From The Vault: Who Owns The Fruits Of Research?

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[Occasionally, we like to revisit posts from days gone by that either (1) are always relevant, or (2) are the subject of recent questions received by our office.  In today’s From The Vault, we look at the issues concerning ownership of materials produced during a research project.]

Originally published January 9, 2013

In a previous post, we discussed how best to protect the proprietary information that your institution brings into a project (aka Background Intellectual Property).  However, who owns IP, and specifically inventions, created during the research?

This can naturally be a very sticky issue, so it’s helpful that there are mechanisms in place that take much of the decision-making out of the hands of the parties.  The most frequently utilized ‘resource’ is the Bayh-Dole Act, which provides non-profits and educational institutions the first right of ownership of any ‘subject inventions’ that they create using federal funds.  This legislation applies regardless of where the institution falls during the research process, be it as a direct recipient of NIH funds or as a subcontractor to a company (even if it’s private) whose Prime is a federal entity.  While we’ve often times had to explain the implications of the Act, including quoting the relevant language verbatim to skeptical sponsors, its existence has still streamlined many a contract negotiation.

Unfortunately, not all clauses can be cleared up this easily, so each privately-funded contract becomes a creature unto itself.  However, certain fact patterns usually bear the same results, which can help guide the drafting of acceptable terms.  For instance, in an agreement where the Scope of Work has been dictated by the sponsor, the sponsor will generally request that it own any IP that the researcher generates during the project.  Similarly, in a clinical trial or other endeavor involving human subjects where the protocol is sponsor-driven, the institution will likely be told that it will not have ownership rights to new IP.

On the flip side, the more involvement that the PI has in guiding her research, the greater basis the institution has in requesting ownership in the resultant IP.  And, of course, there are many instances where the sponsor and the institution will jointly own inventions that arise during the project, usually in more collaborative settings where PIs from both parties are actively performing duties.

Once ownership has been sorted out, the next step is usually to address rights for the non-owning party.  This generally is accomplished by the owning party granting, at the very least, a non-exclusive, royalty-free (NERF) license to the other party for non-commercial purposes, which is sufficient for a party to investigate subsequent research activities.  At JHSPH, we’ve encountered many sponsors who also wish to include terms for the commercialization of any new IP, such as royalty rates, minimum payments and the like.  Besides the fact that these actions are often handled by a separate division of a university, it is usually not in the best interests of the parties to include these terms in the award since any amounts and obligations are purely speculative.  Consequently, a significant amount of time could be wasted haggling over details that could end up being moot, thus delaying the onset of the research itself.

In these situations, the parties can simply acknowledge the possibility of commercialization of inventions, and include a clause stipulating that any such activities will be addressed in a separate agreement.  If that isn’t sufficient, and the non-owning party wants to make sure they have the opportunity to commercialize, the owning party can grant them a ‘first option to negotiate’ a commercial license, which provides the non-owning party a window (usually 6 to 12 months) to agree to terms before the IP owner looks around for other partners.  This gives the licensee peace of mind that it will have an opportunity to bring the invention to market, while also ensuring that the IP owner is not completely limited in its options.

2 thoughts on “From The Vault: Who Owns The Fruits Of Research?

  1. I have heard about some sticky situations where the researchers from an institutions did research on a non-profit in the city and the model the non-profit have developed to address an issues in the city. The researcher ended up publishing papers about these intervention models and the best practices they’ve created from their research mirror the work of the non-profit.

    Where do the rights of the non-profit fit in to this equation, if the researchers ended up receiving significant sums of grant money to create their own intervention programs, that are simply replicas of the non-profit’s original model?

  2. We obviously can’t speak to the example provided, since we’re not aware of the facts concerning the project itself, the agreement that was in place, etc.

    That being said, the rights of a sponsor (be it non-profit or otherwise) are frequently also addressed in the research contract, though generally as it relates to ownership of deliverables and the like. However, we have seen many sponsored research agreements come through that are very light on legalese, thus leaving much open to interpretation. Overall, the best first step is almost always for the parties to communicate and learn as much as possible about a particular issue before going down any unnecessary path.

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