Chapter 11
Table of Contents
Chapter 11-100
11-100 Relationship to Academic Policy
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: Principles Regarding Rights to Future Research Results in University Agreements with External Parties, issued August 26, 1999 by President Richard C. Atkinson; APM-020 (formerly Regulation 4), Services to Individuals and Organizations issued June 23, 1958 by President Robert G. Sproul; and the University Publication Policy and Guidelines on Rights to Results of Extramural Projects or Programs as stated in Chapter 1-400.
The 1999 Principles Regarding Rights to Future Research Results in University Agreements with External Parties establishes the fundamental parameters for negotiating agreements with external parties to address rights and obligations associated with future University research results. The eight core principles delineated are intended to offer flexibility to a broad range of specific circumstances to address the parties’ interests in future research results.
These eight principles are:
- Open dissemination of research results and information
- Commitment to students
- Accessibility for research purposes
- Public benefit
- Informed participation
- Legal integrity and consistency
- Fair consideration for University research results; and
- Objective decision making
APM-020, historically known as 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 an individual may make worthy contributions to knowledge; or 3) it is an appropriate public service.
The University's policy on Publication Policy and Guidelines 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, researchers, 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 APM-020 and Principles Regarding Rights to Future Research Results in University Agreements with External Parties, 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 Contract and Grant Manual 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 Contract and Grant Manual 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.
11-110 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 to the Provost and Executive Vice President — Academic Affairs 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, who has redelegated the authority to the Executive Director, Innovation Alliances & Services.
The President has promulgated specific policies and delegations of authority in each of the areas of intellectual property.
Chapter 11-200
11-200 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.
11-210 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 subsequently revised, and the current Patent Policy, which was issued on October 1, 1997, generally applies, except with respect to certain University inventors who were eligible and elected to be governed by the 1985 version of the Patent Policy. 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, now replaced by the Technology Transfer Advisory Committee, chaired by the Provost and Executive Vice President--Academic Affairs, and the assignment of responsibility for implementation of the policy to the Provost and Executive Vice President-- Academic Affairs.
11-220 Patent Acknowledgment
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 Acknowledgment only if they are employed by the University, receive contract or grant funds through the University, are engaged in a sponsored research project, or use University research facilities.
The Patent Acknowledgment 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 Acknowledgment or (prior to 1997) 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 Acknowledgment before such use or work commences.
When there is no use of University research facilities or use of University contract, grant or gift funds, exemptions to signing the Patent Acknowledgment may be authorized for: military personnel on assignment at the University but who are not compensated by the University; University Extension teachers and lecturers; 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 Acknowledgment is included in this Bulletin.
The Patent Acknowledgment 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 confirming 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 campus Authorized Licensing Office may release rights in inventions to inventors in accordance with the following criteria:
-
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 APM-020 - rights to be released to the inventor. An invention is considered to have been made under a “permissible consulting” activity (and thus an invention in which patent rights may be released to inventors) if that invention is made:
- pursuant to an outside professional activity (as discussed under APM-025);
- without utilization of University research facilities and/or gift, grant, or contract funds administered through the University (University Patent Policy);
- without incurring any University obligations to other parties (University Patent Policy and Patent Acknowledgment); and
- outside an individual’s employment obligations (“scope of employment”) to the University.
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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 course and 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 intending to actually file a U.S. patent application.
11-230 Responsibility for Patent Clauses in Sponsored Agreements
The Patent Policy, Section III C, assigns the responsibility for implementation of the policy to the Provost and Executive Vice President – Academic Affairs. Two of the responsibilities assigned to the Provost 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..."
And
"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, Research Policy Analysis and Coordination (RPAC) 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 and other guidance issued from time to time by RPAC, the Provost retains the authority to determine exceptions to these Guidelines, and has delegated this authority to the Executive Director, RPAC.
11-240 Procedures for Accepting Patent Clauses in Sponsored Agreements
Sections 11-240.1 through 11-250.3 outline the general procedures used for the development, approval, and dissemination of acceptable patent clauses in sponsored agreements.
11-240.1 Clauses That May Be Used by Contracts and Grants Officers
- Campuses and Laboratory Contracts and Grants Officers may accept patent clauses independently of the Office of the President, Research Policy Analysis and Coordination (RPAC) if a standard or tailored patent clause is acceptable to the sponsor and is within University policy.
