The process for technology commercialisation at the University of Melbourne
This guide to technology commercialisation outlines the essential elements of technology commercialisation at the University of Melbourne. This guide answers the most common questions we field from our research community, and is designed to provide a broad overview of the technology commercialisation process, and services available for researchers. This guide is intended for all University of Melbourne academics, postdoctoral researchers, and graduate students, in any field of research, curious about achieving broad impact from their research.
We encourage you to contact RIC during your early research activities to ensure you are aware of the options that will best create impact from your research. The staff at RIC have experience that will help them assist you with questions related to marketability, funding sources, commercial partners, patenting and other protection methods, start-up considerations, University policies and procedures and much more.
1. Commercialisation Overview
1.1 What is commercialisation?
Technology commercialisation, also referred to as technology transfer or research translation, is the transfer of knowledge and discoveries to the broader community. It can occur through publications, educated students entering the workforce, exchanges at conferences, relationships with industry, and more. In this guide, the term “commercialisation” will be used to refer to the formal licensing of technology to third parties, under the guidance of professionals from the University’s Research, Innovation and Commercialisation (RIC) office. This includes the full spectrum of research translation activities -- royalty-free licences, open-sourcing, and transfer of knowledge to social enterprises and not-for-profit ventures, as well as more conventional licences to established, for-profit companies, start-ups, and spin-outs.
The University’s commercialisation goals
UoM engages in technology transfer to create impact (change the world for the better) and enhance its reputation. Revenue generation is an important but secondary goal that flows naturally from success in creating impact.
1.2 What is UoM Research, Innovation and Commercialisation (RIC)?
The University of Melbourne is home to some of the best thinkers in the world. It’s the job of the University’s Research, Innovation and Commercialisation (RIC) office to help transform their ideas into reality. We do this by providing expert services to researchers along the research, development and partnership continuum, including:
- Help seeking grants and other sources of funding
- Help with ethical guidance and approvals
- Developing custom education
- Supporting contracts and consultancy
- Assistance identifying and protecting intellectual property
- Licensing and patenting
- Assistance with spin-outs or start-ups
RIC’s mission is to facilitate world-class research that is globally engaged. To learn more about RIC, visit http://research.unimelb.edu.au/#research-support. Information about RIC Business Development is here: http://research.unimelb.edu.au/contact-us/contacts-for-industry-and-partners/business-development-disciplines.
1.3 Why would a researcher want to participate in commercialisation?
According to the broad definition used here, commercialisation of research is necessary to achieve impact from the research – that is, to use the research to make a contribution to the economy, society, culture, national security, public policy or services, health, the environment, or quality of life, beyond contributions to academia. Reasons for researchers to become personally involved in generating impact from their research are unique to each researcher, and might include:
- Making a positive impact on society
- Feeling a sense of personal fulfillment
- Achieving recognition and financial reward
- Generating additional lab, department or centre funding
- Meeting the obligations of a research contract
- Attracting research sponsors
- Creating educational opportunities for students
- Exploring an alternative career to academia
- Potential to discover and lead new research ideas and directions
- Linking students to future job opportunities.
1.4 What is “intellectual property?”
Intellectual property (IP) includes creations and/or material that may be registered or protected under the patent, trademark and/or copyright laws, or by contract; and knowledge that cannot be protected under these laws, such as non-patentable creations and know-how. This might include databases, datasets, material on websites, blogs, wikis and podcasts.
1.5 What happens in technology transfer and commercialisation?
Because most intellectual property developed by university research are at an early stage, and because universities are focused on research, rather than product development, universities usually achieve impact with their research via partnerships with industry. Technology is typically transferred from the University to a partner through a licence agreement, in which the University grants its rights in the defined technology to a third party for a period of years, often limited to a particular field of use and/or region of the world. The licensee (the third party licensing the technology) might be an established company, a government agency or statutory authority, or a new start-up or spin-out. Licences include terms that require the licensee to meet certain performance obligations and to make financial payments to the University. Once the commercialisation costs have been recouped, these payments are shared with the creators and are also distributed to the creator’s faculty and central University administration to provide support for further research, education, and participation in the technology transfer and commercialisation process.
1.6 Who owns my intellectual property?
According to the University Statute:
“The University owns intellectual property created by staff in the course of, or incidental to, employment with the University, except copyright in scholarly works. The University owns intellectual property created by any student, honorary appointee or visiting personnel, whilst engaged in an activity which is the subject of a specified agreement.”
A specified agreement, in this context, is an agreement between the University and any party about the ownership and/or use of intellectual property (IP). Most grant funding, including ARC and NHMRC funding, require a specified agreement that obliges the University to manage the IP. More detail can be found in Section 13— Intellectual Property of the University Statute (http://www.unimelb.edu.au/governance/statutes ). RIC will work with you to resolve any questions about IP ownership. If you own the IP, you will be asked to assign it to the University if you wish to take advantage of the University’s commercialisation support services. It is important to note that any net revenue obtained by the University from commercialisation of intellectual property is shared with the creators.
For the remainder of this manual, unless specifically described otherwise, the term “creator,” rather than “inventor,” will be used to describe all the contributors who have shared in creating the value of intellectual property, including the individuals listed on a patent, as well as contributors to intellectual property that is not patented.
2. The Commercialisation Process
2.1 What are the typical steps in the commercialisation process?
The process of technology transfer and commercialisation is summarised in the steps and diagram that follow. These steps can vary in sequence and often occur in parallel. RIC is constantly refining and streamlining the process, to make it more efficient for creators and licensees, so check the RIC web site for updates, starting here: http://research.unimelb.edu.au/contact-us/contacts-for-industry-and-partners/business-development-disciplines. In addition, it is sometimes necessary to iterate through the process as you further refine the details of your intellectual property.
2.2 How long does the commercialisation process take?
The process of protecting the technology and finding the right licensing partner may take months—or even years—to complete. The amount of time will depend on the development stage of the technology, the market for the technology, competing technologies, the amount of work needed to bring a new concept to market-ready status, and the resources and willingness of the licensees and the creators.
2.3 How can I help in this process?
- Contact RIC (http://research.unimelb.edu.au/contact-us/contacts-for-industry-and-partners/business-development-disciplines) as soon as you believe you have created or discovered something unique with potential commercial value. The sooner you contact RIC, the sooner the IP assessment and protection process can start, and the less likely it is that publications and other public disclosures of the IP will be delayed.
- In consultation with your faculty’s RIC Business Development Team representative (found at http://research.unimelb.edu.au/contact-us/contacts-for-industry-and-partners/business-development-disciplines), complete and submit the IP Disclosure Form (found at http://research.unimelb.edu.au/partner/technology-licensing/for-researchers/ip-disclosure ). It is very important that this is done at least several months in advance of publicly disclosing your technology or submitting a manuscript for review and publication.
