Entrepreneurial Considerations For Faculty, Grad Students, Post Docs, and Various Researchers
Written By: Daniel Shores J.D. and Michael Thompson M.S., Ph.D.
The first section of this article briefly describes the relationship between university research and development (R&D), expenditures, and intellectual property (IP). The second part or section then quickly discusses University IP and its link with commercialization. After the second section, key points to consider are provided for faculty, graduate students, research fellows, post-docs, visiting scholars, and other researchers when founding or joining a startup, company, or Research Impact (RI) Venture based on technology developed at a university or college. These considerations include: 1. understanding patent ownership in a university or college setting; 2. traits of institutional technology transfer offices (TTOs); and 3. university or college Conflicts of Interest (COI) issues. Immediately after these considerations are discussed, the authors conclude by providing a few takeaways*.
Research and Development (R&D), Expenditures, and Their Relation to Intellectual Property (IP)
According to National Science Foundation (NSF) Fiscal Year (FY) calculations, Universities in the United States (US) expended almost 84 billion dollars ($US) for Research and Development (R&D) . This is an increase of approximately 5 billion ($US) from the previous year . In accordance with all past data this trend is expected to continue its upward trajectory.
While no correlations are shown here, the result of expenditures for R&D does play a significant role in university education and training. R&D at a university is largely undertaken by several individuals (e.g., faculty, graduate students, research fellows, post-docs, and visiting scholars). These R&D expenditures also result in a benefit to the national economy, especially in terms of technology transfer aka tech transfer .
Meaning that through R&D activity while working in, with, or for a university or college the above-mentioned individuals can and do generate patentable inventions, know how, and other valuable intellectual property (IP). Furthermore, many inventions, know how, and other valuable IP that are associated with tech, are then package so they might be utilized in the greater or broader community.
University Thoughts, Approaches, and Commercialization of IP Through a Start-Up and/or Research Impact (RI) Venture
The amount of IP that can be generated requires each university and any college with a university-like infrastructure to take steps to ensure interests are always protected pre-, during, and post-IP development. This is particularly important when that knowledge, information, or know-how produced (i.e., IP) may have commercial value and can potentially impact society in significant ways .
Each step in this process of IP protection comes at a cost. To ensure revenue versus a matrix of multiple risks leading to commercialization are balanced, dollars spent on IP protection must be invested wisely.
Most university and college charters, mandates, or mantras are not centered around commercialization. As a result, many institutions are not well equipped to take all their university-owned IP to market. This means that institutions will consider all the pros and cons before commercializing their own technology.
Universities and colleges often seek to partner with others to help achieve this goal. Sometimes this go-to-market approach is best initiated by the formation of a startup company.
Many times, these start-up companies, businesses, or Research Impact (RI) Ventures are composed of one or more university or college-related individuals as founders. When this is done there are a whole list of things to think about for these founding individuals. For example, a contracted Option Agreement which is a precursor to a License Agreement .
Three (3) Considerations
Below are provided three basic things you must know if you are planning to be a founder or participate in a university-based start-up and/or Research Impact (RI) venture.
1. Understanding Patent Ownership in a University or College Setting
Under United States (US) patent law, inventors who solely or jointly contribute to the conception  of a claimed invention are the first legal owners of resulting patent rights. This can be upheld if there has been no invalidating agreement to the contrary – usually beforehand but there are always exceptions. Patent ownership confers a bundle of rights to the patent-holder including the right to exclude others from making, using, selling, offering to sell, or importing a claimed invention.
This means that patent owners are allowed to leverage their patent rights in a multitude of ways. For example, patent owners can: license all or part of the patent rights to third parties on an exclusive or non-exclusive basis; bring an infringement action against alleged infringers; build US and international patent portfolios surrounding the inventions; build new companies around the patent rights; sell the patent rights; and otherwise leverage the patent rights in an advantageous way.
Accordingly, universities and colleges typically seek to maintain ownership over innovations they sponsor or otherwise support. Universities and colleges have broad policies requiring employees and partners who use institutional resources to assign over their patent and other IP rights as a condition of the employment or engagement. Such IP policies are largely available online or through university network portals. For example, here are the IP policies of Harvard  and Stanford .
These policies are invariably broad in scope requiring all inventions developed by those at a college or university to be owned by the institution. However, it should be noted that several states have adopted laws providing boundaries on the scope of employee invention assignment agreements . A variety of these statutes could be useful in situations where universities and colleges significantly overreach to claim ownership over inventions not related to the employee’s work at the university.
Outside of some exceptions such as substantial overreach , it is still important to understand that the boundaries set by state laws are relatively broad. Meaning that state laws can be left open for various interpretations regarding IP ownership.
As a general guideline, assume that the IP developed during the scope of employment or otherwise supported by a university or college will be entitled and owned by the institution.
