University inventions - lessons from Cambridge

By Alasdair Poore, Mills & Reeve, Cambridge

A smart idea?
Two members of the team were sitting talking about their work on diet and mental acuity in the crypt bar. They had lots of ideas about how it could be turned into a commercial product, and bring fame and glory to themselves and the university. The biochemistry had been shown to work very effectively. There were issues with the software that they were writing at the moment but, as optimists, they could see that these could quickly be overcome, and the potential was literally mind blowing. While they were talking, an MA student, who had overheard them, offered them another drink. And so the seeds of a lucrative-sounding collaboration came to be sown.

There was, of course, one little mountain to be climbed. That was ‘the university’. Their MA interposer had talked to them about the vital need to secure the intellectual property, or IPR, and they had a vague notion about university IPR policies, and uneasy feeling associated with them. Maybe some stories in the background from other colleagues about ideas entering a vast ‘university machine’, a bureaucracy of ‘1984’ standards where big brother was more interested in processes than outcomes. The thought of gradually being chewed around, ideas and opportunities being diluted and delayed until the ideas (and the colleagues) were rolled over in an atmosphere of despair, and life got back to doing research rather than spreading the wings of innovation.

Getting to an IPR Policy: Negotiating turbulent waters
Is this the environment into which university IPR policies are inevitably born? The University of Cambridge has recently given birth to a policy which started with morning sickness and continued with pregnancy complications to compete with a minor celebrity giving birth on ‘Big Brother’. Do the experiences of the University of Cambridge throw any light on how to nurture a new intellectual property policy into being so that it creates a flourishing environment to promote effective support of academics in getting their ideas out into the world? And do they assist in solving the problem identified by Lord Justice Jacob in IDA Ltd and others v University of Southampton and others regarding the high costs involved in fighting to the end what frequently become protracted disputes, in the process of which the ‘development and exploitation of the invention under dispute will be stultified by the dead hand of unresolved litigation’? 1 Indeed, Jacobs LJ recommends earlier settlement of disputes for a lesser sum than one might expect, given that ‘a small share of large exploitation is better than a large share of none or little’. 2

Several hundred years’ baggage
A brief lesson on (recent) history is in order. The University of Cambridge, together with its sister institution in Oxford, came to IPR policies with some background – background from liberal academic traditions, rather than the tight world of corporate intellectual property. Rather like, as those who are familiar with the city surroundings in Oxford and Cambridge will have experienced, the quiet and relaxed world of taking a punt down the ‘backs’, compared with the competing in the stormy forces of ocean-going yacht racing. In Cambridge these policies used to be summarised along the lines: ‘If you are an academic at Cambridge University, you own all the rights/the university does not assert any rights, in intellectual property resulting from your work as an academic’. Indeed this was promoted as a significant factor in the success of the Silicon Fen: academics, because they owned the rights, had the freedom to develop and exploit them, and therefore they set up businesses around their bright ideas and so grew the bright future of Cambridge as a world-leading successful hub of innovation. Silicon Fen is not confined to electronics, being also part of one of the largest biosciences clusters in Europe, and the same factors are relevant in the biosciences field.

A change meant that transforming this laissez faire into a structured framework, where academics were to be constrained by specific rules, was bound to be a tough process.

However, like many fairytales, this one was actually far more complicated than the simple explanation would lead one to believe. I shall return to this, but first it is as well to understand the way in which intellectual property can arise in a university, and why there was always a risk that an idea conceived in a university would be traumatised in child birth, and even end up as an emotionally disturbed adolescent.

Where (or who) do University inventions come from?
University intellectual property issues, like many aspects of operating within universities, are always more complicated than their corporate counterparts, and not without some good reason. The simple questions ‘Who was the invention made by?’ and ‘Was it made in the course of the person’s normal duties or duties specifically assigned to that person?’, or the more convoluted question, ‘Did that person, by reason of their special position, have an obligation to further the interests of the employer in the relevant area?’ are ones which are fundamental to deciding who owns an invention, and ones it is often difficult enough to answer in the context of a tightly managed corporate environment. In universities these questions are just at the end of a series of other issues which could keep any administrator awake:

Staff, students and visitors

• Was the person making the invention employed at all – what is the position of undergraduates, PhD students, visiting scholars, the individual seconded from industry, or indeed the individual in an industry placement scheme or providing consultancy services to industry? If the individual is not employed, what rules apply to them and what is the legal basis for binding them to such rules? Even if they sign up to a set of rules when taking up their position, have they really consented to them when they may not have been aware of the implications, or in some cases they were not even of the age of consent when they signed up?

