In the previous parts of this series, we discussed grant funding requirements and active management of confidential information flows in R&D collaborations in the energy and resources space. In this part, we explore options for structuring the rights of collaborating parties to use and exploit results and developed IP arising from the project.
Carefully structure rights to results
Results and developed IP are the goal of all R&D programs, and the rights of collaborating parties to those results must be carefully structured from the outset, with a view to balancing clarity and flexibility.
Multilateral research projects will generally vest ownership of IP in the lead research institution for a variety of reasons. What happens to the IP from that starting point can vary, for example:
- Options to take exclusive or non-exclusive licences to exploit developed IP;
- Rights to use results internally (which may or may not extend to the corporate group and/or service providers) for business process improvement purposes;
- First refusal rights for parties involved in particular projects in respect of the IP arising out of that project; and
- Rights to exploit IP outside the project while the project is still underway.
In most cases, research partners will expect rights to use IP for ongoing research and development, and you should consider whether those rights should be limited, for example by:
- Requiring that results only be used for research internal to the institution;
- Requiring reports on any future research;
- Prohibiting third party access to results; or
- Automatically licensing improvements in the same way as IP developed during the course of the project.
In bilateral projects, it may be easier to obtain an assignment of IP, but research licences may still dilute the value of that IP to the business, in particular where it is being used for external commercialisation or to attract investment.
Where other parties’ pre-existing IP or other third party IP is required to make use of developed IP, this generally needs to be licensed separately. The costs of licensing pre-existing IP should be factored up front into any decisions around investing in the R&D project, and when assessing the potential benefits of exploiting project IP. Reach-through terms applicable to open source software used in a project can also be a real risk to any plans to commercially exploit developed software.
As it is generally unclear what results will actually emerge from projects, clear processes should be agreed for protection of IP and managing infringement claims, including who pays for patent costs and whether the paying party then has exclusive rights to the IP in question.
Although not directly an IP issue, you should also obtain advice to ensure that the IP arrangements in collaborative projects involving competitors do not risk constituting a cartel in contravention of the Competition and Consumer Act. The recent removal of the exemption from breach of cartel provisions for assignment and licensing of IP means these arrangements may expose your company and its officers to increased risk if not structured appropriately. Consideration should be given to fitting within the joint venture exemption if there is any risk of a cartel arising.
In the next part of this series, we explain the imperative on academics to publish results, and how to manage the implications for the value of IP in a collaborative project. If you missed the earlier parts of this series, you can find them here.
HWL Ebsworth’s intellectual property team has extensive experience assisting clients to maximise the value of their R&D investments. Please contact us to learn more.
This article was written by Luke Dale, Partner and Nikki Macor Heath, Senior Associate.