TECHNOLOGY TRANSFER FROM THE UNIVERSITY ENVIRONMENT
Intellectual property is intangible personal property and includes patents, copyrights, trademarks, mask works, and trade secrets.
1. Patents
a. What does a patent protect?
A patent protects the application of an idea (an invention), the physical embodiment of an idea.
b. What is a patent?
A U.S. patent is an official document of the U.S. government that gives the owner of the patent the right to exclude others from making, using, or selling the invention claimed in the patent in the U.S.
c. Requirements for patentability
1) Patentable subject matter
a) Processes (including uses of computer software)
b) Machines
c) Articles of manufacture
d) Compositions of matter
e) Methods (e.g. new use of a known composition of matter)
2) With regard to prior art:
a) Non-obvious
b) Novel
c) Utility
d) Types of patents
1) Utility
2) Design (ornamental)
3) Man-made microorganisms, cells, transgenic animals, etc.
4) Plants
e) Limitations of patents
1) Term: 20 years from date of filing of application if application was filed on or after June 8, 1995 OR for applications filed before June 8, 1995, 17 years from the date of issuance, or 20 years from the date of filing the application, whichever is longer.
2) A patent does not give the owner the legal right to make, use, or sell the patented invention. The owner can be prevented from exploiting his invention whena) The patented invention infringes someone else's patent.
b) Governmental regulation may delay or deny exploitation of the invention.
f) Joint inventions
2. Trade Secrets and Know-How
a. What do trade secrets and know-how protect? Trade secrets and know-how protect ideas.
b. What is know-how?
Know-how refers to a broader scope of property rights that includes trade secrets, as well as matters that may not be protectable as trade secrets, such as general manufacturing data, etc.
c. What is a trade secret?
1) "A trade secret may consist of any formula, pattern, device, or complication of information which is used in one's business, and which gives one an opportunity to obtain an advantage over competitors who do not know it or use it. The subject matter of a trade secret must be secret...so that, except by the use of improper means, there would be difficulty in acquiring the information. An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one's trade secret are: (1) the extent to which the information is known outside of his business: (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information to him and to his competitors; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others". Restatement of Torts, Section 757, Comment (b) (1939).
2) Trade secret law is based on the common law (i.e., court decisions). Although each state can establish its own trade secret law, most states have adopted the Restatement's definition and have been surprisingly uniform in their interpretation of the Restatement definition.
3) Basic elements of a trade secret:
a) It gives the owner marketing or competitive advantage over competitors.
Examples:
Customer lists
Method of making a product cheaply
An invention, whether patentable or unpatentable
Elements of computer software that comprise computer software's unique logic and coherence
b) Confidentiality of the alleged trade secret
3. Copyright
a. What does copyright protect?
1) Copyright protects the expression of an idea, as that expression is fixed.
2) Its origin is in the constitutional provision empowering Congress to protect writings. "Writings" has been interpreted broadly.
b. Requirements for copyright protection to arise.
1) Within the scope of copyrightable subject matter ("writings"). 17 U.S.C., SECTION 102, SUBJECT MATTER OF COPYRIGHT: IN GENERAL
a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:
(i) Literary works;
(ii) Musical works, including any accompanying words;
(iii) Dramatic works, including any accompanying music;
(iv) Pantomimes and choreographic works;
(v) Pictorial, graphic, and sculptural works;
(vi) Motion pictures and other audiovisual works;
(vii) Sound recordings; and
(viii) Architectural works.b) In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.
2) Originality (not novelty, but original to the author)
3) Fixed or tangible.
c. What are the exclusive rights of copyright? (Divisible rights)
1) To reproduce
2) To prepare derivative works
3) To distribute
4) To perform
5) To display
6) To transmit digital audio recordingsd. Moral rights
e. Duration of protection (Life of author plus 70 years)
f. To register or not to register? (Attorney's fees and statutory damages)
g. Ownership, authorship, and licensing
1) Author
2) Work-for-hire (employee within scope of employment/contractual work-for-hire)
3) Assignment ("transfer")
4) Licensing (exclusive vs. non-exclusive)
4. Data Rights
a. Statistical data
b. Reports
1. The Intellectual Property Policy constitutes regulations of a state agency.
2. Other limitations on contractual agreements of a state agency:
a. State immunity and issues of indemnification
b. Use of public funds for private purposes
c. Duty to make development and inventions available to public and to commercially exploit them.