- To avoid risking your patent rights and possibly hindering the opportunity to market your intellectual property, contact RIC before holding any discussions about your creation with people outside the University community.
- Respond promptly to requests for information from RIC and their external patent attorney. While some aspects of the patent and licensing process may require significant participation on your part, we will strive to make efficient use of your valuable time.
- Keep RIC informed well in advance of upcoming publications or interactions with companies related to your intellectual property.
2.4 Steps to commercialisation
Observations and experiments during research activities often lead to discoveries and creation of intellectual property. Often, multiple researchers have contributed to the creation of the intellectual property.
An early contact with the RIC Business Development Team to discuss your intellectual property and to receive guidance with respect to the disclosure, evaluation, and protection processes described below. The sooner in the discovery process you contact RIC, the sooner the IP assessment and protection process can start, and the less likely it is that publications and other public disclosures of the IP will be delayed.
2.4.3 Intellectual property disclosure
The notice of intellectual property creation to RIC via a completed Intellectual Property Disclosure Form begins the formal technology commercialisation process. An Intellectual Property Disclosure remains a confidential document, and must fully document your intellectual property so that the options for commercialisation can be evaluated and pursued.
The period – typically several months long – in which RIC, with your help, reviews the Intellectual Property Disclosure, conducts patent searches (if applicable), and analyses the market and competitive technologies to determine the intellectual property’s commercialisation potential. The assessment process, which may lead to a broadening or refinement of the intellectual property, will guide our strategy on whether to focus on licensing to an existing company or creating a new staff start-up or University spin-out. It might also provide insights on the focus of future research and development.
2.4.5 Intellectual property protection
The process in which protection for intellectual property is pursued. Patent protection, the legal protection method for inventions, begins with the filing of a provisional patent application with IP Australia and, when appropriate, foreign patent offices. Once a patent application has been filed, it will typically require several years and tens of thousands of dollars to obtain granted Australian and foreign patents. This is often done in conjunction with an industry partner. Other IP protection options are discussed later in this guide.
2.4.6 Development and marketing
With your involvement, RIC staff identify candidate companies that have the expertise, resources, and business networks to bring the technology to market. This may involve partnering with an existing company or forming a staff start-up. Your active involvement will dramatically enhance this process. In some cases, RIC will conclude – with your input, and potentially with input from potential licensees – that further development of the technology is necessary before it’s ready to be licensed. In this case, RIC will also provide advice on potential sources of funding for this development.
2.4.7 Identify an existing company, or form a staff start-up or University spin-out
If an appropriate and interested existing company, or companies, are selected as a potential licensee, RIC licensing specialists work with those potential licensees to develop the appropriate financial and diligence terms to fully commercialise the technology.
If creation of a new staff start-up or University spin-out business has been chosen as the preferred commercialisation path, RIC will assist the founders in planning, creating and finding funding for the start-up or spin-out. This is discussed in more detail in a later section of this guide.
A licence agreement is a contract between the University and a third party in which the University’s rights to a technology are licensed, without relinquishing ownership, for financial and other benefits. A licence agreement is used with both a new start-up business and with an established company.
An option agreement is sometimes used to enable a third party to evaluate the technology and its market potential for a limited time before making a decision about licensing.
The licensee continues the advancement of the technology and makes other business investments to develop commercial products or services based on the technology. This step may entail further development, regulatory approvals, sales and marketing, training, and other activities. The creator’s input and know-how are often needed at various stages, and further development work is often contracted back to the creator’s laboratory, resulting in valuable research funding and allowing new IP to be created.
2.4.10 Revenue and impact, re-investment in research and education
Net revenue received by the University from licensees is distributed to creators’ faculties to fund further research and education, and to creators to encourage entrepreneurial endeavor and further participation in the tech transfer process. The principles behind this are described in detail here: http://research.unimelb.edu.au/partner/technology-licensing/for-researchers/intellectual-property-policy-ownership. In summary, the net proceeds of commercialisation received by the University are distributed as follows: 40% to University creators, 40% to their Faculty, and 20% to the University.
3. Managing research for effective commercialisation
3.1 May I publish the results of my research and still protect the commercial value of my intellectual property?
Yes, but since patent rights are affected by these activities, it is best to submit an Intellectual Property Disclosure form (see next section) well before communicating or disclosing your intellectual property to people outside the University. There are significant differences between Australia and other countries as to how early publication affects patentability. Once publicly disclosed (published or presented in some form), intellectual property may have restricted or minimal potential for patent protection outside of Australia. Be sure to inform your RIC Business Development Team representative of any imminent or prior presentation, lecture, poster, abstract, website description, research proposal submission, dissertation, publication, or other public presentation that includes the intellectual property.
3.2 May I use material or intellectual property from others in my research?
Yes, but it is important to document carefully the date and conditions of use so that we can determine if this use may influence the ownership and license rights of your subsequent research results. If you wish to obtain materials from outside collaborators, an incoming Material Transfer Agreement (MTA) must be completed. More information regarding MTAs is here: https://staff.unimelb.edu.au/research/research-contracts/types-of-research-contracts/material-transfer-agreements.
3.3 May I share material, research tools or intellectual property with others to further their research?
Yes. However, it is important to document items that are to be shared with others, and the conditions of use. If you wish to send materials to an outside collaborator, an outgoing Material Transfer Agreement (MTA) must be completed for this purpose. It also may be necessary to have a Confidentiality Agreement completed to protect your research results or intellectual property. More information regarding MTAs is here: https://staff.unimelb.edu.au/research/research-contracts/types-of-research-contracts/material-transfer-agreements.
3.4 What rights does a research sponsor have to any discoveries associated with my research?
A Research Contract must clearly specify the intellectual property (IP) rights of the sponsor. These rights vary widely from one contract to the next. In some cases, the University retains ownership of the intellectual property resulting from sponsored research, and the sponsor has rights to obtain a licence to the defined and expected results of the research in a nominated field. In other cases, research contracts allow the sponsor a limited time to negotiate a licence for any intellectual property developed as the result of the research. Contact RIC for help initiating, understanding, and dealing with research contracts.
3.5 What about consulting?
In a typical consultancy by an academic, the academic provides defined, specialist advice to a customer for a fee. Academics considering entering into consultancy agreements must consult with their Department to ensure that the proposed consulting arrangement is consistent with the Departmental and University policies, including those related to IP ownership and use, employment responsibilities, and conflict of interest.
4 Intellectual Property Disclosures
4.1 What is an Intellectual Property Disclosure?
An Intellectual Property Disclosure is a written description of your discovery, creation or development that you provide to the University’s RIC office. The Intellectual Property Disclosure will describe the IP in detail, along with comparisons with alternative or competing solutions. It will list all collaborating sources of support that might be relevant to the ownership of the IP. It will include all of the information necessary for RIC to determine the intellectual property’s ownership and commercialisation potential; and (with your input) to begin pursuing protection, marketing, and commercialisation activities, if the decision is made to do so. The Disclosure will be treated as “University Confidential.”
