Addressing ownership issues regarding your idea as early as possible will help you avoid problems later in the development process. It is imperative to determine the ownership of the idea by the time you have developed your prototype device. For the purposes of our discussion, we will address issues faces by funded researchers/developers (e.g., agencies such as OSERS and NIH, or universities). If you are an independent inventor or company developer using your own resources, see the sidebar, “A Note to Company Technology Developers and Independent Inventors.”

Who owns your product or idea?

If you are a university researcher and you developed your invention as part of your employment at a university, using university resources, understand that you do not have exclusive ownership rights to your product/idea. The legal rights to any invention generated through your occupation belong to your university and to the funding agency; however, universities are required to share a portion of the royalties with the developer. This information should have been included in the terms you agreed to upon hire at the university. Look carefully at the hiring contract. The university may own any intellectual property in the field that you were hired in even if you were working off-campus or consulting. Thus, you should make sure any consulting contract complies with your university contract.

All universities have specific patent policies outlining the invention process that a university employee will be required to follow. The university will follow U.S. Patent and Trademark Law and will act as the assignee to the invention, while the inventor must be an individual (the university employee inventor). This means that the university will be the decision maker in terms of what happens to the invention (whether is it patented, licensed, or released to the inventor).

If you developed your invention under a federal grant, there are three things you should understand:

• First, although you may be the Principal Investigator or the Project Director, the grant is actually awarded to your university and not to you personally. The university is the entity responsible for ensuring that the grant activity complies with all federal guidelines.
• Second, since the money comes from the federal government, the government legally has the first right to future use of any invention resulting from their funding, should they choose to pursue it. However, the government only rarely acts upon this right under compelling reasons.
• Third, since the university is the actual grant recipient, it has the second right to either take ownership of any invention or to decline ownership.

In short, when you develop a product or technology through a host institution with federal funding, you become the third in line to claim ownership.

Be aware that the Patent and Trademark Law Amendment Act of 1980, primarily known as the Bayh-Dole Act, sets the guidelines for ownership and licensing or transferring technologies developed at universities with federal funds. Some principal tenets of the law include the following stipulations:

• A university must disclose “all inventions conceived or reduced to practice (prototypes) during the performance of a federal grant, contract, or cooperative agreement” to their funding agencies.
• The U.S. Government has non-exclusive, non-transferable, irrevocable rights to use the patented technology developed with government funds. [Note: The university or company retains the right to enter into license agreements with companies outside of the government.]
• The university has an obligation to contract written agreements with its faculty and staff requiring disclosure of inventions developed within the confines of the university. It also specifies that the universities must share a portion of the revenue received from licensing the invention with the inventor/developer. All remaining revenue must be used to support scientific research or education (Council on Government Relations, 1999).

Role of the University Technology Transfer Office (TTO)

University-based researchers should contact their university’s Technology Transfer Office (TTO) early in the technology development journey. The university patent policy will be in effect, which means that you must disclose the invention to the TTO. Use their resources and their experience to guide you through this process. Among other things, the university can help you develop the best strategy, notify the government, and offer protection if a publication or other disclosure is coming.

If you are working at a university and receive federal grant money from a government agency (e.g., OSERS) for your work, the product or invention you develop must be disclosed to your university’s TTO. Most universities require their university-based researchers to fill out an Invention Disclosure Form. Go to http://ora.ra.cwru.edu/techtransfer/pages/forms.htm and click on “Invention Disclosure Form” to view a sample disclosure form from Case Western Reserve University.

There is no hard and fast rule about when this information should be disclosed; however, it is recommended that you do so once the idea is reduced to practice (prototyped). By law, universities are required to have invention disclosure forms, confidentiality forms, and an ownership policy in place regarding concepts developed by university employees. Your university has a right to claim the majority of ownership and any subsequent royalties generated from licensing any invention or product you develop. You and your home department will typically share in the royalties.

While this may not seem reasonable given the initial effort and idea were yours, it is important to remember that you have already been compensated for your work through your salary. The university has supplied the research facilities and environment to support the work. The great majority of the effort involved in bringing a product to market comes AFTER the idea is conceived. It is the university that will bear all cost and risk associated with protecting and commercializing the invention.

Example

Assume you have developed a unique learning tool for including special education students into general high school math classes. Your university’s TTO will evaluate your disclosure and try to ascertain the market for the technology. If it is something the university believes will generate a high royalty return or have a significant societal impact, they will want to lay claim (ownership) to the invention. However, prior to their being able to do so, they must petition your grant funding agency (ex. OSERS) asking them to waive ownership back to the university. They must do this within two months of your disclosure to the university. Upon receipt of that ownership waiver, your university’s Technology Transfer Office will then add it to the portfolio of products they are attempting to license to the business community for the university.

Benefits of TTOs to researchers and developers

University TTOs offer many benefits to funded researcher/developers or other inventors based at a university:

• Familiarity with the process necessary to protect your concept or idea.
• Non-disclosure (confidentiality) agreement and Material Transfer Agreement templates already drafted for use.
• Experience in completing prior art searches to ascertain whether or not the product you are developing is new and unique.
• The ability to assign value to your invention (projecting the target market and potential sales) to determine if patent protection is fiscally prudent. (When it is proven to be a prudent course of action, your university may bear the costs and complete the paperwork necessary to apply for a patent.)
• The tools to address ownership issues with your funding sponsor.
• The skills to develop a commercialization package to present to potential licensing companies.
• The resources to handle the negotiations and draft the license agreement with an interested company.
• The willingness to be your watch dog for product sales and royalty payments once your invention or product is licensed.

