1 Intellectual Property Workshop Linda Kawano – UCTech Denise Butler – URA Mary Ellen Sheridan...

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Intellectual Property Workshop

Linda Kawano – UCTech

Denise Butler – URA

Mary Ellen Sheridan – URAOctober 20, 2003

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The University of ChicagoGovernance of IP

Statute 18 http://trustees.uchicago.edu/articles/statutes.pdf New Information Technologies and Intellectual

Property at the University www.uchicago.edu/docs/policies/intell_prop.html Personnel Policy Guidelines, Section: U1004 http://uhrm.uchicago.edu/policy/p1004.html

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What is Intellectual Property?

Tangible Property – a set of rights defined by law that relate to a physical object

Intangible Property – a set of rights defined by law that are not related to a physical object

Intellectual Property “IP” –

Intangible property resulting from the process of intellectual creativity. IP includes the rights provided by the laws of patents, copyrights, trademarks, trade secrets and rights of publicity.

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STATUTE 18. Patent Policy.

18.1. The basic policies of The University of Chicago include complete freedom of research and the unrestricted dissemination of information.

The normal method of dissemination of the results of academic work is through publication in scholarly or other public media.

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STATUTE 18. Patent Policy.(Continued)

18.1 (Cont.) Where research or other activities carried out at the University, or with substantial aid of its facilities or funds administered by it result in inventions, discoveries, or device-like software, such products shall be disclosed to the University, shall be the property of the University and shall be assigned to the University, or an organization designated by the University.

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New Information Technologies and Intellectual Property

Neither new information technologies nor rules and procedures designed to accommodate them should interfere in any way with the ability of faculty members to pursue their research and freely present their ideas to their colleagues, their students, and the world at large.

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New Information Technologies and Intellectual Property (Continued)

Faculty currently enjoy royalties on their texts, whether disseminated in print or electronically. This should not change. As a general matter, however, the University should own the intellectual property created under its auspices or with its resources.

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The University should not assert this interest in the case of a faculty member's noncommercial use of new information technologies or in the case of the commercial use of such technologies until the revenues generated are substantial.

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The University has an interest in how its name is used. Individual faculty cannot alone decide whether a program should be sponsored by the University. Hence, they must be vigilant when using new information technology as elsewhere to ensure that they do not engage in activities that give the appearance of being sponsored by the University.

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Because information technology can change rapidly, the most important obligation of faculty who exploit such technologies is early disclosure of what they are doing to their chairs or deans.

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Personnel Policy Guidelines

Section: U1004 Any invention, discovery, or device-like software which

results from activities carried out at the University or with substantial aid of its facilities or funds shall be disclosed to the University, shall be the property of the University and shall be assigned to the University or a University-designated organization.

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Guidelines for Grant & Contract Management

212 -- Policy on Patents and Software (October 2003)

213 -- Committee on Patents and Software (October 1992)

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University Reporting Lines

U C T e ch

V ice P re s ide n t fo r R e se a rch

U R A

D e p u ty P rovo s t fo r R ese a rch

P ro vo st

P re sid e n t

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Material Transfer Agreement:Intellectual Property Issues

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Desirable Definitions of Terms in Material Transfer Agreements

Material – the physical substance being transferred, but in a proposed contract the term may be definitionally enlarged to include other items, including confidential information about the material, and the forms of the material which may arise from replication and maintenance in the recipient laboratory Occasionally, the proposed definition of “Material” in agreement drafts may even include new intellectual property arising through the use of the transfer material.

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Desirable Definitions Cont.

Progeny – usually means the descendant copies of the material that are produced in the recipient laboratory as a result of replication (e.g. cell division, DNA copying). The implication is that progeny material is an essentially unchanged copy of the originally provided material, and thus is provider-owned.

Unmodified Derivatives – usually means products of the original transferred material (e.g. monoclonal antibodies secretd by a hybridoma cell line) and these are also considered to be provider-owned. When the term “derivatives” is used in a contract, it should be clarified whether or not this term includes more than unmodified derivatives.

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Desirable Definitions Cont.

Modifications – usually means modified derivatives (cf. Unmodified Derivatives) of the original material (e.g. the original provider-owned DNA molecule or a fragment thereof newly embedded in a recipient-owned expression vector and using a recipient-owned promoter). Modifications with new utility that include material from both the provider and the recipient may be inventions with ownership vesiing in both the provider and the recipient, but each individual case must be well understood for such conclusions to be reached.

