Industry University Collaboration and Intellectual Property

By Donal O’Connell

The world is our lab

There are a number of industry and market-place trends impacting innovation. We are witnessing an expanding number of technologies combined together in many products and services. At the same time, we are seeing an explosive growth in new applications and a phenomenal increase in the amount of content demanded for many products and services. The role of venture capital and start-ups is increasing. Companies are having to learn to deal with increasing market dynamics, and turmoil. Innovation is becoming more costly, complex and competitive which is leading to a move away from ‘the lab is our world” and towards “the world is our lab”.
Collaboration between companies and universities is expanding given the concentrations of skilled and competent resources in such university centres of excellence. Partnerships, alliances and public-private cooperation are becoming the norm, leading to the creation of knowledge and business networks involving companies and universities. These networks are allowing costs and risks to be shared, they are leveraging research and development having critical mass, and they are enabling the early matching of technology with new applications. These networks are also attractive as they facilitate the co-creation of business and market opportunities.
Universities and business continue to produce their traditional output, but universities and business are increasingly overlapping. Yes, academia should have a clear focus on providing education and on the publication of research results while business should have its focus on its products and services. However, there is indeed overlap in such areas as education tools and teaching media, research tools, diagnostic tools, development tools, product tools, system innovations, feature and functionality as elements in product and services concepts, control marks and quality stamps, content creation and application development, databases and information collections as well as open innovations and other platform innovations. Through real time relationships and technology transfer, universities and business together are producing new opportunities, such as new ventures and new industries.
There is clear value in a company or organisation working with Universities and Colleges. Universities have bright and capable staff and students willing to learn and full of curiosity and with great ideas. Universities may be involved in research in areas of interest to a company. Universities are more than willing to cooperate and collaborate with others and their students can be a company’s future employees. Universities can be a safe place to get it wrong. It is only when we experiment, when we really push ourselves that we actually learn. Universities are places dedicated to the pursuit of knowledge, expanding human knowledge through innovative research and through passionate dedicated teaching. Universities provide academics with space to flourish, embrace the fact that we are all coming at it from a slightly different place, and can often achieve remarkable results.
However, it can be a potentially complicated form of collaboration as the interest of educational institutes and companies frequently diverge. Universities have a public mission to disseminate the results of their research which may be in the form of public presentations or publications. University faculty members are evaluated for promotion and tenure based in part on their publication record. Companies on the other hand have their primary mission to make good technology and business decisions that benefit the company. The dissemination of information can be limited by companies claiming that the information is proprietary, as their concerns are to protect their intellectual property and financial interests and that frequently requires keeping information away from their competitors. Problems can arise between universities and companies involved in collaborative innovation over whether and when to publish because of proprietary concerns and/or the ownership and usage of intellectual property.

Forms of university collaboration
Symmetric joint development is usually between companies with both parties having similar interests, and a balanced contribution being made by both parties. Asymmetric joint development can for example be between customers and suppliers and part of a commercial agreement. Such collaboration often comprises of unbalanced contributions in terms of money, resource, expertise and areas of interest. Joint development between a company and a university is inherently asymmetric in nature.
The University of Southampton, located in the city of Southampton on the south coast of the United Kingdom combines academic excellence with an innovative and entrepreneurial approach to research, supporting a culture that engages and challenges students and staff in their pursuit of learning. It is one of the top 10 research universities in the country. Research represents the lifeblood of the university, powering everything it does, from its innovative teaching methods to its growing portfolio of spin out companies. Southampton University offers a variety of ways and means for companies and industry to cooperate and collaborate with the university.
Their list is very comprehensive but is probably similar to what many other well established and reputable universities offer …

•   Undergraduate Student Projects
•   Undergraduate Student Work Placements
•   Student Visits to Company Premises
•   Recruitment talks to Students
•   Participation in Careers Events
•   Industrial Sponsorships for Students
•   Sponsorship of Student Prizes
•   Provision of Case Studies for used in Academic Programmes
•   Senior Professionals from Companies providing lectures
•   Sponsorship of Research Programmes
•   Business and Graduate Placements
•   Participation in Employer Forums in Academic Schools
•   Engineering Doctorate Opportunities
•   Knowledge Transfer Partnerships (KTP) Opportunities
•   Industrial Secondments for Research Assistants