Standard patent clauses may also have been approved by RPAC (or its predecessor Office of Technology Transfer (OTT)) for continuing use with a particular sponsor. Contracts and Grants Officers must assure that such clauses are appropriate to the individual case at hand.
- 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 RPAC. General Guidelines applicable to all sponsors and specific Guidelines for five types of sponsors are promulgated in 11-300 of this Chapter.
- Section 11-300, General Guidelines for Patent Clauses
- Section 11-310, Preferred Patent Provisions
- 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
11-240.2 Exceptions to Patent Guidelines Approved by RPAC
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 RPAC, and the agreed-upon variation may be used in the contract or grant. However, such exceptions to the Guidelines must be reapproved by RPAC before they can be used in another contract or grant with the same sponsor.
11-240.3 Review by Provost and Executive Vice President--Academic Affairs
Where agreement cannot be reached between the sponsor, Contracts and Grants Office, and RPAC, the Chancellor or Laboratory Director may request a review by the Provost and Executive Vice President--Academic Affairs.
Chapter 11-300
11-300 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. 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, Innovation Alliances and Services or campus Authorized Licensing Offices 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 best evaluated after the invention is made 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.
11-300.1 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.
A grant or contract which has no patent clause is also acceptable. In the absence of any patent obligation 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 or other proprietary materials. It is frequently possible to negotiate the preferred patent provisions.
11-300.2 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 sponsor’s unilateral right to determine equities after the fact can only be accepted by Contract and Grant Officers with prior approval by RPAC.
11-300.3 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.
11-300.4 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" in the performance of 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 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 scope of Federal government patent rights as set forth in 37 CFR Part 401, the codification of the Bayh-Dole Act and related regulations.
Federal regulation 37 CFR 401.1(a) 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.
11-300.5 Obligations Outside the Agreement Work Scope
Care should be taken to assure that patent clauses place no patent obligation on the University beyond the carefully defined scope of 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.
11-300.6 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.
11-310 Guidelines for Patent Clauses in Agreements with Federal Sponsors
11-310.1 Federal Patent Statute and 37 CFR 401
Patent terms in Federal agreements with educational agencies, non-profit institutions and small businesses are governed by patent law, codified in Public Laws 96-517, 98-620, and 106-404, and implemented through 37 CFR Part 401.
With few exceptions, nonprofit organizations and small businesses who perform work under federally funded research agreements may elect to retain patent rights to inventions arising from the sponsored research, subject to granting certain rights to the government such as 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."
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 not to pursue commercialization, 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 the Federal standard patents rights clause in 37 CFR 401.14(k)).
11-310.2 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 any Federal funding agreement, which includes any contract, subcontract, grant, or cooperative agreement entered into by any Federal agency (other than the Tennessee Valley Authority) and the University for the performance of experimental, developmental, or research work funded in whole or in part by the Federal government, the required standard Federal patent clause is incorporated in 37 CFR 401.14.
11-320 Guidelines for Acceptable Clauses for State of California, County, and Municipal Government Agencies
11-320.1 Standards for Acceptable Clauses
Historically, many agreements with State, county, and municipal government agencies traditionally have not included any patent provisions, and this precedent should be continued as much as possible. 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.
11-320.2 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 11-300.1 is acceptable.
11-330 Guidelines for Patent Clauses in Agreements with For-Profit Sponsors
11-330.1 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 time-limited first right to negotiate 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 time-limited first right to negotiate 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 sponsor a time-limited first right to negotiate a license to patentable inventions (other than plant patents) conceived and reduced to practice in the performance 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 and reimbursement of patent prosecution and maintenance costs.
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.
11-330.2 Considerations in Developing Acceptable Clauses with For-Profit Sponsors
- 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."
- 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 time-limited first right to negotiate 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."
- 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.
- 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.
- 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 Innovation Alliances and Services and to campus Authorized Licensing Offices (and not to Contract and Grant Officers). (See Sections 11-110 and 11-230.) Other than stating general conditions of the license, such as negotiable royalty rates based on general university-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, Innovation Alliances and Services or campus Authorized Licensing Offices will usually negotiate a separate agreement containing the license terms.