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How does loss of control of intellectual property limit future research paths?

If preemptive MTAs cloud ownership rights, investigators may be restricted in their ability to interact with a future sponsor.

Intellectual property terms in MTAs may prevent the institution from conferring rights on a future developer, just as a lien on real property may prevent subsequent transfer of title. No sponsor wants to pay for research benefits that it cannot have.

In addition, the terms of an MTA may make it difficult to collaborate with other scientists.

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Why is there concern about ownership rights?

While it is obvious that the physical materials are the property of the provider, providers may also assert ownership not only to the physical material being provided, but also to new materials created by the recipient or inventions made through the use of the provided materials.

While an agreement may not claim actual ownership, it may award the provider an automatic license to resulting intellectual property for little or no compensation.

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Why is there concern about ownership rights? Cont.

When a company makes what it regards as available materials for use in university research, it generally expects some access to resulting intellectual property.

Since the provider of the material is (usually) not funding the research, the institution needs to ensure that its intellectual property obligations to those sponsors who are funding the work do not conflict with the proposed obligations to the provider of the material.

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Because so much academic research is federally funded, it may be important to clearly acknowledge in the MTA the rights of the federal government regarding inventions that may be made with the material.

Terms which give the provider licensing rights to resulting intellectual property must be carefully crafter to ensure that (a) the rights of research sponsors are protected, (b) the licensee company will diligently develop the intellectual property for public use, and © the university receives fair compensation for its contribution.

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The bottom line is that getting the material may open new avenues of research, but careless acceptance of terms that surrender intellectual property rights may close them down.

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Is there an option for an institution to forego ownership rights?

Investigators may be willing to forego inventor’s rights because they believe it would expedite MTA processing, and intellectual property rights and commercialization are not that important to them personally.

Investigators who have federal funding should be aware that although the federal government does not demand active participation in commercialization by anyone, it does require that its grantees avoid impeding commercialization.

The institution cannot “give away” rights which it has previously agreed either to claim itself or waive to the federal government.

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Sponsored Research Agreement Intellectual Property

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Intellectual Property

University is to grant commercial sponsors of research an option to negotiate to obtain a license for intellectual property that may be created in the research they sponsor

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Patents and Licensing

The University will not agree to assign inventions to commercial sponsors, nor will it agree (usually) to specific financial terms for a license before an invention is made.

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Policy on Patents and Software

This policy refers to Statute 18. In keeping with its long-standing policies, the University does not pursue research in anticipation of profits. The principal goals of research remain the discovery of new knowledge and its dissemination. Since some of the by-products of research may be of commercial value if they are properly protected, developed and marketed, the University realizes that it needs an appropriate mechanism to recognize developments, protect them, and bring them to the marketplace.

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Policy on Patents and Software Cont.

In order to recognize changing circumstances, the scope of Statute 18 has been broadened to cover certain software in addition to patents. The policy follows the University's traditional distinction in the treatment of inventions and publications. Under University policy inventions have been the property of the University with the inventor receiving a share of any proceeds from their commercialization. Traditionally, published works written by members of the faculty have been published under agreements made by the faculty members and without the participation of the University. There is no purpose to change the customary arrangements on published material.

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One type of materials that is not normally patented but has become potentially valuable property is computer software. Such software often is protected by copyrights. In some cases it may be patented and in other cases it is either licensed under secrecy arrangements or made readily available to the public. After some study, it is being recommended that "device-like" software be treated as a by-product of research activities like inventions.

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Software may conceptually be divided into two principal categories. "Textual" software is software which is primarily intended and likely to result in informing or educating the user or in improving his or her general capabilities. For instance, such software may be an interactive package intended to train the user in a skill as part of the user's education, or may teach the user elements of software design or engineering. This type of software is akin to a textbook, and ordinarily will be treated as published materials rather than as an invention subject to Statute 18.

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"Device-like" software is software which is primarily intended and likely to result in the accomplishment of a task or in allowing the user to produce, manage, analyze, or manipulate a product, such as data, text, a physical object, or more software. Such software acts as a tool or building block in the accomplishment of such a task or in the creation or management of such a product or result.

