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Negotiating IP Ownership in Research Agreements #2

Sometimes the ownership of IP becomes a controversial point in a negotiation of research agreements under which a university or research institute receives private sector funding to carry out research.


Sophisticated multi-national companies, such as a pharmaceutical company, will not seek to own the IP arising under a research agreement. They will secure access to the IP on terms that will justify their investment of hundreds of millions of dollars into the IP. They constantly deal with universities and research institutes and therefore appreciate the landscape in which the research agreement needs to be negotiated. IP ownership is not controversial.


In contrast, SMEs and even large companies which are inexperienced in dealing with universities and research institutes, as well as inexperienced in dealing with IP, will seek to own the IP arising from a research agreement. They mistakenly perceive the research monies they pay to be a purchase price. IP ownership is controversial.


Sometimes, overcoming the controversy is best achieved not by engaging in a negotiation about who will own the IP, but instead, before the negotiation starts, influencing expectations and setting parameters so that the ownership of IP is “off the table.” A previous edition of IP Bits dealt with this: Negotiating IP Ownership in Research Agreements #1.


Another strategy is to omit from a research agreement any clause that deals with the ownership of IP.


Including such a clause flags the issue. Often, a party’s approach to a negotiation is to challenge and test every clause in the agreement that it thinks it should or could change. If an IP ownership clause is included in the agreement, it becomes part of the negotiation agenda, and will be negotiated, with the other party wanting to own the IP, instead of the IP remaining owned by the university or research institute.


If a research agreement or a contractor agreement does not include an IP ownership clause, it is less likely that the issue of IP ownership will be put on the agenda for negotiation. Experience is that this strategy works. While there is no empirical evidence of how often the issue is avoided, anecdotal evidence is that the occasions that the sensitive issue of IP ownership is negotiated are significantly reduced when this strategy is used.


There is a simple reason for that: Most parties negotiate from the agreement, using the agreement as the negotiation agenda. If the agreement says nothing about IP ownership, then that issue is unlikely to be introduced as a new issue. The parties will stick to the agreement as their negotiation agenda. The agreement effectively sets the boundaries of what the negotiation will be about. If the agreement is silent about IP ownership, the negotiation will often be as well.


Is the university or research institute worse off by omitting a clause confirming its ownership of the IP arising from the research agreement?


Not at all. IP will be owned by the employer of the staff that create it. IP will therefore be owned by the university or research institute which employed those staff. That ownership cannot be changed unless there is a written and signed assignment.


A research agreement that intentionally omits any IP ownership provisions therefore ensures that the IP arising from the agreement will be owned by the university or research institute.


A clause that confirms that a university or research institute owns the IP arising from a research agreement really does no more than state what would be the case if the clause was omitted from the agreement.


A clause that confirms a university’s or research institute’s ownership of IP is strictly speaking unnecessary.


Including that unnecessary clause provokes a negotiation which could result in needless negotiation tensions, and sometimes, a concession that the IP be assigned by the university or research institute. Both these effects could have been avoided if the IP ownership clause was omitted altogether.


So, if we omit a clause about IP ownership, what does the agreement say about IP?


The agreement instead focuses upon what rights the other party needs. Some possibilities:

The agreement instead focuses upon what rights the other party needs. Some possibilities:


  1. A report. The other party may want nothing more than a report about the research outcomes. If that is all it wants and needs, the agreement can be confined to providing this. This is frequently enough for contract services agreements but can sometimes be used in research agreements as well.

  2. A license of data. Sometimes the other party only needs to have access to the data that arose from undertaking the research. In that case, a license of the data may be sufficient for the other party and be all it wants.

  3. A license to use in own operations. Sometimes the other party needs more. Its expectation may be that the research outcomes, if they are useful in its business, will be available to it to use in its business. Again, if that is all it needs or wants, that can be accommodated, being silent on all other rights or uses, which are retained.

  4. An option to negotiate a license. The other party may seek commercialisation rights. In that case an option to negotiate a license can give it confidence that if it decides after the research is completed that it seeks a license, that the license can be negotiated. See a previous edition of IP Bits: Are Rights of First Refusal and Options to Negotiate Legal?

  5. Include the IP in a contemporaneous license. If at the same time the research agreement is negotiated a license of Existing IP is being negotiated (which will invariably be the case where large research monies are being committed) then the license can include within its scope of what is licensed the IP that will arise under the research agreement.


The focus of the negotiation becomes what the other party’s rights will be, and their scope. It is this which occupies the parties’ attention, with the ownership of the IP residing with the grantor of those rights being an assumed parameter.


It is counterintuitive to negotiate the issue of IP ownership by not negotiating the issue of IP ownership. But it works. Not all the time, but often enough to make it part of a negotiator’s toolbox.


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