University–industry collaboration may also be defined by the type of funding model employed. Helsinki University of Technology, TKK, is the second oldest university in Finland, and the leading university for technology and architecture. Its fields of education and research cover all areas of technology that are of importance to the Finnish economy. Helsinki University of Technology is involved in nine national Centres of Excellence in Research. Nominated by the Academy of Finland, the Centres of Excellence carry out research on topics ranging from nanotechnology and radio technology to bio-adaptive materials and brain activity. Along with motivated students and high-quality personnel, active cooperation with businesses is one of the key success factors of TKK. Collaborative innovation projects with industry at TKK may fall under a variety of different funding models.

Some examples of these different funded models are listed here …

•   EU funded
•   Subcontracting projects where the company or industry pays
•   Tekes funded
•   Medea+ funded
•   ITEA funded

Tekes, the Finnish Funding Agency for Technology and Innovation, finances industrial research and development projects and research projects in universities and research institutes. In particular, it promotes innovative and risk-intensive research and development work. Funds are directed to all fields of technology. Tekes is the main public financing and expert organisation for research and technological development in Finland. The budget comes from the Finnish state budget via the Ministry of Trade and Industry. Tekes funds research and development activities by companies, universities and research organisations registered in Finland. In addition to Tekes, companies also invested their own money in the projects. The majority of the funded projects are challenging and demanding by international standards and among the top domestically. More than half of corporate research and development and innovation funding granted by Tekes goes to small and medium-sized enterprises. Approximately one-fifth goes to the smallest, micro-companies employing less than ten people, and more than two-thirds to companies employing less than 500 people. Funding to large companies is further channelled to universities, polytechnics and research institutions as paid research services, and to SMEs as subcontracting.
Various forms of cooperation and collaboration with Universities exist, each have their own set of Intellectual property issues and challenges which to be addressed and overcome. Also, the way in which Universities view Intellectual property matters varies greatly by jurisdiction and by individual University and even sometimes by University Dept. In certain jurisdictions, there are also national laws governing intellectual property matters to be taken into account. So while university collaboration is a way of accessing new and innovative technology, there are some complications which need to be managed.