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Since device-like software serves the same purposes as other inventions, the new statute identifies device-like software, like inventions, as a type of property that will be owned by the University. Protection in the form of copyright, patents and/or licensing will be utilized as appropriate. In no case will the policy be used to interfere with the free publication of research results. Income from patents and device-like software shall be distributed among the inventors, Division and research units involved, and the University.

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The statute recognizes that procedures to implement the policy will be administered under the direction of the President. It is also recognized that in particular situations questions may arise as to the proper ownership of patents or device-like software under the policy (including whether a particular piece of software is textual or device-like). As with all other business or professional activities, a faculty member should obtain the consent of the appropriate Chairman or Director and Dean before engaging in activities that might be inconsistent with this University policy.

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In order to advise on this and other questions of implementation, the President will appoint a Faculty Committee on Patents, Software, and Intellectual Property. A Chairman, Director, Dean or Faculty member may seek the advice of this committee in any case if he or she desires [See Guideline 213, "Committee on Patents, Software, and Intellectual Property", p. 213.1].

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This policy is grounded in sound principles. Often, inventions made during the course of commercially sponsored research are the result of years of activity using University facilities and resources that have not been supported by the sponsor.

While commercial sponsorship may defray a portion of the actual cost of carrying out a sponsored research program, it does not and is not intended to compensate the University for the commercial use of inventions that may be made during the research.

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Applicable laws and regulations provide an additional basis for the University’s position on sponsor rights. One such law that bears on the University’s handling of intellectual property created during commercially sponsored research relates to use of facilities that have been built or enhanced with tax exempt bonds. The general rule is that the tax-exempt status of bonds issued for the construction of research facilities may be lost if the facilities are used for private, rather than public purposes. Such a loss of tax-exempt status would have serious consequences for the University.

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Background Technology

Often in sponsored research proposals, sponsors may need or want to utilize existing technology owned or controlled by the University. This scenario creates significant problems. For example, how can a sponsor be given rights in technology that it did not fund and/or was funded by other industrial sponsors or government.

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Technology TransferThe transfer of research results from universities to the commercial sector

Origin of Technology TransferVannevar Bush Report of 1945Importance of University research to national defenseInitiated substantial Federal funding to university researchStimulated formation of NIH, NSF, ONR

Bayh-Dole Act of 1980 (Public Law 96-517)Encouraged utilization of Federally-funded inventionsPromoted participation of universities in commercialization processEstablished a uniform Federal patent policyProvided the basis for US university tech transfer practices

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Bayh-Dole Act Important Provisions

Universities may elect title to inventions

Universities are expected to protect IP

Government retains non-exclusive license

Government retains march-in-rights

Uniform guidelines for granting licenses

Universities must report on activities

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UCTechOffice of Technology and Intellectual Property

Who we are…UCTech Home Page

http://uctech.uchicago.edu/contact/index.shtml

What we do…We work to disseminate discoveries with commercial potential to the

publicWe work with faculty, students and staff in this effortWe protect the IP rights of inventors and the UniversityWe seek out and work with industrial partners to develop and

commercialize discoveriesWe strive to generate revenues of research and educationWe ensure that the revenues are shared with inventors, their labs,

departments and academic divisions Revenue Share Policy: http://uctech.uchicago.edu/crsp060603.pdf

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When do IP issues arise within the University?

As a by-product of sponsored research grants

As a result of a sponsored research agreement

In the creation of course materials

In the transfer of tangible properties out of and into the University

Through collaborations with other institutions

Through the use of third party proprietary research materials

During clinical trials (not common but possible)

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When does UCTech become involved in the research process?

New Invention Disclosures

Inter-institutional Agreements

License Agreements

Option Agreements

Material Transfer Agreements (MTAs) – IP clauses

Sponsored Research Agreements – IP clauses

General advising of faculty, students, staff – IP issues, licensing, working with industry

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Invention Disclosure and Management

Invention DisclosureNew Invention Pending ListInvention Assessment

Potential for patent protection - public disclosure?Commercial potentialSponsor rights/other rightsStage of development/ future research plannedInventor’s interests and expectations

Invention Management StrategyAllocate resources – yes? no?

