NYS SCIENCE AND TECHNOLOGY LAW CENTER AT SYRACUSE UNIVERSITY COLLEGE OF LAW

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NYS SCIENCE AND TECHNOLOGY LAW CENTERAT SYRACUSE
UNIVERSITY COLLEGE OF LAW

• Lowering Real and Perceived
• Intellectual Property Barriers to
• University-Industry
• Sponsored Research Collaborations

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Research Team

• Research Associates
• Matthew French
• George Raynal
• Andrew Snook
• Melissa Vierling
• Senior Research Associates
• Sharon Lai
• Seth Libby
• Faculty Supervisors
• Rich Newman
• Ted Hagelin

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NYS Science Technology Law Center at Syracuse
University

• Pre-NYSTAR
• Technology Commercialization Research Center
• Over 75 Research Projects for Universities and
  Federal Laboratories, and for Large, Small, and
  Start-Up Companies
• Technology Evaluation Projects
• Intellectual Property Policy Projects
• Post-NYSTAR
• NYS STLC
• Information, Education and Support Services for
  NYSTAR Funded Organizations, Universities and
  Start-Up Companies
• Conferences Workshops Reports Newsletters
• Research Projects

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Two Caveats

• (1) Suggestions and recommendations in study are
  not endorsed by NYSTAR or by the NYS Science
  Technology Law Center
• Suggestions and recommendations are based solely
  upon apparent consensus among universities
• (2) Suggestions and recommendations in study are
  based on preliminary data
• Suggestions and recommendations do not
  incorporate data from Phase II (industry survey)

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Purposes of University-Industry Sponsored
Research Contract Project Phase I

• Survey Sponsored Research Contracts at Different
  Universities (19 Universities Surveyed)
• Determine Similarities and Differences in
  Sponsored Research Policies
• Analyze Most Contentious Issues in Sponsored
  Research Negotiations
• Review Federal Laws Relating to Sponsored
  Research Agreements
• Prepare Short-Form Reference Materials for
  Universities and Sponsors
• Suggest Preferred Sponsored Research Contract
  Language

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Overview

• Reviewed sponsored research agreements from 19
  universities
• University of California Berkeley
• California Institute of Technology
• Case Western Reserve University
• Columbia University
• Cornell University
• Drexel University
• Georgia Institute of Technology
• Harvard University
• Lehigh University
• Massachusetts Institute of Technology
• Michigan Technological Institute
• Rensselaer Polytechnics Institute
• University of Rochester
• Rochester Institute of Technology
• Stanford University
• State University of New York Research Foundation
• Syracuse University
• University of Texas

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Overview - continued

• Reviewed eight contentious issues
• Equipment Ownership
• Contract Termination
• Confidentiality
• Ownership of Discoveries
• Warranties and Limitation of Liability
• Publication
• Indemnification
• Licensing Provisions

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Summary Matrix Consensus and Outliers
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Summary Matrix Consensus and Outliers
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Summary Matrix Consensus and Outliers
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Summary Matrix Consensus and Outliers
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Summary Matrix Consensus and Outliers
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Reference Materials for Sponsors, Administrators,
and Investigators

• Six-page document to hand to parties involved
  sponsor, university administrator, researcher.
• Educates individuals quickly and easily.
• Gives common approaches for each of the eight
  contentious issues.
• Explains rationale for the suggested approaches.

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Reasonable Contractual Language

• Four-page compilation of preferred language.
• Language for each of the eight contentious
  issues.
• Use as template to reduce time to negotiate
  contract.
• Tailor to each university/sponsor contract.

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Equipment Ownership

• Equipment ownership is not generally a
  contentious issue between universities and
  industry.
• As a result of a properly drafted equipment
  ownership clause, each party may define ownership
  rights to the equipment that it brings to the
  project. In the absence of an express agreement
  to the contrary, title to any equipment purchased
  or fabricated with sponsor provided research
  funds vests in the university, whereas equipment
  purchased by a sponsor outside of the agreement
  but loaned for research purposes may be returned.
• Equipment ownership provisions should be
  appropriately tailored to reflect the prominence
  and expense of the equipment in the research
  project, and each partys potential downstream
  activity requiring the equipment.

