Establishing ownership of university-originating IP is not straightforward and is made even more complicated by the collaborative nature of academic research and potential grant funding obligations. The question of IP ownership should not be overlooked and will be raised by investors looking into investing in a university start-up. There are two key areas investors will want to look at - who owns the existing IP, and what will happen to ownership of new IP created by your start-up?
If IP ownership remains uncertain, the investor will more likely walk away rather than risk investing their funds into the unknown. To prevent this from happening, start by asking these questions to help you determine who owns the IP and decide what to do next.
1. WHO IS ENTITLED TO THE IP FOR A NEW IDEA?
Generally the IP owner can be traced back to the creator of the IP. The entitlement to the ownership rights initially resides with the creator, although there may be an automatic transfer of entitlement arising from employment or contractual obligations. If there are co-creators of the IP, there is the possibility of multiple parties being jointly entitled to the ownership of the IP.
2. WHY IS IT IMPORTANT TO IDENTIFY THE CREATOR OF THE IP?
Since an IP right can be challenged on grounds of the rights holder lacking entitlement to ownership, it is crucial to correctly identify the IP creator which will then enable the IP owner to be identified.
The identification process can be very complex and can vary greatly depending on circumstances. Hence, the determination of the IP creator is best handled together with help from your tech transfer office or professional advisor. What should not be done is taking the same approach as adding authors to journal publications because someone qualifying as an author may not necessarily qualify as an IP creator in the eyes of the law.
3. WHO OWNS THE IP CREATED BY ME DURING MY TIME AT UNIVERSITY?
This will depend on your role in the university and any contracts governing your role.
IP generated by an employee will typically be owned by the employer (unless the employment contract explicitly states otherwise). If you are a postdoctoral researcher, technician or tenured academic, you are likely to be classed as an employee, meaning that your inventions will belong to the university.
The situation around PhD students and undergraduates is different as they are not technically employees. Some universities have a clear policy that student-generated IP belongs to the student, while in other institutions the IP may be partly or wholly owned by the university depending on whether university resources were used in generating the IP.
It may be that your industrial sponsor has rights to the IP created as part of the research programme.
4. WHAT ABOUT IP CREATED BY ME AFTER I HAVE LEFT UNIVERSITY?
The circumstances under which the new IP is created will be a factor in determining whether the university or your industrial sponsor continues to have an ownership stake. IP independently created by your start-up outside the university would normally be owned by you, although having an active university employee or student in your start-up team may complicate matters. If your start-up enters into a collaboration with the university, then you need to consider how background IP and foreground IP are treated in the collaboration agreement.
Licensing agreements in relation to IP owned by the university may have clauses that dictate the ownership of newly created IP that are “improvements” of the licensed IP. Having what would be considered to be improvements clearly set out in the licensing agreement can help distinguish the IP that would be owned by the university from the IP that would be owned by your start-up.
5. WHAT POTENTIAL OWNERSHIP ISSUES MIGHT I FACE IN A COLLABORATION WITH A PARTNER?
With whom you collaborate in an inventive or creative capacity will impact who owns the IP, and you will need to consider their status in addition to your own. It is advisable to maintain an open dialogue about IP ownership and keep clear records of potential inventions and inventorship. Co-ownership in itself is not inherently a bad thing but it can give rise to a lot of problems and headaches if not handled properly.
To find out more about how we can help university start-ups develop their own IP blueprint for securing investment, please contact Jason Teng at jason.teng@potterclarkson.com and Sara Holland at sara.holland@potterclarkson.com.