3. Procedure for adoption of a contract
by the institution: contract is effective only when adopted by Board of Regents
on the docket or agenda, as applicable.
1. Intellectual Property
a. Board of Regents must own all rights to patentable discoveries, unpatentable technology, technical know-how, and other intellectual property resulting from research project.
b. The component institution may offer the research sponsor an option to negotiate a royalty-bearing license agreement for intellectual property resulting from a study project.
c. If an option to license is exercised, sponsor must pay for the patent expenses that the Board has already incurred as well as future expenses for obtaining and maintaining patent protection.
2. Publication
The publication of scholarly work concerning the research project may be restricted only to the extent necessary to protect the sponsor's confidential information and the potential value of any discovery resulting from the research.
3. Indemnification
The agreement must have an appropriate indemnity from the sponsor for the damage or liability that may result when a research project involves the use of materials, processes, or procedures furnished by sponsor or required by sponsor to be used, so long as such damage or liability is not due to the negligence of the persons performing the research.
1. "True" sponsored research agreements
2. Testing agreements
3 Compound agreements
4 Participation agreements
5. Clinical studies and pre-clinical studies (exclusive of "compassionate study")
6 Material transfer agreements
7. Subcontract under government grants or contracts
8. Laboratory study agreements
1. Intellectual property
a. Issues:
1) Assignment of rights vs. licensing
2) Royalty-free (paid up license) vs. royalty-bearing:
a) sub-issue; rights to professor's publications (reports vs. academic papers)
b) sub-issue: internal use only vs. commercial exploitation
3) The intellectual property subject to an option must not be greater in scope than the intellectual property developed under study.
a) "Pre-existing" technology
b) "Related" technology
c) Restrictions on faculty-investigator's basic research efforts not funded by a sponsor4) Options versus right of first refusal, and time limitations upon exercise and negotiation
5) Joint inventions
6) Other parties who benefit from sponsor's rights: is sublicensing brought in via the back door?
a) Affiliates (definition)
b) Licenses of sponsor
b. How do these rights arise in a research agreement?
1) Professional papers may arise from the research.
2) Computer software may be developed to manage data or interpret data from a study.
3) Look at where design of a study originates: investigator, sponsor, or as the result of the interplay between them (joint inventions).
4) Flexibility of protocol or description of study:
a) There may be a contractual provision indicating that the study design may not be changed without the consent of the investigator and sponsor.
b) The study design itself may be "loose".
5) Definition of "Arise": The invention may be conceived or developed as the result of participation in the study (even though it may be reduced to practice later). Whether or not research is "routine" may be irrelevant to when intellectual property "arises".
6) Consulting arrangement: possible conflicting rights may be set up; investigator can't waive or assign U.T. rights.
2. Confidentiality
Issues:
a. Term of protecting sponsor's confidential information.
b. The information for which a sponsor seeks protection extends beyond information that is confidential information.
c. Protection of component institution's confidential information, including inventions, know-how, and trade secrets required to be disclosed by the agreement.
d. Restriction on use and disclosure by component institution of its own confidential information.
3. Publication
Issues: Retention by institution of editorial discretion and control over content, versus review and comment by sponsor.
a. Disclosure of sponsor's confidential information.
b. Publication would be "commercially prejudicial" to sponsor.
c. Sponsor intends to "coordinate" a group publication.
d. The impact of tax concerns (U.B.I.T)
4. Indemnity
Issues:
a. U.T. requires that sponsor provide indemnification when the sponsor supplies material or prescribes use of materials or procedures.
b. Complete or full indemnity from sponsor versus indemnity only for claims arising from use of material (e.g. drug) or use of the results of the study (downstream liability).
c. Exclusion from sponsor indemnity for U.T. negligence.
d. The statutory duty of the Texas Attorney General to defend U.T. System.
e. U.T. Provision of a hold harmless for its own negligence, to the extent authorized under the constitution and the laws of the State of Texas: negligence does not include willful malfeasance.
f. Indemnification should extend to U.T. System, the component Institution, and their regents, officers, agents, and employees.