Do they invent as part of their jobs?

• What were their duties if they were employed: are they ‘employed to invent?’ In other words, is the nature of their duties such that they have an obligation to carry out research and is that research directed to any specific inventive end? In Greater Glasgow Health Board’s Application 3 the issue turned on whether a medic, who had teaching duties and a ‘privilege’ to do research work, had made an invention which belonged to the university. It was held there, perhaps on the somewhat idiosyncratic relationship he had with the university, that he did not have a duty to do research, and the invention was held to belong to the medic. And what about technicians and assistants: as in many other areas, in the biotech sector technicians are often involved. Are they employed to invent?

Collaboration and cross-fertilization?

• What happens when others are involved in making an invention? Typically, research work in universities, in all fields, but especially the more complex scientific fields, is based around collaborations with others – both other academics and in many cases in the applied science fields with industrial partners, often partners from different countries. Moreover, one of the great merits of a university environment is that it permits cross-disciplinary interactions, so that colleague may well not be in the same research group or even in the same faculty.

For example, problems of the nature of protein-folding technology are now as familiar territory for parts of the mathematics community as they are in the biochemistry department; and quantum interactions, ion channels and electron transfer engage physicists as well as chemists. To say nothing of the impact of software and software engineering on all aspects of the biosciences field, from gene mapping, through structure analysis to in silico chemistry. Indeed the nature of the way inventions may arise in universities opens up questions as to whether the legal framework defining the inventor as the person who devises the invention really works at all.

And beer and coffee

• Furthermore, although some administrators might like to do so, one cannot impose rules or be prescriptive about where inventions arise. Some element of an invention is usually based on conceiving an idea, and that may happen while at the lab bench or research strategy meeting, but equally it may happen in the shower as the problems of the previous day are mulled over, or with colleagues at the coffee machine – or in the bar or on the beer mat.

Competing employers
In Oxford and Cambridge this is not the end of questions keeping the administrator awake: there is a further complication in that there is often more than one employer, the university and the individual’s college. Of course this is not unique, in that in the spin out environment, university staff may, subject to their university rules, or sometimes in breach of them, also be employed in spin-out companies.

The ‘ancillary’ rights
Not, however, content with keeping to this scale of complication, there is a further set of issues for universities which a self-respecting corporate will not have to face up to. Copyright and confidential information, as an example, pose further conundra. Typically, all universities in the United Kingdom have taken a rather different approach to copyright works and other unregistered intellectual property. The knowledge and the way that a lecturer presents it is part of the lecturer’s skills and tools of the trade. Since mobility has always, or at least for the last hundred years, been a feature of an academic’s life, as well as dissemination of that knowledge, rights associated with it have been more mobile. A practice has grown up that copyright works are treated in a different way. This way varies with institution, but runs along the lines that copyright in academic output, papers and so on will often belong to the individual author rather than the institution. This may also apply to material put together for teaching, such as lecture notes or examination scripts, although the university would be wise to make sure that it has sufficient rights to use these after the lecturer has moved on, or in other teaching media, such as the internet. 4

The impact of this background is seen starkly in the context of the cross disciplinary involvement noted above: not only are the underlying rights very diverse, but, as Cambridge has learnt in a very public way, the philosophies of those coming from different disciplines can also be very different. Free software is the opposite end of the spectrum from proprietary drug development.

And there are yet further complications. Some rights, such as database rights, rights in films and sound recordings, do not or have not always belonged to the creator. For example, database rights, a creature of the European Union with now somewhat precarious credentials, 5 belong to the person making the substantial investment or taking the ‘risk’ in creating the database. Database rights have been very much a poor sibling in the biosciences field, but in many cases that is where mountains of research funding are really directed.