Invention Marketing – seeking potential licenseesLicensing

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Licensing

Conduct basic research – business area and marketTarget specific companies – more researchMake contactsBegin initial discussions – fit/capabilities/interestsNegotiate license termsPrepare license agreement

(Licensor = University; Licensee = Company)Continue negotiationsCome to agreement on all termsExecute license agreement

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License Terms of Major Importance to the University

No restrictions on research and teaching activities Patent reimbursement Management of patent prosecution and maintenance Indemnification No warranties or representations Reservation of rights of Government sponsors No use of names without written permission No assignment of patent rights Inclusion of diligence / performance terms Reasonable financial terms

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Priorities and Concerns of Industry

PROFITEfficiency

Costs vs Benefits

Time to market – stage of development

Regulatory issues / hurdles

Budgetary concerns

Standardization of manufacturing processes

Market acceptance

Outcomes

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University and Industry NegotiationsBest Practices

Strive for excellent communications – professional, clear and effective

Fully understand the goals, interests, priorities and constraints of the university

Understanding the goals, interests, priorities and constraints of the other party

Discuss the above at the outset of negotiations

Establish clear understandings and manage expectations within your own organization

Respond in a timely manner

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IP at Chicago: Points to Consider

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Colleagues, Objectivity and the IRS

Data Sharing FOIA & Data Access IRS and Tax-exempt Bonds Financial Conflicts of Interest

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Who OWNS the Data?

University Policy says the University owns the IP

No University data “ownership” policy per se PHS policy states the institutions owns the

data

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Obligations for Data Sharing (“access”)

Sharing research resources, including data, already a condition of award for PHS, NSF

Specific data sharing plan required by NIH in certain proposals

Why is sharing important? Confirmation of scientific progress is replication of claims

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Retention of Data?

A-110 requires institution to retain data for three years after the end of the project period

What happens when students or postdocs leave the University?

Take a copy of data for future research, leaving original notebooks

No rights to underlying IP

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What happens to data when PI leaves?

It all depends – are there collaborators? Usually data are under “custodial” care of PI,

but obligation to produce data would still be University’s (e.g. in an allegation of scientific misconduct)

HIPPA, IRB clinical data concerns. Medical records cannot leave the University

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What’s FOIA got to do with data?

Access to applications – NO Access to funded proposals – YES PI contacted by Agency prior to release Ability to protect certain information in funded

application

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Including “proprietary” data in proposal?

Mark every page of application Weigh the consequences about how reviewers

might regard this Does meet the “business information”

protection

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FOIA and Shelby Amendment

Shelby proposed access to research data developed with Federal funds

OMB refined: Must be related to agency action or position that has the force and effect of law

Agency must have publicly cited the findings in developing agency action

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Exemptions from Shelby Amendment

Preliminary analyses Communications with colleagues Data that would violate personal privacy

information

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Shelby applies to all awards issued after November, 1999

PIs are urged to discuss any FOIA requests for data with URA, Legal before approving release of funded proposal or data

All FOIA requests go through agency – NO direct requestor-PI contact

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Why does the IRS care about IP rights?

Tax exempt status granted to organizations with public service mission

University’s education and research must benefit the public, not private interests

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Tax-exempt Bonds and IP complications

Institutions borrow money for construction of research buildings with tax-exempt bonds

If private sector has “exclusive” committed rights to research outcomes, perhaps through sponsored research agreement

Tax-exempt status may be jeopardized

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Avoiding Tax-exempt pitfalls

Watch which space is used for corporate sponsored research

Use “option” for exclusive license for commercialization not assignment or outright exclusive license

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Financial Conflicts of Interest

Individual Institutional Maintain objectivity in research

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Outside commercial relationships

Compensation (consulting, gifts,honoraria) Equity – stock or stock options in company Special concerns if clinical research

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Relationships that may distort

Design Conduct Reporting

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University policy: Individual Financial COI

Incorporates PHS and NSF regulations and policy

Requires Assurance of Compliance by all faculty and key personnel

Not restricted to sponsored research

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Policy – no outright prohibitions

Emphasis on on Disclosure Protection of human subjects Concerns for students, junior faculty, staff Recognizes complexity of relationship with

commercialization of University IP

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Processing of COI Disclosures

Review through departmental/divisional channels

Management Plan established by Deputy Provost

Oversight of Compliance - Dean’s office or other as delegated

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Institutional COI

Situations where outside interests or advantages influence or appear to influence institutional decision making

Interfere with integrity of University’s research and education mission

University beginning to develop policy

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