11-340 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 including full indirect costs. 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 entity 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 11-300.1). Only if this is unacceptable to the sponsor should the following Guidelines for acceptable clauses be used.
11-340.1 Considerations in Developing Acceptable Clauses with Non-Profit Sponsors
- Right to Non-Commercial License
Upon request, a non-profit sponsor may be offered a non-commercial, royalty-free, non-exclusive license to any patentable invention that is conceived and first actually reduced to practice in the performance of 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.
- 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 a non-profit charitable 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 at the time the invention is known.
- 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 11-310.3), it is acceptable to negotiate provisions that allow the non-profit sponsor to seek title in the event the University elects not to seek patent protection and not to pursue commercialization. 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 performance of research carried out under this award shall be the property of the University provided that the University shall 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 not to pursue commercialization, 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. In cases where the non-profit sponsor is not paying al direct and indirect costs of the research and for the reasons outlined in Section 11-340.1(2), it is essential that a patent provision al owing 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."
- Royalty Sharing
Clauses providing for royalty-sharing with a non-profit charitable sponsor can only be accepted with the concurrence of the campus Authorized Licensing Offices and cannot be approved independently by the Contracts and Grants Office.
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Chapter 11-400
11-400 Patent Terms Requiring Exception to the Guidelines for Patent Clauses
Exceptions to the Guidelines given in this Chapter or other guidance must be approved by RPAC, or if agreement between the campus and RPAC cannot be reached, a review by the Provost and Executive Vice President--Academic Affairs 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.
11-420 Procedure for Patent Clause Exceptions by RPAC
All situations not covered by standard clauses or other guidance must be referred to RPAC.
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 context of the project in the research program. Review at RPAC will include assessment of the level of research support from the sponsor among all campuses.
11-430 Procedures for Review by Senior Vice President—Business and Finance
In cases where the campus, RPAC, and sponsor cannot agree on appropriate patent clauses, the Chancellor or Laboratory Director may request in writing a review by the Provost and Executive Vice President—Academic Affairs.
Chapter 11-500
11-500 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 or other guidance;
- Collaborating with RPAC if exceptions to standard clauses or other guidance are required;
- Accepting patent clauses that vary from guidance with concurrence from RPAC;
- Seeking the Chancellor's request for a review and approval by the Provost and Executive Vice President—Academic Affairs in cases where agreement with RPAC 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 and project staff, such as pre- publication review by the sponsor or specific record-keeping or reporting requirements, or when such clauses limit the Principal Investigator's and other researchers’ normal patent rights, such as those entailing royalty-sharing or non-royalty bearing provisions; and
- 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 campus Authorized Licensing Office or IAS, as appropriate, for concurrence and forwarding to the extramural sponsor.
11-510 Research Policy Analysis and Coordination, Office of the President
The Office of the President Research Policy Analysis and Coordination is responsible for:
- Updating the Contract and Grant Manual as Presidential patent policies are revised or issued;
- Reviewing and approving exceptions;
- Disseminating standard clauses for use with generic categories of sponsors, and sponsor-specific clauses approved by RPAC;
- Negotiating with sponsors on behalf of the University when the objective is to secure systemwide master terms; and
- Training Contracts and Grants Officers in intellectual property matters, with particular emphasis upon negotiation of patent clauses in sponsored agreements with commercial and non-profit sponsors.
11-520 Innovation Alliances and Services, Office of the President and Campus Authorized Licensing Offices
The campus Authorized Licensing Offices (or Innovation Alliances and Services if applicable) responsibilities include:
- Preparing, reviewing and approving required reports of patentable inventions to sponsors;
- Specifying acceptable and unacceptable patent terms and conditions;
- Reviewing and approving clauses providing for royalty sharing with a non-profit, charitable sponsor;
- Assisting Contracts and Grants Officers in developing and negotiating agreed-to variations, modifications, or exceptions appropriate to specific situations; and
- Negotiating terms of proposed licenses with sponsors.
11-530 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 Acknowledgmentbefore doing so; or insuring that an appropriate exemption document is in the file of an individual who has not executed a Patent Acknowledgment.
- 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 campus Authorized Licensing Office or IAS, as applicable, in such form as may be prescribed; and
- Preparing and submitting appropriate reports.