A link to the Intellectual Property Disclosure template is here: http://research.unimelb.edu.au/partner/technology-licensing/for-researchers/ip-disclosure.
4.2 Why must I submit an Intellectual Property Disclosure?
UoM researchers have an obligation to disclose all new intellectual property to the University via their RIC Business Development Team representative. Please do this before talking to external parties, especially prospective investors. Please contact your RIC Business Development Team representative with any questions about discussing your research with people outside the University.
When you disclose your intellectual property to RIC, it starts a process that could lead to the commercialisation of your discovery or creation. This might involve beginning the legal protection process and working to identify outside development partners. If industry or government funds were used for your research, you might have obligations and reporting requirements to the funding party.
4.3 How do I know if my discovery or creation is intellectual property?
What makes a creation count as intellectual property, and what makes it different to a discovery? A discovery reveals and describes the natural world — for example, the sequence of a gene, or an observation of how a child acquires knowledge. Intellectual property is the new creation that makes use of that discovery — for example, a test for a genetic disorder, or a tool to assess how well a child is learning. But the tipping point from discovery to intellectual property is not always clear. What’s more, not all intellectual property can be commercialised or used for social good. To find out whether you have intellectual property that can be further developed, talk with your Business Development Team representative. She or he will help assess your intellectual property. As a general rule, you are encouraged to contact your RIC Business Development Team representative and submit an Intellectual Property Disclosure for all developments or creations that you think might solve a significant problem and/or have commercial value, or could be made into a product or service by an industry partner.
4.4 When must I complete an Intellectual Property Disclosure?
Complete an IP Disclosure well before presenting the discovery through publications, poster sessions, conferences, project reports, press releases, or other communications – ideally several months before doing so, at the draft manuscript stage. Once publicly disclosed (published or presented in some form to non-University listeners), intellectual property may have restricted or minimal potential for patent protection. Be sure to inform RIC of any imminent or prior presentation, lecture, poster, abstract, website description, research proposal, dissertation, publication, or other public presentation including the intellectual property.
4.5 Impact via research tools
Research tools that you have created in your lab might be very beneficial to other researchers and have significant impact, especially in the life sciences. These tools might include materials such as antibodies, vectors, plasmids, cell lines, mice, and other materials used in the research process. If you’ve mentioned tools that your lab has developed in peer-reviewed publications, and this has led other researchers to request to use them (e.g. via outgoing Material Transfer Agreements (MTAs), there is probably potential for broader impact. RIC can help you make these tools available to a wider research audience, for instance by offering antibodies in catalogues, or mouse models via suppliers like Jackson Labs. Many research tools do not need to be protected by patents in order to be licensed to commercial third-party providers and/or generate revenue for your laboratory, and impact and reputation for the University. If you have research tools that you believe to be valuable, RIC will work with you to develop the appropriate protection, licensing and distribution strategy.
4.6 How do I submit an Intellectual Property Disclosure?
To submit an Intellectual Property Disclosure, download the Intellectual Property Disclosure Form here: http://research.unimelb.edu.au/partner/technology-licensing/for-researchers/ip-disclosure, complete the form, and email it to the RIC IP and Licences Manager, whose email address is included in the Intellectual Property Disclosure Form.
Performing a preliminary IP search
The University of Melbourne Intellectual Property Disclosure Form asks IP creators to list existing patents that are closely related to their creation. A full and comprehensive search for so-called prior art can take weeks and cost tens of thousands of dollars, if performed by a patent attorney. However, it’s possible for you, as a researcher and IP creator, to perform a useful preliminary IP search yourself in a few minutes. This is often a valuable exercise for researchers, since there are considerable research outputs found in patents which is not found in general peer-reviewed research publications and literature. Like a survey of the technical literature, the key to a useful IP search is the choice of keywords or search terms. As the IP creator, you are as well-equipped as anyone, or better, to identify the keywords that describe your creation. The UoM IP Disclosure suggests using these keywords at https://patentscope.wipo.int/search/en/search.jsf. Another alternative, often broader, is to enter the same keywords into a general search engine, such as Google, together with the word “patent.” This will help you complete the IP Disclosure Form, and it might become a tool you use often in your research.
4.7 Is a grant application detrimental to patenting?
Grant reviewers for publicly-funded grant providers in Australia (such as the ARC and NHMRC) are under an obligation to maintain confidentiality and not make the details of the application publicly available. However, reviewers for other funding bodies might not have the same obligations, and this might impact patentability. In addition, successful grants might be advertised online, so check what information in the grant application might become public.
4.8 Who is considered a creator for the purposes of commercialisation?
According to the University’s Intellectual Property Policy (https://policy.unimelb.edu.au/MPF1320#section-7):
“Creator means any member of staff, students, honorary appointees or visitors who create any intellectual property whether or not in conjunction with other persons.”
The term “inventor” has a particular meaning in patent law, and the definition of “creator” used here is broader than the usual meaning of “inventor.” Creatorship is discussed further in section 15.5 of this guide.
5 Ownership of intellectual property
5.1 Where can I find the University’s policy on ownership of IP?
The University’s approach to IP ownership and management is contained in the University Statute, section 13: http://unimelb.edu.au/governance/statutes.
5.2 Who owns rights to discoveries made while I am consulting?
The ownership of intellectual property created while consulting for an outside company depends on the terms of your consulting contract with the company. It is important to clearly define the scope of work within consulting contracts to minimise any issues with ownership of intellectual property created from University research. If you have questions, contact RIC.
5.3 Who owns rights to discoveries made while on sabbatical?
Generally, if you are on a sabbatical paid by the University, the University still retains rights to any discoveries connected to your scope of employment. This is explained in Section 13 of the University Statute, referenced above. Contact RIC before your sabbatical to ensure that ownership considerations are documented. The Intellectual Property Disclosure form (downloadable from here: http://research.unimelb.edu.au/partner/technology-licensing/for-researchers/ip-disclosure ) also has more information.
5.4 Must I list visiting scientists on my Intellectual Property Disclosure?
All persons who might have contributed to the ideas leading to a discovery must be mentioned in your disclosure, even if they are not University of Melbourne employees or students. RIC, along with patent attorneys if necessary, will determine the rights of such persons and institutions. It is prudent to discuss with RIC all working relationships (preferably before they begin) to understand the implications for any subsequent intellectual property. Again, the relevant principles are explained in the Statutes, and more detailed information is included in the Intellectual Property Disclosure form.