Another item to be aware of affecting patent ownership is the 1980 Bayh-Dole Act or Patent and Trademark Law Amendments Act . The Bayh-Dole Act allows universities and colleges to own federally funded inventions. This is with the understanding that: the government has a nonexclusive license to the invention; substantial manufacture of the invention will occur in the US; there will be certain government march-in-rights; and other conditions .
The Bayh-Dole Act is also important and should be considered in advance of accepting federal funds. Especially when seeking to commercialize a technology while simultaneously trying to avoid or minimize the concomitant attachment of these federal rights.
2. Technology Transfer Offices
Most universities and several colleges who have administrative structures like that of a university have technology transfer offices (TTOs). The TTO gained popularity during the technology transfer movement of the late 1970s early 1980s . These offices help administer the transfer of technologies from a university or college to other persons or entities primarily with a goal of technology commercialization.
TTOs usually employ a diverse set of professionals that include but are not limited to scientists, lawyers, engineers, licensing experts, business managers, and analysts. This diversity of expertise allows TTOs to better assess and determine a financial path forward for each agreement involving any technology generated from multiple innovation nodes within each institution.
TTOs can facilitate this path forward in several ways. For example, they act as a channel between academia and industry. TTOs also form and maintain industry partnerships. Utilizing these channels and partnerships increases the chances of these offices to out-license university-owned patent rights and know-how for commercialization.
If successful, the university or college will receive royalties and other payments. These royalties and payments will happen on a going-forward basis and may come from those who have partnered to obtain these rights and know-how. This is important because many times through TTOs, universities and colleges absorb significant upfront financial risks surrounding the entire go to market and commercialization process. University and college recoupment of cost through varying royalty schemes and payments ensures TTOs can continue their operations.
As one can surmise from what has been already stated, the institution is typically the owner of the patent rights if the IP or know-how was developed and then patented by the academic organization. Meaning that universities and colleges usually have discretion on the type of license they may grant to partners**. This includes, for example, whether the license will be exclusive or non-exclusive, limited to a particular field or territory, or is sublicensable.
Depending on the situation, TTOs may seek to obtain an ownership interest in the company or the payment of upfront licensing fees or triggering fees upon an event such as funding or acquisition. Some institutions also distribute a percentage of net royalties to inventors of the technology which has been successfully commercialized or taken to market.
It is imperative to know how your institution and TTO will recoup cost and generate revenue.
In addition, TTO personnel typically support innovative students and faculty in the process of their research and development activities. Some TTOs form incubators to encourage entrepreneurship and commercialization activities among faculty, staff, and industry partners.
Most TTOs are internal to the university, but there are other types set up as separate companies that operate outside of the university setting. Some examples of university incubators include Georgetown University  and the University of Pennsylvania . Links have been provided in the reference section.
3. Institutional Conflicts of Interest Policies
Participation by those working, studying, or conducting research at a university or college who plan or are in startup companies can potentially generate a conflict of interest. These “Conflict of Interest” policies should always be considered very carefully. Especially in the context as to what existing projects and initiatives should be pursued through to commercialization.
One of the chief concerns underlying these policies includes potential exposure to assertions that researchers at a university are biased due to financial incentives. Links to some examples of conflict-of-interest policies, namely Massachusetts Institute of Technology (MIT)  and University of Texas  are provided in the reference section.
Below is provided an excerpt from MITs COI policy. No two university or college COI policy are the same. However, most university or colleges with a university structure will provide language, claims, and statements similar to the below provided excerpt.
“A conflict of interest (COI) can be any situation in which financial or other personal considerations have the potential to compromise a researcher’s professional judgment and objectivity in the design, conduct or reporting of research. MIT has a responsibility to ensure that its teaching and research environment fosters the generation of new knowledge and positive learning opportunities for students and preserves the integrity of its research enterprise and the public’s trust. MIT policy, therefore, requires that MIT officers, faculty, and staff and others acting on its behalf avoid or mitigate real or perceived financial conflicts of interest and ensure that their activities and interests do not conflict with their obligations to MIT or its welfare. The Vice President for Research is responsible for ensuring implementation of this policy.”
This means that most if not all university and college COIs policies will address conflicts that come from activities related to research done by a faculty, post-doc, research fellow, visiting scholar, researcher, or a graduate student when it allows for potential or actual financial gain through a startup (e.g., a founding ownership interest).
From a process perspective, most COI policies or institutional COI representatives will state or recommend that if a potential conflicting situation is imminent, or could or does exist – the faculty, post-doc, graduate student, etc., involved would need to disclose the potential conflict.
When this disclosure is provided, the university or college (through a designated committee, office, group, or individual) will review the potential conflict and adjudicate with recommended next steps depending on the perceived outcome.