Chapter 11-300
Guidelines for Patent Clauses for Use by Contracts and Grants Officers
11-300 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. 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, Innovation Alliances and Services or campus Authorized Licensing Offices 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 best evaluated after the invention is made 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.
11-300.1 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.
A grant or contract which has no patent clause is also acceptable. In the absence of any patent obligation 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 or other proprietary materials. It is frequently possible to negotiate the preferred patent provisions.
11-300.2 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 sponsor’s unilateral right to determine equities after the fact can only be accepted by Contract and Grant Officers with prior approval by RPAC.
11-300.3 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.
11-300.4 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" in the performance of 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 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 scope of Federal government patent rights as set forth in 37 CFR Part 401, the codification of the Bayh-Dole Act and related regulations.
Federal regulation 37 CFR 401.1(a) 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.
11-300.5 Obligations Outside the Agreement Work Scope
Care should be taken to assure that patent clauses place no patent obligation on the University beyond the carefully defined scope of 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.
11-300.6 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.
11-310 Guidelines for Patent Clauses in Agreements with Federal Sponsors
11-310.1 Federal Patent Statute and 37 CFR 401
Patent terms in Federal agreements with educational agencies, non-profit institutions and small businesses are governed by patent law, codified in Public Laws 96-517, 98-620, and 106-404, and implemented through 37 CFR Part 401.
With few exceptions, nonprofit organizations and small businesses who perform work under federally funded research agreements may elect to retain patent rights to inventions arising from the sponsored research, subject to granting certain rights to the government such as 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."
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 not to pursue commercialization, 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 the Federal standard patents rights clause in 37 CFR 401.14(k)).
11-310.2 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 any Federal funding agreement, which includes any contract, subcontract, grant, or cooperative agreement entered into by any Federal agency (other than the Tennessee Valley Authority) and the University for the performance of experimental, developmental, or research work funded in whole or in part by the Federal government, the required standard Federal patent clause is incorporated in 37 CFR 401.14.
11-320 Guidelines for Acceptable Clauses for State of California, County, and Municipal Government Agencies
11-320.1 Standards for Acceptable Clauses
Historically, many agreements with State, county, and municipal government agencies traditionally have not included any patent provisions, and this precedent should be continued as much as possible. 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.
11-320.2 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 11-300.1 is acceptable.
11-330 Guidelines for Patent Clauses in Agreements with For-Profit Sponsors
11-330.1 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 time-limited first right to negotiate 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 time-limited first right to negotiate 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 sponsor a time-limited first right to negotiate a license to patentable inventions (other than plant patents) conceived and reduced to practice in the performance 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 and reimbursement of patent prosecution and maintenance costs.
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.
11-330.2 Considerations in Developing Acceptable Clauses with For-Profit Sponsors
- 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."
- 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 time-limited first right to negotiate 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."
- 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.
- 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.
- 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 Innovation Alliances and Services and to campus Authorized Licensing Offices (and not to Contract and Grant Officers). (See Sections 11-110 and 11-230.) Other than stating general conditions of the license, such as negotiable royalty rates based on general university-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, Innovation Alliances and Services or campus Authorized Licensing Offices will usually negotiate a separate agreement containing the license terms.
11-340 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 including full indirect costs. 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 entity 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 11-300.1). Only if this is unacceptable to the sponsor should the following Guidelines for acceptable clauses be used.
11-340.1 Considerations in Developing Acceptable Clauses with Non-Profit Sponsors
- Right to Non-Commercial License
Upon request, a non-profit sponsor may be offered a non-commercial, royalty-free, non-exclusive license to any patentable invention that is conceived and first actually reduced to practice in the performance of 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.
- 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 a non-profit charitable 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 at the time the invention is known.
- 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 11-310.3), it is acceptable to negotiate provisions that allow the non-profit sponsor to seek title in the event the University elects not to seek patent protection and not to pursue commercialization. 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 performance of research carried out under this award shall be the property of the University provided that the University shall 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 not to pursue commercialization, 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. In cases where the non-profit sponsor is not paying al direct and indirect costs of the research and for the reasons outlined in Section 11-340.1(2), it is essential that a patent provision al owing 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."
- Royalty Sharing
Clauses providing for royalty-sharing with a non-profit charitable sponsor can only be accepted with the concurrence of the campus Authorized Licensing Offices and cannot be approved independently by the Contracts and Grants Office.
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