Over on LinkedIn, Stef van Grieken complains, rightfully, about a ridiculous demand by a university technology transfer office (TTO). To agree to a licensing deal with Stef’s company, the unnamed TTO had requested a bi-directional rights grant of intellectual property (IP). That is, the university wanted to receive a license to the company’s IP in return for licensing its own IP to the company.
I have sat on both sides of the table, in industry and in academia, in the United States and in Germany, respectively. I have never encountered anything so outlandish as described above. However, I understand where it is coming from. So let me tease this apart.
Which ever side you are on, you need to understand (1) the multi-faceted value of the IP in question, (2) the power of your position, and (3) your interests.
Re: the value of the IP. Does it already exist or is it to be created? A company expects significantly more for their money if it is to pay for the research, with uncertain outcome. A university should be more accommodating in this case. Or is it clear cut existing proven code or patents? Then the value is more clear.
Re: position of power. U.S. American universities are or see themselves in a position of power. All I ever was able to negotiate was to provide a gift and get early information flow and the non-exclusive option to pay (for a second time) for any generated IP. German universities are often willing to sell you the (uncertain) project results outright, including with an exclusive license.
Re: your interests. This is where it gets interesting and which explains Stef’s experience.
I’m switching to my professor role now. In Germany, a TTO will not act against the will of the professor, so it is a powerful position. There is one win/loose and two win/win situations. It seems that Stef ran into a win/loose situation: I assume that his company wants to exclusively license IP it thinks will create competitive differentiation. The exclusive nature makes this unattractive to the university, hence the obnoxious demand and the breakdown of negotiations. The only way this can be resolved is if the university has no further interest in the IP, most notably because the professor has abandoned the underlying research.
The first win/win situation is when the university, in form of a professor and their team, perform projects and non-exclusively transfer IP to industry where this IP is relevant and important, but does not make it into their products and hence does not generate revenues for the buyer. My prime examples are helping our industry partners (customers) get open source and inner source right. You can view this as consulting projects with a strong product component.
The second win/win situation is when the professor and their team turn their research into a startup. Then, the TTO can negotiate an exclusive licensing deal, now with the startup, but they are there at the beginning with a corresponding (risky) upside. Exclusively licensing out IP to a wholly independent company, by comparison, is usually not so attractive (see win/loose).
There you have it. I understand that companies want to exclusively license IP to build products from, but to a TTO this is the worst of three possible situations, so negotiations will be tricky. If there is no way around the university IP, your best approach is to get to the professor behind the research and get them to convince the TTO to let go.
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