Conflicts that exist which cannot be managed may preclude the individual/s from participating in a startup should they seek to continue their engagement with the university or college.
Individuals at universities and colleges who may be interested in founding a company based on research, with an emphasis on technology, science, engineering, mathematics and/or things that can be patented or commercialized – should carefully consider institutional IP policies as early as possible. This will provide critical early understanding of the parameters needed to navigate one’s activities on a going forward basis with the end goals of forming a startup.
More so, such individuals should build relationships with TTO personnel to confirm how the written IP policies are typically applied, which may or may not be to the letter of the policy.
Since in the end this is all a human exercise, getting the know TTO personnel will be to your long-term advantage as you seek to help society while also being able to generate commercial revenue for the startup and university.
Navigating COI policy when forming a startup can be tricky. Understanding your university and college COI policies is paramount to avoiding issues down the road. Entrepreneurial university and college individuals should confer with: others (sometimes they might need to be third parties outside of the university or college); their university or college COI policy document; and institutional COI staff to understand the parameters at play.
Conflicts issues are not always clear, but the general principles are usually defined well. One should understand these principles. Try to avoid the binary choice of being a founder of a company or leaving the university or college altogether.
In all reasonable cases, university and college individuals (i.e., post-docs, researchers, research fellows if applicable, and graduate students) should consult with their own advisors when: planning their venture or start-up; forming it; and taking their startup or RI Venture to market. All of these actions should be done in the context of this article and other factors.
If you are a visiting scholar, faculty, or the advisor – make sure to consult with your TTO, both the TTO of the visited and your home university or college if applicable, and others to ensure you can navigate your start-up or venture journey.
* A version of this article can be found on RF Emerge.
** Partners can be understood here in the broad sense of the term, being defined as anyone who wants to use or partake of the intellectual, know how, or patent rights.
1. National Science Foundation (NSF) Higher Education Research and Development (HERD) Fiscal Year (FY) 2019, https://ncses.nsf.gov/pubs/nsf21314#data-tables.
2. IP WatchDog, The Evolution of University Technology Transfer: By The Numbers, 2020, https://www.ipwatchdog.com/2020/04/07/evolution-university-technology-transfer/id=120451/.
3. Security, Protecting IP at American Universities, 2019, https://www.securitymagazine.com/articles/90977-protecting-ip-at-american-universities.
4. Entrepreneurship & Clinic At Yale Law School, Academic Entrepreneurs, Beware! How to Proactively Ward off University Ownership Claims and Minimize Licensing Costs., Fuller, L., 2019, https://eic-yls.org/insights-blog/academic-entrepreneuers.
5. The United States Patent and Trademark Office (USPTO), https://www.uspto.gov/web/offices/pac/mpep/s2138.html#d0e207607.
6. Harvard Office of Technology Development, https://otd.harvard.edu/faculty-inventors/resources/policies-and-procedures/statement-of-policy-in-regard-to-intellectual-property.
7. Stanford, Office of Technology Licensing, https://otl.stanford.edu/intellectual-property/stanford-policies.
8. RF Emerge, IP Assignments Considerations for Emerging Companies, 2021, https://www.rfemerge.com/2021/03/26/employee-assignments-for-emerging-companies-key-considerations/.
9. Merriam Webster, https://www.merriam-webster.com/legal/overreaching.
10. “H.R. 6933 — 96th Congress: Government Patent Policy Act of 1980.” www.GovTrack.us. 1980. November 2, 2021., https://www.govtrack.us/congress/bills/96/hr6933.
11. West Group Briefing Paper reproduced, https://www.mofo.com/resources/news/the-governments-patent-policy-the-bayh-dole-act-and-authorization-and-consent.html.
12. Georgetown University Incubator, https://eship.georgetown.edu/venture-lab/.
13. University of Pennsylvania Incubator, https://entrepreneurship.wharton.upenn.edu/about_us/.
14. Massachusetts Institute of Technology (MIT) Office of the Vice President For Research Financial Conflicts of Interests in Research, https://coi.mit.edu/sites/default/files/uploads/coi-policy-2017-02-23.pdf and https://coi.mit.edu/policy#:~:text=MIT%20policy%20requires%20that%20researchers,of%20a%20conflict%20of%20interest.
15. University of Texas at Austin Conflict of Interest, Conflict of Commitment, and Outside Activities, https://policies.utexas.edu/policies/conflict-interest-conflict-commitment-and-outside-activities.
16. RF Emerge, companion article link, https://www.rfemerge.com/2021/11/17/three-3-initial-considerations-for-entrepreneurial-faculty-researchers-post-docs-and-graduate-students/.
