Make a killing on property

October 27, 2000

The government hopes that new guidelines will increase the exploitation of intellectual property rights by public research bodies - Philip Atkinson explains.

As part of its new approach to publicly funded research, the government has produced a set of guidelines aimed at increasing the commercial exploitation of intellectual property rights in publicly funded research work.

These guidelines - on which consultation is being undertaken - offer a great opportunity for the university sector as a whole and for the individuals who work within it. They present new potential for career advancement and for making money.

In a knowledge-based economy, the recognition of intellectual property as a valuable asset is a key commercial factor in the private sector. The public sector has not always been in a position to follow suit, but the new guidelines look set to change this.

The government's realisation that intellectual property rights represents a potential source of value to the economy has led it to urge universities and research bodies to master intellectual property and its economic benefits. The "core mission" that it envisages should be adopted by government departments and other public sector purchasers of research is spelt out in the science white paper, Excellence and Opportunity.

The guidelines advocate the ownership of intellectual property being vested in the institutions that provide the research, unless compelling reasons to the contrary exist. These research providers, having carried out the research, are recognised as being better equipped to realise the potential for commercial exploitation.

This seems a sensible move by the government. However, the public sector purchasers will also be expected to play a key role in the strategic monitoring of exploitation by the research bodies. The guidelines even envisage the funders intervening if the researchers fail to exploit the intellectual property rights they create. This should be an interesting area to observe as public sector bodies take what in many cases will be their first steps in the commercial world. Managing intellectual property is potentially difficult and will require resources to be allocated to the research provider so that they have access to the skills and management necessary. These extra resources will come at a cost, but one that should be easily offset by the gains from exploiting intellectual property rights.

Incentives are another measure advocated to ensure that exploitation is as effective as possible. Terms such as bonuses, equity and share options may well become commonplace as researchers are given incentives to hit targets resulting in financial gain for them and their organisations. It becomes apparent that exploitation of intellectual property will bring radical changes to the whole notion of public sector providers and purchasers of research.

If the research providers have no legal identity, as is the case with public sector research establishments, then parent departments must allow offshoot companies to be established so that intellectual property can be commercially exploited.

Although the proposals mean that the research providers will own the intellectual property, the government will still be able to enjoy its use by licensing it from the providers. This is not unfair given government's role in sponsoring and funding the work. In fact, this will be positive for most research bodies, reducing waste as the government will take only that proportion of the research it actually requires.

On a technical note, it is important that details of the rights required by the public sector purchasers be reflected in the research contract, to avoid problems later. The contract is very important in defining the nature of relationship between the two institutions. Such issues as confidentiality of information, scope of the entitlement to use of intellectual property, third-party use, payment for use of results and provisions for the use of background rights must all be considered.

Thought will also need to be given to the control of the research provider in relation to making intellectual property available to all companies for commercial use, rather than exclusive licensing. Various routes are available.

Of course, this whole process could benefit the taxpayer, whose money pays for the research. It is likely that many projects will include a payment into the public purse from any revenue.

Generally, the purchaser has a responsibility to create an environment that promotes exploitation. So the best strategy towards intellectual property ownership and management must be considered. The guidelines, although fairly stringent, do allow for differentiation if circumstances dictate.

Public sector purchasers can also expect to be held to account for how they implement the guidelines. Although exploitation of research is a secondary goal to the advancement of knowledge, it is important for the benefit of the economy and to quality of life.

The new guidelines may mean that researchers will no longer need to travel to abroad to profit from their research. These guidelines are not just another piece of legislation, they represent a real opportunity for employees in the UK research sector to further their careers and make their fortunes - this time on home ground.

The consultation period ends today, and the final guidelines are expected to be published early next year.

Philip Atkinson, intellectual property partner at the European law firm, Eversheds.

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