This means, to mix metaphors, that running with intellectual property in a university environment can be a little like trying to run a car where the engine is controlled by one person, the steering by another, the doors by a third and so on.

Cuts
I implied earlier that fairytales are not necessarily solidly founded in facts. The picture of ownership of intellectual property at Cambridge University painted by the short quote I gave earlier had offered only a small window on the overall arrangements for intellectual property. Since at least 1987, 6 there had been at least two very substantial exceptions. Hardly surprisingly, where intellectual property arose as part of sponsored research or another research agreement (which might cover a large part of charitably supported research), and as would typically be the case in relation to collaborative research, the ownership rights would be determined by the agreement. And secondly, where research was funded by a Research Council (as in the case of a very substantial part of governmentfunded research), Cambridge University was entitled to call for the rights to be assigned to the university or a university exploitation vehicle, in this case a company catchily named Cambridge University Technical Services Limited, colloquially known as CUTS, which could of course be misunderstood as a reference to top slicing the income from any exploitation.

There were significant practical issues in implementing this policy, but the bottom line was that in many cases the academic did not have exclusive control over intellectual property rights arising from their work.

In this context it may be something of a surprise to see the stormy waters that the current intellectual property policy still had to go through before implementation, in somewhat amended form. Or perhaps, like the gestation of the ideas the policy was supposed to relate to, one should not be surprised that, within the university context, its birth was traumatic, and like births to many celebrities, much of it conducted in public. 7

A pragmatic policy?
The end result is a policy which addresses the context in a pragmatic way; and it also attempts to deal with areas which many university IPR policies skate round. All of it is essentially subject to third-party agreements relating, for example, to sponsorship, so many aspects of IPR generated within the university will still fall outside the principal elements of the policy. Subject to that, there are some interesting features such as the absence of any claim by the university to most copyright material generated by academic staff, including not just academic publications but software and similar commercially applicable copyright works; and its application to students who are involved in collaborative research, with the evident intention that the background rights in collaborative work which has potential for exploitation, can be cleaned up as expeditiously as possible; and the provision of a ‘technology referee’ to whom questions can be referred on the applicability of the rules.

It also poses some possible questions, such as the status of information disclosed between individuals within the university about their inventions, if none are under an obligation to the university to keep the information confidential. Is this a situation where an implied obligation of confidence will arise, or do the individuals in the university have sufficient common interest that a disclosure from one to another is not to be regarded as a publication for the purposes of the patents legislation?

A very quick summary is something like the following:

• You may have entered into an agreement which controls what you can do with your IPR
• for example with a company or other body sponsoring your research. If so, you are subject to that agreement.
• Nothing (other than such an agreement) should stop you publishing – but be warned: it may scupper your chances of making a fortune.
• If the rights which you create coming out of your work for the university are registrable (for example, patents, registered designs, registered trade marks, plant variety rights), they belong to the university.
• Non-registrable rights you create (for example, copyright and maybe confidential information) belong to you. This includes copyright, for example, in computer software, but excludes works created for administrative and managerial purposes, for exams, or specifically commissioned by the university.
• If other types of non-registrable rights, such as database rights, turn out to belong to the university, it will licence them to you to exploit.
• Students who generate intellectual property rights will be bound by their sponsorship agreements (as long as they have been told about them), and where they are involved in collaboration and this gives rise to joint IPR or ‘interdependent intellectual property’ they may be required to assign this to the university.
• In addition, there are fairly generous revenue-sharing arrangements, at least as generous as in many other academic institutions. Where Cambridge Enterprise is involved, the inventors get 90 per cent of the first £100,000, 60 per cent of the next £100,000, and 34 per cent of the remainder, and where Cambridge Enterprise are not involved, 100 per cent of the first £50,000 and 85 per cent of the remainder.
• If there is a problem, this should be referred to the University Technology Referee.

One can clearly see the footprints of movements like ‘Open Software’ on these rules. Overall, the rules seem much more benign than in many universities in the United Kingdom. They leave in place much of what was there before, while making it clear that academic freedoms are being preserved. In practice, much research will be conducted under specific agreements, and those agreements will govern the end result.

