Understanding University Patent Policies

Unlike industrial scientists and engineers who generally are hired to invent and assign all worldwide rights in their inventions to their employer without any residual rights to additional compensation, university personnel are in a different position. The prime focus of universities is to educate and, in some instances, to conduct technical research.

Most university intellectual property policies embrace faculty, staff, and students and govern both patentable and unpatentable new technology within the area of focus of the individual or with respect to which substantial use is made of university resources such as personnel, equipment, and time.

In general, worldwide ownership of developments vests with the university, which has sole discretion to determine whether a patentability investigation will be conducted, whether patent applications will be filed, and whether the technology and related intellectual property rights will be sold or licensed to third parties.

Restrictions are typically placed on the individuals creating the developments in order to avoid forfeiture of patent rights. A U.S. patent application must be filed within one year after the first publication offering an invention for sale or commercial use. Most university policies state that the university has the right to cause publication to be withheld up to a specified maximum period, which may be on the order of four to six months. Similar restrictions may be placed on other activities, which might result in forfeiture of patent rights.

To the extent to which an individual feels that his or her invention is so unrelated to their areas of university responsibilities that an assignment of ownership to the university would not be within the letter or spirit of the policy, provisions are made for a request of waiver of rights on the part of the university.

One major departure from general industrial practices involves the sharing of consideration received for licensing or sale of rights in an invention. In industry, an individual having research or development responsibilities is generally regarded as having been “hired to invent,” with the compensation received being viewed as consideration for creation of the new technology and assignment of rights to the employer. In the university environment, a very different formula is applied in connection with funds received from the marketing of intellectual property rights. Typically, the initial funds received are applied to reimburse the university for the cost of the evaluation and protection of intellectual property rights in the specific invention. After that, there is a sharing of income. The inventor or inventors receive a fixed percentage of that income, about 20–30%. Duplicate payments, of course, are not made. For example, if the inventor’s share of income in a specific case were $10,000, a sole inventor would receive this entire sum, while two joint inventors would each receive $5,000. In this context, it is important to bear in mind that the patent law requires a good faith determination of actual inventorship based upon the claims appearing in a patent application or patent. In addition, a percentage of the income is typically directed toward a fund to provide resources for evaluating and protecting future inventions. There is frequently a provision giving a percentage of the income back to the inventor’s department for research, either on the same technology or other technology.

Another issue covered by a patent policy is what happens if an inventor leaves the university. Typically, the inventor’s share of income continues to be paid to the inventor, but there is no portability of funds going back to the inventor’s department and, as a result, that remains with the department.

In those instances where an individual is not “hired to invent” as at least part of his or her responsibilities, or the invention relates to subject matter totally unrelated to the individual’s university responsibilities, but nevertheless significant use of university resources has been made, the university may obtain a “shop right.” This means that the university has a personal, nontransferable right to use the invention, but does not own the invention or any patents that may issue therefrom.

Many policies provide that even if the university elects to maintain the technology as a trade secret, the university patent policy will govern.

In summary, while there are substantial variations among the various university patent policies, it is important to be aware of the substantial differences that exist between university policies in general and industrial or other employment arrangements, whether the latter are governed by law or contract.

Arnold B. Silverman is chair of the Intellectual Property Department and a member of Eckert Seamans Cherin & Mellott, LLC in Pittsburgh, Pennsylvania.

For more information, contact A.B. Silverman at Eckert Seamans Cherin & Mellott, LLC, 600 Grant Street, 44th Floor, Pittsburgh, Pennsylvania 15219; (412) 566-2077; fax (412) 566-6099; e-mail abs@escm.com.