Five red flags in technology transfer projects

Experienced technology transfer (TT) managers can smell a toxic IP package at 50 paces.  Here are some features of TT proposals that should cause the TT manager to take a good sniff of the milk bottle, to make sure that the contents have not turned to cheese.  The following examples are taken from the university environment, but some of them could arise in any environment where technology development and intellectual property (IP) creation are not properly managed.

  1. The TT project uses software that the academic department developed internally.  Worse, the TT project IS software that the academic department developed internally.  No, there is no written record of who developed each line of code.  Yes, they did involve students and a contractor to write some lines of code, “but it doesn’t matter, because they were only following orders; all the ideas behind the code were developed by Professor Gremlin who is a full-time university employee”!  Yes, they think it “quite likely that some open source software was incorporated, as well as some other standard routines that are freely available on the internet”.  The software can “easily be converted into a commercial product”, although the academic admits that at present, no-one but him can make it work, and the data “does have to be interpreted correctly”.
  2. The lead academic has been running his own company for many years, “without complaint from the university; indeed the former Registrar [in 1990] encouraged me to do so”.  This company “developed some of the IP, as the university was not prepared to spend money on it”. This company is to have the rights to commercialise the TT project, and the university will get some shares in the company.  There are fifteen other shareholders, mostly family members and former research associates of the lead academic.
  3. The key patent claims inventions that were made in an industrial collaboration 5 years ago.  There is no written contract for that collaboration, as the key scientist in the commercial company didn’t want to slow the project down by referring it to their legal department.  Instead, they signed a non-binding letter of intent, as this could be done without referring to the legal department.
  4. The patent names a former student as one of six inventors.  The lead academic is convinced that they didn’t really deserve to be named as an inventor, and it was only done as a matter of professional courtesy, so it doesn’t really matter that the student has not executed an IP assignment in favour of the university and cannot now be traced.
  5. The academic seems to think that a licence may have been granted to a former industrial collaborator, but no-one can now find the licence agreement.  It was drafted by the professor’s brother in law, who is a high street solicitor in Mold, Wales.  Unfortunately there was a fire and a flood at the solicitor’s offices and none of the papers can now be found.  But “this draft is pretty much the final version”. [The draft licence agreement is based on a template from the 1970s edition of the Encyclopedia of Forms and Precedents, but this is the least of our worries.]

The above examples have been pasteurised and semi-skimmed to make the actors unrecognisable, but they reflect situations that IP Draughts has encountered.  Some universities (eg Imperial College) are now employing skilled staff who are responsible for undertaking “due diligence” on potential TT projects.

If problems of this kind are identified at an early stage, it may be possible to solve them before spending time and money on TT activities.  If the problems only emerge during negotiations with a licensee or spin-out company investor, it may be much more difficult to solve them in a risk-free way, and the university’s investment in the TT project may be jeopardised.

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Filed under General Commercial, Intellectual Property

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