The University of Victoria in Canada
To give the university’s perspective, it is perhaps best to highlight some concrete examples.
The University of Victoria in Canada came into being in 1963, but it had a prior tradition as Victoria College with sixty years of distinguished teaching at the University level. Located in Canada’s far west, it is one of the nation’s leading comprehensive universities, with access to world-class professors, and possibly the most attractive and vibrant location that any university can offer. The university offers various opportunities for companies, whether they are searching for research expertise, looking to access some of the finest library resources in the country, wanting to hire one of the many talented students or interested in tapping the intellectual and creative resources of one of Canada’s leading comprehensive research universities.
The University of Victoria has one of the largest co-op education programs in Canada. The co-op program is available to both undergraduate and graduate students. Students are placed in 8, 12 or 16 month work terms. Companies that contact the co-op program are connected with their own dedicated co-op coordinator who helps with all the steps in the hiring process. In addition to working with companies to place students, the co-op office follows up with employers during and after the work term, to make sure things are going well or went well.
The University often partners with companies on research projects. In some cases companies approach the University looking for help or because they have read about the university’s research or technology in a publication. The university’s industry liaison office seeks to find a company interested in an active area of our University’s research. Faculty members have industry contacts through previous work experience, consulting jobs or from people they have met at conferences. A good majority of the connections with industry are made as a result of faculty members and their professional networks.
When the university has an industry partnership, the university creates a “University / Industry Contract” that governs the relationship. This is a fairly standard form with variations depending upon the amount of funding and what each party is bringing to the table. It also varies depending upon whether another external third party (e.g. some sort of funding agency, Canadian or otherwise) is matching or contributing funds. They often have their own criteria, including intellectual property terms and conditions, that must be met.
Natural Sciences and Engineering Research Council of Canada (NSERC) Collaborative Research and Development (CRD) are well defined projects undertaken by university researchers and a private sector partner. CRD projects can be at any point in the research and development spectrum that is consistent with the university’s research, training, and technology transfer mandate. The program matches the contribution of the University and the private sector company. NSERC Idea to Innovation (I2I) is a program for improvement of a prototype that is of interest to industry. There are different phases. In Phase I, the university only need letters of support from Canadian Industry. In Phase II they need a cash contribution from industry which is again matched by NSERC. The university completes a large number of “Internships” each year where the company puts up $7500 CDN and a federal program puts up $7500 CDN to allow graduate students and post doctoral fellows to spend time in both the academic and industrial environments. From the company’s point of view, they are usually seeking a graduate with a specific skill set to solve a particular problem. The University of Victoria also actively participates in four Networks of Centres of Excellence programs in Canada. These programs fund partnerships between universities, industry, government and not-for-profit organizations. They help turn Canadian research and entrepreneurial talent into economic and social benefits for all Canadians.
The university industry liaison office actively promotes the University of Victoria and its research and technology with industry and works on brokering relationship between faculty members and companies. This is done by the direct marketing of technologies and research programs and by networking at industry events. Aside from handing the Industrial Agreements, they also handle Non-Disclosure Agreements, Confidentiality Agreements, Material Transfer, Licenses, Research Licenses, and Letters of Intent.
As far as the intellectual property terms and conditions are concerned in industry partnerships, it depends what each party is bringing to the table and it also depends upon obligations to any third party funding agency that is contributing to the project. It is fair to say each project is looked at on a case by case basis. Having said that, the university does try to encourage industrial interaction and usually finds a way to ensure the participating company has some sort of access to the “new” technology developed under the specific research program on which they are involved. Therefore, at a minimum, it is common for the university to give an industrial partner a first opportunity to discuss licensing a technology if they have had involvement with the project. If the industrial partner has paid its fair share of the project cost, the university might in some cases provide a non-exclusive license to the technology for a specific field of use. The license could be fully paid up, or it could be at a reduced royalty rate. The university may give the company the first right of refusal to negotiate an exclusive license within a given time period. Going further, if the research project has been fully supported, i.e. all cost plus overheads funded by the industrial partner, and there has been no assistance from any government agencies, then it would be very likely that the university would allow the company to own the Intellectual Property, or get an exclusive license to use the intellectual property.
At the University of Victoria, they have a “Creator Owned” intellectual property policy, with obligations back to the university. So the statements about usual practices above ultimately depend upon the faculty member’s willingness to let go of the intellectual property and whether or not they have other plans for it. In most cases, researchers are primarily just interested in doing more research and are not stuck on intellectual property ownership. The intellectual property policy of the university is published, and readily available to potential industrial partners.
There are sometimes challenges working out the access to intellectual property. Companies usually want as much rights as they can get for as little money as they can pay. On the other hand, universities are always accused of over-valuing the intellectual property. It can be a challenge, certainly in the university’s situation, to explain to the company that just handing over the intellectual property and all associated rights is not something the university can always just do. For example, first and foremost, students and faculty must always retain the right to publish. If the company will not give the student or faculty member some sort of right to publish, in most cases this is a deal breaker and such a collaboration will not happen. Fortunately, all of this kind of things are negotiated prior to the start of any project. Other challenges might include such issues as valuing the various contributions to a project, joint-ownership of intellectual property, deciding who is taking the lead on commercialisation, defining and agreeing on project time-lines, deciding on the types of access (e.g. assignment of technology versus license of the technology), clarifying the field of use, agreeing who pays for the cost of patenting any inventions, and of course granting access to any background intellectual property.
Based on the University of Victoria’s experiences, successful collaboration between a university and a company in industry usually depends on …

•   Starting the collaboration discussions early,
•   Defining the roles and responsibilities well,
•   The company already having some experiences of working with a university,
•   The company being fully aware of what a university can and cannot do,
•   The university industry liaison office understanding the needs and pressures of the company in industry,
•   Both parties showing flexibility,
•   Both parties having an appreciation of the work undertaken by the other,
•   Both parties have a willingness to find a win-win situation.

