Contract and Grant Manual

INTELLECTUAL PROPERTY AND RELATED MATTERS

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Table of Contents

11-100 INTELLECTUAL PROPERTY--GENERAL

11-110 RELATIONSHIP TO ACADEMIC POLICY

11-120 AUTHORITY FOR INTELLECTUAL PROPERTY AND RELATED MATTERS

11-130 BASIC PRINCIPLES AND SUBJECT MATTER OF INTELLECTUAL PROPERTY [RESERVED]

11-200 PATENTS--GENERAL

11-210 OVERVIEW

11-220 UNIVERSITY OF CALIFORNIA PATENT POLICY

11-230 PATENT AGREEMENT

11-240 RESPONSIBILITY FOR PATENT CLAUSES IN SPONSORED AGREEMENTS

11-250 PROCEDURES FOR ACCEPTING PATENT CLAUSES IN SPONSORED AGREEMENTS

11-251 Clauses For Use by Contracts and Grants Officers

11-252 Exceptions to Patent Guidelines Approved by OTT

11-253 Review by Senior Vice President--Business and Finance

11-300 GUIDELINES FOR PATENT CLAUSES FOR USE BY CONTRACTS AND GRANTS OFFICERS

11-310 GENERAL GUIDELINES FOR PATENT CLAUSES

11-311 Preferred Patent Provisions

11-312 Right to Elect Title

11-313 Importance of Well-Defined Scope of Work and Budget

11-314 Conceived and Reduced to Practice and Multiple Sponsor Support

11-315 Obligations Outside the Agreement Work Scope

11-316 Importance of Early Consideration of Patent Rights

11-317 Patent Clause Compendium

11-320 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH FEDERAL SPONSORS

11-321 Federal Patent Statute, OMB Circular A-124, and 37 CFR 401

11-322 Approved Clauses for Federal Agreements

11-330 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH STATE, COUNTY, AND MUNICIPAL GOVERNMENTS

11-331 Standards for Acceptable Clauses

11-332 Sample Acceptable Clause

11-340 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH FOR-PROFIT SPONSORS

11-341 Summary of Sponsor Patent Rights Applicable to Funding Agreements With Industrial (For Profit) Sponsors of Research

11-342 Considerations in Developing Acceptable Clauses With For-Profit Sponsors

11-343 Standard Clauses

11-350 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH NON-PROFIT, CHARITABLE SPONSORS

11-351 Considerations in Developing Acceptable Clauses With Non-Profit Sponsors

11-352 Standard Clauses

11-400 PATENT TERMS REQUIRING EXCEPTION TO THE GUIDELINES FOR PATENT CLAUSES

11-410 TYPES OF EXCEPTIONS

11-411 For-Profit Sponsors

11-412 Non-Profit, Charitable Sponsors

11-413 Other Types of Exceptions

11-420 PROCEDURE FOR PATENT CLAUSE EXCEPTIONS BY OTT

11-430 PROCEDURE FOR REVIEW BY SENIOR VICE PRESIDENT-- BUSINESS AND FINANCE

11-500 SUMMARY OF RESPONSIBILITIES

11-510 CONTRACTS AND GRANTS OFFICERS

11-520 CONTRACTS AND GRANTS OFFICE, OFFICE OF THE PRESIDENT

11-530 OFFICE OF TECHNOLOGY TRANSFER, OFFICE OF THE PRESIDENT

11-540 PRINCIPAL INVESTIGATOR

11-600 COPYRIGHTS AND RIGHTS IN DATA [RESERVED]

11-700 TANGIBLE RESEARCH RESULTS AND PROPRIETARY DATA [RESERVED]

11-800 TRADEMARK AND USE OF UNIVERSITY NAME [RESERVED]

11-999 UNIVERSITY REFERENCES

EXTERNAL REQUIREMENTS--FEDERAL

11-F01 37 CFR 401 [RESERVED]


11-100 INTELLECTUAL PROPERTY--GENERAL

11-110 RELATIONSHIP TO ACADEMIC POLICY

This chapter covers University policies on patents, copyrights, trademarks, and tangible research results, which are commonly referred to as intellectual property, as they relate to sponsored research agreements. The section on copyrights includes rights in data; the section on trademarks includes the use of the University's name; and the section on tangible research results includes, because of its related character, the topic of protection of proprietary data (trade secrets), when those results are neither patentable nor copyrightable.

University policies in intellectual property are influenced by the academic policies of the University as discussed in Chapter 1. Therefore, a review and complete understanding of the following closely related academic policies is necessary for providing the context for the intellectual property and related policies outlined in this chapter: Regulation 4, Services to Individuals and Organizations issued June 23, 1958 by President Robert G. Sproul; University policy on Rights to Results of Extramural Projects or Programs as stated in Chapter 1-400; and the Guidelines on University-Industry Relations issued May 17, 1989 by Presidential Memorandum.

University Regulation 4 describes the basis upon which the University will conduct research, instruction, or public service under agreements with extramural sponsors. One of the primary purposes of the University is to carry out research to advance the frontiers of science and technology and further the University's educational programs. The University will enter into arrangements for research when that research does not interfere with University commitments and: 1) it provides faculty with the opportunity to gain experience and knowledge of value to their teaching and research; 2) it is suitable research through which the individual may make worthy contributions to knowledge; or 3) it is an appropriate public service.