5.5 Can a student contribute to intellectual property creation?
Yes, many students work on intellectual property creation at the University under a wide variety of circumstances. The University promotes student entrepreneurism, and a student can be the sole contributor or creator, although the student’s supervisor is often found to be a creator. The ownership of IP created or co-created by students enrolled at the University of Melbourne depends on a number of factors. In some circumstances, the student wholly or partly owns the IP. For RIC to commercialise any creation which involves IP partially or wholly owned by a student, the student must assign their ownership to the University. In return, the student will receive a share of the net revenues in the same way that a staff member would. Again, consult the Statute and the Intellectual Property Disclosure form for more information.
6 Assessment of an IP Disclosure
6.1 How does RIC assess IP Disclosures?
RIC Business Development Team members and technology licensing specialists, often with the help of creators, examine each IP disclosure to review the novelty, ownership, inventiveness, and enforceability of the IP, protectability and marketability of potential products or services, relationship to related intellectual property, size and growth potential of the relevant market, amount of time and money required for further development, pre-existing rights associated with the intellectual property, the preferences of the creators, and potential competition from other products and technologies. This assessment might also include consideration of whether the IP can be the basis for a new start-up business. Based on this assessment, RIC’s Technology Commercialisation Committee makes a recommendation to the University about protection of the IP and the preferred commercialisation approach.
6.2 What happens when the University decides not to patent or commercialise IP?
In most cases, if RIC recommends that the University not proceed with patent protection or commercialisation of IP, the RIC Business Development Team representative will explain to you, the creator, that this is because the IP needs more development before it is ready for patenting and commercialisation. RIC will usually provide more guidance as to what aspects of the IP require more development to increase its potential for impact, and what funding sources might be available to support this development. RIC will work with you during and after this development to reassess the IP and find the best path to impact.
7 Forms of IP protection
7.1 What is a patent?
A granted patent gives the holder the right to exclude others from making, using, selling, offering to sell, and importing the patented IP. A patent does not necessarily provide the holder any affirmative right to practice a technology, since it may fall under a broader patent owned by others. Instead, it provides the right to exclude others from practicing the IP. Patent claims are the numbered paragraphs drafted by patent attorneys that provide the legal definition of a creator’s protectable IP.
7.2 What types of subject matter can be patented?
Patentable subject matter includes processes, machines, compositions of matter, articles, some computer programs, and methods, including methods of making compositions, methods of making articles, and even methods of performing business.
7.3 Can someone patent a naturally occurring substance?
Generally, no. A natural substance that has never before been isolated or known might be patentable in some instances, but only in its isolated form, since the isolated form had never been known before. A variation of a naturally occurring substance might be patentable if a creator demonstrates modifications that offer significant advantages of using the variant.
7.4 Can software be patented?
Most software cannot be patented. The most common method to protect software IP is to keep the source code as a trade secret. This is not possible with open-source software.
As the section below on copyright explains, computer software is treated under copyright law as a literary work, and so it is protected by copyright. Under copyright law, the author of the source code is regarded as the creator of software. Sometimes computer programs can also be protected as patents, though the situation is complex. There is no agreed legal definition of a software patent. In Australia, software patents are allowed in principle, but several recent cases, applications to patent abstract ideas (e.g. algorithms) and business methods have been rejected. Some software patent applications have been allowed where the relevant court has been convinced that the patent is for a “manner of manufacture,” resulting in an “artificially created state of affairs.” Contact RIC to discuss options for protecting software creations.
The Open Source Initiative defines open-source software (OSS) as “computer software with its source code made available with a license in which the copyright holder provides the rights to study, change, and distribute the software to anyone and for any purpose.” For more on the open-source software concept, click here [https://drive.google.com/file/d/0B4UVTqmHDXguZGoxYUNrams1UWM/view – UMN Open Source Basics]. Please note that the last section of this document, under the heading “Sponsored Research Due Diligence – Federally Sponsored,” refers to US federal funding. Your RIC Business Development team representative will help you understand the Australian equivalents. The section under the heading “Patented Software” refers to UMN policy. The University of Melbourne’s policy on OSS is under development: contact your RIC Business Development team representative.
The attraction for software creators of making their software available through open-source mechanisms is that it enables collaborative development of the software by many independent parties, with many diverse perspectives. In addition, the potential for enhanced affordability, transparency, customisation, and interoperability of open-source software compared with conventional proprietary software is a path to significant impact. Open-source access to software reduces the project’s ability to differentiate, but often increases its pool of developers, collaborators and users. Some view a decision to allow open-source access to software as the opposite of commercialisation, but in fact a number of very commercially successful companies release open-source software. For more details of potential open-source business models, click here [https://drive.google.com/file/d/0B4UVTqmHDXguUEFqQUgtN2gxckk/view – UMN OSS Business Models]. A number of flavours of open-source license exist, with varying degrees of restriction on the user. Information about different open-source license types is presented here [https://drive.google.com/file/d/0B4UVTqmHDXguTW1OT0t3MDRBVlE/view – UMN OSS License Types]. Again, the section under the heading “Patented Software” refers to UMN policy. Contact your Business Development team representative to discuss the evolving UoM equivalent. Additional unbiased advice on open-source license types is provided by OSS Watch: http://oss-watch.ac.uk/. If you’re considering making your software available via an open-source arrangement, discuss with RIC what the long-term goals are for your software project. RIC will help you choose the open-source license type that best aligns with these goals, and UoM’s impact goals.
7.5 How does RIC decide whether to translate software with a traditional or an “open source” licence?
Generally, RIC supports University software developers who choose to essentially give their software away through open source mechanisms, provided that:
- UoM retains the right to distribute the program freely
- Open sourcing is consistent with obligations to research funding sources
- Each developer’s Department supports the decision.
RIC will help you choose the type of open-source license that best suits your academic discipline, UoM’s impact goals, and the goals of your project.
Protecting electronic circuit designs
A layout (photolithographic mask set) for an integrated electronic circuit (chip) is not protected under copyright law, nor can it be protected under patent law (although aspects of the process technology used to make the mask set, or to make a chip from the mask set, can be patented). However, specific protection for the IP contained in an integrated circuit design is available in most jurisdictions, including the US, Australia, Japan, and the EU. In Australia, such protection is automatic, as it is with copyright. In the US, this protection is referred to as “mask work” protection.
University researchers in the life sciences often ask RIC about commercialisation options for research aimed at discovering new drug targets – molecules, often proteins (such as enzymes or cell surface receptors), that could potentially be manipulated by drugs (chemical or biological entities) to treat disease. Unfortunately, a number of recent court cases in major jurisdictions, initially the US and more recently throughout Europe, have established that many typical claims in patents for drug targets are invalid. There are rare exceptions, but because of the strength of these precedents, the University will usually not proceed with applications to patent drug targets. However, drug target discoveries can still lead to significant impact and return, and allow researchers to continue publishing. The University, often via partnerships with industry, can help researchers who have made drug target discoveries to further develop these discoveries to the point where they are patentable – for example, via early work towards discovering drugs against the target. Contact RIC for more information.