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Contract Termination

• Contract termination is generally a
  non-contentious issue that specifies each partys
  termination rights for the duration of the
  proposed project.
• A properly structured termination clause offers
  both parties a clear understanding of under what
  conditions each party is allowed to terminate.
• Generally a university refunds all unused funds
  to the sponsor after withholding the amount
  necessary to satisfy non-cancelable obligations.
• In the event a contract is terminated, the
  sponsor should be allowed access to the research
  created up to that point in accordance with
  contract provisions governing ownership of
  discoveries and licensing.

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Confidentiality

• Protecting confidential information is not
  generally contentious, but ambiguous detail to
  what information is considered confidential and
  how it is protected might create conflict.
• Neither party wants confidential information
  unnecessarily disclosed to a third party.
• Disclosure of confidential information
• May negate certain industry advantages.
• May place them in breech of the agreement or
  subject to costly litigation.

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Confidentiality

• It is advisable for the agreement to
• State who will be bound by the agreement
• Require marking of confidential information
• Address protection provisions
• Establish a term of years to maintain
  confidentiality and
• Discuss oral disclosures of confidential
  information.

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Ownership of Discoveries

• Ownership of discoveries is highly contentious
  and heavily sought by both parties. When
  discoveries are made in situations not explicitly
  addressed by the agreement, conflicts are likely
  to arise in determining who retains ownership.

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Ownership of Discoveries

• An agreement should include language that
• Accounts for all relevant scenarios of
  development, specifically in regards to
  facilities used, and expresses a default clause
  that will account for discoveries developed
  outside of the agreements explicit provisions.
• Governs the request and filing for patents, which
  party will incur the expenses associated with
  such filing, and what options are available to
  the other party should one party choose not to
  pursue patent protection.

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Warranties Limitation of Liability

• In disclaiming warranties for the research and
  results and limitation of liability resulting
  from their use by a sponsor, it is advisable to
  limit absolute and adversarial language.
• Establishing that the character or condition of
  results is not guaranteed is particularly
  important due to the unpredictable nature of
  scientific research.
• In addition to broadly disclaiming all warranties
  for any matter whatsoever, Universities are
  advised to further specify particular situations
  in which warranties are disclaimed.

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Warranties Limitation of Liability

• Disclaiming warranty for the validity and
  non-infringement of intellectual property ensures
  that sponsors do not unreasonably expect
  financial return from scientific investigation.
• It is advisable to expressly limit any liability
  actually found to the amount paid under the
  research agreement or the amount of insurance
  carried by the University for such situations in
  addition to potentially unenforceable broad
  limitations of liability.
• Universities are advised not to simply hide
  behind a clause disclaiming liability, but to
  establish a series of barriers to liability.

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Publication

• While each party has significant interest in the
  research and results, it is central to academic
  principles that the research and results be made
  publicly available.
• Conversely, a sponsor is likely concerned with
  securing information to achieve a competitive
  advantage.
• Recognizing these competing rationales, contract
  language must find a reasonable resting point
  which allows both public disclosure and satisfies
  a sponsors economic needs so as not to
  discourage critical funding.

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Publication

• For a university to satisfy the requirements of
  501(c)(3) as a tax-exempt entity participating in
  a sponsored research collaboration, the research
  must ultimately become publicly accessible in an
  adequate and timely manner, even though the
  research was privately funded.

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Publication

• A sponsor should be allowed to request that
  confidential information be removed from the
  disclosure in accordance with any confidentiality
  provisions in the agreement, and sufficient
  opportunity protect sensitive intellectual by
  filing a provisional patent application or taking
  other appropriate measures.
• Submission for publication is generally not a
  prior art event that would preclude patentability
  due to lack of novelty, but other forms of public
  disclosure including presentation and
  professional meetings likely would be.

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Publication

• Absolute language that unreasonably indicates an
  ultimate authority to disclose information
  irrespective of sponsor interests should be
  avoided in order to maintain sponsor interest and
  confidence.
• No additional delay for protective measures
  following an appropriate period of sponsor review
  should be allowed where the disclosure is a
  student thesis.

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Indemnification

• Indemnification clauses are not contentious and
  are included to limit the cost of claims arising
  from the agreement
• Typically contains a broad statement trying to
  indemnify the University for all costs.
• Most Universities also limit the claim to the
  amount paid by the sponsor.
• Generally, a university is required to
• Notify a sponsor of any claim and
• Cooperate with the sponsor in the defense of such
  a claim.
• Generally, a sponsor is required to
• Consult with the university in the defense of any
  claim and
• Allow university review review of any proposed
  settlement prior to its approval.
• Allow university review review of any proposed
  settlement prior to its approval.

