Here is a jolt: research conducted at universities fuels nearly 70% of all new businesses. That is a gigantic amount of ingenuity brewing in those labs. I have personally seen countless startups emerge from university settings, often powered by the brilliance of professors and student research. When this happens, intellectual property, or IP, rapidly becomes a crucial consideration. The pressing questions are: Who exactly controls it and how does a startup founder, possibly someone like yourself, successfully maneuver the occasionally baffling legalities regarding startup IP ownership? Having guided many startups through this very challenging situation, I want to share some hard won wisdom with you.
Grasping University IP Guidelines
Before you even consider starting a business based on university findings, you absolutely must gain a solid understanding of the university’s specific IP guidelines. These rules spell out precisely how IP created within the university system is handled. You absolutely need answers to these key questions:
- Control: Does the university automatically claim control of all IP produced by its staff and students? Are there any waivers to this sweeping rule?
- Disclosure: What particular stipulations does the university have concerning the revealing of inventions?
- Licensing: What specific stipulations come into play if a startup wants to license university IP?
- Revenue Distribution: How does the university divide the income derived from turning the IP into a marketable product or service with the inventors?
I have personally seen startups completely fail because they neglected to fully comprehend the university’s IP guidelines right from the beginning. You must not make that same critical error. Connect with the university’s Technology Transfer Office, or TTO, early and often.
Bargaining for IP Privileges: A Startup’s View
Attempting to negotiate IP privileges with a large university can often seem like a losing battle. Universities typically have deeply ingrained rules and seasoned negotiators. Do not despair; startups also possess some bargaining power. This is how to even the score:
- Early Involvement: Start discussions about IP control as soon as possible, even before significant research or development begins.
- Define Boundaries: Precisely define the specific boundaries of the IP being licensed or assigned. Clearly state the technology involved, the area of use and the precise geographic area covered.
- Exclusive versus NonExclusive: Always aggressively pursue an exclusive license if possible. This provides your startup with a real competitive edge in the market. It also actively stops the university from licensing that same IP to other companies working in your specific market.
- Sub Licensing Privileges: Make certain that your startup retains the privilege to sub license the IP to other relevant groups, such as strategic partners or key distributors.
- Careful Investigation: Conduct a careful investigation of the IP to properly assess its real validity, its enforceability in court and its overall potential to be sold in the real world.
I once advised a startup that successfully negotiated a remarkably positive licensing agreement with a major university. They presented a well conceived business strategy and convincingly showed a clear and achievable route to commercialization. The university viewed the startup as a highly beneficial partner and, therefore, was willing to be surprisingly flexible regarding the final conditions.
Patent Applications: Safeguarding Your Startup’s Future
Acquiring solid patent safeguards is often absolutely vital for a startup’s ultimate triumph. Patents can create a formidable competitive advantage, draw significant investment from venture capitalists and dramatically increase the company’s total worth. When dealing with university controlled IP, you must carefully consider the following points regarding how to file a patent in India or elsewhere around the globe:
- Who Submits the Patent?: Clearly determine who will take on the responsibility for submitting and prosecuting the patent application. The university could opt to keep this responsibility internally. Or, alternatively, it could be transferred directly to the startup itself.
- Patent Expenses: Negotiate precisely who will ultimately pay the substantial expenses of submitting and maintaining the patent throughout its life. These expenses can rapidly become considerable, especially when seeking international patents in multiple countries.
- Patent Blueprint: Develop a comprehensive and carefully considered patent blueprint that directly matches your startup’s specific business goals and objectives. Actively spot key inventions, carefully prioritize patent filings and give serious thought to obtaining international patent safeguards in major markets.
- Autonomy to Operate: Order and conduct a complete autonomy to operate search. Be absolutely certain that your startup’s planned actions will not unintentionally encroach on any existing patents held by third parties.
Navigating Shared Control: A Warning
Shared control of IP between a university and a new startup can quickly become unbelievably complex. While it might initially seem like a just arrangement, it often causes disagreements and can severely hinder commercialization. This is precisely why:
- Decision Making: All joint owners must unanimously consent to all decisions regarding the IP. This includes critical decisions concerning patent filings, licensing agreements and enforcement actions. This requirement can be troublesome if the involved groups hold considerably different priorities or conflicting goals.