Dr. Michael Thompson aka “The Broader Impacts Guy”
Michael Thompson has an Executive Education Certificate in Entrepreneurship through the Wharton School of Business at the University of Pennsylvania, a Bachelor of Science (B.S.) in Biology and Chemistry from Saint Josephs College, a Master of Science (M.S.) in Biochemistry, and a Doctorate of Philosophy (Ph.D.) in Chemistry from Purdue University.
Michael is a real estate investor and owner. He has started several companies and has initiated many freelance projects that span the: Industrial, Commercial, and Residential Cleaning; Environmental Heating and Cooling (HVAC) Tech; Engineering and Manufacturing; Educational Secondary and Higher Education Consulting; and Biotechnology/Formulation Consulting spaces.
Michael is the founder and currently serving as the Chief Executive Officer (CEO) of Research Impact Enterprises or RIE for short. RIE is a Research to Impact (RI) Enterprise Accelerator. RIE helps Individuals, Researchers, Faculty, Upper-Level Degree Holders, and Institutional Units plan, develop, fix, and grow their businesses, start-ups, and social enterprises. In short, RIE supports, promotes, and advances different types of ventures.
Michael also enjoys working for universities and other companies in academic and industry sectors. He typically keeps a full-time job while pursuing various entrepreneurial endeavors. For example, in addition to his current entrepreneurial activities, he has also worked in the Dairy and Food Safety Industry for the last three years. He does this because for him, work and entrepreneurship is both a love and hobby that enables his all consuming passion for making a positive impact.
Before serving as CEO of RIE, Michael was the Founding Director of the Broader Impacts in Research (BIR) organization, on the Senior Staff of the Office of the Vice President for Research (OVPR), member of the Center for Research Program Development and Enrichment (CRPDE), and Affiliate Professor of Chemistry and Biochemistry at the University of Oklahoma (OU). He also served on the National Alliance for Broader Impacts (NABI) Working Group, which developed the Broader Impacts Guiding Principles and Questions for National Science Foundation (NSF) Proposals. Prior to working for OU, he lived in Portland, Oregon and worked for Oregon Health & Science University (OHSU), Institute for Environmental Health (IEH), and the Center for Coastal Margin Observation and Prediction (CMOP).
Daniel L. Shores J.D., is a dedicated patent lawyer and strategist who believes in his clients and the power of their ideas. He focuses on serving biotech, medical device, energy, software, cybersecurity, and other technology-based companies and understands the myriad of challenges that such companies face when breaking through and establishing themselves in their respective markets.
Dan works with clients to build robust patent portfolios, protect trade secrets, negotiate strategic collaborations, conduct due diligence and landscape investigations, and prepare for success in funding rounds and exits. An engineer by education, and having extensive experience in transactional, litigation, procurement, and strategic counseling matters for technology-based companies, Dan is a problem-solver who excels at deciphering key translational aspects of a broad array of technologies to maximize leverage in the context of clients’ desired implementation of such technologies whether as participants in dynamic markets or as first movers.
He has served companies utilizing the following technologies (without limitation): mRNA therapies; lipid nanoparticle delivery technologies; genetically engineered swine and organs for xenotransplantation; artificial intelligence for drug discovery; CAR-T therapies; oligonucleotide development; pharmaceutical treatment of rhinitis with levocetirizine; pharmaceutical treatment of hepatitis B with telbivudine; genetically-modified cotton seed; fiber-optic probes for tissue investigation; implantable glucose-sensing devices; high throughput genetic seed-chipping technology; cybersecurity threat assessment platforms; interactive media systems for healthcare institutions; artificial intelligence (various applications); identification systems for cable-based medical devices; identification of digital positions of interest on media items; heat-treated glass with multi-layer low-emissivity coatings; pressure-sensitive adhesives; mass teleconference software; and integrated electronic securities marketplace systems.
Dan is a partner at Rothwell, Figg, Ernst & Manbeck, P.C., which is a full-service intellectual property (IP) law firm. Dan holds a Bachelors of Science (B.S.) from the University of New Hampshire and a Juris Doctorate (J.D.) from the Georgetown University Law Center where he served on the Editorial Board of the Georgetown Law Review. He is a registered patent attorney licensed to practice before the United States Patent and Trademark Office (USPTO), and is admitted to practice law in Massachusetts and in the District of Columbia. He is a member of the bars of the Supreme Court of the United States, United States Court of Appeals for the Federal Circuit, and United States District Court for the District of Massachusetts. Dan lives in Boston with his wife Lindsay and their two English Bulldogs – Jarves and Rosie.
The above article is not to be construed as legal advice – meaning the information contained in this posting does not, and is not intended to, constitute legal advice or express any opinion to be relied on legally, for investment purposes or otherwise. If you would like to obtain legal advice relating to the subject matter addressed in this posting, please consult with us or your attorney. The information in this post is also based upon publicly available information, presents opinions, and does not represent in any way whatsoever the opinions or official positions of the entities or individuals referenced herein.
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