Sunday, August 30, 2015

Collaborative R&D and IP

Collaborative R&D is a common approach that companies use to develop and secure IP by working with third parties. Companies engaged in collaborative R&D have the goal of securing IP, at an economical (e.g., reduced) cost, thus enabling the development of new products and/or protecting one or more existing products. Collaborative R&D is intended to increase a company’s competitive advantage.

Potential partners for research and development are, for instance:
  1. Federal agencies and military organizations that sponsor research and provide grants through; for instance, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, published solicitations, and unsolicited means
  2. Public and private companies that have internal research-and-development budgets
  3. Public and private universities

The entities mentioned above do not engage in research for which they don’t retain some rights. The degree of rights sought by each particular entity depends on its current policies and historical practices. From an entrepreneurial, early-stage company perspective, the most important imperative is to achieve, if possible, a useful license and access to the underlying technology that may be generated through the collaboration of both parties. “Useful” implies that both parties have ownership of the underlying patent and other IP, but each party has an ability to operate freely in the markets it has chosen and with products it wishes to produce. Issues related to negotiation are discussed in Chapter 9.6 of my book in the context of investment; however, many of the key points can be applied to negotiations for technology and licensing. Guidance to how each of these types of entities views its technology and patent positions and how collaboration is achieved is provided below.


Securing the technology desired and the associated rights needed when dealing with federal agencies and military organizations is typically not difficult and presents few issues with early-stage technology companies, as the relationship is structured in the form of a grant. For instance, federal agencies will generally retain rights for their specific purposes and especially so when it comes to military agencies, which are primarily interested only in developing capabilities for the defense of the United States. This leaves the grantee the right to pursue both commercial and military interests through the development, manufacture, and sale of products designed for specific markets and customers. The government expects that the grantee will have successful research culminating in useful products.

Collaborative research does not occur in the typical sense of both government and company researchers working together in the same physical environment; however, results, reports, and methods of research are shared, as the government needs to understand the underlying technology so that it may better manage its transition into useful military products. Government research is always accomplished under one or more agreements on confidentiality of information for both parties.


Public and private companies strive to develop technology and IP in areas germane to their company’s key markets and product opportunities. They are primarily motivated by the need to increase revenue and profits based on products that involve at least moderate levels of technology. These technology-motivated companies view research and development as being in their long-term interest. Suffice it to say that while the contracts may require some complex structuring and lengthy negotiations, appropriate license agreements may be achieved. It is axiomatic that the company paying for the research, or paying the most for the research, has the most rights and in some cases can dictate the terms; however, an entrepreneurial entity with a perceived valuable invention and patent (even if nascent and in the form of a provisional patent application) can leverage the uniqueness of its technology and potential future products into a better negotiation position. Everything is subject to negotiation.

Collaboration with public and private companies can occur in the same physical space, though it is more likely that aspects of the research-and-development effort are divided up in a programmatic manner, with each party being responsible for accomplishing its assigned tasks in its own physical facilities. Any combination of human resources (e.g., assigned researchers) and physical facilities is possible, depending upon what is viewed as optimal to achieve success. As each party is required by its company’s employment agreement to follow strict rules on confidentiality and disclosure, issues are typically minimal with respect to the protection of IP. Nevertheless, continuous reminders to personnel of their need to preserve evolving secrets are a good policy. As employees are known to move from one company to the next, entrepreneurial companies are well advised to not “overshare.”


Public and private universities may seek rights that enable them to continue the research of their professors and departments, which are focused in specific “core competency” areas. They also need to sponsor students’ research and increase the numbers of licensable technologies. Universities seek to license to others in one or more restrictive ways (e.g., by product category or markets, for instance) that don’t interfere with prior licenses and licensee interests. Large universities, such as MIT and Stanford, as well as many others, view the technology developed at their institutions as valuable and a potential source of revenue that can be used to further promote their missions and goals. Universities are generally amenable to any reasonable license that is supportive of their research interests. Technology they own, especially when in the form of a patent, may be sought by more than one company, which can make the negotiation and bidding for the patent highly competitive.

Collaborative research with public and private universities presents some difficult issues related to the inadvertent dispersion of technology. University environments by their very nature encourage sharing and open communications; however, collaborative research requires that sharing be strictly confined to the researchers and students directly involved. There is no issue of balancing the interests of one group (student researchers) with those of the sponsoring early-stage company; that is, student researchers must be arduously advised against sharing information outside the collaborative effort, and nondisclosure agreements, training, and monitoring must be continuous.

Another aspect of inadvertent dispersion of technology and IP involves the student researcher who eventually publishes a dissertation or technical paper and leaves the university environment. The legal entanglements that exist while the student is at a university can be either tenuous or nonexistent, but they are certainly very difficult for an entrepreneurial entity to monitor and enforce. One measure that the entrepreneurial company can take is to separate out, as much as possible, research conducted at the university from product implementations and know-how in the form of trade secrets possessed by the company. In that regard, company researchers have to be mindful to not “overshare” or divulge useful information merely on the basis of being friendly with, and helpful to, the student researcher. This is a gray area that must be carefully monitored by the company’s executive management.

If possible, developed technology is managed into IP (particularly patents) by the company, and professors and student researchers are listed, as appropriate, as inventors, with assignments of the IP to the company based on the licensing agreement with the university. Some aspects of the technology not strictly developed by the university and more applicable to the actual product may be bound up in patents in which only the company’s inventors and researchers are listed. Numerous conflicts will naturally occur, and the company’s executive management, especially the CTO, must tactfully manage the university research so that essential IP is funneled into the company’s portfolio with minimal angst to the university researchers and managers. Usually, if this management activity is left until the end of the research and loose ends remain, then problematic outcomes (e.g., confused IP ownership) occur.

Professors and their student researchers naturally want to publish, so entrepreneurial technology companies can expect to see much information disclosure. In reality, there is little that can be done to prevent publication, though publication may be delayed. Some elements of the collaborative research (perhaps the theoretical parts, for instance) may be isolated into publications managed by the university in which useful IP is either not disclosed or minimally disclosed. Other elements of the collaborative research may be aligned with the company’s product introductions, and formal publication can occur later or not at all and, in any event, disclosure of IP either doesn’t occur or does occur based on actual filed provisional patent applications.


Make sure IP ownership and disclosure rights are clear within the joint development-and-license agreement, especially when paying others to do research or doing research together in a collaborative fashion.



Rocky Richard Arnold provides strategic corporate and capital acquisition advice to early-stage companies founded by entrepreneurs wishing to successfully commercialize high-value-creation opportunities, ideas, and/or technologies. More information about Rocky can be found at His book, The Smart Entrepreneur: The book investors don’t want you to read, is available as paperback or Kindle ebook for purchase on Amazon at Financial software for use by startups can be purchased on Amazon at He posts articles about entrepreneurship on his blog at Connect with Rocky on Twitter @Rocky_R_Arnold; Facebook at; Google+ at

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