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July 12, 2016

Intellectual Property and You: The University Edition

It may be July, but school is still in session. In this blog, I'll discuss another common but mysterious topic: intellectual property ownership, specifically in the university setting. Universities sponsor research, encourage experimentation, and foster collaboration. The hallowed halls of universities are treasure troves of intellectual property. However, the process can hit a snag when it comes time to start a company and (hopefully) make money. Intellectual property is the cornerstone of many companies and at the center of many disputes. Here, I will address a few items: 1) joint inventorship; 2) university policies and grant terms; and 3) employment agreements.

Joint Inventorship

As it is synonymous with intellectual property, let's first tackle patents and the concept of "joint inventorship." 35 USC §116(a) provides that when an invention is made by two or more persons jointly, they shall apply for a patent "jointly." Further, inventors may apply for a patent jointly even though (1) they did not physically work together or at the same time, 2) each did not make the same type or amount of contribution, or 3) each did not make a contribution to the subject matter of every claim of the patent.

Case law maintains no minimum threshold for contribution. In Burroughs Wellcome Co. v. Barr Labs, Inc. (1994), the court posited that "conception is the touchstone of inventorship." There, the patent application was prepared before the defendant's scientists (Barr Labs) contributed to the research on the use of a pharmaceutical to treat HIV. The court held that inventors are those who thought of the idea, not those who only realized the idea. As such, discovery that an idea actually works and reduction of that idea to practice are irrelevant for inventorship. The idea must be "definite" and "permanent" in a sense that it involves a "specific approach to the particular problem at hand." The typical contributions of a supervisor do not necessarily qualify.

Burroughs Wellcome teaches an important lesson for startup teams: everyone should have a clear understanding of their roles and duties. Over an idea's lifecycle, many hands may touch the idea. Confusion among these matters can create disputes and unnecessary hurdles. Teams must secure the intellectual property rights of all inventors, otherwise, the intellectual property will have multiple owners. For example, three students are working on a project for a new light tracking technology. Each student contributed, but only two students were listed on the patent, which was assigned to the company IP, Inc. The third student has inventorship rights, and as such, she can have herself added to the application and more importantly, she has rights to the patent which she may assign and license at her pleasure. Put simply, your company may have a joint owner.

University Policies and Grant Terms

Second, always--and I do mean always--look at your university's intellectual property and technology transfer policies and any funding terms that you receive. These terms will ultimately govern your relationship with the university and dictate your responsibilities and rights. Many of your questions may be answered right in the policy.

For my fellow Wolverines, let's focus on the University of Michigan's Tech Transfer Policy.

1. Ownership. Generally, the University claims ownership over intellectual property made by "any person, regardless of employment status, with the direct or indirect support of funds administered by the University (regardless of the source of such funds)." These funds include University resources, and funds for employee compensation, materials, or facilities.

2. Student Intellectual Property. The University generally does not claim ownership of intellectual property created by students. The policy defines "student" as a person enrolled in University courses for credit, except when that person is an employee. However, UM will claim ownership of intellectual property created by students in their capacity as employees (i.e., persons who receive a salary or other consideration from the University for performance of services, part-time, or full time). Interestingly, a student will be considered an employee, for the purposes of this policy, if they are compensated. UM gives the following examples as compensation: stipends and tuition.

The University of Michigan is relatively generous towards its students. However, employees (professors, graduate student instructors, research assistants, post-docs) are another matter.

Employment Relationships

Lastly, as hinted above, founders should pay close attention to the terms of their engagement with the university, which will include employment agreements or other related agreements. Typically, professors, graduate student instructors, research assistants, and the like will have these agreements in place and they are bound by their provisions. Each of these agreements is likely to have an intellectual property assignment clause, which will give ownership of created intellectual property to their respective university employer.

Conclusion

Although the university setting is a boon to intellectual property creation, it does come with strings attached. IP ownership can also become very messy due to concepts like joint inventorship and a lack of proper assignment documents. An unwary student group can end up with the university, or another party, as a co-owner in his/her intellectual property.

Here are a few suggestions:

  • Communicate. As stated above, it is important that everyone understand their role in your project/venture. Informed persons are less likely to assert unwarranted ownership claims.
  • Read your university, classroom, and grant policy. While some places can be student friendly (GO BLUE!), others may not.
  • Maintain clear documentation. Properly document your inventive processes. Also ensure that when you have a startup involved, have proper intellectual property assignments between participants and the startup. 
  • Always read your employment agreements. These agreements can contain various obligations in regards to intellectual property. They may also contain intellectual property assignment clauses.

Keep in mind, there is a value to working with university intellectual property. The university may already have ownership, or in some cases, a venture (or students) may assign their intellectual property to tech transfer offices for help in commercialization efforts. The university is a valuable environment. 

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