Wikipedia defines a diagnostic test as “any kind of medical test performed to aid in the diagnosis or detection of disease.” Several recent decisions by US courts have effectively prevented the patenting of diagnostics in the US, on the grounds that mere observation of natural phenomena, without any further inventive step, is not patentable. The situation in Australia is uncertain. The High Court of Australia has recently ruled that one diagnostic was not patentable, but several patent experts take the view that some diagnostic methods might be patentable in Australia, because the criteria for patentability are different from those in the US, based on the concept of “manner of manufacture.” Contact RIC for more information.
7.6 What is the definition of an inventor on a patent, and who determines this?
Generally, an inventor is a person who takes part in the conception of the ideas in the patent claims of a patent application. Thus, inventorship of a patent application may change as the patent claims are changed during prosecution of the application. An employer, company, collaborator, granting body, or person who only furnishes money for research or to build or practice an invention is not an inventor. Inventorship is a legal issue and may require an intricate legal determination by the patent attorney prosecuting the application.
We note that the term “inventor” has a legal definition used in patent terminology to mean the creator of patented intellectual property. As noted previously, in this guide we use the term “creator” to include the inventor of patented intellectual property, and also contributors to intellectual property that is not patented, such as copyright.
8. Patenting at the University of Melbourne
8.1 Who is responsible for patenting?
RIC engages external patent attorneys for patent drafting, filing, and prosecution, thus assuring access to patent specialists in diverse technology areas. Creators work with the patent attorney in drafting the patent applications and responses to patent offices in the countries in which patents are filed. RIC selects the external patent attorney with the appropriate technical background, and oversees the patenting process.
8.2 What is the patenting process?
Patent applications are drafted by a patent attorney. The patent attorney will ask you to review an application before it is filed, and will also ask you questions about inventorship of the application claims. The initial provisional patent application may be followed 12 months later with either a PCT application (see below) or direct national phase applications. The PCT stage allows 30 months in which to file national phase applications in any of the PCT signatory countries. This is followed by examination in each country, prior to grant. A summary of the process is given on page 11 of IP Australia’s Patents Application Guide: https://www.ipaustralia.gov.au/tools-resources/publications---reports/patents-guide .
8.3 Is there such a thing as a provisional patent?
No. However, there is a provisional patent application, which is described below. A patent application only becomes a patent after it has been examined and accepted by the patent office.
8.4 What is the difference between a provisional patent application and a complete patent application?
Provisional patent applications can provide a tool for preserving patent rights while temporarily reducing costs and providing extra time to refine, develop and test the invention before preparing a regular application. This occurs because the provisional application is not. A PCT application, complete Australian application and/or related foreign applications must be filed within one year of the provisional filing in order to receive the benefit of the provisional application’s early filing date. However, an applicant only receives the benefit of the earlier filing date for material that is adequately described and enabled in the provisional application.
8.5 What do I have to do after a provisional patent application has been filed?
To take advantage of the benefits of a provisional patent application, sufficient work must be undertaken in the 12 months after its filing to ensure that there is value in making the complete application. Ideally, additional data is acquired to support the patent claims, prove the technical feasibility of the invention, and make rigorous comparisons to existing technologies. You are encouraged to develop the plan to acquire this data with contributions from the patent attorney and your RIC Business Development Team representative.
8.6 What’s different about foreign patent protection?
Foreign patent protection is subject to the laws of each individual country, although in a general sense the process works much the same as it does in Australia. In most foreign countries, however, a creator will lose any patent rights if he or she publicly discloses the IP prior to filing of the first (or “priority”) application in one country. In contrast, Australia (and the US) has a one-year grace period after publication in which a patent may be filed. This has major drawbacks, however, and must not be relied upon. For example, you must file a complete application and lose the benefits of a provisional application, and will also lose patent rights in many countries.
8.7 Is there such a thing as an international or world-wide patent?
Although an international patent does not exist, an international agreement known as the Patent Cooperation Treaty (PCT) provides a streamlined filing procedure for more than 150 of the most industrialised nations. For Australian applicants, a PCT application is generally filed one year after a corresponding Australian provisional application has been submitted. The PCT application must later be filed in the national patent office of any country in which the applicant wishes to seek patent protection, generally within 30 months of the earliest claimed filing date.
8.8 What is gained by filing an application under the PCT?
The PCT application provides two advantages. First, it delays the need to file costly foreign applications until the 30-month date, often after an applicant has the opportunity to further develop, evaluate and/or market the IP for licensing. Second, the international preliminary examination often allows an applicant to simplify the patent prosecution process by having a single examiner speak to the patentability of the claims, in a single language, for a single fee. This often saves significant costs in prosecuting foreign patent applications.
8.9 What is the timeline of the patenting process and resulting protection?
The length of time taken for a patent to be granted depends on the process followed – direct national-phase filing versus filing via the PCT – but typically it takes 3-7 years for a patent to be granted. Once a patent is granted, it is enforceable for 20 years from the initial filing of the application that resulted in the patent, assuming that maintenance fees are paid.
9. Deciding to Patent
9.1 Why does the University protect only some intellectual property through patenting?
Some form of IP protection – for example, by a patent, copyright, or trade secret – is often a requirement of a potential commercialisation partner (licensee) because it can protect the commercial partner’s often sizable investment required to bring the technology to market. In the absence of such protection, many technologies have minimal commercial value. Due to the expense and the length of time required to obtain a patent, patent applications are not possible or appropriate for all University intellectual property. We carefully review the commercial potential for IP, and consider other protection options, before investing in the patent process. However, because the need for commencing a patent filing usually precedes finding a licensee, we look for creative and cost-effective ways to seek early protection for as much promising IP as possible.
9.2 Who decides what gets protected?
RIC and the creator(s) together discuss relevant factors in deciding whether to apply for a patent or another form of protection. Ultimately, the RIC Technology Commercialisation Committee (TCC) recommends what type of protection, if any, will be applied for, and the RIC Manager, IP and Licensing makes the final decision.
9.3 What does it cost to file for and obtain a patent?
The process of obtaining an Australian standard patent typically costs between $6,000 and $10,000, including patent attorney fees. Filing and obtaining issued patents in other countries may cost $20,000 or more per country. Foreign applications are important as they allow protection in markets considerably larger than Australia alone. Once a patent is issued in Australia or in foreign countries, certain maintenance fees are required to keep the patent alive. Initial patent costs are covered by the University, whose patent budget is owned by the RIC Manager, IP and Licensing. If and when the IP is licensed to a third party, the licence agreement usually requires the licensee to assume the patent costs.
