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:
- 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
- Public and private companies that have internal research-and-development budgets
- 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.
FEDERAL
AGENCIES
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
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
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.
FINAL
WARNING
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 www.rockyrichardarnold.com. 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 http://tinyurl.com/pv248qq.
Financial software for use by startups can be purchased on Amazon at http://www.amazon.com/gp/product/B00K2KPSI2.
He posts articles about entrepreneurship on his blog at http://thesmartentrepreneur.blogspot.com.
Connect with Rocky on Twitter @Rocky_R_Arnold; Facebook at www.facebook.com/rocky.r.arnold;
Google+ at www.google.com/+RockyArnold01.
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