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Licensing Provisions

• Licensing provisions are not typically included
  in Sponsored Research Agreements.
• Licensing agreements are subject to restrictions
  under the Bayh-Dole Act and the IRS Revenue
  Procedure 97-14
• A university may not grant licensing rights at
  the sponsored research stage.

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Legislation

• Bayh-Dole Act
• If Federally funded.
• University must own Intellectual Property.
• University must commercialize.
• Federal Government retains royalty-free,
  non-exclusive license.
• IRS Revenue Procedure 97-14
• If tax-free government bonds are used to build
  facility.
• University cannot offer exclusive license at
  beginning of research.
• University can offer 1st right to negotiate at
  reasonable terms and for a specified time.
• University can set bounds on royalty range based
  on extent of IP, development costs, market size,
  competition, etc.
• Create Act
• Prevents barring of patent by prior art
  publication when two universities have written
  agreement to collaborate.

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Licensing Provisions

• Universities tend to include general licensing
  provisions in the sponsored research agreement
  should
• Allow a sponsor the first right to reasonably
  negotiate an exclusive license on favorable terms
  within a set time period
• Enumerate any critical feature thereof in order
  to provide sponsor reasonable notice
• Require that a sponsor will exert its best
  efforts to rapidly develop licensed technologies
  and promote public disclosure if at all
  appropriate and
• Stipulate that no other rights in university
  technology are granted except as those
  specifically provided for.

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Conclusions

• Goal is to establish equitable, reasonable, and
  mutually beneficial sponsored research
  agreements.
• Universitys approach to contracting should be to
  further university interests while remaining
  appealing to potential industry sponsors.
• Private sponsors may be motivated to enter into
  such agreements if the terms are constructed in a
  manner that provides a reasonable understanding
  of university rationales and constrictions and
  results in an equitable balancing of university
  and industry benefits.
• Universities are advised to structure terms so
  that a sponsor affirmatively assents to
  university rationales and conditions.
• A university might obtain a competitive advantage
  in attracting private sponsors by structuring
  contracts that are clear, concise, and
  informative of university rationales.

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Purposes of University-Industry Sponsored
Research Contract Project Phase II

• Perform Similar Survey and Analysis of NYS
  Companies Sponsored Research Contracts
• Similarities and Differences
• Most Contentious Issues
• Bring Selected NYS Universities and Companies
  Together for Sponsored Research Workshop
• Attempt to Develop Group Consensus on Policies,
  Practices and Contract Language
• If Group Consensus Is Reached, Hold State-Wide
  University-Industry Sponsored Research Summit
• Attempt to Develop State-Wide Consensus on
  Policies, Practices and Contract Language
• Publish Sponsored Research Best Practices Report

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Overview

• Surveyed over 150 companies.
• Approximately a dozen returned the surveys.
• Companies were reluctant to return surveys based
  on
• They no longer do university sponsored research.
• Much of sponsored research has moved outside of
  the USA.
• They had no authority to release information
  without permission of corporate legal counsel.
• We reviewed returned surveys and sample sponsored
  research agreements from those companies.

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Overview - continued

• 1. Eight original contentious issues were
  affirmed by industry
• Equipment Ownership
• Contract Termination
• Confidentiality
• Ownership of Discoveries
• Warranties and Limitation of Liability
• Publication
• Indemnification
• Licensing Provisions
• 2. Additional contentious issues
• Foreign Student Clearance
• No Control Over Timing of Project
• High University Overhead
• US vs. Foreign Sponsored Research
• 3. Other information in final report the week of
  April 24.

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Overview - continued

• Three other research projects in the field of
  university sponsored research
• IBM IT Open Source Initiative
• IBM, HP, Cisco, Intel, Ewing Marion Kauffman
  Foundation, seven major IT universities
• Carnegie Mellon, Georgia Tech, RPI, Stanford,
  Berkeley, Illinois, Texas
• Government-University-Industry Research
  Roundtable
• The National Academies, NCURA, Dow Chemical, Penn
  State, Carnegie Mellon, UCLA, HP, Kauffman
  Foundation
• Turbo-Negotiator University-Industry
  Demonstration Partnership
• Thursby Report Kauffman Foundation Study
• Key Factors Driving Off-shoring of Corporate RD
• Only available in summary form still under peer
  review

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For copies of reports contactLiz
Lonerganlonergan_at_law.syr.edu