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Discovery DiscoveryJanuary 2001
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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

Becky Mahurin
Director of the Technology Transfer Office at MSU



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