Question: Technical IP issues

Hi, I've decided to post this on the board since a lot of the members here are very business-knowledgeable. I am looking for opinions on the issue which I am going to specify here. First let's establish the people involved:

1) I am a PhD student in an Engineering department at a well known university - call me entity student ;

2) A knowledgeable professor in our field - call him entity prof;

3) My supervisor - entity supervisor;

4) The university - entity university;

4) An external company working closely with the university - entity company;

5) A large external corporation - entity corporation.

The story is like this -- more than 1 year ago, "corporation" approaches "supervisor" with the idea of a research/prototyping contract for a product.

Two separate contracts are drawn up:
1) Between university and corporation saying that research will be undertaken with the goal of delivering a complete working prototype

2) Between company and corporation sayin that company will aid corporation in the manufacturing of the research results from the university.

Based on this information, supervisor goes and creates one team consisting of student and professor (ie. myself and a professor who acts as my immediate supervisor).

After two years of day-and-night work, we're finally close to the working prototype. Under the initial spoken agreement between the team and supervisor, the intelectual property (IP) belongs to the team creating the work, but the licensing to use the IP belongs to the corporation (who had paid salaries and supported various research subprojects during this time). Stipullation (sp?) was made that with such an arrangement, it would lead to the creation of a local company consisting of team members, and under the wing of corporation - in the case of mass production of the prototype.

Now, the team (myself and the other prof) have the feeling that corporation wants delivery of the prototype after which they want to manufacture and commercialize everything themselves. Although they do not posses the know-how (due to the complexity of the product), they have asked for all drawings, manufacturing details, etc., etc. which ensures they have access to all the team's work for the past 2 years.

The question to the experts here is, what rights do the IP owners (the team) have, and what are we bound by if the arrangement between the team and university was verbal.

Note that we are ***not*** trying to go behind the corporation's back and commercialize the product ourselves, but we definitely want to make sure we're part of the mass production and commercialization as an entity who developed this product during two years.

I am not sure if I expressed everything correctly, please feel free to ask me for more information.

I would appreciate and I thank in advance for all your advice,



/Dan

 

Ahhh, so this has nothing to do with TCP/IP. hrmmm... nevermind, but I'll read along with others' advice.

 

lol... I was thinking the same thing... syn... ack... fin.

 

you should be looking for a good lawyer very clueful about the ways of research universities. there are standards and generally accepted principles for this type of thing (sorta. kinda.).

verbal agreements? bad idea when you've got two companies, tenured professors, employees of the university, and students involved. ugh.

good luck. get proper counsel. get educated.

doody.

 

I thought it might be tcp/ip also but it is very interesting. You will be told to get a lawyer blablabla. My .01 cent is that it gets very interesting, assuming its actually worth something, because your co-discoverer is an employee of the university and the univ has a binding contract. You are independent and most likely not bound so who will claim their input was the critical work. I am curious why you worked so long and hard without thinking about this first.
T

 

i was typing while doody was posting. Is it actually worth money because i'll bet a lotta these type of lawyers have prancin horses in their garage.
T

 

Well the only written agreement and contract was between the said corporation and the university, it allocated money for salaries and manufacturing grants.

However the assembled team at the university was under a verbal agreement with the supervisor (who is a co-signer of the original contract).

There were no written agreements since it's very difficult to know where the research will lead to -- in 99% of the cases all that you end up with are publications of high research but little commercial value. In this case we believe it's a high commercial value as well.

Would it help if I tried to obtain the copy of the contract which deals with the IP? Believe it or not -- I haven't seen such a copy in the two years I was working on this project (I know you will say "bad idea not to look at the contract" but again -- until recently everything was on paper only, but now it's taking shape as a product).

Thanks,




/Dan

 

racerx - like I said in my prev. message, in these highly theoretical research areas, you tend to never think and organize before you have a product, since more often than not the research only leads to theoretical results, with no commercial value.

The work was done by the *team*, myself and a professor who directed me, and both of us are united in our goal.

This *team* had a verbal agreement with the university and the main project supervisor (who is a top professor employed by the university).

The university had a written contract with the corporation which detailed salaries, budgets, etc. The main project supervisor cosigned the contract.

Now the fear of the *team* is that the corporation will take delivery of the prototype (which is stipullated in the contract - to something like "in the case of successful research the team should deliver a working prototype to the corporation"), and will go off on their own to manufacture/commercialize it.