The University of Limerick in Ireland
The University of Limerick was established in 1972 as the National Institute for Higher Education, Limerick and classified as the University of Limerick in 1989. The University of Limerick is an independent, internationally focused university with over 10,990 students and 1,313 staff. It is a young, energetic and enterprising university with a proud record of innovation in education and excellence in research and scholarship. Its mission is to promote and advance learning and knowledge through teaching, research and scholarship in an environment which encourages innovation and upholds the principles of free enquiry and expression. Particular attention is paid to the generation of knowledge which is relevant to the needs of Ireland’s continuing socio-economic development. The university offers a range of programmes up to doctorate and post-doctorate levels in the disciplines of Arts, Humanities and Social Sciences, Business, Education and Health Sciences, Science and Engineering. The University is situated on a superb riverside campus of over 133 hectares with the River Shannon as a unifying focal point. Adjacent to the University is the National Technology Park (NTP), Ireland’s first science/technology park, which is home to over 80 organisations employing over four thousand people. There is a close interaction between the university and the National Technology Park. The National Technology Park has been designed to meet the needs of high-technology and knowledge-based businesses by providing low density development in a high quality parkland environment. The Park provides a range of flexible business infrastructure and accommodation options for eligible activities.
The University of Limerick has a variety of approaches for interacting with companies. The university has a cooperative education program, which has been running for over thirty years. It has relations with both local Irish as well as international businesses which have been built up over that time period and many of those companies who are first introduced to the university through the ‘CoOp’ experience go on to employ graduates from the university. There are also a number of scholarship opportunities at the university sponsored by industry. A number of industry professionals also act as keynote speakers in seminars and forums throughout the academic year, the extent of which varies from department to department. As mentioned already, many of the companies who come to the university to take part in the cooperative education program also recruit graduate students. They actively take part in graduate career fairs and they kindly give career talks. Graduate school, research collaboration and support, technology transfer activities as well as spin off company support are all aided and supported by the university’s Technology Transfer Office.
The intellectual property position with industry at the University of Limerick in Ireland has very much followed a national position developed in two Irish national codes of practice for the management of intellectual property in publicly funded research and publicly funded research involving industry. Rumour has it that the EU based the recommendations in their policy document on the Irish codes. The second of the codes of practice sets out ‘fair rules’ rules for intellectual property management between academic and industry partners. The government funding agencies saw the need to make Ireland an intellectual property user friendly place for research collaboration and to ensure that intellectual property was prudently managed for the benefit of all parties involved. The intellectual property codes were seen as setting a framework within which intellectual property negotiations could take place and expectations of all parties could be more easily managed. The codes are voluntary but were developed at a national level with broad input and participation. In Ireland the universities have adopted the national codes of practice. The intellectual property rules in the codes are fairly straight forward and follow the “inventor / creator owns” approach. Industry collaborators get access rights to all results, at fair market rate, and this includes access to background intellectual property where needed to exploit foreground intellectual property. Essentially where industry and academia interact we need to ensure that the company is not perceived as receiving any indirect aid as a result of the universities contribution to the collaboration. The national codes are compliant with state aid rules and the net affect of all this is that there is a fairly standard approach to dealing with intellectual property in collaboration. In turn this lends itself to standardisation of agreements with reduced costs and time negotiating agreements. As a result of the research investment by the Irish Government, the University of Limerick is now creating more intellectual property than in the past. Often this intellectual property needs further development for specific target markets and the university tries to work with industry in bringing the intellectual property forward to commercial development. In addition the university is creating new companies as a result of long term research collaborations. One example involves Aughinish Alumina and the university is currently working with the company to spin out a new research and development focused company based on intellectual property created jointly by the two parties. The company sees this as a positive way of ensuring that the knowledge generated in the collaboration remains available to them in the future.
The university does face some interesting challenges at present dealing with joint intellectual property and EU state aid rules but the universities tries to work this out through consultation with its industrial partners. The challenge is that the EU rules are very much a policy instrument and open to interpretation. Some elements of the larger ICT multi-national industry (e.g. some large software companies) are pursuing NERF terms on jointly developed intellectual property, and in some cases, all of the intellectual property, and there is a feeling by some that this is not a fair arrangement. A further complication is that different industries take very different approaches to intellectual property, e.g. ICT versus Pharma and BioTech, and the university believes that they will see different intellectual property models emerge to deal with the different characteristics of these industries. In summary, the University of Limerick has a very strong interaction with industry and their intellectual property position has been developing a lot of late. There is also a national dimension to how they operate and a requirement to operate within the boundaries of EU state aid rules.
The university’s motivation for working with industry may be seen as a loop which links together research publications, investment and reputation as well as employment opportunities for the university students after graduation. Universities have a very strong desire to publish their research activities and strive hard to get papers published in various respected publications, at established conferences and exhibitions, in reputable periodicals and even in technology chat rooms. Publications in turn help attract investment which in turn attracts more money attracting other investors and sponsors to the university. This helps improve the university’s reputation, and their standing in the wider academic community. It also helps with the recognition of individuals at the university, brings a new status to a department, allows the university to get to a level of recognition that they become recognised as a place of excellence, perhaps getting to the point that they would be granted consideration for access to national or international facilities and get their research work recognised nationally or internationally.
Before I move to discuss the company’s perspective to university-industry collaboration, I wish to highlight one key issues with respect to universities in the USA. There is a seminal piece of legislation called the “Bayh-Dole Act” which governs the application of university-generated, US federally funded inventions to commercial use. Many US university research labs find it extremely difficult to ensure that there is no federally funded contribution to their labs. Hence, the restrictions arising from the Bayh-Dole Act are regularly applied in US university research cooperation agreement negotiations. Among other restrictions, the Bayh-Dole act prohibits the assignment of ownership interests in university inventions that are federally funded to a third party. In general, therefore, companies can not gain full ownership of intellectual property that is jointly generated with US universities.