9.4 What if I created the IP with someone from another institution or company?
Ownership of IP created with collaborators from another institution or company depends on the details of the agreement under which it was created, and the policy of the other organisations. RIC will work with the other organisation(s) to decide on management of the IP. Usually, if the other institution is a university or research institution, we will make an “inter-institutional” agreement (or IIA) that provides for one of the institutions to take the lead in protecting and licensing the IP, and allocating any licensing revenues. Often the commercialisation lead will assume the expenses associated with protection.
9.5 Will RIC initiate or continue patenting activity without an identified licensee?
If patenting is the preferred method of IP protection, the University accepts the risk and cost of filing a patent application before a licensee has been identified. After the University’s rights have then been licensed to a licensee, the licensee generally assumes the patenting expenses. If no licensee has been found after a reasonable period (often two or three years) of attempting to identify a licensee, or if it is determined that we cannot obtain reasonable patent coverage, we might make the difficult decision to abandon a patent application.
9.6 Where do I find more information on patents and patenting?
IP Australia’s Patents Guide has a range of information on the topic of patents: https://www.ipaustralia.gov.au/tools-resources/publications---reports/patents-guide .
9.7 What is IP Australia?
IP Australia is the Australian government agency that administers Patents, Trade Marks, Designs and Plant Breeder’s Rights on behalf of the government. IP Australia employs examiners skilled in all technical fields in order to appraise applications for patents, trademarks, designs and plant breeder’s rights. More information is at www.ipaustralia.gov.au .
10.1 What is a copyright and how is it useful?
Copyright is a form of protection provided by the laws of Australia and other countries to the authors of “original works of authorship.” This includes literary, dramatic, musical, artistic, and certain other intellectual works, as well as computer software. This protection is available to both published and unpublished works. The Copyright Act 1968 (Cth) generally gives the owner of copyright the exclusive right to conduct and authorise various acts, including reproduction, publication, communication to the public, public performance, and adaptation (see next section). Copyright protection is automatically secured when a work is fixed into a tangible medium such as a book, software code, or video, so, unlike patents, there is no need to formally apply for copyright protection. In some instances, the University registers copyrights, but generally not until a commercial product is ready for manufacture.
10.2 What is an adaptation?
An “adaptation” (referred to in the US as a “derivative work”) is a work based upon one or more pre-existing copyright works. Adaptation includes translation into other languages, deriving object code from the source code of a computer program, creating a film or play from a novel, musical remixes, memes and mash-ups. In each of these cases, the copyright owner of the original work has the exclusive right to make adaptations that include recognisable or substantial portions of the work.
10.3 How do I represent a proper University of Melbourne copyright notice?
Although copyrightable works do not require a copyright notice, we recommend that you use one. For works owned by the University, use the following notice: "© 200X [year of first publication] The University of Melbourne. All rights reserved."
10.4 Where do I learn more about University of Melbourne copyright policies?
Refer to www.unimelb.edu.au/copyright.
11.1 What is a trademark and how is it useful?
A trademark includes a word, name, symbol, device, colour, shape, sound, movement, scent, or combination of these that is used in commerce to identify and distinguish the goods of one manufacturer or seller from those manufactured or sold by others, and also to indicate the source of the goods. Trade marks may be used unregistered (™) or registered (®).
11.2 What is trademark registration?
Trade mark registration is a procedure in which IP Australia determines if the trade mark application meets the requirements of the Trade Marks Act 1995. If your trade mark is accepted for registration, it is published in the Official Journal of Trade Marks. There are then three months for other parties to oppose your trade mark’s registration. If there is no opposition during this term, or the opposition is unsuccessful, then the trade mark will be registered once the registration fee is paid. This registration only applies to Australia. It is not necessary to register a trade mark to prevent others from infringing it, though it is strongly advised as this provides other avenues for enforcement. An Australian registered trade mark may be used as a basis for filing corresponding applications in other countries.
12 Marketing To Find a Licensee
12.1 How does RIC market my IP?
RIC uses many sources and strategies to identify potential licensees and market IP to them. Often existing relationships of the creators, RIC, and other researchers are useful in marketing IP. Market research can also assist in identifying prospective licensees. We also examine other complementary technologies and agreements to assist our efforts. We use the RIC website (http://research.unimelb.edu.au/partner/world-class-research-globally-engaged) to describe IP we’re marketing, and we attend conferences and industry events, and make direct contacts. Faculty and Departmental publications and presentations are often excellent marketing tools as well.
12.2 How are most licensees found?
Studies have shown that 70% of licensees were already known to the IP creators. Thus, your research and consulting relationships are often a valuable source for licensees. Licensees are also identified through existing relationships of the RIC staff. Our licensees often license more than one technology from the University. We attempt to broaden these relationships through contacts obtained from website inquiries, market research, industry events and the cultivation of existing licensing relationships.
12.3 How long does it take to find a potential licensee?
It can take months and sometimes years to locate a potential licensee, depending on the attractiveness of the IP, its stage of development, competing technologies, and the size and stage of development of the market. Most University IP tends to be in the early stage in the development cycle and thus requires substantial commercialisation investment, making it difficult to attract a licensee.
12.4 How can I assist in marketing my IP?
Your active involvement will dramatically improve the chances of matching IP to an outside company. Your research and consulting relationships are often helpful in identifying both potential licensees and technology champions within companies. Once interested companies are identified, the IP creator is the best person to describe the details of the IP and its technical advantages. The most successful technology commercialisation results are obtained when the creator and the licensing professional work together as a team to market and promote use of the technology.
12.5 Can there be more than one licensee?
Yes, IP can be licensed to multiple licensees, either non-exclusively to several companies or exclusively to several companies, each only for a unique field-of-use (application) or geography.
13 Licence Agreements
13.1 What is a licence?
A licence is a permission that the owner or controller of intellectual property grants to another party, usually under a written licence agreement.
13.2 What is a licence agreement?
Licence agreements describe the rights and responsibilities related to the use and exploitation of intellectual property developed at the University. University licence agreements usually stipulate that the licensee must diligently seek to bring the University intellectual property into commercial use for the public good, and provide a reasonable return to the University. More details about UoM license agreements are here [http://research.unimelb.edu.au/partner/technology-licensing#for-industry].
13.3 How is a company chosen to be a licensee?
A licensee is chosen based on its ability to commercialise the technology for the benefit of the general public. Sometimes an established company with experience in similar technologies and markets is the best choice. In other cases, the focus and intensity of a start-up company is a better option.
13.4 What can I expect to gain if my IP is licensed?
In accordance with University policy, a share of any financial return from a licence is provided to the creator(s), as discussed on page 4.6 of this guide. In addition, creators enjoy the satisfaction of knowing their creations are being deployed for the benefit of the general public. New and enhanced relationships with businesses are another outcome that can augment one’s teaching, research and consulting. In some cases, additional sponsored research may result from the licensee.