The University's policy on Rights to Results of Extramural Projects or Programs is based upon the fundamental principle that the teaching and research environment should be open to allow faculty and students to exchange ideas freely. The University's research activities are conducted as an integral part of the total educational program, and these activities often form the basis for articles in professional journals, seminar reports, presentations at professional meetings, and student dissertations and theses. Therefore, the publication policy requires that, with limited exceptions, the University will undertake research or studies only if the scientific results can be published or otherwise promptly disseminated.

In order for the University to accomplish its academic purposes, and in accordance with Regulation 4 and the policy on rights to results of research, the University, in general, must own the research results created under sponsored research agreements; however, in specific instances an unrestricted right to use the results may be appropriate.

Refer to Chapter 1 for further information about academic policies, the basis upon which the University performs extramurally funded contracts and grants, and the rights to research results. Also, refer to Chapter 20 for information about Federal export controls, classification, and national security controls which may limit certain aspects of the University's exercise of its intellectual property rights.

11-120 AUTHORITY FOR INTELLECTUAL PROPERTY

Standing Order 100.4, Duties of the President of the University, effective January, 1983, provides the following:

(mm) The President is authorized to develop and implement policies and procedures on matters pertaining to intellectual property, including patents, copyrights, trademarks, and tangible research products, and to execute documents necessary for the administration of intellectual property, including those which may contain commitments existing longer than seven years. The President annually shall report to the Board on matters pertaining to intellectual property.

The President has delegated the authority under Standing Order 100.4 (mm) to execute documents necessary for the administration of intellectual property and to annually report to the Board to the Senior Vice President--Business and Finance, who has redelegated the authority to the Executive Director, Research Administration and Technology Transfer.

The President has promulgated specific policies and delegations of authority in each of the areas of intellectual property which are described in the following Sections of this Chapter:

Patents - Section 11-200

Copyrights - Section 11-600 [RESERVED]

Tangible Research Results - Section 11-700 [RESERVED]

Trademark and Use of University Name - Section 11-800 [RESERVED]

11-130 BASIC PRINCIPLES AND SUBJECT MATTER OF INTELLECTUAL PROPERTY [RESERVED]

[To discuss general nature of intellectual property protection of the tangible expression, not protection of the idea (or intangible). Outline general distinction between patent (utility) and copyright (form of expression) protection. Discuss distinctions between copyright, ownership of research findings, and rights in data. Outline consequence that, absent protection through patent or copyright, any contract (or license) is based upon maintaining secrecy (non-disclosure) for some set period of time.]

11-200 PATENTS--GENERAL

11-210 OVERVIEW

The basic aim of the University of California patent program is to promote the progress of science and technology, to assure that inventions are used to benefit the public, and to provide appropriate royalty revenues to the University and the inventor. It is University policy to retain ownership of inventions developed from research. At the University of California, patentable discoveries and inventions are usually fortuitous by-products, rather than the direct objective, of scientific investigation. Scientists working in University laboratories generally pursue their research without thought to the patentability of results. Yet new ideas, discoveries and inventions arising out of experiments and investigations, frequently undertaken with quite a different purpose, may have applications that will be put into commercial use for public benefit only if the invention is protected by a patent. The University, as owner of the patent, encourages commercial development by licensing the patent to industrial companies. The companies are required to develop and market the invention. Royalty income is then shared between inventors and the University, and first consideration for use of the University's share is to support University research.

11-220 UNIVERSITY OF CALIFORNIA PATENT POLICY

In November, 1985, the President issued the University of California Patent Policy, pursuant to his authority under Standing Order 100.4 (mm). This policy was revised on April 16, 1990. The policy includes: Section I, Preamble, an outline of the principles upon which the policy is based; Section II, Statement of Policy, which sets forth the requirement that employees and certain others agree to assign inventions and patents to the University or other parties as appropriate, to promptly report and fully disclose potentially patentable inventions, and sets forth royalty-sharing provisions with the inventor and use of royalty income; and Section III, Patent Responsibilities and Administration, detailing responsibilities of the Intellectual Property Advisory Council chaired by the Senior Vice President--Academic Affairs, and the assignment of responsibility for implementation of the policy to the Senior Vice President--Business and Finance. Refer to Business and Finance Bulletin G-40 for full text of the University of California Patent Policy.

11-230 PATENT AGREEMENT

The University of California Patent Policy requires all employees, users of University research facilities, and those receiving gift, grant or contract funds through the University to agree to assign inventions and patents to the University, except those resulting from permissible consulting activities without use of University facilities or those covered by State of California Labor Code 2870.

Students are required to sign the Patent Agreement only if they are employed by the University, receive contract or grant funds through the University, or are engaged in a sponsored research project.

The Patent Agreement binds the individual to perform those acts and to provide such data as are necessary to satisfy patent commitments made by The Regents to grantors of funds for research or to contracting agencies.

All persons employed by the University since July 1, 1963 have executed a Patent Agreement at the time of their employment; non-employees who use University funds or research facilities or who work on a sponsored research project must execute a Patent Agreement before such use or work commences.

When there is no use of University research facilities, exemptions to signing the Patent Agreement may be authorized for non-University-compensated military personnel; University Extension teachers and lectures; teachers and lecturers of regular University curricula and visiting scholars on special short-term assignment of one-year or less; lecturers making one-time or series appearances; and clinical appointees who are not compensated by the University, pursuant to the established University-wide procedures promulgated in Business and Finance Bulletin G-40, University of California Patent Program. A full-text copy of the Patent Agreement is included in this Bulletin.

