Use and exploitation of IP (Clause 4)

The university's return

When a University owns the IP in any of the Results licenses or assigns them under any of the Consortium Agreements, as a charity, the University is obliged to seek a fair return. That return may take various forms - a one-off payment, royalties or a share of revenue.

Re-assignment of IP/Time Limited Licence

Model Consortium Agreements B and C contain an assignment of IP in the Results to the party or parties responsible for exploiting those Results. The other parties should consider whether they want to include a clause that re-assigns the IP if any targets for on-going payments or exploitation are not met or if the party responsible for exploitation fails to exploit. For an example see clause 10.8 of Consortium Agreements B and C. The re-assignment provision may not be effective if the party owning the IP has gone into liquidation.

If there is any concern about the solvency of any party to whom any IP is to be assigned, the parties may prefer to grant a licence that can be terminated on breach or insolvency. Clauses 10.1 and 10.8 in model Consortium Agreements B and C (clause 10.9 in Consortium Agreement A) achieve this.

Another approach that you might consider is to time limit the rights of the party exploiting the IP, allowing it exclusivity for a number of years, and at the end of that period, all the parties having non-exclusive rights to exploit the IP. An example of this sort of wording is in clause 5.4 and 5.10 of Consortium Agreement B. (If you chose this option you will need to insert the duration of the Exclusive Period on the definition of the Exclusive Period in clause 1 of Consortium Agreement B.)

The Lead Exploitation Party will want a sufficiently long period of exclusivity to justify its investment in exploiting the IP. If the Lead Exploitation Party's rights are not to be limited in time you should delete all references in the Agreement to the Exclusive Period.

At the end of the Exclusive Period all parties have the right to use the Results for any purpose (clause 5.10 in Consortium Agreement B). The model Agreements envisage that those rights will be royalty-free but, depending on the circumstances, the parties may decide that there should be some revenue sharing arrangements.

In Consortium Agreements B and C, the party responsible for exploiting the Results undertakes to take reasonable action against infringers of the Intellectual Property in the Results, to the extent that is necessary to allow it to meet its obligations to exploit the Results. This may be expensive and the parties should give some thought as to whether there are sufficient resources to enable the party tasked with exploitation to meet this obligation.

Background

Clause 5.1 clarifies that the Agreements are concerned only with the ownership and right to exploit the IP in the outputs or Results of the Project; the ownership and exploitation of other intellectual property rights are not affected.

Under the first set of wording in clause 5.2 of Consortium Agreements A, B, and C, if any party provides any Background, the other parties may not exploit it commercially or use it for any purpose except the Project. However, it may be necessary to exploit some or all of the Background in order to be able to exploit the Results. In that case the parties may wish to consider the second set of wording in clause 5.2 of Consortium Agreements A, B, and C and extending the licence of Background so that it can be used where necessary for the exploitation of the Results. The licence of the Background may be royalty free or it may be granted in return for payments set out in the Payment Plan.

In some cases, the parties may wish to grant exploitation rights to some of the Background, but not all of it. In that case the licence to exploit the Background in clause 5.2 should refer to ‘the Specified Background’ and not the Background generally.

Unless a party designates any of its Background as confidential, it may be used it in connection with the Academic Publication of the Results. (Please see the note on Academic Publication).

Level Playing Field

Under Consortium Agreement A, each party owns the intellectual property rights in the Results it creates and takes a licence of the Results generated by other parties so that each party is free to exploit all of the Results. That licence may be granted on a royalty free basis, or may be granted in return for payments set out in the Payment Plan. Depending on the circumstances, you should delete one or other of the sets of words in square brackets in clause 5.9 of Consortium Agreement A.

In Consortium Agreement A each of the parties has a non-exclusive licence to use the Results for any purpose. This would include use for the purpose of the Project, but use for the purposes of the Project and more general use have been treated separately (in clauses 5.2 and 5.9 respectively) because the parties may decide that there should be payment in return for the general licence (which will include the right to exploit) and the right to grant sub-licences is restricted to group members where the licence is for the purposes of carrying out the Project, whereas the more general licence allows unfettered sublicensing in order to promote greater use of the Results.

Factors influencing exploitation rights

The decision as to which party owns the IP in the Results and/or has the right to exploit them will depend on a number of factors including: the parties' respective contributions in terms of intellectual effort, Background, money, materials, facilities and human resources, their ability to exploit the Results, any conditions imposed in relation to any External Funding, and a company's need to claim R&D tax credits (for which the IP in the Results needs to vest in the company, either alone or with another person) and a company's need to own assets against which it may be able to raise investment. Please refer to the Decision Guide when deciding which of the five Research Collaboration Agreements to use.

Subcontractors and students

Where any student or sub-contractor works on the Project, the University or the party engaging the sub-contractor should ensure that it has acquired any rights in the IP that the student or sub-contractor acquires by virtue of his involvement in the Project. Those rights will not automatically belong to the party that engages the sub-contractor.

Assignment of IP

Where a party is to own the IP in any Results that it has not created, that IP needs to be transferred or assigned to that party. Clause 5.4 of Consortium Agreements B and C contains that assignment.

Some forms of IP, such as copyright, can be assigned in advance or prospectively assigned, i.e. before the IP is created, but that is not always the case. The IP is assigned in advance where the law allows that, and where IP cannot be assigned in advance there is an agreement to assign it later, once it has come into existence.

The obligation in clause 5.5 is to notify any patentable Results promptly, and the clause leaves the notification of other Results until the time of the next report. This is to reduce the administrative burden but, depending on the nature of the Project, the parties may wish to consider amending the clause so that all Results are to be notified promptly.

Because in Consortium Agreements B and C the IP has been assigned or licensed to one or more parties on an exclusive basis, there is a licence back to the other members of the Consortium to use the IP for the Project.

Joint Ownership of IP

Clause 5.4 of Consortium Agreement A provides for joint ownership, but only where it is not possible to distinguish between the parties' contribution to any Result. The joint owners may take steps to protect the jointly owned IP. If one of them does not want to take those steps, the other joint owner(s) may take them and the owner not wishing to protect the IP must provide reasonable assistance.

Clause 5.7 of Consortium Agreement A allows all joint owners to deal with and exploit the jointly owned IP without accounting to the other owner(s) for any money made.

Please note that the members of the Lambert Inner Working Group do not recommend joint ownership of IP.

Negotiations for Licence to Exploit/Assignment of IP (Consortium Agreement D only)

Consortium Agreement D allows any party to approach another during the Project Period and for a limited time afterwards with a view to negotiating the terms of an assignment or licence of IP. If an approach is made, there is a Negotiation Period during which the potential grantor will not negotiate with another party. You should be aware that an agreement to negotiate does not mean that the potential grantor will grant a licence or an assignment of IP and that there is a risk that the negotiations will come to nothing.