5. Governing Law and Forum for Suit
6. Signatures and Parties to the Agreement
a. Component Institution
b. Sponsor
c. In the context of clinical study agreements, certain obligations, by virtue of FDA rules, are personal to the investigator. Therefore, in a clinical study, the investigator should sign as "Read and Understood" (i.e., "I have read this agreement and understand my obligations hereunder.")
1. Payment for funds reasonably committed or extended, upon termination.
2. Moving payments "up front", advances to cover out-of-pocket expenses.
3. The impact of U.B.I.T. (Unrelated Business Income Tax).
4. Institutional overhead and salary for investigator, as well as graduate students and staff participating in the study.
5. Preparing the budget.
1. Indemnification
a. Tort: U.T. will, to the extent authorized under the constitution and laws of Texas, hold harmless a licensee for U.T.'s own negligence.
b. Intellectual Property: Patent indemnification and/or hold harmless may not be granted because University does not perform a patent infringement search, and payment of cost to perform search might unconstitutionally expend public monies for private purpose.
c. Licensee or Sponsor must indemnify and hold harmless U.T. for all claims arising out of the licensee's or sponsor's practice of the license granted.
2. Publication
Publication rights should not be hampered.
3. Scope of Rights Granted
a. No entity shall be granted the exclusive right to license all of the intellectual property created at a component institution.
b. Agreements should grant rights only on a specific project basis.
4. Failure to Commercialize
If an entity is granted exclusive rights, rights must revert to U.T. Board of Regents if entity fails to diligently develop and commercialize within a specified period of time, and rights to any additional technology developed by entity concerning rights granted to entity must also revert to Board.
5. Patent Expense
Exclusive patent licensee must reimburse all patent expenses incurred by component or Board, or pay for costs of obtaining and maintaining patent protection, as well as litigation expenses to protect and preserve patent rights from infringement.
6. Entity must covenant to comply with all laws.
7. Confidentiality.
The licensee should covenant not to disclose University's confidential information.
8. Sublicensing financial split.
50% of any royalty, equity or other consideration which the licensee receives or to which it is entitled, must be transferred to U.T.
1. Patent license agreements
a. Non-equity
b. Equity
2. Technology license agreements (including software)
a. Non-equity
b. Equity
3. Mixture of patent and technology licensing.
1. Governing law and forum for lawsuit clauses should be included.
2. Signatures
a. All licenses are approved as docket items
1) Board of Regents signs (by Chief Administrative Officer
or designee)
2) OGC signs as "Approved as to Content"
3) Contracting party signs
3. Financial Impact
a. Royalty (payable when due and owing to
entity vs. payable on receipt)
b. Advances
c. Equity position
and other forms of consideration
1. Grant of rights - the license
a. Definition of rights
b. Territory
c. Term
d. Field of use
e. Sublicenses
f. Reservation of rights - publishing and academic rights
g. Termination of license
h. Access (or denial of access) to software source code
2. Royalties
a. Advances
b. Percentage
c. Base of calculation
d. Payments
e. Reports and auditing
f. Payment of taxes
3. Equity compensation
4. Warranties
a. Ownership of intellectual property rights
b. Authorized to
execute agreement
c. Compliance with
applicable laws and regulations
5. Indemnification and protection of patent
a. Indemnity
b. Suits against
third party infringers
6. Marketing efforts and commercialization
7. Term and termination of agreement
a. Term of agreement
b. Compensation
c. Default of material
obligation (as well as cure provisions)
d. Bankruptcy
e. Termination
of license
f. Surviving obligations
8. Assignability
9. Intellectual property notices required to be placed on item manufactured, etc.
a. Patent
b. Trade secret
c. Copyright
d. Trademark
10. Compliance with export/export regulations governing technical data
11. Quality control (and product liability)
12. General
a. Notices to parties
b. Amendment of
agreement and incorporation
c. Waiver
d. Governing laws
e. Unenforceability
of provisions(s)