The Patent Agreement requires full disclosure of all inventions, whether or not the invention was developed as a part of, or outside of, any University duties or use of University facilities. After disclosure, the equities of the parties are assessed, as are the interests of the University in seeking assignment of patent rights for filing of patent applications. Absent obligations to third parties, the University's interests, if any, may be released to the inventor subject to a shop right to the University. The Director-Patent, Trademark, and Copyright Office may release rights in inventions to inventors in accordance with the following criteria:

a. When the invention has been conceived and reduced to practice without any University support, without using University research facilities (exclusive of libraries), not on University time, and when the invention is not within the scope of the inventor's assigned University activities, or is within the scope of consulting activities permissible under campus policies and Regulation 4--rights to be released to the inventor.

b. When the invention has been conceived or reduced to practice with University support; or while using University research facilities (exclusive of libraries); or on University time, or when the invention is within the scope of the inventor's assigned University activities and in the absence of an overriding obligation to third parties--rights may be released to the inventor, subject to the inventor's agreeing to actually file a U.S. patent application.

11-240 RESPONSIBILITY FOR PATENT CLAUSES IN SPONSORED AGREEMENTS

The Patent Policy, Section III C, assigns the responsibility for implementation of the policy to the Senior Vice President--Administration (now Business and Finance). Two of the responsibilities assigned to the Senior Vice President--Business and Finance impact contract and grant administration:

...3. Negotiating licenses and license option agreements with other parties concerning patent and/or analogous property rights held by the University....

5. Assisting University officers in negotiating agreements with cooperating organizations concerning prospective rights to other agreements to be funded in whole or in part by such cooperating organizations, and negotiating with Federal agencies regarding the disposition of patent rights....

It is the responsibility of those Contracts and Grants Officers who have the delegated authority for entering into sponsored agreements to negotiate and accept agreement terms on prospective patent rights which are consistent with guidelines outlined in this Manual. Contracts and Grants Officers are assisted in this activity by the Office of the President, Office of Technology Transfer (OTT) which will specify what is and is not acceptable under patent policy. While it is the Contracts and Grants Officer's responsibility to negotiate and accept patent clauses consistent with guidelines expressed in this Manual, the Senior Vice President retains the authority to determine exceptions to these guidelines, and has delegated this authority to the Executive Director, Research Administration and Technology Transfer.

11-250 PROCEDURES FOR ACCEPTING PATENT CLAUSES IN SPONSORED AGREEMENTS

Sections 11-251 through 11-253 outline the general procedures used for the development, approval, and dissemination of acceptable patent clauses in sponsored agreements.

11-251 Clauses That May Be Used by Contracts and Grants Officers

a. Campuses and Laboratory Contracts and Grants Officers may accept patent clauses independently of the Office of the President OTT if a standard or tailored patent clause is acceptable to the sponsor.

Standard clauses appropriate to the generic categories of sponsors are disseminated in the Patent Clause Compendium described in Section 11-318.

Standard patent clauses may also have been approved by OTT for continuing use with a particular sponsor. Contracts and Grants Officers must assure that the clauses are appropriate to the individual case at hand. A listing of sponsors for whom standard clauses have been previously negotiated and approved and the test of such clauses will be maintained and disseminated by the Office of the President Contracts and Grants Office in the Patent Clause Compendium.

b. If the sponsor will not accept the standard clause, Contracts and Grants Officers may negotiate clauses with the sponsor which conform to Office of the President guidelines developed by the OTT. General guidelines applicable to all sponsors and specific guidelines for five types of sponsors are promulgated in the following sections of this Chapter:

Section 11-310, General Guidelines for Patent Clauses

Section 11-320, Guidelines for Patent Clauses in Agreements with Federal Sponsors

Section 11-330, Guidelines for Patent Clauses in Agreements with State, County, and Municipal Governments

Section 11-340, Guidelines for Patent Clauses in Agreements with For-Profit Sponsors

Section 11-350, Guidelines for Patent Clauses in Agreements with Non-Profit, Charitable Sponsors

Section 11-360, Guidelines for Patent Clauses in Agreements with Trade Associations

11-252 Exceptions to Patent Guidelines Approved by OTT

When a Contracts and Grants Officer and a sponsor are unable to negotiate a standard patent clause or patent provisions consistent with the appropriate guidelines promulgated in Section 11-300, exceptions to these guidelines shall be discussed by the Contracts and Grants Officer with the OTT, and the agreed-upon variation may be used in the contract or grant. A list of sponsors and projects for which an agreed upon exception has been approved will be disseminated in the Patent Clause Compendium. However, such exceptions to the guidelines must be reapproved by the OTT before they can be used in another contract or grant with the same sponsor.

11-253 Review by Senior Vice President--Business and Finance

Where agreement cannot be reached between the sponsor, Contracts and Grants Office, and the OTT, the Chancellor or Laboratory Director may request a review by the Senior Vice President--Business and Finance. A listing of reviews approved by the Senior Vice President--Business and Finance will be disseminated in the Patent Clause Compendium.

11-300 GUIDELINES FOR PATENT CLAUSES FOR USE BY CONTRACTS AND GRANTS OFFICERS

11-310 GENERAL GUIDELINES FOR PATENT CLAUSES

Research funding agreements are legal contracts and set forth the rights and obligations of both a sponsor and the University. Each article of the agreement must be considered in conjunction with all the articles, as none of them will stand alone. For example, a patent clause is dependent on many articles of the agreement, such as the research proposal, and the budget, publication, confidentiality, and termination clauses. Every time a proposed article is reviewed, amended or replaced, consideration should be given to the effect that article has on the entire agreement.

