by Becky Mahurin
Beginning in the last issue of Discovery, I raised some of the challenges that occur for
the university when faculty become company founders. In this column I will address the question,
"Does the university or the new company own the faculty/founder's intellectual property?"
This is usually the first question asked by the investigator. What often follows are statements
such as, "My company should own all intellectual property which I create" or, minimally, "My
company should own all IP created in the company's area of technology."
By virtue of the employment contract, employees of MSU must assign all patentable technologies
to MSU. Copyright ownership will vary, depending on the conditions under which it was created.
It is the university's belief that it is, therefore, not appropriate for the employees intellectual
property (IP created with significant use of university facilities and resources and/or in the
technological area of expertise of the faculty member) to be transferred to a company without a
licensing arrangement. Such a move could fall under the category of giving away state property.
Additionally, it brings into question a much more complicated picture. Often there are co-inventors
of technologies. These may include other faculty, graduate students, technicians or off-campus
collaborators. If IP created by the faculty/founder can be assigned to the company, then where
does that leave co-inventors? They may believe that the faculty/founder is being treated in a
favored light. It may appear to them that faculty/founder is enriching his own company, while
other faculty must assign IP to the university and thus be further removed from the potential
wealth. Therefore, it is the practice of many research universities to require that all IP created
by university personnel be assigned to the university. This IP then may be licensed, and there is
a clear and defensible path that can be tracked.
If the faculty/founder's technology is automatically assigned to the company, other problems may
also ensue. The university fails to have the opportunity to review any grants/contracts that
supported the creation of the technology. These grants/contracts may specify how IP created under
sponsorship is to be treated.
Student co-inventors face some additional challenges. Is the faculty/founder on his/her committee,
is faculty/founder his/her advisor? It is easy to see that students may be or may feel that they
are being unfairly influenced to "back-door" technology to the company rather than to report
technology to the university.
An additional complication occurs if the company owns or has exclusive license to a dominant patent.
The university may have ownership to a patent which furthers the technology or is a new use or an
improvement to the base technology. But if the university's patent cannot be practiced without
licensing the dominant patent, then the company is in control. This situation may be especially
problematic if the company has a co-inventor (i.e., faculty/founder) on the secondary technology.
By patent law the company could practice the secondary patent, but because of its dominant position,
could block the university from practicing or licensing the technology to others. The company
could do so without paying royalties to the university, so the university is blocked from licensing
its technology and does not benefit economically from the company's commercialization efforts.
In the next issue, I'll discuss licensing university technology to spin-off companies and the
use of university facilities and equipment. If you have questions, please contact me at 994-7868
or by e-mail at email@example.com.
Director of the Technology Transfer Office at MSU