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Lay groundwork carefully or face the perils of joint research projects


By David Schwartz
Published: January 5th, 2011

The very phase “cooperative research” conjures visions of collegial scientists working together in harmony. But things can get ugly if the results of joint projects yield valuable IP with no clear roadmap for ownership and commercialization.

Consider the case of the University of Pittsburgh v. Hedrick, a squabble over inventorship in a patent relating to adipose-derived stem cells. While researchers from both the University of Pittsburgh and the University of California at Los Angeles worked on the innovation, after nearly three years of contentious litigation over the discovery the U.S. District Court for the Central District of California ruled in June that only a pair of researchers from Pitt are the rightful inventors. That decision is now being appealed, and the dispute is particularly messy since both universities signed separate exclusive licenses for the technology with outside companies.

The patent had originally included four co-inventors from UCLA. Pitt and UCLA signed separate exclusive deals with Sunnyvale, CA-based Artecel and San Diego-based Cytori Therapeutics, respectively. Under the district court ruling, UCLA and Cytori lost all patent rights.

It is hard to say exactly what went wrong in this case because neither side is talking while the case remains in litigation. Experts acknowledge that there is no surefire way to prevent such disputes, but there are definitely steps you can take to minimize the chances you’ll be caught in a similar squabble.

Build an administrative framework

“I think this situation is a very good exemplar of the kinds of problems that can arise,” stresses Jay Kesan, a professor of law and an expert on technology patents and IP at the University of Illinois at Urbana-Champaign (UIUC). “[Universities] get involved with these joint agreements for all kinds of reasons, but they also can give rise to ownership disputes. It is important that systems be put in place so that when any invention disclosures are generated … things like inventorship are properly worked out.”

Kesan is not necessarily calling for specific language in a contract, but rather strongly recommends establishing processes to establish ownership and commercialization rights at the point of disclosure, not later when the parties may have different views of their stake in the IP. “Put a mechanism in place so IP that is generated is basically reviewed by offices at both entities, and issues like inventorship are resolved,” he says.

Equally important to having a process in place is making sure that everyone involved is clear on what that process is, emphasizes Lesley Millar, MS, MBA, director of the office of technology management at UIUC. She urges tech transfer officials to be “up front in articulating early the process for review and evaluation of a piece of IP — including what you might do if there is a dispute,” to keep things from turning ugly. “It is such an easy thing to say — communicate early and often — but that is what it comes down to,” she comments.

Get inventorship right

Once a disclosure has been made, an important next step is to bring in a patent attorney to speak with all of the inventors from every participating institution. “We have often done this by hosting teleconference calls,” says Millar. “We have counsel sit down with faculty members and principal investigators and go through what they believe the invention or the technology is, understanding that by the end of the process the invention [that is patented] may not be the same thing.”

With a thorough review process, mistakes will usually come to light before a patent application is too far along, according to Willis Colburn, a UIUC patent coordinator and patent agent. “The whole process of having the inventors, and particularly the principal inventors, go through the patent application drafts and think about who they need to speak with to get some questions answered often reveals that there is a particular graduate student who should be added as an inventor,” he says. “Our office and our attorneys are good at making it clear that we don’t have any biases over who should or who should not be an inventor. We just want to get it correct because of the serious penalties involved in the patent office if we don’t make a good faith effort to get the inventorship correct.”

Both before and after inventorship is determined, it is often incumbent on tech transfer professionals to make sure that faculty understand the importance of maintaining all the documentation they have surrounding their discovery process. “The use of notebooks and other evidence in relation to who invented what — sometimes it comes down to that,” says Millar, noting that notebooks are a key piece of evidence in the University of Pittsburgh v. Hedrick case. “Although some people say that notebooks in their written form are out of the Dark Ages, that sort of information is essential in determining inventorship, and those pieces of information need to be kept.”

Take care of contributors

While the technicalities of patent law dictate who should and should not be listed as an inventor on a patent based on the specified claims, there are ways to take care of researchers who made significant contributions to an invention, but who do not meet the legal criteria as inventors. “If there are opportunities for funding to either continue the research or to implement a commercialization plan, we will give very careful thought to who should benefit in that funding,” explains Jim Baker, PhD, the director of technology and economic development at Michigan Technological University in Houghton, MI. Other ways you can recognize contributors include citing them in published work or even granting them a share of whatever income is derived from the innovation. Baker emphasizes that such consideration can go a long way toward minimizing discord as well the potential for legal challenges later on. “If you have a good working relationship … then you can work through just about anything,” he says.

Creative solutions that keep all contributors satisfied often depend on having attorneys who understand the collegial nature of academic research, Baker adds. “It all comes from an understanding that these are professional colleagues, and they have a working relationship well outside of this particular commercialization case we are working on, and there are a lot of tangential and downstream benefits well beyond the commercialization program that we need to be at least mindful of,” says Baker. “In my experience, having someone who is sensitive to that — who does not just blow off the scientists’ collegial interests — is very important.”

Many attorneys have been ingrained with the belief that it is their job to ask for more than they think they can get in any negotiation. But Baker advises adopting a more reasonable or realistic posture in negotiations with research colleagues. “If we have two scientists working together, and I give their technology transfer office some onerous terms, the TTO is going to go back to the scientist and say that these guys are really playing hardball with us, and that harms the relationship,” says Baker. “We never ask for more than we think we deserve. That is one of the strategies we have for preserving the relationship.”

Define contribution percentages up front

At Texas Tech University, problems with joint research agreements are headed off by defining in percentage terms the contributions that each researcher or lab is expected to deliver over the course of any particular project. Things don’t always play out exactly as planned, but spelling out such terms on the front end sets up a process and an expectation that can be amended if necessary, according to David Miller, vice chancellor in Office of Technology Commercialization at the Lubbox, TX-based school. TTO negotiators there document the expected contribution percentages of the parties involved ahead of time “rather than waiting until there is actual revenue created. If [the percentages] vary along the way, let’s revisit them at that time,” he says. “Our concern is that if we get to a place where there is actual cash flow coming in, it is much harder to reach an agreement because people are actually counting money.”

Even when there is no obvious reason to adjust a research agreement, Miller likes to work into the agreement a schedule to revisit the pact at specified intervals. “If it is a two-year project, we recommend semi-annual [meetings], but if it is three years or longer, then we would recommend annual meetings,” says Miller. “If it is a shorter-term agreement, say six months or one year, then we would recommend that we come back and revisit the agreement at least one time.”

Such communications go a long way toward insuring that there won’t be any surprises at the conclusion of a project, and they make it easier for difficulties to be addressed before they grow into larger problems. “I think we have caught a lot of potential conflicts before they were created,” says Miller. “If we had left some of these issues alone, as the revenue started flowing through, we would have had a bigger issue.”

Contact Kesan at Kesan@law.uiuc.edu or 217-333-7887; Millar at millar@illinois.edu or 217-333-6807;Colburn at wcolburn@illinois.edu or 217-265-6217; Baker at jrbaker@mtu.edu or 906-487-2228; and Miller at david.l.miller@ttu.edu or 806-742-4103.

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