Universities, industry partners often at odds over “non-commercial” IP
Excerpted from the January 2024 issue of University-Industry Engagement Advisor. UIDP members can view the entire issue here.
Negotiations are often difficult in finalizing a university-industry partnership, and in at least one respect industry engagement professionals say things are getting even tougher. They point to a recent trend in which industry partners in sponsored research have become more reluctant about agreeing to limit IP use to “non-commercial” applications — i.e., artistic, educational, scholarly, or internal research projects that will not be marketed, promoted, or sold. Some partners, they note, insist that by their very nature everything they do is commercial. At the other end of the spectrum is the argument that the resources the university provides to enable and enhance the research more than justify the financial investment the industry partner is making.
A wide variety of options have been offered, but no “perfect” solution has been found. One suggestion for overcoming that friction is defining “commercial” in the agreement (any use of the technology that creates a revenue event), rather than defining “non-commercial” and therefore subject to a non-commercial NERF license. Some on the university side say the issue is “much ado about nothing,” since the vast majority of IP yields a negligible amount of revenue. Still others suggest that if the industry partner is so adamant about having such broad rights to a technology, they should be willing to pay more via an upfront fixed fee, whether or not the technology produces an invention.
“I’m not sure you can define non-commercial; all research is potentially commercial,” says Ashley Stevens, principal with Focus IP Group, LLC, Winchester, MA. “It seems to me if somebody pays a university to develop something, the least they can get is the right to use it in their own research. Not ‘make use and sell’ — they should pay more for that — but a license to make and use but not sell. If they want to sell, have a negotiation — but that will cost more.”
A key part of the issue, adds Deah McGaughey, MS, technology licensing associate in the Office of Commercialization at Washington State University, comes down to differences in philosophical approach. “Industry looks at research specifically for commercial purposes, while the university is more, ‘Let’s see what happens,” she offers.
In addition, she notes that many industry partners don’t realize the limitations on what many universities can agree to. “Part of the problem I see is that private industry wants us to agree to give them all rights to anything even related to the project — and as a state entity we’re not allowed to do that,” she observes. “Each state is different, and it also depends on if the university is public or privately funded — whether it’s a land-grant university,” she explains. “As a land-grant, we have other regulations we must follow — even in a sponsored research project. For example, we can’t do anything where it looks like a company is being given an unfair advantage in a field.”
McGaughey also notes there are restrictions around what the university can offer when it comes to intellectual property rights “if we do not know what the IP is, and whether it’s derived from a sponsored research project or separate from it.”