Adherence to the guidelines for acceptable patent clauses does not exempt the agreement from the policy and procedures for review and approval of contract and grant documents by General Counsel outlined in Chapter 13. (Refer to Section 26.9 of the 1967 Edition of the Contract and Grant Manual.) the Office of General Counsel is responsible for the provision of legal advice to the University, and for the preparation or approval of all contracts, grants, licenses and other legal documents including those relating to the University patent program. The University official having execution authority for such documents (e.g., campus Contract and Grant Officers for research contracts and the Director, OTT for licenses) is to coordinate legal review with the Office of the General Counsel prior to execution or use.

It is University practice to secure patent provisions in each contract or grant agreement which conserve the potential interests of both the inventor and The Regents, while recognizing the probable interests of the source of extramural funds when the source has a desire to have such interests considered. Policies of extramural fund sources and the involvement of third party co-inventors affect patent matters. Frequently, rights associated with patentable inventions can be evaluated only after invention and, therefore, it is not possible to set forth definitive terms for allocation of rights in advance. However, the following statements are provided as guidelines to negotiate patent clauses in research agreements.

11-311 Preferred Patent Provisions

The University prefers grants or contracts with patent clauses expressly giving all patent rights to The Regents to be disposed of in accordance with University patent policy. This can be accomplished with the following standard clause:

All rights to inventions conceived or reduced to practice during the performance of this agreement are the property of The Regents and will be disposed of in accordance with the University of California Patent Policy.

This clause preserves the maximum rights of The Regents and does not entail any additional administrative effort or obligation to the sponsor.

Also acceptable is a grant or contract which has no patent clause. In the absence of any patent obligation or assignment of ownership of results to the sponsor, the University would retain any University patent rights. Caution should be exercised whenever this approach is used with commercial sponsors where the work involves receipt of the sponsor's proprietary data. It is frequently possible to negotiate the preferred patent provisions. Assistance in convincing sponsors of this preferred situation, in the form of sample letters and substantiation of the effectiveness of the University's Patent Program and a list of sponsors which have accepted these conditions, will be disseminated in the Patent Clause Compendium.

11-312 Right to Title

It is University practice to retain ownership of inventions developed during the course of sponsored research. Patent clauses proffered by extramural fund sources that demand all rights to inventions or discoveries or a unilateral right to determine equities after the fact can only be accepted by Contract and Grant Officers with prior approval by the OTT.

11-313 Importance of Well-Defined Scope of Work and Budget

Before any research agreement is negotiated, it is essential that the work statement and budget for the project be well-defined, specific, and complete. In the event the research program is sponsored by more than one extramural source that claims patent privileges, and it is not possible to discretely identify and separate one project from another, then patent terms in the various agreements supporting the research program must not conflict. A well-defined statement of the scope of work is the basis for determining which sponsor has been granted rights.

11-314 Conceived and Reduced to Practice and Multiple Sponsor Support

It is necessary to limit the grant of patent rights to non-federal government entities to inventions "conceived and reduced to practice" during the sponsored project.

Many sponsors try to assert a claim to patent rights arising from research funded in whole or in part by them. Since development of a patentable invention includes both conception and reduction to practice, it is possible for an earlier sponsor to claim rights to an invention conceived during the earlier period but reduced to practice at a later date.

As the Federal government patent policy asserts an interest in any invention conceived or first actually reduced to practice in the performance of a project funded in whole or in part by the Federal sponsor, it is useful to review the guidance regarding commingling of funds provided in Office of Management and Budget Circular A-124, "Patents-Small Business Firms and Non-Profit Organizations" (see 11-F01).

Circular A-124 differentiates between supplemental projects (when the University accepts "supplemental funding from other sources for the purpose of expediting or more comprehensively accomplishing the research objectives of the government sponsored project"), and simultaneous, closely related projects (when a "non-government sponsor establishes a project which, although closely related, falls outside the planned and committed activities of a government funded project"). The government claims patent rights in inventions developed under non-government sponsored supplemental projects but does not claim rights in non-government sponsored closely related projects.

When a research program is sponsored by more than one extramural source, any proposed patent relationship between the University and the sponsors must be carefully examined to insure that commitments to be made to one sponsor do not conflict with commitments already made to another. When an option on an exclusive license is provided, the Principal Investigator shall be required to certify that a proposed new commitment will not conflict with existing commitments. This requirement applies equally to projects supported by private or public agencies.

11-315 Obligations Outside the Agreement Work Scope

Care should be taken to assure that patent clauses place no patent obligation on the University beyond the work to be performed under the specific contract or grant. For example, there should be no patent rights granted to information or research findings produced prior to, or after, the performance period covered by the contract or grant, or produced by the effort of other University employees working in similar or related fields, but not covered by the terms of the contract or grant.

11-316 Importance of Early Consideration of Patent Rights

Many conflicts and problems over patent rights can be avoided by early consideration of patent matters. It is necessary to anticipate patent issues and to consider any overlapping obligations to sponsors before entering into any research agreement.