13.5 What is the relationship between an IP creator and a licensee, and how much of my time will it require?
Most licensees require the active assistance of the IP creator to facilitate their commercialisation efforts, at least at the early stages of development. This can range from infrequent, informal contacts to a more formal consulting relationship. Working with a start-up can require substantially more time, depending on your role in or with the start-up and your continuing role within the University. Often further development work will be contracted back to the IP creator. Your involvement with a start-up is governed by the University’s conflict of interest policies (discussed further below in the "Considerations for a start-up" section of this guide).
13.6 What other types of agreements and considerations apply to commercialisation?
- Confidentiality Agreements, also known as Non-Disclosure Agreements (NDAs), are often used to protect the confidentiality of IP during evaluation by potential licensees. Confidentiality Agreements also protect proprietary information of third parties that University researchers need to review in order to conduct research or evaluate research opportunities.
- Material Transfer Agreements (MTAs) are used for incoming and outgoing materials at the University. These agreements describe the terms under which University researchers and outside researchers may share materials, typically for research or evaluation purposes. Intellectual property rights can be endangered if materials are used without a proper MTA.
- Inter Institutional Agreements (IIAs): when two or more institutions (generally two universities) co-own IP, an IIA defines which party will lead commercialisation of this IP.
- Option Agreements, or Option Clauses within research agreements, describe the conditions under which the University preserves the opportunity for a third party to negotiate a licence for intellectual property. Option clauses are often provided in Research Contracts to corporate research sponsors at the University. Option agreements are entered into with potential licensees wishing to evaluate the technology prior to entering into a full licence agreement.
- Sponsored and Collaborative Research Agreements describe the terms under which sponsors provide research support to the University. It is important that these agreements include clear definition of IP and commercialisation terms.
For more information on any of these agreements, contact RIC.
14. Considerations for a Start-Up Company
14.1 What is a start-up and why choose to create one?
For the purposes of this guide, a staff start-up is a new business entity formed by the creators of IP to commercialise their IP. For creators, forming a start-up business is an alternative to helping RIC license the IP to an established business. A few key factors when considering generating impact from your IP via a start-up company are:
- How high is the development risk? Often large companies in established industries are unwilling to take the risk of commercialising unproven technology
- Is there potential for multiple products or services from the same technology? Few companies survive on one product alone
- Does the IP give you a sufficiently large competitive advantage and target market?
- Are the potential revenues sufficient to sustain and grow a company?
RIC uses this information, working with creators and others, to identify the most appropriate licensing partner(s), whether established companies or a new start-up.
14.2 What’s the difference between a staff start-up and a University spin-out?
In special cases, the University might decide itself to establish a new company, that is at least partially owned and controlled by the University, to commercialise University IP. Such a company is referred to here as a University spin-out, to distinguish it from a staff start-up. The University might create a spin-out under these circumstances:
- When the University sees potential for significant commercial return from its IP, and the creators do not want to become personally involved in commercialising it; and/or
- When the IP is a platform technology, and the creators are focused on generating impact and return in only one of its potential applications; and
- When it is clear that a new entity, a staff start-up or University spin-out, rather than a license to an existing company, is the right commercial vehicle to create impact.
Most of the remainder of this section will focus on staff start-ups, not University spin-outs.
14.3 Who decides whether to form a staff start-up?
The choice to establish a new start-up company for commercialising intellectual property created at the University depends on decisions made by RIC and by the creators. For a staff start-up to be the preferred commercialisation path, you, the creators, must be willing to take the lead in founding the start-up, and RIC must decide that, after assessing other possible options, a licence to your start-up is the best option to create impact with the IP. If this is the case, your RIC Business Development Team representative will assist you and the other founders in meeting investors and accessing other resources to help you in founding the company. Then, RIC will negotiate with a representative of your start-up company to grant a licence to the company.
In order to consider all commercialisation options for its IP, including your proposal to commercialise the IP via your start-up, the University needs to understand your plans in some detail, and have confidence in them. Your plans for your start-up are typically summarised in a commercialisation plan and a business plan. A commercialisation plan (or IP development and commercialisation plan) is a step-by-step plan to develop a saleable product or service from the University IP generated by your research as it currently exists. A business plan is a detailed financial analysis showing what the company will do to develop a profitable business based on this product or service. The ideal scenario is that you have developed these plans in consultation with RIC. A clear discussion in your business plan of your competition (your customers’ alternatives), and the reasons your customers will choose your product rather than theirs, will help the University understand the advantages for it of your proposed commercialisation pathway versus alternatives.
More detailed discussion these and other topics related to staff start-ups, are included in the University’s Start-up Guide, which will be published on the RIC web site soon.
14.4 What assistance and resources are available to the creator?
Resources available to prospective founders of staff start-ups based on University IP include:
- Introductions to potential customers and investors, from RIC, Entrepreneurs in Residence or Enterprise Professors
- Advice from RIC about potential sources of grants
- Accelerator and incubator programs
- A Start-up Guide, with general advice for prospective founders, to be published on the RIC web site soon.
14.5 What role does an IP creator usually play in a staff start-up company?
University academics who found or co-found a start-up to generate impact with their research typically serve as the start-up company’s Chief Scientist, Chief Technology Officer, technology consultants, advisors or in some other technical developmental capacity. Occasionally, academics choose to temporarily or permanently leave the University and join the start-up full-time. This option is discussed in more detail in the Start-up Guide. In many cases, the creator’s role is suggested by the start-up’s investors, who identify the best role based on the creator’s expertise and interests. As the company matures, and additional investment is required, the creator’s role may change. Academics’ involvement of any kind in a start-up must also comply with the University’s Conflict of Interest policies, discussed later in this guide. Student and post-doc creators might choose to join the start-up upon graduation, but often do not have the experience or business skills to serve as the company’s sole management.
14.6 How much of my time and effort will it take?
Starting a company requires a considerable amount of time, effort, passion, and persistence. Until the start-up team is identified and engaged, the academic will need to champion the formation effort. After the team is in place, effort is required for investor discussions, formal responsibilities in or with the company, and University processes such as conflict of interest reviews.
14.7 Will the University take equity in a staff start-up?
In some instances, the University will take equity in a staff start-up company as part of the financial terms of the licence to use the University’s IP. Equity may be substituted for other cash considerations that are often difficult for start-ups. It is also a way for the University to share some of the risk associated with the start-up, and effectively become an investor in the start-up. An equity agreement might also include governance rights for the University, i.e. membership of your start-up’s board of directors, and thus a say in your company’s strategy. A decision to take equity must make sense for both the University and the company.
14.8 Will the University pay for incorporating a staff start-up company?
Whether or not the University takes equity in your start-up, the University has chosen your start-up as its partner to achieve impact with its IP. So, the University has a strong interest in helping your start-up to succeed. Historically, the University has not paid start-up incorporation costs. However, University policy on assistance for start-ups is evolving. Check the RIC web site for the latest policy.
