Unfair IP terms in student contracts

wise monkeysOnce upon a time, dear readers, universities knew nothing about IP.  There were both cultural and legal reasons why this was so.

The Stone Age

IP Draughts grew up in the 1970s, when socialist ideas were fashionable and the coal miners’ strikes caused electricity to be rationed during the so-called three-day week. IP Draughts remembers his father showing him how to light an old-fashioned Primus stove, using its pump.  The stove had been brought out of the attic, so that we could cook our dinner, during one of the periods when it was our neighbourhood’s turn to be without power.

At this time, and into the 1980s, there was a great deal of academic disdain for anything connected with commerce.  The term commercial exploitation was, for some, a pejorative term: the word exploitation said it all.

year zeroIn any case, there was little need for UK universities to be involved in IP commercialisation, as most research was funded by the Research Councils, and the Government required universities to channel any IP that was generated from such research through a governmental body, the National Research and Development Corporation, later renamed British Technology Group. This arrangement ended in 1985, which could be viewed as the Year Zero for technology transfer units in UK universities.

As a result of these factors, universities gave little thought to the question of who owned the IP that was generated by their academic staff, and even less thought to IP that was generated by students who assisted on academic projects.  Typically, therefore, students owned the IP that they generated, and they needed to be persuaded to assign it to the university or its nominee (eg NRDC) in appropriate cases.

The Bronze Age

During the later part of the 1980s and into the 1990s, universities became more familiar with IP issues.  They came to realise that students sometimes owned part of an IP package that the university was trying to commercialise.  In some cases, the student couldn’t be found, as they had left the university and had provided no forwarding address.  While they might be content to be treated in the same way as university employees, and assign the IP to the university in return for a generous revenue-sharing arrangement, there was always the risk that they might not agree.  In that case they could, in theory at least, obtain an injunction to prevent the university or its licensee / assignee from infringing their IP rights.

sign hereTo address this issue, some universities changed their financial regulations to require students, as well as academic employees, to assign their IP to the university.  Students are required to sign a form as part of the admission process, and the form typically refers to the student agreeing to be bound by the financial regulations.

The Iron Age

The problem with a blanket obligation on students to assign IP is that it potentially captures more IP than the university has a legitimate need to acquire. Several years ago, IP Draughts recalls stumbling across an internet discussion board in which Australian school leavers compared notes on the (seemingly broadly drafted) IP policies of Australian universities.  The contributors’ concerns were that they might lose the IP to any computer games that they created while at university.

Some universities now take a more nuanced approach, and require an assignment only of IP in certain cases, eg as a condition of participation in industrially-sponsored research projects.

Making the Bronze Age agreements legally effective

During the “Bronze Age” mentioned above, IP Draughts was asked to advise on several university IP policies.

expectsRegrettably, the wording of those policies was often decided in an academic committee, without specialist legal involvement. As a result, obscure language like “claims ownership”, “expects”, and “asked to” was sometimes used, which created some doubts about the legal effect.

For example, consider the following wording, from the University of Bristol’s IP policy.  IP Draughts has chosen this for no other reason than that it was the first UK university IP policy that came up on an internet search; the wording is more favourable to the student than some other policies that IP Draughts has seen.  And there are some clues that this wording has gone through a legal review process.

In the event that an undergraduate student or a postgraduate student on a taught course generates intellectual property in the course of a University project, either solely or in collaboration (where the collaborators may be fellow students, members of University of Bristol staff, employees of a sponsoring organisation or collaborative partner or a combination thereof), he or she is asked to assign [emphasis added] to the University any intellectual property that he or she may generate. Assignment will only take place in the event that intellectual property is generated. A student shall then give to the University all reasonable assistance to enable the University to obtain patents or other forms of legal protection for the intellectual property.

Did the university intend the first sentence of this quoted text to create a legal obligation on the student to assign their IP, or alternatively just to give an impression that the student has very little choice in the matter? The third sentence is more conventionally hard-edged, using the word “shall”. A later paragraph, dealing with postgraduate students, uses stronger language:

Postgraduate students will be required to execute agreements and assignments of intellectual property as a condition of participation in University research projects, a copy of which is available from the Research and Enterprise Development Office…

IP Draughts’ best guess is that the university is not claiming ownership of all student IP, and that “asked to assign” means the university will request, but the student will not be obliged to accede to the request.  However, this could be made more clear.

Duties on university to act reasonably to students?

locoWhen asked to advise on this type of language, one of the concerns that IP Draughts has raised is whether the university may have duties to the student, or other legal obligations, which prevent it from being too “grasping” in respect of student IP.  There are at least 2 main areas of concern:

  1. Students who are under the age of 18 and where the university may have duties to act in the best interests of the student where it is acting in loco parentis as a kind of guardian of the student during their minority.  This will only rarely be relevant, as most students are over 18.  However, might a court impose some similar, but perhaps lesser duty, to that mentioned above, in the case of undergraduates over the age of 18?  IP Draughts doesn’t have any case authority to back up this idea, but instinctively he feels there is a potential issue, perhaps under the law of equity.
  2. Are students consumers, and do they benefit from consumer protection legislation? The answer to this question is almost certainly yes.  If that is the case, does consumer protection legislation, and in particular the Unfair Terms in Consumer Contracts Regulations, prevent the university from imposing one-sided IP terms (eg a blanket assignment of all the student’s IP) as a condition of admission to the university?

In IP Draughts’ view, the second of these points is likely to constrain the university in the terms that it can impose, although the limits of what can or cannot be imposed are not clear – as far as IP Draughts is aware, there has been no case law on student IP terms.

oftSupport for this view (and here we finally get to the reason for writing this article at this time) is given in a report by the UK Office of Fair Trading, published this week and entitled Universities’ Terms and Conditions. The report focuses on unfair terms relevant to student debt, and makes no mention of IP.  But some of the statements in the report are made in general terms, and could (in IP Draughts’ view) apply to IP terms.  Consider, for example, the following statements in the report:

1.17 We recommend that universities review their rules and regulations, other terms and conditions, and practices in light of the OFT’s views outlined in the report, and make amendments where necessary. We would expect universities to refrain from using unfair terms and practices, and from misleading students about either the university or student’s legal rights.

3.6 We have identified that the overarching rules and regulations tend to be lengthy and we consider they may be difficult for students to navigate. We understand that some universities may provide students with information in other sources such as in joining information, student handbooks and on intranet sites. However, it is not clear how aware the average student may be about a university’s terms and conditions.

5.5 It is the OFT’s view that a university’s rules and regulations that purport to govern the relationship between the university and undergraduate students are likely to form part of a contract for the provision of educational services. The terms set out in the rules and regulations are likely to be subject to the test of fairness under the [Unfair Terms in Consumer Contracts Regulations].

6.19 Terms which have the effect of irrevocably binding the consumer to terms with which he or she had no real opportunity of becoming acquainted before the conclusion of the contract are open to challenge. A term which deems students to be bound by the university’s rules and regulations, unless they are given an appropriate chance to read them, is likely to be considered unfair. In our view, providing the relevant rules and regulations at the time of the enrolment process is unlikely to be considered sufficient to mitigate the potential unfairness of binding students to terms they have not have the chance to become familiar with.

As the OFT makes clear, it is for the court to decide whether a particular term is unfair and therefore not binding, eg under the Unfair Terms in Consumer Contracts Regulations. However, the OFT’s analysis is persuasive and by publishing their report they have put universities on notice that they should review all of their terms affecting students, including (in IP Draughts’ view) those on the subject of IP.

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