TTO outcomes

While it is advisable to notify the TTO prior to the creation of a prototype device, keep in mind that they will decide whether or not to proceed with commercialization activities based on an evaluation of the market potential of your prototype. If they determine that there is an insufficient return on investment (ROI), they can (and most likely will) refuse to pursue further activities toward commercialization of your technology. In this case, the university can release the invention to you. Further development of the invention, including patent costs, will then be your responsibility if you choose to proceed with commercialization.

Many universities choose to protect intellectual property by using the provisional patent. For a minimal cost, the university can establish the priority date and explore market interest. Within the next year, if significant interest is shown in the invention, the university can then choose to proceed with a full patent application, while still enjoying the priority date established in the provisional patent application. Due to the volume of inventions typically handled by universities, many choose this route for every invention.

However, if they find that your technology offers an acceptable return, the benefits of working with them are well worth sharing the royalties for your future product. By virtue of their experience, the university TTO will help to ensure that your invention is protected from theft or loss of IP rights. Your intellectual property claims (e.g., patent or copyright) are only as good as your ability to protect them. You may need deep pockets to defend your claim, even if you are right and the infringer is wrong. If a company infringes on the claim, the university has its own attorneys to enforce the patent, whereas you alone would have to find and hire legal representation out of your own pocket. In the competitive world, a company may not hesitate to infringe on claims held by an individual, but may think twice about the cost of legal action taken by a university. This is especially true of a public university, where the State’s Attorney General’s Office may be employed.

Example

A case in point: Vanderbilt University, as IP owner, decided to bring the Jasper Woodbury series of laserdisc technology to market. It had been developed by the Cognition and Technology Group at Vanderbilt (CTGV). The series included 12 videodisc-based adventures plus video-based analogs, extensions, and teaching tips designed to improve the mathematical thinking of students from grades 5 and up, and to help them make connections to other disciplines such as science, history, and social studies. Research conducted by the group indicated the series was effective as a math instruction strategy for low-performing students. Recognizing its potential as a commercial product, the university made plans to contract with a company they had worked with previously in publishing written works. The company had just opened a technology division for producing and marketing technology products. However, the company knew little about the technology itself or marketing this type of product. It is still available today in original laserdisc format,a medium that has been replaced by CD-Rom and DVD technologies. As such, the commercialization of the product failed.

Note: To prevent this from happening, an inventor may have to take the lead in identifying potential licensing partners and introduce those companies to the university TTO.

Issues specific to assistive technology product development

In cases related to assistive technology products, the expected returns on your invention may be very low, given the small “niche” markets. In fact, sometimes the market is too small to justify spending the resources to patent the product since competition may be avoided simply through the size of the market. In these cases, small niche companies are able to build a successful business out of a non-IP protected product. You should always at least copyright and trademark the innovation since they are low cost ways to protect the product.

Your university may decide that it is not worth the investment of their time and resources to bring your technology to market. In some cases, the university will decide not to actively pursue a license for your technology. This often causes a great deal of frustration on the part of the researcher/developer as the process often stalls here.

If your university’s TTO is not willing to pursue a license agreement on your behalf, you can ask your TTO and your funding agency to waive all ownership rights back to you personally. This action has its pros and cons. While it will give you the right to pursue commercialization independently, you may find that the potential return on your investment (ROI) is insufficient to warrant the investment of your personal resources. At the same time, you won’t have the institutional expertise and resources to protect and commercialize the invention. At this point, you have to consider all of the findings to determine if you think it is worth your time and effort to continue independently. For assistance in making this decision, Bessette (2003) provides a formula and basis for determining ROI in the article entitled Measuring the Economic Impact of University-Based Research.

In some cases, the university will decline the offer to waive rights back to you and may not take any further action to commercialize your technology application themselves. Unfortunately, in these situations there is very little recourse that the developer can take other than seeking market information and possible partnerships on behalf of the TTO.

While in some cases these efforts may entice the university TTO to move forward with a technology, in others it may not. One of the major pitfalls of working with your TTO for technology applications with small markets is the ability of the university to determine whether or not the development merits further work toward commercialization. Results from pilot testing a prototype of the innovation for a sample of the potential market and conducting a proof-of-concept test can assist the TTO in making their decision. While this process is very frustrating for the researcher/developer, it is a fact of life when pursuing commercialization of devices with small market sizes.

Example

The following is an example of the consequence of undercutting university involvement. As an undergraduate student and part-time assistant at the National Center for Supercomputing Applications (NCSA) at the University of Illinois, Andreeson was familiar with the Internet. At the time (1992), most of the browsers were for Unix machines and were expensive. Andreeson decided to design a browser that was more graphically enhanced and easier to use by all. In order to do this, Bina, another co-worker, was recruited. Together, the two developed the browser Mosaic. In 1993 Andreeson and Bina graduated and re-located to Silicon Valley to start a business. In 1994, they created the Mosaic Communications Corp. and introduced the Netscape browser. Success seemed likely until the University of Illinois claimed that Andreeson had stolen Mosaic from them and demanded they change their name and quit distributing their product. Mosaic did change its name to Netscape Communications Corp. but would not stop distributing software. A settlement was reached where the University of Illinois made no further claims on Netscape and they received a financial settlement, which cost Netscape a substantial amount of money. (Massachusetts Institute of Technology, 2001).