There will still be a heavy onus on those involved in the administration of the system, both administrators and academics who are responsible for setting up research under contractual arrangements, to ensure that the appropriate prior agreement is reached between all the relevant parties, or at least (as in the case of students who are involved in such research) that they have prior notice of any arrangements which are special. One can see that, as in the case of many academic environments, it is this area where the biggest gaps are likely to open up. Whereas most universities have opted for a centralist approach, where effectively all relevant rights accrue to the university and are then released if their release does not adversely affect the exploitation potential of other rights, in the case of this policy a great deal is left to the maturity of the academic staff in understanding and communicating issues to others involved.

For bioscience companies working with the university, they will need to be satisfied that their principal contacts are communicating all the relevant information to those who are involved – and be aware that those who might be involved could, indeed should, include not just the immediate faculty.

So does the policy impact the nascent spin-out being formulated in the crypt bar? The answer is almost certainly that it does: if the team are academic staff they may well be worse off in that patent rights belong to the university, but better off in that copyright in computer software does not. If they are students, they are in a similar position, but reached by a different route. They do not own the ‘interdependent’ IP which has resulted from their work; but, on the other hand, previously they would have had a problem exploiting it, because it was interdependent. What they do have, however, is a clear focus on who has control. The situation highlighted by Jacob LJ, in IDA Ltd and others v University of Southampton and others8 does not need to arise because the rights are clearly in one hand. And the added benefit is that the remuneration terms are clearly defined.

Of course the policy has difficulty in dealing with a number of questions which arise in the university arena, such as what about the chat at the coffee machine or the work which is not part of the duties of the academic, but it does make a brave attempt to cover these by highlighting the need to draw outside contributors into the arrangements adopted by the university and by specifically highlighting that inventions may be made away from the desk:

• [Relevant research] shall include all research conducted under the obligation to do so, expressed or implied, in their terms of employment. The time when, and the place where, particular research results are reached or achieved shall be factors to be taken into consideration in assessing whether the research is in the course of employment

and by clarifying the ‘consultancy’ role of academics:

• Where a person external to the University consults a University staff member for advice, that advice will normally be regarded as private and therefore as forming no part of her or his obligations in the course of employment by the University.

  Nevertheless, one can expect that knotty questions will continue to arise, including whether the University Technology Referee can make binding decisions in all cases. It is to be hoped that all parties involved, including external commercial parties, will recognise the wisdom of Jacob LJ’s remarks referred to above, and appreciate that being precious about the details of the rights which each contributor has may have a high intellectual fascination, but is often tantamount to commercial suicide.

  Bearing all this in mind, was is it worth such a struggle? Conscious adoption of a policy more appropriate to the modern environment is certainly worthwhile, but it has perhaps just moved the some of the administrator’s headaches from legal issues to where they should reside – back into effective administration.

References
1) [2006] EWCA Civ 145 at paragraph 44.

2) Ibid.

3) [1996] RPC 207.

4) See, for example, the University of East Anglia IPR policy, http://www.uea.ac.uk/ltq/Calendar/Intellectual Property.pdf ; and compare it with the MIT IPR policy http://web.mit.edu/policies/13.1.html.

5) Case 203/02 The British Horseracing Board Ltd and others v William Hill Organisation Ltd, in which the European Court of Justice determined that the important issue is the investment and risk in creating the database; investment and risk in generating the underlying data (in that case race information: the races would run anyway) was not enough to generate the database right.

6) General Board Notice 26 February 1987 http://www.cus.cam.ac.uk/~mrc7/cuipr/Rep870226.ht ml.

7) See, for example, the discussion held in Senate- House on 15 October 2002, in the University Reporter No 5901 http://www.admin.cam.ac.uk/reporter/2002- 03/weekly/5901/16.html; Mike Clark, ‘The Cambridge University Policy on Intellectual Policy Rights – A Critical Appraisal’ at http://www.cus.cam.ac.uk/~mrc7/cuipr/; ‘Cambridge in row over intellectual property rights’ The Guardian 10 May 2004, at http://education.guardian.co.uk/higher/research/story /0,,1213498,00.html; BBC News 26 September 2002, ‘Row over university ownership rules’, at http://news.bbc.co.uk/1/hi/england/2281969.stm.

8) [2006] EWCA Civ 145.

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