The ETI operates according to a set of Intellectual Property Principles which have been agreed between the ETI members. These govern how IP should be dealt with, and are reflected in the project contracts which participants enter into with the ETI.
The questions and answers below address various issues relating to intellectual property matters on projects funded by the ETI. They are directed towards projects whose purpose is to develop a technical solution to an identified problem. These projects are usually carried out by a group of organisations who have formed a research consortium. It is likely that in carrying out the project or in exploiting the results of the project, access to the pre-existing intellectual property rights of one or more members of the research consortium will be required.
The ETI also carries out projects involving third parties who provide consultancy or contract research services. In those cases it is likely that different arrangements will apply and, generally, the ETI will look to own the intellectual property rights created in the provision of those services.
The ETI recognises that its "standard" approach to intellectual property matters may not be suitable for every project it carries out. The ETI has sufficient flexibility in its approach to intellectual property matters to allow it to tailor the intellectual property arrangements on individual projects to meet the specific needs of that project where the circumstances justify a departure from the "standard" approach.
Background IP and Background Patents
1. What are Background IP and Background Patents
These are confidential and proprietary information, data, know-how, software copyrights, patents and the like which a project participant has in its possession before a project starts or which it subsequently develops , independently of a project.
2. Does a project participant have to license its Background IP and Background Patents if it joins a research consortium?
The purpose of the ETI is to generate new technologies which can be optimally exploited and which will be widely accessible in the medium to long term. So, if a project participant has Background IP and Background Patents which are material to carrying out the project or the subsequent exploitation of any project results, that project participant will be expected to make them available. This will not be an automatic legal requirement unless the project participant agrees in the project agreements. However, a failure to make such rights available is likely to affect the attractiveness of the project and could make it less likely to attract funding.
3. Who will receive a licence to a project participant’s Background IP and Background Patents if they are made available?
A project participant will be expected to make its Background IP and Background Patents available on a royalty-free basis for the purpose of carrying out the Project. They will also be expected to make their Background IP and Background Patents available for the commercial exploitation of the results of the project to those entitled to use and exploit the results although in this case this will be subject to a fair and reasonable royalty. In the short term, those entitled to ask for a royalty-bearing licence will be limited strictly to those who can exploit the results of the project. This will be the ETI Industry Members and any Programme Associates and, depending upon what has been agreed, other members of the research consortium. However, given the wide remit of the ETI it is unlikely that all Industry Members and Programme Associates will wish to exploit the results of all projects. Therefore, a project participant may not have to license its Background IP and Background Patents to all of those having a theoretical entitlement. A project participant will not have to license its Background IP and Background Patents for any other purpose.
4. If a project participant makes its Background IP and Background Patents available for a Project can it still use them for other purposes?
Unless agreed otherwise, a project participant will make its Background IP and Background Patents available to the project on a non-exclusive basis.
5. Where will these licences be documented?
The project agreements will reflect what has been agreed with a project participant relating to Background IP and Background Patents (any licences will be set out in these agreements). Details such as royalty rates may be decided upfront or at the end of the project when there is a clearer idea of the value of the original contribution and its significance to the exploitation of the results of the whole project
6. What happens to these licences if a project participant leaves the Research Consortium?
If a project participant has made its Background IP and Background Patents available to a project and that project participant subsequently decides to leave the research consortium, then the obligations to licence the relevant Background IP and Background Patents set out in the project agreements will remain in force. A project participant who leaves a research consortium will not, however, need to make any further Background IP and Background Patents available.
Ownership of Arising IP
7. What is Arising IP?
Arising IP (sometimes known as foreground IP) is confidential and proprietary information, data, know-how, software, copyrights, patents and the like which arises out of a project. This could include developments and improvements to any Background IP and Background Patents which have been made available to the project.
8. Who will own the Arising IP?
The party best placed to look after the Arising IP will own it. This will be decided by the ETI and the research consortium at the time funding is sought and set out in the project agreements. In most instances, we would expect the owner of the Arising IP to be a project participant. The ETI reserves the right to ask to be the owner in certain circumstances - for example where research consortium members cannot agree or a particular owner is not able to look after the Arising IP properly.
9. Will it be possible for a project participant to own Arising IP which represents an improvement on the Background IP and Background Patents of the project participant?
Yes. In fact this would be a strong reason for that project participant to be the owner.