A company’s perspective
One typical approach taken is for the company to pay the university to conduct some research with the research results as well as any associated intellectual property then going back to the company. The company pays for all of the filing, prosecution and annuity costs associated with the patenting process. It seems to vary greatly between companies as to whether or not they pay awards or remunerations to the inventors at the university. Some do pay a limited award for patentable inventions with a larger award paid if the company obtains extraordinary commercial benefits from that intellectual property later on. The university can publish the research provided that it does not adversely impact the patenting process. From the company’s perspective, the company bears the risks and thus gets the benefits of any exploitation of the patented technology. Arrangements should be win-win so that both University and the company benefit from the joint development and the collaboration. If the cost of the research at the university is too expensive, then the company will conduct that research either internally or elsewhere. If all of the benefits arising from the research stay with the university, then the company will be unlikely to take on any of all of the risks. The company contributes towards the cost of the research, the cost of patenting any related inventions and pays awards to the inventors. The benefits to the company are that it can tap into the knowledge base of the University plus it gets the research results and the associated intellectual property. The university contributes by conducting the research, helping the company with the patenting and postponing any publications until the patents applications are filed. The university benefits by being able to conduct research funded by an outside company, it can publish papers telling about the research, it avoid costs associated with the patenting process, plus its inventors get financial awards.
Generally this general approach works with universities all around the world but it does vary from one university to another within even one country and definitely between countries. It can even vary between departments or faculties within the same University. There is no one solution that fits all. Care needs to be taken in certain countries such as Germany to comply with inventor award legislation. Companies need to realise that there are three parties involved when collaborating in this mode, namely the researcher at the University, the University itself and the company. In the USA, most universities insist of owning any intellectual property which arises from the joint development even if fully funded by the company. Universities in the USA typically want to own the intellectual property but grant a license to the company involved. There are also tax issues to be considered when looking from country to country. Experiences also seem to differ greatly depending on the field of technology involved in the joint research, for example medical and pharma experiences gathered are very different from those in telecommunications and consumer electronics.
The high impact research is research aimed at addressing the next technology challenges and opportunities in the areas of information explosion, sustainability, content transformation, intelligent infrastructure and cloud services.
Most of the successful companies in the area of collaborative innovation take a pragmatic approach to intellectual property matters when collaborating with others and treats each case on its merits according to needs. They typically aim to get world wide unencumbered rights which are not restricted to a particular business, application or geography as the company’s business may evolve quickly, and such restrictions could be expensive and complex to track over time and expose the company to risk. They aim to get non-exclusive rights for exploitation. It should be understood however that intellectual property is only one of many elements to bringing a successful product or service to market and one needs to invest much more than the cost of the original intellectual property rights in product development, marketing, product support, channel development, and branding.
“It is now”
Companies who wish to succeed and plan to engage with external forms of innovation to help them to succeed should start by talking research and development with universities and other third level education institutions. However, universities also need to reach out to industry. Academic staff at most universities are paid to teach and to conduct research. They are not paid to commercialise that research or work with companies in industry. What money is given to universities is primarily for teaching and research, not for helping industry. We do need to break out of tradition to a degree. Academics are hungry to be successful, but the problem is their day job is teaching, their second job is writing research papers and their final job is to help industry and turn that research into something concrete. We also need to avoid dangerously focused research. Sometimes, you can be too far ahead of the curve or there is far too much blue skies research. Academics need to be talking to industry and finding out where the pain is. We need to allocate finances differently, so academics are focused more on research and interacting more with industry. While most universities and institutes of technology have commercialisation departments, the challenge is to ensure there is a mechanism to allow companies in industry to interact with university resources, while also ensuring academics who work with SMEs and large companies get some reward for their efforts. The solution is to develop vehicles or platforms that allow both industry and the third-level community to reach each other and generate real, tangible results. The focus should not just be on getting industry in touch with the top PhD researchers, but also undergraduates and academics who can add potential value to a business. However the wider issues facing the economy and students and academics’ own ambitions for the future are leading to a step change. One area where we are seeing this change is with universities working more and more with local SMEs who are struggling in the current economy and need to modernise processes or create a new product or service that can be developed and marketed successfully. There is a story told how, when the former UK Prime Minister John Major took office, he visited US universities like Stanford and research bodies such as Massachusetts Institute of Technology (MIT). On his return, Major summoned all the chancellors of the UK’s prestigious universities and asked them why they weren’t working more closely with private enterprises. “It isn’t our job,” they replied. “It is now,” he retorted. However from my experiences, universities have a passion for innovation and are more than willing to collaborate with companies in industry, provided a ‘win-win’ situation can be achieved.

