Taking a licence from a university or other academic institution raises specific considerations in addition to those that would normally apply in a purely commercial setting. We set out below ten key considerations for any commercial entity taking a licence from a university in the EU.
1. Continuing academic research in the field and publication rights
Commonly a university will wish to continue to carry-out research in the field within the scope of the licence for academic purposes leading to a risk of intellectual property/confidential information leakage. Where the university is a charity, it will often have an obligation to publish results in the public interest.
The ability to patent a particular technology, for instance, can be adversely affected if key information has already been released to the public through inclusion in a doctoral thesis, or inclusion in a peer reviewed journal.
A common compromise is a publication reporting provision which recognises the university’s right to publish, subject to the commercial entity having a right to be notified of or approve any proposed publication, so that measures can be taken to file patents to protect patentable rights, and otherwise ensure that publication does not prejudice commercial interests.
2. Right to sub-license
A university may attempt to limit a commercial party’s right to sub-license licensed intellectual property, subject, for instance, to prior approval by the university in order to protect its reputation. A commercial party will generally push for an absolute right to sub-license, so that its ability to commercialise any valuable intellectual property is not limited.
3. Existing funding terms
The terms of existing governmental or charitable funding arrangements to which the university is subject can raise specific considerations, for instance, is intellectual property generated using the funding subject to specific licensing restrictions or conditions? The funding used to finance research and the terms on which this funding was advanced needs to be reviewed as part of the due diligence into the licensing arrangement.
4. Who has carried out the research to date?
A number of different universities and academic institutions, and potentially commercial entities, may have been involved in the production of the relevant intellectual property. Will you need licences from more than one party?
It is also worth considering that those that have carried out the relevant research will often not be employees of the university, for example PhD students. In England, for instance, this will mean that the university does not automatically own the intellectual property without an assignment from the relevant researcher. As a result, due diligence will need to be carried out regarding existing ownership of the intellectual property which will be licensed.
5. Can you get access to the on-going pipeline?
Does the licence include improvements to the licensed technology made by the university or other rights to the academic’s on-going pipeline? If so, at what cost? If not, there is a risk that a subsequently patented “improvement” will block or compete with the licence you have received.
Where the commercial party is granted access to the on-going pipeline it should consider putting in place restrictions to ensure the university owns all intellectual property generated from the on-going pipeline. For instance, by requiring the university to ensure that it owns the results of academic collaborations, and by restricting the university’s ability to carry out further research in the field of the licence using commercial funding.
6. Jurisdictional considerations
The law of intellectual property ownership will vary depending on the location of the university. For instance, in England, provided relevant academics are employees, any patent rights will, generally, vest in the university. However, in countries such as Sweden academics will often own any intellectual property they create.
7. Subject to specific legislation?
If the university constitutes a public body, it may be subject to special legislation which can impact on a licence. Pursuant to the Freedom of Information Act 2000, universities in England can be obliged to disclose certain information upon the request of a member of the public. This legislation, and legislation like it in other jurisdictions, poses obvious issues to commercial partners in relation to confidential information and intellectual property.
8. Approach to financial liabilities
Universities will attempt to avoid any risks that may be thought inappropriate for a charitable body that spends public money. For example, a university will be likely to approach any warranties and indemnities it is asked to give with particular caution, including warranties in relation to the licensed intellectual property.
9. Which academic entity should you be dealing with?
While universities can own and license intellectual property themselves, many universities use trading subsidiaries (so called “tech transfer offices”) to take ownership of and negotiate licences to their intellectual property.
10. Executing the licence; a-typical formalities?
A university may not have the standard corporate structure that commercial parties are used to dealing with. This consideration will differ on a jurisdiction by jurisdiction basis.