How to know who owns what: IP war of words takes centre stage between universities

It’s a game of good cop, bad cop.

Paul Paolatto knows how to coach a hesitant researcher through the process of bringing an invention to market. But when it comes to the business-end of things, he isn’t afraid to roll up his sleeves and do the dirty work to get it off the ground.

“We serve as agents or advocates on behalf of the researcher, that way the researcher can maintain a positive and healthy relationship with the commercial partner and we get to be the bad guys,” the WORLDiscoveries executive director says. “I’m not an academic, I’m a business guy. My job is to protect the interests of the researchers and try to extract as much value on behalf of the researchers and institution as possible.

“So, I’m the Mean Business Guy.”

Developed out of a partnership between The University of Western Ontario, Robarts Research Institute and Lawson Health Research Institute, WORLDiscoveries draws upon a mix of industry connections, sector-specific market knowledge and business development expertise, to help researchers and local inventors commercialize their discoveries through licensing and new company spin-offs.

It is a key organization in Western’s Intellectual Property (IP) approach, an area that has been in the spotlight across Canada for months.

The University of Waterloo brought IP policy to the forefront when it recently launched a redesign of its main homepage. Calling up the site, uwaterloo.ca, visitors are immediately hit with the phrase, ‘Everything you discover at Waterloo belongs to you.’

The words are bigger than anything else on the page, including the name of the university. It’s quite a bold pronouncement, a stake in the ground other Canadian universities have been responding to since.

And Western is no different, trying to get its message out that everything you discover at Western belongs to you, too.

And, as Paolatto points out, they’ll help you along the way as well.

Western’s IP policy is best described as the ‘inventor-choice’ option.

When researchers come up with a new invention, they are obligated – through the faculty association’s collective bargaining agreement – to disclose the discovery to the university. This allows the university to evaluate the commercial potential for the invention.

Researchers are sometimes quick to publish, but this can compromise their ability to protect their IP. “Once they’ve published it’s simply too late,” Paolatto says.

The invention is evaluated on a series of criteria: product attributes; value proposition; prior art review (ensuring it is a novel idea); market prospects by partner; and a life-cycle return on investment analysis.

From there, the inventor has three options – either a university-led, inventor-led or inventor-alone option – each with a different revenue-sharing model.

In the university-led option, WOLRDiscoveries will ask the researcher to assign the invention (legally transfer ownership of the IP) to the university. The net income derived from the invention, after paying third-party expenses (such as legal expenses), will be divided in half between the university and the inventors.

WORLDiscoveries will find seed money, spin off a company, find management support and market the company to outside parties, Paolatto says.

“The university is willing to bear the risk associated with technologies that may or may not ultimately generate a return to the university,” he says.

This option worked well for Hanif Ladak, Department of Medical Biophysics, Department of Electrical and Computer Engineering and Otolaryngology.

With the help of WOLRDiscoveries, he developed a spin-off company, ENT Simulation Technologies, offering medical students the ability to practice disease diagnosis and surgery using a virtual, 3-D anatomical model with realistic graphics and touch feedback.

“WORLDiscoveries has essentially handled all business aspects of our spin-off company and allowed me and my team to focus on product development and testing, which is our strength,” Ladak says. “Had WORLDiscoveries not assisted us, it would not have been possible to balance academic work with business development and bring a product to market in a reasonable amount of time.”

But zero obligation exists for inventors to assign the technology to Western.

In the inventor-led option, either inventor chooses not to assign to Western the IP or WORLDiscoveries chooses not to invest in it. At that point, the university is entitled to 12.5-25 per cent of the inventor’s net income depending on the nature of the invention.

In the inventor-alone option, they are just that, on their own to pursue the IP’s commercialization in any way they wish. Western is owed no compensation.

“If an inventor discloses something to us and then subsequently says that they would like to advance the invention on their own or independent of the university, we give them that choice and we will assign it back to them,” Paolatto says. “No questions asked.”

WORLDiscoveries generates between $5-6 million annually in income (in returns to the university and researchers), while costing the university about $2 million each year to operate. And while not all of the inventions are going to be successful, many offer significant social value, such as providing green technologies.

“Those types of initiatives are more important than the return itself because you are putting the researcher’s life work into the marketplace where it can do some good for people,” he says.

Nevertheless, Western ranks third in Canada for commercial income and tops the list in the number of spin-off companies.

“Sometimes you hit a home run and, when you hit a home run, it can be very lucrative,” Paolatto says.

 

How does Western compare?

See how Western’s intellectual property ownership policy measures against other comparative Canadian institutions.

University of Western Ontario: “Intellectual Property not arising from Contract Arrangements, unless otherwise assigned, shall be owned by the IP Creator(s).”

University of Waterloo: “It is University policy that ownership of rights in IP created in the course of teaching and research activities belong to the creator(s).” Exception made for contract research.

University of Toronto: “The inventor and the University will normally share the rights to an invention, unless a third party, such as a corporate sponsor, is granted rights in a preexisting contractual agreement. An inventor may choose to assume full responsibility for the legal protection and commercialization of the invention. In this case, the University will assign its rights to the inventor in return for 25 per cent of future net revenues.”

Queen’s University: “Ownership of all types of intellectual property and for all members of the University should rest with the creators, unless other arrangements have been agreed to in advance for certain categories of employment, for certain types of funding, or by individual contract.” Exceptions made for contract research and work for hire.