The *team* only wants to protect its interest of 2 years of research in said project, not to breach the verbal agreement of delivering the prototype, nor to go off on their own to manufacture the product.

Basically I am looking for advice of how to create a win-win situation. Ideally we'd have one of two cases: 1) the *team* gets a cash settlement in which we turn over all designs to the corporation including the know-how, or 2) the *team* acts as a subsidiary company to the corporation providing consulting for the mass production.

I am not sure if any of these make sense, I mean to myself they do, but I'm waiting for the board members here to voice their input.

Thanks,



/Dan

 

Like i said very interesting. DISCLAIMER i am not a @#&&""$## lawyer and you should not act or not not act from what i say. As hopeful as you are, this widget may never make a dime. Ofen companies spend a fortune with no return (VW and rolls from another thread). A lawyer might say that until it makes a very many dimes there is nothing to sue for and even then you would have to hire pricey experts to investigate, prove, yadiyadiya etc.. your enemies have more money, lawyers etc. Even if ever in court proceedings, there is a good reason why there are so many lawyer jokes and they are at the bottom of the respect barrel. You will get screwed. But the lawyers including yours will drive off in their p-cars, f-cars.

Verbal contract, you have got to be kidding. If you can't prove it with something tangible forget it. Once your professor is told that he can kiss his pension goodbye despite tenure for his breach, he would say he never knew you.

The best you could hope for would be to ask Corp. to be hired on for your expertise in this area, work for them for 5 years and given that you have learned how scummy people can be and did not sign a noncompete agreement you go out on your own and compete with them with a better mouse trap.

But thats just my take, from my life experience.
T

 

Hehe good and practical advice. Makes sense racerx, I'll see what happens.

Personally I don't think it's ever going to come to the case of sueing or similar, but I just wanted different opinions on how something like this can be handled to the best of everybody's interest.

I also agree that the corporation has invested lost of money for research and salaries, and they should be the primary beneficiary. Hopefully the *team* under a small company/business contract can provide consulting and take a share of the profits.

But of course I'm not holding my breath, thank God I'd been progressing on my PhD at the same time .

If anybody else has other opinions, I'd appreciate hearing them.

Thanks,


/Dan

 

really, you have two viable options:

1) get a competent attorney involved - even if just casually for educational purposes or
2) assume you're gonna get a visit from the telephone pole fairy (free advice: keep the lube handy).

it's possible it'll all "just work out", but that's certainly the exception not the rule.

as a student i think you probably have minimal legal standing, but i'm not a lawyer (i just play one on the net).

you haven't told us where you are (country, state) or what type of university this is (public, private, etc.).

i know some very good attorneys on matters like this in MA (lots of fodder - MIT, etc.).

doody.

 

Well, as far as location goes the matters are even more complicated ...I'm in Canada, the university is a Canadian public institution. The sponsoring corporation is based in the US (the whole thing started two years ago when they realized how cheaply they can get things done in Canada - rememeber how strong the US dollar was then ).

I will do my best to get educated on this matter; will try to get the copy of the contract detailing the IP and production rights.

Thanks Mr. Doody,



/Dan

 

I am an ip lawyer and have done a number of development deals, typically on behalf of outside developers working with university types as co-developers. I cannot and will not pretend to advise you here, because i don't know if i have a conflict of interest, ie, whether I or my firm have advised or represent any of the players.
I am posting only to let you know that your situation deserves the attention of someone who is competent to advise you; unfortunately, that advice often comes at a price. As a student, you may not be in a position to pay for that. My only advice is that you act ethically.

Schools which are heavily involved in entrepreneurial development usually have in-house counsel and a set of procedures. Ethical standards, as Doody said, and your obligations as a student under school policies may well apply in addition to the law. If you are planning on living and working in the academic community, you will have to live with the consequences of your decisions well into your professional future. (I represented one well regarded professor who was continually haunted by false accusations that he tried to profit from something he developed using school resources; although the event took place more than a decade before, it was always an issue for him).
One approach, if you are unwilling or unable to pay for independent advice, is to bring the matter to the attention of the school's administration. Granted, the school's interest is adverse to yours, but you weren't planning on running off into the night with this stuff anyway, so i assume that the issues will have to be confronted at some point.