11-317 Patent Clause Compendium

The Office of the President, Contracts and Grants Office, maintains and distributes a Patent Clause Compendium through Contract and Grant Memo issuance. It contains the following:

--a list of sponsors who have accepted the preferred patent provisions (see Section 11-311);

--the text of standard patent clauses for various purposes and various types of sponsors, and an acceptable clause describing the general requirements of licensing agreements;

--a list of certain sponsors and the text of the patent clause accepted by the OTT which is a standard clause for use with that sponsor only;

--a list of sponsors and individual projects for which an exception to the guidelines has been agreed to by the Contract and the Grant Officer and the OTT;

--a list of sponsors and projects approved by the Senior Vice President--Business and Finance through the review process;

--sample letters and responses to frequently asked questions about the University patent program and its rationale.

IT IS INAPPROPRIATE TO LET ONE COMMERCIAL SPONSOR KNOW WHAT ANOTHER COMMERCIAL SPONSOR HAS ACCEPTED. THEREFORE, WHILE THE PATENT CLAUSE COMPENDIUM IS A PUBLIC DOCUMENT, AND AVAILABLE UPON REQUEST, DISTRIBUTION IS DISCOURAGED.

11-320 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH FEDERAL SPONSORS

11-321 Federal Patent Statute, OMB Circular A-124, and 37 CFR 401

Patent terms in Federal agreements with educational agencies, non-profit institutions and small businesses are governed by patent law. The law, as amended, is implemented through OMB Circular A-124, Patents - Small Business Firms and Non-Profit Organizations and more recently through 37 CFR IV. (See Section 11-F01). With few exceptions, nonprofit organizations and small businesses who perform work under federally funded research agreements may now elect to retain patent rights to inventions arising from the sponsored research, subject to granting to the government a "nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject inventions throughout the world."

However, this is not the case when one of the inventors is also a government employee. In that case, a waiver of patent rights from the government employer (such as the Veterans Administration or U.S. Department of Agriculture) to the government employee must be sought. The government employee then executes a license to the government and an assignment to the University.

The regulations provide a preference for United States industry, and exclusive licensees must agree that products embodying the subject invention will be manufactured substantially in the United States. There are limited conditions for government march-in-rights, as well as provisions for the University to decline to assert rights and thus leave them with the government. In the event the University elects not to file a patent application, and if the government decides not to pursue patent protection on the invention, the individual inventor(s) may request release of rights to the invention from the government. Finally, there are prohibitions on assignment of the patent rights to third parties and requirements to use royalty payments, after payment of expenses and the inventors' share, to further scientific research or education. See Section 11-F01 for a summary of the Federal patent legislation and OMB Circular A-124.

11-322 Approved Clauses for Federal Agreements

It is University practice for campus-based research to accept Federal grants and execute Federal contracts only when the patent rights given to the Government in such a grant or contract provide a non-exclusive, royalty-free license to the government for governmental purposes.

For grants, the required standard Federal patent clause is incorporated in OMB Circular A-124. For contracts, the Federal Acquisition Regulation 52.227-11 specifies the Patent Rights--Retention by the Contractor (Short Form) clause. Guidance on specific agency patent clauses is included in the Patent Clause Compendium.

11-330 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH STATE, COUNTY AND MUNICIPAL GOVERNMENTS

11-331 Standards for Acceptable Clauses

Most agreements with State, county, and municipal government agencies traditionally have not included any patent provisions, and this precedent should be continued. Moreover, the University has maintained its long-standing practice that inventions arising from University research funded by those agencies are the sole and exclusive property of The Regents. Most State, county and municipal governments are not in the position to patent or license inventions. Not only does the University benefit from this practice but so does the State of California, as the State receives a percent of the University's net patent royalties.

11-332 Sample Acceptable Clause

In the event that an agreement with a State, county or municipal government requires a clause governing patent rights, the clause provided in Section 11-311 is acceptable.

11-340 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH FOR-PROFIT SPONSORS

11-341 Summary of Sponsor Patent Rights Applicable to Funding Agreements With Industrial (For Profit) Sponsors of Research

For commercial sponsors, patent privileges correspond to the level of funding provided. The following categories have been established:

--When the sponsor pays all direct and indirect costs (including an appropriate share of any faculty salary and benefits) for the research to be undertaken, the sponsor may be granted a right of first refusal to an exclusive or nonexclusive license for the life of any U.S. patent. Right to sublicense may be granted under exclusive license only.

--When the sponsor pays less than all direct and indirect costs in the form of money, expendable materials or supplies, or other substantial assistance, the sponsor may be granted a right of refusal to a non-exclusive license for the life of any U.S. patent.

--When the sponsor pays only salary or stipend in support of a fellowship or research assistantship for an individual, the sponsor may not be assured of a license but may be considered as a licensee.

Subject to the above conditions, research funding agreements may provide a time-limited right of first refusal by the sponsor for a license to patentable inventions (other than plant patents) conceived and reduced to practice in the course of the sponsored research. All licenses will:

--be royalty-bearing, rates negotiable and based on general industry practices for the type of invention involved;

--provide for diligent development, commercial marketing, or use as one condition for retention of the license; and

--normally require a license issue fee and appropriate minimum annual royalties.

Licenses under corresponding foreign patents may be granted where possible on terms and conditions similar to U.S. license, except that the sponsor must agree to reimburse the University for its foreign patent prosecution and maintenance costs.

See Business and Finance Bulletin G-40 for a full-text copy of the Summary of Sponsor Patent Rights Applicable to Funding Agreements with Industrial (For Profit) Sponsors of Research.