- Licensing Hurdles: Licensing jointly controlled IP always needs the explicit approval of every owner. This requirement can significantly complicate finding appropriate licensees and successfully negotiating mutually acceptable conditions.
- Enforcement Problems: Successfully enforcing jointly controlled patents requires the full cooperation of all owners. If even one owner is unwilling to actively participate, it can become exceptionally difficult to effectively pursue potential violators in court.
Avoid shared control structures at all costs if possible. Instead, actively seek a clear assignment of control or an exclusive license granted solely to the startup.
Secrecy is Vital: Safeguarding Trade Secrets
Not all IP can necessarily be patented. Some sensitive details are often much better protected as a closely guarded trade secret. This typically includes highly private business details such as proprietary formulas, specialized processes and carefully collected customer lists. When working closely with a university, you must create crystal clear secrecy agreements from the very start. This will effectively protect your startup’s valuable trade secrets from unwanted disclosure.
- Secrecy Agreements (NDAs): Mandate that all university employees, enrolled students and outside collaborators sign legally binding NDAs. Insist on this before sharing any private details whatsoever.
- Restricted Access: Strictly restrict access to sensitive trade secrets on a need to know basis. Only those specific individuals who must have access to the details to perform their duties should be granted it.
- Marking Private Details: Clearly and visibly mark all documents and physical items containing trade secrets as strictly private to prevent accidental disclosure.
- Physical Safeguards: Put in place strong physical safeguard measures to actively protect trade secrets from any unauthorized access, whether digital or physical.
The Function of the Technology Transfer Office (TTO)
The university’s dedicated TTO is indispensable in effectively managing and successfully commercializing IP. The TTO is primarily accountable for:
- Evaluating Inventions: Rigorously assessing the patentability and overall potential to be sold of newly created inventions.
- Submitting Patents: Carefully submitting and prosecuting complex patent applications on behalf of the university.
- Licensing IP: Skillfully negotiating and actively managing licenses with startups and other established companies.
- Supporting Startups: Actively providing valuable resources and constant support to startups actively working to commercialize university controlled IP.
Develop a strong working relationship with your university’s TTO. They can serve as a highly useful resource for successfully maneuvering the many inherent challenges of startup IP ownership.
Seeking Specialized Guidance: When to Consult an Attorney
The legal aspects of university IP can often be challenging to successfully maneuver. It is almost always best to consult with a highly seasoned IP attorney who focuses specifically on university collaborations and technology transfer. An attorney can give invaluable guidance on:
- Negotiating IP Agreements: Carefully reviewing and skillfully negotiating complex licensing agreements, assignment contracts and other critical IP related contracts.
- Patent Blueprint: Devising and putting in place a comprehensive patent blueprint tailored to your specific needs and objectives.
- Careful Investigation: Conducting careful and complete IP investigation to uncover any possible issues or risks.
- Dispute Resolution: Effectively resolving IP disputes that could arise with the university or with other relevant parties.
I have personally witnessed firsthand how incredibly helpful expert legal advice can be in actively protecting a startup’s vital IP privileges. Do not ever hesitate to seek professional guidance from qualified specialists when necessary.
An Example in the Real World
Consider the specific case of a startup actively creating a novel and innovative drug delivery system. This pioneering system is directly based on extensive research done at a major respected university. The startup founders kept close communication and collaboration with the university’s TTO throughout the entire process. They successfully negotiated an exclusive license to the underlying foundational patent. They shrewdly secured the privilege to sub license the technology to larger pharmaceutical companies for further creation and distribution. The startup then strategically used these valuable IP privileges to successfully raise significant venture capital funding from eager investors. They proceeded to successfully create and commercialize the innovative drug delivery system, creating significant returns for both the startup and the university.
Conclusion
Successfully maneuvering the complexities of university IP is vital for startups hoping to turn academic research into thriving businesses. By thoroughly understanding university guidelines, skillfully negotiating favorable IP privileges and diligently acquiring solid patent safeguards, you can effectively create a solid base for a successful and sustainable company. Actively protecting your startup IP ownership is an investment in your long term future and continued success.