There are a few resources that might help you if you decide not to hire a lawyer and don't want to have a discussion with the school. There is a program at Harvard devoted to IP and the 'Net and often, legal issues are "beta tested" on their website by smart law students and professors. They tend to have an anti-establishment bent, at least when it doesn't involve their own property.
I am sorry i cannot help you on this one; as others will tell you, despite all the jokes and negative press, lawyers are often willing to contribute their time and energy to situations where those less fortunate (ie, those not owning a ferrari) are concerned. I will tell you this much: as a lawyer, i hire a lawyer to deal with my legal problems. Its more than just proof of the old axiom that one would otherwise have an a.s.s. for a client; i don't do real estate, taxes, or myriad other things and have to call upon someone with knowledge when i need help. I also need objectivity and a clear voice unaffected by my own emotions and direct involvement. Please let us know what happens once the dust settles (if you can- often resolution of these matters involves confidentiality). Regards.

 

LOL. how typically harvard

doody.

 

Seems to me that the 'team' was employed by the university, and thereby has an implied employment agreement with said university. This probably ends up meaning that the university OWNS the IP rights not the actual team that pulled off the work.

Since you are a student, you are effectively employed by the university, and you have an uphill battle to assert your rights to the IP rights.

I suggest you take this as an 'educatioin' in IP rights and move forward with the rest of your life.

 

Explain that one mitch, he is paying through the nose to be an employee.
T

 

Actually Mitch you don't seem to know much about the Canadian university system at least...the IP belongs to the developer/producer, the university does not interfere at all.

Basically in this case I was ***NOT*** asking how to proceed legally, since it's not the case. With the know-how the team obtained developing this product, we can build a better one independently and sell it separately, if it comes to that.

I was just looking for advice on how people here view these issues and any recommendations on how to proceed.

Legally and in a very messy way it would be possible to refuse disclosure of the designs since no contract was signed by the team. What does this get:

- supervisor goes into legal trouble (can you say 'jail'?)
- corporation sues university
- university "fires" team
- product is caught in a legal circle where nobody profits.

I was in no case looking to do this at all don't get me wrong!!!




/Dan

 

racerx - completely true, the student pays the school tuition for studying. Alternativelly, the supervisor pays the student the monthly stipend for research (NON-industrial). It's common case for supervisors to ask their students to help on various industrial comittments - off the record of course.

Here it's not the case of "me" against the world, I was asking from the team's perspective - ie. how could we pursue the company into offering us future work during the manufacturing stage.


/Dan

 

Yep, a grad student is the lowest paid employee in the world (negative paychecks--generally due up front).

 

I'm not a lawyer, but I seem to recall from a 1L casebook that (in the US) "verbal" contracts cannot be enforced beyond one year, under the Statute of Frauds, due to the problems with using peoples' old memories as evidence. That's probably not definitive, but it would give lawyers somthing to hit each other over the head with.

That part's easy. Put your experience with the project on your resume, and submit it to the company while they're trying to get the @#$% thing to work.

Engineering companies (way too) often hire based on little more than past experience with a specific piece of hardware.

 

Mitch - it depends what you make the life as a grad student to be. Sometimes it can be quite rewarding - 'freelance'-style work. With the economy the way it's been going, MANY companies have looked to outsource their research in universities, and this creates some good inward cash flows. It's easy to supplement a scholarship + funding + external mini-contracts to get...oh...let's say $50K/year...although it's a lot of work for this little money...

DGS - you hit it right on with the second part. Actually we've broken down the thing and we're manufacturing in various 'undisclosed' places, and delivering the entire thing after internal assembly. It's impossible to reverse engineer something like this, so they ***have*** to come back to us for the know how .

Best,


/Dan

 

why not sell your services of you and your team to the company after this project is done, and ensure there's an appropriate IP contract in place (my neighbour here in Canada specializes in this stuff - he's good, but $, although doesn't apply to our business much).

Sounds like you can get a strong hourly rate, retain future IP, and what the company has in this project from you today is a one-off that they can't reverse engineer. Just enough to tease them I'd think? hopefully you don't have much longer to go to get that thesis out of the way.

Lots of UBC spin-offs out here in the west, although not that many/any made real money. I'd think you're better off doing this yourself.

You mentioned Canada, are you near Vancouver?

 

You don't really have to "hide" anything. Very little engineering is "obvious". That's why there's a "theory of operation" section in most military manuals, because the code is not obvious, and hardware isn't trivial at a glance either.

Heck, look at a Ferrari wiring diagram.

 

tjacoby - thanks for the advice. I am not from Vancouver btw, but I know of many spinoffs consulting companies - many of which are struggling. There are also some interesting cases where VCs continue to pour money into some developments even though they are dead ends....


/Dan