University shall so notify Sponsor and Sponsor may elect to continue prosecution and maintenance at Sponsor's sole expense. 2) The university and sponsor jointly own the invention In the case of joint ownership of an invention, the university and the sponsor together should decide which party is responsible for filing and prosecuting the patent application. The other party retains the right to review the patent prosecution documents, and patent costs are usually shared. When the sponsor has an option to obtain an exclusive right to commercialize the joint invention, the sponsor generally pays all patent costs, with what would have been the university's share of such costs being deducted from royalties. Contract language Tor "Patent procedures when the university and the sponsor jointly own the invention"—The University and Sponsor shall decide which party shall be responsible for the prosecution of patent applications on joint inventions. If Sponsor has an option to obtain an exclusive license to the joint invention, Sponsor shall be responsible for all patent costs; otherwise patent costs shall be shared. Whichever party is responsible for patent filing and prosecution will provide the other party with an opportunity to comment on papers filed in connection with the patent application. Such comments shall be taken into consideration. 15

C. Confidential information Most universities will agree not to disclose to third parties confidential information that is provided by the sponsor for use in the sponsored research. Similarly, most companies will agree to protect university confidential information. Some universities require that the university investigator(s) personally sign a confidentiality agreement to safeguard confidential information received from the sponsor, rather than the university signing. Other universities will assume this liability for persons acting within the scope of their employment. The sponsor and the university may further agree that only confidential information directly relevant to the research project will be exchanged, unless the receiving party agrees in writing to accept additional confidential information. In practice, this concern is generally more important to the sponsor, who wants to confine disclosure to information relating to the research project to avoid potential conflicts over ownership of inventions that arise from the sponsor's own research. Sometimes, confidential information will be disclosed by both parties during the course of the research. Rather than deal with this issue in the research agreement, the parties may enter into a separate confidentiality agreement at the time confidential information is disclosed. Otherwise, disclosures not covered by a confidentiality agreement may be considered public disclosure. The parties should be aware of the terms of their state's Freedom of Information Act, which may limit the conditions under which confidentiality can be maintained. Contract language for "Confidential information"— During the term and any subsequent extension of this Agreement, and for a period of _ years thereafter, the parties shall not use or disclose to any third party without prior written consent of the other party, any Confidential Information of the other party. For the purposes of this Agreement, "Confidential Information" means all information which is disclosed or provided to one party to this agreement (Receiving Party) by the other party (Disclosing Party), whether in written form, or in oral or electronic form which is reduced to written form, and is designated in writing as confidential. The Receiving Party shall have no obligations with respect to any portion of such Confidential Information which: (a) is or later becomes generally available to the public by use, publication, or the like, through no fault of the Receiving Party; or (b) is obtained without an obligation of confidentiality from a third party who had the legal right to disclose the same to the Receiving Party; or (c) the Receiving Party already possesses, as evidenced by its written records, pre-dating receipt thereof from the Disclosing Party; or (d) the Receiving Party independently develops without reference to Confidential Information of the Disclosing Party; or (e) is required to be disclosed by law. [Contract language continued on next page.] 16