10. What does ownership of Arising IP mean for a project participant in practice?
An owner of Arising IP will be required to license the Arising IP it owns to the ETI so that it can in turn sub-licence it to anyone else who has exploitation rights. The owner will be responsible for protecting the Arising IP, which could include obtaining any patents (see below). In doing so the owner will be required to ensure that the interests of anyone else having access to the patents are properly looked after including possibly enforcing the patents against others.
11. Who will pay for these patents and other protection?
Any costs which are likely to arise during the project will be met by the ETI. At the end of the project, the ETI, together with those having an active interest in exploiting the patents and other IP, will decide how costs should be managed and apportioned thereafter.
12. Will an owner be able to ask for extra patent protection?
In principle yes, but it will be subject to the agreement of the ETI and the other interested parties.
13. What about the costs of enforcing these patents?
This will be addressed on a case-by-case basis, but the general principle will be that those who benefit will contribute towards those costs.
Exploitation of Arising IP
14. How will a project participant be able to exploit the Arising IP?
This will depend on what is agreed with the ETI. For example, a project participant may simply be providing contract research services to the research consortium at above the full economic cost, in which case the expectation might be that such a project participant would not get any rights. On the other hand, a project participant may be contributing both critical Background IP and Background Patents and unique expertise and undertaking the work on the project at cost. In such situations, the expectation is that they would be granted exploitation rights similar to those of the Industry Members (see below). It is believed that this approach allows maximum flexibility and scope for all the parties concerned to reach a fair and equitable outcome.
15. Who else will have rights to the Arising IP?
This will depend upon the outcome of discussions between the ETI and the members of the research consortium at the time the request for funding is approved. The default position is that the Industry Members and any Programme Associates (and their affiliates) will be granted a royalty-free right to use and exploit the Arising IP. These entities will have no right to sub-license third parties except for a "have made" right and contract research purposes. In some cases some Industry Members and Programme Associates will not wish to exercise their licensed rights and exploitation is likely to be by a small group of those granted rights.
16. Does this mean that there will be an “exclusive club” of people who can exploit the Arising IP?
Potentially “the club” could consist of all of the relevant Industry Members, Programme Associates and one or more members of the research consortium. In practice, as explained above, those actively using or exploiting the results are likely to be a smaller group.
17. How long will exclusivity last?
Since the ETI is keen to see the results of ETI projects effectively commercially exploited there will be a limit on the length of the exclusivity period. In general, the licences of the Arising IP will become non-exclusive seven years after the end of the project. It will be for the ETI and the research consortium members to agree how the Arising IP should be made available at the end of the exclusivity period. This could be agreed at the start of the project or decided at a later date, once the project was up and running. The default position is that in the absence of any other approach, licences will be made available by the ETI. Also, if before the end of the exclusivity period, it becomes apparent that nobody in the club will be exploiting it, the ETI can grant early open access. Any licence granted to a third party in such circumstances is likely to be royalty-bearing.
18. How will licensing of the Arising IP work in practice?
An owner of Arising IP will be required to exclusively license it to the ETI who will then grant the other members of the exclusive club the exploitation rights to which they are entitled. At the end of the exclusivity period (see question 17), the ETI will grant rights to third parties on royalty-bearing terms. This activity is quite separate from the licensing of a project participant’s Background IP and Background Patents which will remain the responsibility of that project participant.
Miscellaneous
19. What obligations will be placed on project participants regarding confidentiality, reporting and publication?
The project agreements will include the usual obligations of confidentiality with respect to Arising IP and other parties’ Background IP and Background Patents. Any policy around publication will be agreed on a case-by-case basis, bearing in mind the wish of academics to publish their research findings whilst safeguarding the commercial value of associated IP. Project participants will be required to report project results to other research consortium members, the ETI and those Industry Members and Programme Associates entitled to use and exploit the Arising IP.
20. Third Party Infringement
Before agreeing to fund a research consortium’s project, the ETI will need to be satisfied, as far as possible, that carrying out the project (and exploiting the Arising IP) will not lead to an infringement of any third party patents. In practice this will involve patent searches and analyses. The risk of infringement should be small, especially in the early stages of a project. Where appropriate, licences of third party IP should be obtained. While any third party infringement matters will remain the responsibility of the relevant project participant, where feasible, the ETI will help a project participant to resolve any dispute especially if it can help facilitate exploitation of the Arising IP more widely.