11-342 Considerations in Developing Acceptable Clauses with For-Profit Sponsors

a. Conflicting Terms

In the event that standard clauses are not used or the terms of the agreement are unusually complex regarding rights in data or ownership of deliverable results, it may be appropriate to introduce the patent clause with a phrase such as "notwithstanding any other provision of this agreement."

b. Granting Right to Exclusive License

When the agreement covers all direct and indirect costs of the research, including a proportionate share of the salary and benefits of the Principal Investigator and any other co-researcher, and the sponsor seeks a right of first refusal to an exclusive license, the agreement should be reviewed to determine that there is a complete, specific work statement and that the budget is adequate to perform the task. Further, it should be determined that the Principal Investigator does not have and does not contemplate support from other sponsors for related work. When the sponsor wants to prescribe conditions to insure that the project will not be supported by other sponsors or benefit from other sponsored support, such conditions must be specifically discussed and agreed to in writing by the Principal Investigator. Because of the nature of the research environment, it is impossible to completely isolate a research project. Therefore, if the Principal Investigator is willing to accept additional terms about separating the sponsored research project and/or maintaining additional records to support and document inventions resulting from the work, such agreements should be qualified with the statement such as "the University will use reasonable efforts to insure that the sponsor's support of research is not commingled with other sponsored research and will not be financially liable for failure to do so."

c. Granting Right to a Non-Exclusive License

If it is clear that the agreement will not cover all costs and a right to a non-exclusive license is to be granted, the right to the non-exclusive license should be qualified with the statement "to the extent the University has the legal right to do so." Because such situations anticipate that there will be other sponsors sharing the cost of the research, to whom patent obligations may be given, all current and future agreements for support of the project must be reviewed to insure that the patent clauses are consistent with each other.

d. United States and Foreign Patents

It is important that the University not become obligated to file foreign patent applications. Consistent with the Summary of Sponsor Patent Rights Applicable to Funding Agreements With Industrial (For Profit) Sponsors of Research in Section 11-341, if the right to a license to foreign patents is provided, then the sponsor must agree to reimburse the University for its foreign patent prosecution and maintenance costs. The Principal Investigator and all others involved in a commercially sponsored project must agree in writing to consent to withhold publication for a reasonable period as may be necessary to protect foreign patent rights, if such delay is required by the contract. Most foreign patent rights are lost if an enabling disclosure is made prior to filing a patent application, but rights can be preserved for a one-year period if a United States application is made prior to an enabling public disclosure.

e. License Agreement Terms

Generally, license agreements cannot be prepared until the subject invention has been made. Further, the authority to negotiate license agreements has been delegated only to the OTT. (See Sections 11-120 and 11-240.) Other than stating general conditions of the license, such as negotiable royalty rates based on general industry practice and due diligence, it is difficult as well as beyond the scope of Contract and Grant Officer's authority to include the terms of the licensing agreement in the sponsored project patent terms. In the event that the sponsor insists that certain licensing terms be negotiated at the same time as the sponsored agreement, the OTT will usually negotiate a separate agreement containing the license terms. Contracts and Grants Officer may consult the Patent Clause Compendium for general statements about requirements of licenses that can be included in the sponsored agreement.

11-343 Standard Clauses

Standard clauses for use with for-profit sponsors will be disseminated through the Patent Clause Compendium. Such clauses may be used whenever they are acceptable in individual circumstances and in accordance with Section 11-341, Summary of Sponsor Patent Rights Applicable to Funding Agreements With Industrial (For Profit) Sponsors of Research. Contracts and Grants Officers should use the exact wording of the appropriate standard clause whenever possible.

11-350 GUIDELINES FOR PATENT CLAUSES IN AGREEMENTS WITH NON-PROFIT, CHARITABLE SPONSORS

The patent position of this class of sponsors varies considerably from seeking no rights, to insisting on retaining all rights, to insisting the rights be 'dedicated to the public". A frequent complication with this class of sponsors is refusal or inability to pay for the full costs of a project. Many non-profit charitable sponsors are approved for a full or partial waiver of indirect cost reimbursement and many also limit reimbursement of direct costs, such as the Principal Investigator's time. An important consideration in negotiating with non-profit, charitable sponsors is that offering a commercial license is not practical because the non-profit agency is not in the position to manufacture or distribute products. All non-profit sponsors should first be encouraged to accept the University's preferred patent provisions (See Section 11-311). Only if this is unacceptable to the sponsor should the following guidelines for acceptable clauses be used.

11-351 Considerations in Developing Acceptable Clauses with Non-Profit Sponsors

a. Right to Non-Commercial License

As a last resort, a non-profit sponsor may be offered a non-commercial, royalty-free, non-exclusive license to any patentable invention which is conceived and first actually reduced to practice under the research agreement for the sponsor's internal use only, subject to the University's legal ability to offer such a license, whether or not the sponsor is supporting the partial or full cost of the research.

b. Clarification of Patentable Invention Selection and Prosecution Responsibilities

According to Federal patent policy, when the University does not elect to file a patent application, the patent rights revert to the Federal government if the project was supported at least in part with Federal funds. The Federal policy then provides for the government to release the rights to the individual inventor(s) if the government elects not to file a patent. Therefore, in cases of partial support to a Federally-funded project, it may not be possible for the University to agree to allow the sponsor to file the patent application if the University elects not to do so, as such rights reside with the Federal government. Further, the University must be free to determine whether patent applications should be filed on a subject invention. The standard patent clauses for non-profit sponsors provided in the Patent Clause Compendium are carefully worded to give the sponsor rights to patentable inventions "for the term of any patent thereon," which insures that the University has discretion about whether to file patent application.

