Patent of the month – Intellectual property for R&D
Rayyan Mughal, of Marks & Clerk Law LLP, looks at what you need to consider when working in international R&D teams, collaborations and university spin-out companies.
Intellectual property (IP) generation and ownership is central to all innovation – whether it be while working in international R&D teams, collaborations and university spin-out companies, or taking part in innovation-based competitions. Currently, much of the world is locked down but many such projects are still continuing, facilitated by remote and virtual communication.
The whole point of these activities is to generate innovative and useful output but, unless there is clarity regarding who owns the IP in that output, and how it will be protected and exploited, any benefit may be squandered.
In the UK, as in most other countries, employers automatically own IP rights created by their employees during the course of employment. However, should an employee create IP (i) outside their capacity as an employee, and (ii) without their employer specifically asking them to do so, then the employee will likely retain IP ownership.
Conversely, IP created by contractors will be owned by the contractor in question, unless the contract states otherwise. The courts may determine that the consultant has given an implied licence for them instead. However, from the commissioning party’s point of view, it is immensely preferable that the IP in question be assigned to it so it will want this specified in the contract. Many commissioning parties forget to do this, assuming wrongly that they automatically own the IP generated, just as if their employees had created it.
Where funding has been provided for a project, the parties involved should be sure to look at the terms of the grant to see if any strings are attached.
For example, Innovate UK will not necessarily be interested itself in commercialising any IP generated from a research project, as its primary purpose is to encourage innovation in the UK. A more commercially orientated funder, on the other hand, will likely want to maximise their return on helping to fund a project – this could manifest in them wanting to have some ownership of the IP generated from the project.
When entering a competition, for example, to win a prize for the best student start-up idea, participants often give scant attention to the competition terms, but it is certainly worth understanding what these terms state before entering any competition. Not doing so could risk the protection afforded to IP that competitors already own, as well as those that are developed during the competition. For example, are there obligations on other participants to keep your IP confidential? Overlooking these issues can risk invalidating and/or damaging what IP you own, or IP you could own in the future.
IP might also be disclosed or generated at a gathering, such as a hackathon or elevator pitch exercise. In such circumstances, it is vital that all attendees keep everything aired confidential. The understandable temptation to broadcast anything interesting on social media must be nipped in the bud.
Co-ownership may seem the logical and most politically palatable way to go, as when a party is collaborating with an external innovator, it is often assumed that the partnership will be equal. However, the parties involved can be from various disciplines with varying stature and funding. Identifying and assigning ownership of the resulting IP can therefore become complicated, as monetary and intellectual contributions need to be recognised. Consequently, joint ownership may not be the fairest solution. Moreover, it is rarely the neatest.
When jointly developed IP rights arise, both parties share the cost and risk of the research and development work involved. This means that joint decisions are required from all co-owning parties for practically any, or all, disposal of the IP rights. What happens if one party won’t cooperate in this, play its role or pay its share of the costs, whether it be in connection with patent costs or countering infringement? This could mean that a contract between the parties is required for each party to be able to enforce its rights and to impose rules regarding licensing, exploitation and revenue share.
Consequently, instead of opting for joint ownership, collaborators are better off going for other options, such as one party owning the results and paying the others a royalty, or each party owning the IP in a particular field and the parties cross-licensing to each other if necessary.
So, as we can see, the implications of not getting things right can be serious, but the danger can be avoided if the issues are considered at the outset and laid out in a written agreement. This is time the parties may not wish to spend on legal formalities when they just want to get on with the work, but it is much easier than trying to sort the issue out afterwards, when it may be too late.