A scientist from a US university took 6 months sabbatical leave and arranged with an Australian colleague to spend those six months at the Australian colleague’s university.

 

The Australian university hosting the visiting scientist provided her with access to an office, labs, the library, and all the other things that a visiting academic would customarily have access to.

 

It was the practice at the Australian host university to ask the visiting scientist, on arrival, to sign a “Visiting Scientist’s Declaration and Undertaking.”

 

That document contained provisions, amongst other things, by which the visiting scientist:

 

1. promised not to disseminate and to maintain in confidence the host university’s confidential information

2. promised to assign to the host university all intellectual property that the visiting scientist created at the host university.

 

She was not remunerated by the Australian host university. While on sabbatical she continued to receive her salary from her US university employer.

 

During the visiting scientist’s stay at the host, she continued to work on a project that was funded at her US employer university.

 

She was in the host university’s labs every day. In the spirit of scientific collegiality her colleagues at the host university shared with her details of their research. She was subject to confidentiality after all.

 

In the course of these congenial discussions her Australian colleagues shared with her details of obstacles they were encountering in their research. She made some suggestions.

 

Her Australian colleagues were impressed with her suggestions. They designed an experiment to test those suggestions. The experiments were successful. The obstacles vanished.

 

They decided a patent application should be sought. A patent attorney engaged to draw the patent application was customarily also engaged to make an inventorship determination. That is, an objective determination of which researchers had made contributions to the research which met the threshold that they should be named an inventor. The patent attorney advised that she met the criteria to be an inventor. Her name was included in the list of inventors.

 

That research project at the Australian university had had a long funding life. It had continued for 7 years. Many researchers were involved in the research project, and in numerous sub-projects. It was calculated that the research project and all its sub-projects had lasted the equivalent of 108 FTE years.

 

Five patent applications emerged from the research project.

 

Through its marketing efforts the tech transfer office found a multinational company that was interested in a worldwide exclusive license. It undertook its usual due diligence on the ownership of the IP it wanted to license. It needed to know that the Australian university in fact owned it and could license it.

 

“Who is Dr [name of visiting scientist]?” they asked.

 

The TTO enquired of the research team and learned that the visiting scientist had made an inventive contribution on one of the five patent.

 

“And we had her sign the usual ‘Visiting Scientist’s Declaration and Undertaking,’ so we (the host university) own the IP she created, and she will receive a share of commercialisation revenue under the Commercialisation Revenue Sharing Policy.”

 

But of course, the Visiting Scientist’s Declaration and Undertaking which purported to assign IP from the visiting scientist to the host university could not possibly do that, legally.

 

The visiting scientist was employed by the US university. That employment continued during the sabbatical. Any IP that she created in her scientific field was owned by her US employer, whether that IP was created at the US university, or elsewhere.

 

As is customary in the US, when an academic is employed by a university they sign two documents. The first is an employment contract. The second is a Deed of Assignment by which they assign all future created IP which they create in their field, during the period of employment.

 

The visiting scientist did not own the IP she created at the host university, so the promise to assign in the Visiting Scientist’s Declaration and Undertaking was ineffective. The prior assignment to the US employer assigned all future created IP. That assignment was first in time and would prevail. There was nothing left to assign to the host university.

 

The US university that employed the visiting scientist owned 50% of the invention, even though there were 6 inventors named on that patent.

 

“We can fix this,” the tech transfer office said. “We’ll do an Inter-Institutional Agreement and get the US university to license its share of the patent us [the Australian Host University]. We’ll still be able to do this deal.”

 

Looking at the 5 patents, the 16 inventors named in those 5 patents, and looking at the relative contribution that each patent made to the package of patents, the tech transfer office assessed that a royalty of 5% of license income would be fair, or even generous.

 

It approached the US university. A call was arranged.

 

The US university put an inflexible position: “We’re happy with an Inter-Institutional Agreement. You can appoint us to commercialise the IP.”

 

They already knew, but we repeated that the patent they had an interest in was one of five.

 

“We have a lot of expertise in commercialisation,” they said.

 

“So do we. In fact we have been in discussions with a multinational licensee for two months.

 

It took a second phone conference before the US university conceded that it would license its share of one patent to the Australian host university under an Inter-Institutional Agreement.

 

“And you can pay us a royalty of 50% of license income,” it said.

 

The Australian host university was shocked.

 

“The patent we jointly own with you is a critical patent in the portfolio. No deal can be done without it. That’s why we should get 50%,” it insisted.

 

The Australian host university was shocked, again.

 

It explained that that could be said about every one of the 5 patents. Each was critical to the package to be licensed. While the visiting scientist made an important contribution, hers was one of 16 critical contributions by 16 inventors.

 

The phone conferences continued and then stalled. The multinational interested in a license sat on the sidelines, waiting, sometimes patiently, and sometimes impatiently.

 

We then learnt that the PVC for Research was acquainted with the Vice President for Research at the US university. We asked him to make a call, not for the purpose of negotiating, but rather a statesperson-like call, to discuss the relationship and the importance that the deal be done.

 

On the next conference call with the US university they sheepishly agreed to license its share of the invention to the Australian host university, and to accept the proposed royalty of 5% of license income.

 

The license to the multinational proceeded.

 

Some lessons:

 

1.     A US visiting scientist has no power or capacity to assign to a host university the IP that the visiting scientist creates at the host university. This is because of the unique US practice at US universities to have new staff sign a Deed of Assignment of future created IP, and that in turn is because of the unique US law that an inventor (even an employed inventor) is the first owner of IP they create.

 

2.     A visiting scientist from every other country (Australia, New Zealand, Singapore, Hong Kong, Malaysia etc) similarly has no power or capacity to assign to a host university the IP that the visiting scientist creates at the host university. But that is for a different reason. In those and other countries an employer owns the IP created by its employees in the course of performing their employment duties, and prudently the employment contract expressly states (or should state) that the employment duties include the “duty to research and to invent or create intellectual property.”

 

3.     A tech transfer office should never assume that its university or institute owns the IP that the tech transfer office seeks to commercialise. In fact, given scientific collegiality, collaborators, students, etc, it should suspect that there may be wrinkles in the clear ownership of IP. After all, there so often are. The tech transfer office should accordingly, for each parcel of IP that becomes an active commercialisation project, undertake a due diligence on the ownership of IP, and in that way discover those wrinkles, and fix them, before they become commercialisation impediments, or outright obstacles.

 

How should visiting scientists be dealt with to avoid the disaster that this example almost became?

 

That will be the subject of the next edition of IP Bits.

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