c. Sponsor Option to Seek Title

With the consent of the Principal Investigator and the absence of commingling the sponsor's support with other sponsor's support whose requirements may preclude doing this (see 11-314), it is acceptable to negotiate provisions which allow the non-profit sponsor to seek title in the event the University elects not to seek patent protection. Such clauses generally incorporate provisions such as the following:

To the extent the University has the legal right to do so, any invention conceived and reduced to practice in the course of research carried out under this award shall be the property of the University, provided, however, that the University shall seek patent protection thereon and make such invention available for commercial license upon reasonable terms and conditions. In the event the University elects not to seek patent protection on such invention, and to the extent that the University has the legal right to do so, the University agrees to assign all rights to such invention to the nonprofit sponsor upon request.

Because the University Patent Policy provides the option for title to be released to the inventor in cases where the University elects not to file a patent application, express approval from the Principal Investigator should be obtained when the option to elect title is provided to the non-profit sponsor. In cases where the non-profit sponsor is not paying all direct and indirect costs of the research and for the reasons outlined in Section 11-351b, it is essential that a patent provision allowing the sponsor the option to seek title be qualified by a phrase such as "to the extent the University has the legal right to do so."

d. Royalty Sharing

Clauses providing for royalty-sharing with any sponsor can only be accepted with the concurrence of the OTT and cannot be approved independently by the Contracts and Grants Office.

11-352 Standard Clauses

Standard clauses for various purposes acceptable for use with non-profit, charitable sponsors will be disseminated in the Patent Clause Compendium. It is anticipated that many non-profit charitable sponsors will be listed as having accepted the preferred patent provisions outlined in Section 11-311 or as having agreed to a standard clause negotiated by the OTT for use with that sponsor.

11-400 PATENT TERMS REQUIRING EXCEPTION TO THE GUIDELINES FOR PATENT CLAUSES

Exceptions to the guidelines given in this Chapter must be approved by the OTT, or if agreement between the campus and OTT cannot be reached, a review by the Senior Vice President--Business and Finance may be requested.

11-410 TYPES OF EXCEPTIONS

The campus may seek an exception when a sponsor will not accept standard or sponsor-specific clauses or patent terms consistent with the Guidelines for Patent Clauses in 11-300 through 11-350.

11-411 For-Profit Sponsors

Some commercial sponsors ask for an exception to the Summary of Sponsor Patent Rights Applicable to Funding Agreements With Industrial (For Profit) Sponsors of Research, (see Section 11-341), by requesting a non-exclusive, paid-up license. Guidelines for a limited trial of such exceptions have been adopted by the OTT and are summarized in the Patent Clause Compendium.

11-412 Non-Profit, Charitable Sponsors

Some non-profit, charitable sponsors request title to inventions with prohibitions upon University acceptance of other sponsor support. In other cases, sponsors insist upon sharing royalties with the University. The OTT has authorized exceptions in cases where the University has been unable to negotiate more favorable provisions and such exceptions are disseminated in the Patent Clause Compendium. In some cases, the exception will be approved on a class basis for all agreements with that particular Sponsor, and the text of the approved clause will be disseminated in the Patent Clause Compendium, Section I, Part D, Standard Clauses for Agreements With Non-Profit, Charitable Sponsors. In other cases, the exception will be approved on an individual basis for the specific award and will be disseminated in the Patent Clause Compendium, Section IV, List of Sponsors With Individual Projects Approved for Exception by OTT; in these cases, the exception must be reapproved by the OTT if proposed for use in another agreement with the same sponsor.

11-413 Other Types of Exceptions

In certain cases, such as collaborative agreements involving commercial and non-profit sponsors, agreements with limited partnerships, or those entailing plant patents, the guidelines for acceptable clauses (see Sections 11-300 through 11-350) are not applicable. In these cases, assistance from the OTT is required to negotiate an acceptable patent provision.

11-420 PROCEDURE FOR PATENT CLAUSE EXCEPTIONS BY OTT

All situations not covered by standard clauses listed in the Patent Clause Compendium or within the guidelines for acceptable clauses must be referred to the OTT.

Exceptions will be considered on an individual basis for the specific award or on a class basis applicable to all awards from the sponsor. Information will be required regarding the level of support to be provided in the specific project, the anticipated level of support from other sponsors for the project, and the over-all level of support from the sponsor to the campus. Review at the OTT will include assessment of the level of research support from the sponsor among all campuses. A list of sponsors and projects for which exceptions have been concurred with by the OTT will be disseminated in the Patent Clause Compendium.

11-430 Procedures for Review by Senior Vice President--Business and Finance

In cases where the campus, OTT, and sponsor cannot agree on appropriate patent clauses, the Chancellor or Laboratory Director may request in writing a review by the Senior Vice President--Business and Finance. A list of sponsors and projects approved through such review will be disseminated in the Patent Clause Compendium.

