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Who should own the New IP under an MTA
Under a material transfer agreement (MTA) an owner of material provides a sample of that material to the recipient. The material with which the MTA is concerned may be:
biological (a compound, an antibody, a protein, a cell line, etc), or
non-biological (an alloy etc),
The recipient’s use of the material may lead to the creation of new intellectual property and data.
Who should own the New IP and Data under an MTA depends on the nature of the MTA, the identity of the parties, and the purposes for which the material was provided by the owner.
For present purposes, Data refers to data arising from experiments upon or with the material, and New IP refers to new inventions and discoveries, as well as unpatentable know how.
Material provided by research organisation as a service to the research community
When a university or research organisation provides material as a service to the research community, the MTA will often be silent about the ownership of New IP and Data created by the recipient. That being so, the recipient, as the employer of the researchers that created the New IP and Data, will own the New IP and Data.
This silence on the issue is intentional. When a university owner provides its material to a university recipient, it would normally be regarded as intolerable for the university owner to do so on condition that the recipient university surrender its ownership of the New IP or Data that it creates. It would hardly be a service to the research community in that case.
The Uniform Biological Material Transfer Agreement is a master agreement which many US universities and research organisations have adopted and signed up to. It sets out the agreed terms that those US universities and research organisations have agreed are appropriate for the transfer of biological materials between them, when that occurs as a service to the research community. It is silent about the ownership of New IP and Data, leaving these therefore to be owned by the recipient. It does however, in relation to biological materials, provide that the owner will own any new unmodified derivatives of the material, and that the recipient will own any modified derivatives of the material.
Provided by licensor to prospective licensee for evaluation purposes
The situation is different if an owner provides material to a recipient to enable the recipient to evaluate it, for example, to enable the recipient to undertake a due diligence on whether it may have interest in seeking a license of the intellectual property with which the material is associated.
In this type of MTA, the ownership of both Data and New IP need to be considered.
The ownership of the Data is not necessarily the most important issue. What is more important is that the Data is disclosed to the owner, as the owner is vitally interested in the results of the tests and analysis to which the Recipient has put the material.
What is also important is that the owner has the ability to use that Data, for example, to support a patent application. This can be secured by the Recipient licensing the Data to the owner, in either case, for no payment.
Also important is that the recipient is bound by obligations of confidentiality to the owner, in relation to the Data.
Although New IP is not expected to arise in the course of the recipient’s evaluation, it might. The recipient’s scientists may, in the course of the evaluation, testing and analysis undertaken, conceive of an invention. Or they may create unpatentable know how. Inventiveness by the recipient cannot be stopped, and it cannot be precluded.
Who should own this New IP?
Most often an MTA in these circumstances is also silent on the issue. In this case, again, the recipient will own any New IP that arises. This is the result of the owner's commercial assessment that:
it is unlikely or even remote that New IP will arise, and
if the owner required the recipient to assign any such New IP to the owner, this would complicate the negotiation and finalisation of the MTA, delay the recipient's due diligence, and delay the finalisation of the license that it is hoped eventuates.
The occasions will be few and far between, but it may arise that an owner would be so prejudiced by the recipient owning New IP, that it must address that issue, even if it delays the MTA being finalised.
The owner's options are, in descending order of difficulty, to require the recipient to:
assign the New IP to the owner (most difficult)
grant an exclusive worldwide royalty free license of the New IP, with the right to sub-license
grant a non-exclusive worldwide royalty free license of the New IP, with the right to sub-license
grant a right of first refusal or option to negotiate such an exclusive or non-exclusive license (easiest, but may still be difficult).
Rights of first refusal and options to negotiate carry their own challenges, see Rights of First Refusal and Options to Negotiate: Are They Legal?.
Provided by company to university or research organisation
Universities sometimes request companies to provide their materials to them for research purposes.
Again, the matter of the ownership or rights to use Data is easily dealt with a royalty free licence.
In this type of MTA the question of the ownership of the New IP cannot be avoided, and must be dealt with.
Often, the company owner of the material will be concerned that it is not prejudiced by the New IP that the university recipient might create. This prejudice might occur where the university might as a result of its research with the material own a critical or vital piece of New IP. The result might be that the company will now have to license in that New IP, introducing an overhead to its business.
Where the New IP was within the capability of the company to create, the company’s position might be reasonable.
However, where the New IP was not in the company’s capability to create, either because it lacked the innovative staff, or lacked access to specialist equipment, or lacked resources, etc, the company’s position may be less reasonable.
Most companies will not seek to own the university recipient’s New IP, appreciating that this would be unlikely to be agreed to.
Instead, they will usually be content with having an option or right of first refusal to negotiate a license to the New IP. This is a fair way to approach all MTAs where a company is the provider and a university is the recipient. After all, the university is applying its own resources, and the innovation and inventiveness of its staff, and undertaking the research at its own expense.
Again, these rights of first refusal and options to negotiate carry their own challenges, see Rights of First Refusal and Options to Negotiate: Are They Legal?.
Another possibility that might be considered is that the New IP be jointly owned. This however will most likely disadvantage the university, and may sometimes disadvantage both the university and the company. See Joint Ownership of Patents Does Not Result in Joint Benefits.