Intellectual Property and Commercialisation Guidance
Readers should view the relevant research programme contract in conjunction with this document. This document is not intended to replace review of the research programme contract, input from the contracts/research office (or similar) of the funding recipient, or discussion with the funding programme team and/or the NIHR IP Unit.
The mission of the NIHR is to improve the health and wealth of the nation through research. To achieve this goal, research funded by NIHR needs to be translated in to improvements in treatments, technologies, services and expertise used by the National Health Service and allied organisations. NIHR recognises that intellectual property (IP) is one of a number of important tools to deliver patient and public benefit from the UK taxpayer money it manages. IP is used in a complementary way with other outputs, such as publications and presentations, to produce diverse, impactful outcomes.
The NIHR funds research by contracting organisations (the “Contractor”) on behalf of the Secretary of State for Health and Social Care (the “Authority”) to perform individual projects, allow individuals to be trained or for specialist infrastructure units to be developed. The contract is constructed to ensure that Intellectual Property generated from NIHR funding is secured within an appropriate legal, contractual environment to facilitate the realisation of patient and public benefit.
NIHR expects that the majority of its funding will result in some form of IP (including data) that researchers need to recognise, manage and exploit in an appropriate way to improve the health and care system in the UK and overseas (via ODA). NIHR-funded IP can take a wide range of forms including know-how, data sets, copyright, trademarks and patents. In many cases, NIHR-funded research will produce impact by normal academic and professional communication and dissemination activities. However, NIHR also recognises that in some cases IP assets need to be used by clinical, commercial or charitable bodies that have not received NIHR funding but offer the highest chance of producing patient benefit. For example, some NIHR-funded research may generate clinical tools (e.g. questionnaires) that may be of interest to third parties but care needs to be taken to ensure that appropriate legal mechanisms are put in place to prevent inappropriate use (e.g. management of Copyright). A limited number of NIHR awards will result in data, medical devices or novel pharmacological treatments that have the potential for commercial exploitation by licensing to a third party, formation of a spin out company and may merit patents being filed. In these cases detailed IP management is needed to ensure that publicly funded research is used in an appropriate way that produces patient and public benefit with recognition of the economic value added by NIHR funding. Therefore, effective IP management, licensing, dissemination and transfer mechanisms that are appropriate for each situation are needed for the NIHR to achieve its goals.
To achieve these goals, the contract outlines a clear position on ownership of foreground IP and allows the Authority to secure a return where appropriate. The contract also ensures as far as is reasonably possible, that the IP on which a Contractor wishes to base its NIHR-funded research is also free for use by such research.
There are a number of areas with respect to IP that a Contractor should consider during the contracting process.
Does the research involve collaborators?
The NIHR is interested in ensuring that the research it supports is undertaken in an environment that promotes maximum dissemination and if appropriate, exploitation of any results. It is essential therefore, that the NIHR is aware of who is involved in the research and how that relationship is governed. With this in mind, Contractors should be aware that NIHR may wish to review any collaboration agreements before they are executed to ensure that they are consistent with the NIHR research contract. The standard research contract places obligations on organisations to disclose arrangements made with third parties, and to ensure that no agreements are entered into which prevent organisations from complying with the terms of the contract. Whilst the NIHR wishes to be able to review such agreements and advise on their compatibility with the contract, the responsibility is ultimately with the recipient organisation to ensure that any contractual arrangements are in line with the NIHR funding terms.
What is the Background IP position?
Background IP can be crucial in unlocking Foreground IP because often Foreground IP cannot be produced or used without pre-existing Background IP. The provisions in the research contract on Background IP are therefore intended to supply the Authority with confidence that research outcomes funded by NIHR will be eventually be translated into patient and public benefit. The intention behind Schedule C is to allow the Contractor an opportunity to manage any potential risk of technically being in breach of the NIHR research contract. This is needed because clause 23.1.4 requires the Contractor to confirm that they have the appropriate authorisation to use Background IP introduced to the Research. It is acknowledged that there will be some pieces of IP that are used in the Research with proper authorisation but where the Contractor’s rights are not unrestricted for future exploitation. To avoid the Contractor being in breach of the warranty wherever the Contractor has a restricted right to use the IP, the Contractor is able to include a list of the restricted use IP in Schedule C. In short, Schedule C represents a carve-out from the scope of the 23.1.4 warranty and it is in the Contractor’s interest to populate Schedule C with as comprehensive a list as possible. This schedule also provides NIHR with clarity on the ownership and rights to Background IP needed for generation of patient and public benefit.
What are the proposed Foreground IP ownership arrangements?
Where possible, the Authority expects that the Contractor (i.e. the organisation signing the research contract) will own all Foreground IP arising from the NIHR funding. However, this is not always appropriate when the research involves collaborators. The NIHR recognises the complex nature of research and the many partners needed for success. The standard research contract contains provisions that recognise collaborations and the need to accommodate flexible IP ownership.