11-500 SUMMARY OF RESPONSIBILITIES

11-510 CONTRACTS AND GRANTS OFFICERS

Contracts and Grants Officers are responsible for:

--Negotiating and approving clauses in sponsored agreements consistent with standard clauses or which meet the general and specific guidelines for patent clauses promulgated in Section 11-300 of the Contract and Grant Manual;

--Assisting the Office of the President, Research Administration Office in maintaining the Patent Clause Compendium;

--Collaborating with the OTT if exceptions to standard clauses or the guidelines are required;

--Accepting patent clauses that vary from the guidelines with concurrence from OTT;

--Seeking the Chancellor's request for a review and approval by the Senior Vice President--Business and Finance in cases where agreement with the OTT cannot be reached;

--Obtaining written concurrence from the Principal Investigator and project staff, as necessary, when agreed-to patent clauses place additional obligations upon the Principal Investigator, such as pre-publication review by the sponsor or specific record-keeping or reporting requirements, or when such clauses limit the Principal Investigator's normal patent rights, such as those assigning the patent rights to the sponsor or entailing royalty-sharing or non-royalty bearing provisions;

--Advising Principal Investigators at the time of awards of the patent provisions set forth in the agreement supporting their project and of related University patent policies, regulations and procedures; and

--Submitting Interim and Final Reports of Patentable Inventions, if required, to the OTT for concurrence and forwarding to the extramural sponsor.

11-520 RESEARCH ADMINISTRATION OFFICE, OFFICE OF THE PRESIDENT

The Office of the President Research Administration Office is responsible for:

--Updating the Contract and Grant Manual as Presidential patent policies are revised or issued;

--Maintaining and disseminating via Contract and Grant Memo the Patent Clause Compendium, including standard clauses for use with generic categories of sponsors, sponsor-specific clauses, and a listing of sponsors and projects for which exceptions have been approved by the OTT Director or the Senior Vice President--Business and Finance; and

--Negotiating with sponsors on behalf of the University in consultation with the OTT.

11-530 OFFICE OF TECHNOLOGY TRANSFER, OFFICE OF THE PRESIDENT

The Office of Technology Transfer (OTT) responsibilities include:

--Specifying acceptable and unacceptable patent terms and conditions;

--Providing standard clauses for certain categories of sponsors and various types of situations to be disseminated in the Patent Clause Compendium for use as a guide by Contracts and Grants Officers;

--Providing a list of sponsors and the approved sponsor-specific patent clause for dissemination in the Patent Clause Compendium;

--Negotiating with sponsors on behalf of the University when the objective is to secure a change in the patent policy of a sponsor;

--Training Contracts and Grants Officers in patent administration, with particular emphasis upon negotiation of patent clauses in sponsored agreements with commercial and non-profit sponsors;

--Assisting Contracts and Grants Officers in developing and negotiating agreed-to variations, modifications, or exceptions appropriate to specific situations and providing a list of such approvals for dissemination in the Patent Clause Compendium;

--Preparing a background recommendation for the Senior Vice President--Business and Finance in the event that an acceptable variation cannot be developed and the Chancellor or Laboratory Director requests a review by the Senior Vice President--Business and Finance; and

--Preparing, reviewing and approving required reports of patentable inventions to sponsors.

11-540 PRINCIPAL INVESTIGATORS

Principal Investigators, on behalf of themselves and project staff, are responsible for:

--Providing a well-defined, specific, and complete work statement and budget for the project;

--Apprising themselves and others of their obligations under contract and grants, using reasonable effort to avoid conflicting obligations to third parties, and bringing any potential conflicting obligations promptly to the attention of the Contract and Grant Office in the event such obligations develop;

--In accordance with University of California Patent Policy, insuring that all individuals, including graduate students, visiting scientists and scholars, to be involved in work under a contract or grant, or who may use University research facilities, have executed a University Patent Agreement before doing so; or insuring that an appropriate exemption document is in the file of an individual who has not executed a Patent Agreement;

--Periodically reminding all individuals associated with work under a contract or grant of both University and sponsor patent obligations and submitting any periodic reports on patents, as required;

--Promptly reporting all patentable or possibly patentable inventions directly to the OTT in such form as may be prescribed; and

--Preparing and submitting appropriate reports.

11-600 COPYRIGHTS AND RIGHTS IN DATA

RESERVED

11-700 TANGIBLE RESEARCH RESULTS AND PROPRIETARY DATA

RESERVED

11-800 TRADEMARK AND USE OF UNIVERSITY NAME

RESERVED

11-999 UNIVERSITY REFERENCES

GENERAL

  • Regulation 4, Services to Individuals and Organizations issued June 23, 1958 by President Robert G. Sproul

  • Chapter 1-400; and the Guidelines on University-Industry Relations issued May 17, 1989 by Presidential Memorandum

  • Presidential memorandum dated January 28, 1983 to Vice President Business and Finance, Subject: Delegation of Authority--Execution of Documents for Administration of University Patent and Other Intellectual Property Matters

  • Senior Vice President - Administration Memorandum dated April 23, 1985 to Associate Vice President, Subject: Delegation of Authority--Execution of Documents for Administration of University Patent and Other Intellectual Property Matters

  • Associate Vice President Memorandum dated June 27, 1985 to Director, Patent, Trademark and Copyright Office, Subject: Delegation of Authority--Execution of Documents for Administration of University Patent and Other Intellectual Property Matters

    PATENTS

  • University of California Patent Policy

  • Patent Agreement

  • Summary of Sponsor Patent Rights Applicable to Funding Agreements With Industrial (For Profit) Sponsors of Research

  • Standing Order 100.4(mm) Duties of the President

  • Business and Finance Bulletin G-40, University of California Patent Program

    COPYRIGHTS

  • University of California Copyright Policy

    EXTERNAL REQUIREMENTS--FEDERAL

    11-F01 37 CFR 401

    [RESERVED]