References

•   The University of Southampton – http://www.soton.ac.uk
•   Helsinki University of Technology, TKK – http://www.tkk.fi/en/index/
•   Tekes, the Finnish Funding Agency for Technology and Innovation – http://www.tekes.fi/en/community/Home/351/Home/473/
•   The University of Victoria – http://www.uvic.ca/
•   Natural Sciences and Engineering Research Council of Canada (NSERC) – http://www.nserc-crsng.gc.ca/index_eng.asp
•   Collaborative Research and Development (CRD) – http://www.nserc-crsng.gc.ca/Partners-Partenaires/programs-programmes/CRDProfile-RDCProfile_eng.asp
•   Networks of Centres of Excellence programs – http://www.nce-rce.gc.ca/index_eng.asp
•   The University of Limerick – http://www.ul.ie/
•   “National codes of practice for the management of intellectual property in publicly funded research”, Irish Council for Science, Technology and Innovation (ICSTI), January 2004
•   Aughinish Alumina – http://www.rusal.ru/en/aughinish_factory.aspx
•   NERF – Non exclusive royalty free license
•   The Bayh-Dole Act or University and Small Business Patent Procedure Act is United States legislation dealing with intellectual property arising from federal government-funded research. Adopted in 1980, Bayh-Dole is codified in 35 U.S.C. § 200-212, and implemented by 37 C.F.R. 401

[This article originally appeared as an INTIPSA TIP.]