The intention behind Schedule D is to allow the Contractor to outline Foreground IP ownershipwhere it differs from the preferred position of the Authority. This allows NIHR to have confidence that there are no significant barriers to using the Foreground IP to generate public and patient benefit. Potential reasons for an alternative ownership position may include pre-existing arrangements or a desire to simplify the route to patient benefit. A robust justification in terms of how any alternative arrangement would maximise patient and public benefit more effectively than the preferred position should be submitted to the NIHR during the contract negotiation phase. This is particularly important when the research is expected to produce a mixture of “severable” and “non-severable” Foreground IP. “Severable” Foreground IP is standalone and separate from the Background IP, e.g. a new questionnaire, a dataset, a toolkit. “Non-severable” Foreground IP is based on and linked to the Background IP and cannot be used without it, e.g. an amended questionnaire, an app based on an existing treatment.
Whilst joint ownership of arising Foreground IP may seem easiest to agree in principal, the experience of NIHR is that this arrangement can make it more challenging to exploit and disseminate Foreground IP for patient and public benefit. Therefore, NIHR is unlikely to agree to this arrangement unless the circumstances are exceptional. Please highlight in your application if you think joint ownership of Foreground IP is appropriate for your project and why it is justified in this case.
In general, the ownership arrangements for arising Foreground IP should be as simple as possible and laid out clearly in Schedule D.
NIHR’s Contractual Rights
Organisations that sign the NIHR research contract are responsible for ensuring the wide-ranging contractual obligations are fulfilled for the organisation and any approved collaborators. NIHR expects that research organisations will maximise dissemination and exploitation of all research as they are best placed to do so. To enable NIHR to track how NIHR-funded Foreground IP is being used and provide reassurance that the research outcomes are being used in the public interest, all standard research programmes contracts issued after April 2012 include a written consent right for the Authority for any commercialisation of Foreground IP which would include database rights and arising know-how. Clause 16.5 in Version 2/18 of the research programmes contract is one such obligation However, to further protect the public interest, the NIHR research contract contains a number of “safety net” clauses that allow the Authority, under extreme circumstances, to take action to ensure that patient and public benefit is generated from use of taxpayer funds. Thus, the standard research contract also includes provisions around the licence and/or assignment of IP to NIHR under certain conditions (clauses 15.3 and 16.6 in Version 2/18 of the research programmes contract).
Consent to commercialise
The NIHR has an obligation to act as a custodian of public finances. The ‘consent to commercial exploitation’ provision within the standard research contract enables the NIHR to have sufficient oversight of how its funding is being used, whilst providing a mechanism for all parties to be made aware of the proposed exploitation, to input to the process and to agree what (if any) return is being shared. This process ensures that IP is being used in a way that is aligned with the NIHR’s aims and objectives without being burdensome, whilst providing parity with other major research funders in the UK.
Given the wide-range of research funded by NIHR, contractors should note that each consent request, and therefore revenue share agreement, will be negotiated on a case-by-case basis at an appropriate point. With this in mind, NIHR will not agree to pipeline deals or pre-emptively give consent for use of Foreground IP. NIHR needs to be able to review commercialisation deals when appropriate, and pipeline deals and pre-emptive consent prevent this review from occurring. Finally, whilst NIHR needs to agree an appropriate return that recognises the funding provided, it is not the overriding intention of the Authority to seek a direct financial return from the exploitation of NIHR-funded IP. Revenue sharing is one possible way to recognise the funding input, but there are several other routes to demonstrate a return on the public funding and the primary focus of the NIHR remains to ensure that patient and public benefit is realised.
Licence and/or assignment of IP to NIHR
The standard research programmes contract includes the obligation for the Contractor to make available Contractor Background IP that is necessary or useful for the research and for the protection, dissemination or exploitation of the Foreground IP. If the Contractor does not fulfil this obligation, the Authority has the right, but not the obligation, to take over responsibility for such Contractor Background IP. The NIHR expect this right to be rarely exercised, and only under limited circumstances. Inclusion of these provisions is necessary and consistent with the desire to ensure that IP arising from NIHR-funded research can be exploited or disseminated without any hindrance. Any assignment would normally be subject to agreement with the Contractor and only as a result of the Contractor electing to abandon Intellectual Property that the Authority considers relevant or
critical for realising benefit from the research being supported. Any assignment would also take into account pre-existing rights to Background IP. The right to take assignment of Contractor Background IP relate only to the contracting organisation and does not extend to Third Party IP.
The standard research contract also includes the right, but not the obligation, for the Authority to take assignment of arising Foreground IP that the Contractor does not reasonably protect, manage or exploit. As with the provisions concerning Contractor Background IP, this right is one that is expected to be rarely exercised. The NIHR seeks to ensure that arising Foreground IP is exploited where possible and appropriate to achieve public and patient benefit. Therefore there are two conditions for possible transfer of ownership to the Authority. First, if the Contractor elects not to protect the Foreground IP, then the Authority reserves the right (but not the obligation) to take ownership, but this would be a very unlikely occurrence. Second, if reasonable steps are not being taken to exploit or manage Foreground IP then, subject to any third party rights the same right for the Authority applies.
Schedule A: Assignment
This schedule, along with clause 17.5, assigns all IP rights in the Material to the Authority on behalf of the Crown. Material in this context (as outlined in the contract) means the copyright in any report, executive summary, paper, abstract or other document provided by the Contractor during the research, as part of the final report, or in the course of reporting research outputs. It does not extend to Results, Foreground IP or any other IP contained within such a report, etc. The purpose of this schedule, therefore, is to allow NIHR to publish information about the research (e.g. that the research has been commissioned; interesting press coverage), and to publish the final report in line with its aims to deliver patient and public benefit.