The University usually does bear the costs of founding a University spin-out, including the incorporation costs.
14.9 What professional assistance is needed to create a staff start-up company?
The start-up will need its own legal advice in its licence and other negotiations with the University. The start-up’s founders will also need financial advice. In addition, the start-up might need its own patent attorney to assist with patent strategy, especially if the company will be involved in a patent-rich area. The start-up’s patent attorney must be separate from the University’s patent attorney, though it is advisable and recommended that the patent attorneys coordinate activities. Also, it is wise for creators to have a written Founders’ Agreement, defining their roles with the start-up, in place as early as possible during the development of plans for the start-up, and to have legal and financial advice on this agreement.
15.1 What activities occur during commercialisation?
Most licensees continue to develop a creation to enhance the technology, reduce risk, prove reliability, and satisfy the market requirements for adoption by customers. Depending on the type of product, this might involve additional testing, prototyping for manufacturability, durability and integrity, and further development to improve performance and other characteristics. Documentation for training, installation and marketing is often generated during this phase. Benchmarking tests are often required to demonstrate the advantages of the product or service, and to position the product in the market.
For IP in life sciences, ongoing development might include pre-clinical safety and toxicology testing, and subsequent clinical trials.
15.2 What is my role during commercialisation?
Your role can vary depending on your interest and involvement, the interest of the licensee in utilising your services for various assignments, and any sponsored research related to the licence or any personal agreements.
15.3 What revenues are generated for the University if commercialisation is successful
Most licences have licensing fees that might be very modest, for start-ups or situations in which the value of the licence is deemed to warrant a modest licence fee, or might reach hundreds of thousands of dollars. Royalties on the eventual sales of the products based on the licensed IP can generate similar or greater revenues, although this can take years to occur. Equity, if included in a licence, can yield similar returns, but only if a successful equity liquidation event (public equity offering or a sale of the company) occurs. Most licences do not yield substantial revenues. A recent study of licences at US universities demonstrated that less than 1% of all licences yield over $1 million. However, as discussed earlier, the University does technology transfer primarily to generate impact and enhance its reputation. For IP creators, too, the rewards of the IP they created reaching the market are often more significant than the financial considerations alone.
15.4 What will happen to my IP if the start-up company or licensee is unsuccessful in commercialising the technology? Can the IP be licensed to another entity?
Licences typically include performance milestones based on the impact and enhancement to the University’s reputation that the licensee achieves. If these milestones are unmet, the University typically has the right to terminate of the licence. This termination allows for subsequent licensing to another business.
16. Navigating conflict of interest
16.1 How does the University define a conflict of interest?
The University’s guidelines for staff on research integrity and conflicts of interest (https://staff.unimelb.edu.au/research/ethics-integrity/research-integrity/research-integrity-in-practice/conflict-of-interest) state that:
- “Conflicts of interest include any circumstances where a researcher has a real, perceived or potential opportunity to prefer their own interests, or those of any other person or organisation, to the interests of the University.”
- “Conflicts of interest can arise naturally from a staff member’s engagement with the world outside the University. The mere existence of a conflict of interest does not necessarily imply wrongdoing on anyone's part. However, in an academic environment where entrepreneurial and commercial practices are increasingly encouraged, it is essential that University research is carried out (and is seen to be carried out) in an impartial and independent manner, and is not compromised by any commercial activity.”
16.2 When must I seek guidance on conflict of interest?
As the previous section explained, a conflict of interest occurs when there is a misalignment between your personal interests and your professional duty to the University, to the point where an external party might wonder if your actions or decisions are motivated by the potential for personal financial gain. These situations do not automatically imply unethical behaviour, but in the academic community this inference can compromise the University's reputation, values and research integrity. It is critical that you understand the problems caused by real or perceived conflict of interest, and how to disclose a potential conflict of interest.
Conflict of interests often occur at the junction of two differing academic responsibilities – to go beyond the limitations of current knowledge, and to ensure the public benefits from this knowledge via the private sector. Outside consulting, patenting and licensing a creation, or forming a start-up company, potentially offer powerful financial incentives; however, personal gain must not have any influence over decisions you make as a University employee. Even the suggestion of a conflict of interest can damage the University's research objectivity, affect the protection of human participants in research, or impair other University responsibilities in education, clinical care or administration. Because of this, you must identify and disclose conflict of interests so that they can be eliminated.
Whenever a question or uncertainty arises, seek advice from your Head of Department or your Faculty Associate Dean (Research). There might also be specific requirements imposed by funding bodies. Of particular importance to the University is the requirement under the NHMRC Deed for immediate disclosure in writing of a conflict, risk or apparent conflict of interest. The holder of an NHMRC grant must notify in writing both their Head of Department and the Deputy Vice-Chancellor (Research) in any situation where they believe a conflict, risk or apparent conflict of interest has arisen.
16.3 What kinds of issues could cause a conflict of interest?
Conflicts of interest can arise in situations including those dealing with the appropriate and objective use of research, the treatment and role of students, supervision of individuals working at both the University and a licensee company, and conflicts of commitment (i.e., your ability to meet your University obligations). A conflict of interest can also arise when a member of University staff is a director of a company that wishes to contract the University to undertake research in the staff member’s laboratory. The University’s Research Ethics web site (https://staff.unimelb.edu.au/research/ethics-integrity/research-integrity/research-integrity-in-practice/conflict-of-interest) presents a conflict of interest management strategy that discusses the types of situation in which conflicts of interest might arise.
16.4 What are examples of a conflict of commitment?
A conflict of commitment might exist if duties, assignments or responsibilities associated with a technology licence or outside business arrangement have a negative impact on your ability to meet commitments associated with your University employment, or exceed the amount of time available to you for these activities. The best approach is to fully disclose your situation to your Head of Department and discuss the implications for your job responsibilities.
16.5 How does the University manage conflicts of interest associated with research and commercialisation transactions?
The University’s Research Ethics web site (https://staff.unimelb.edu.au/research/ethics-integrity/research-integrity/research-integrity-in-practice/conflict-of-interest) presents a conflict of interest management strategy based around the “Six R’s” – Register, Restrict, Recruit, Remove, Relinquish, Resign – and discusses when each of these strategies is most and least appropriate. For example, if you’re a member of a departmental or faculty committee that decides on pricing and availability of University facilities for external industry customers, and you’re also a founder of a staff start-up company that wants to pay the University to use these facilities over an extended period, it might be appropriate for you to remove yourself from this committee.
It is the responsibility of the researcher or faculty member to disclose and document any situations that constitute a conflict of interest, as described in the University Code of Conduct for Research (www.unimelb.edu.au/Statutes/pdf /r171r8.pdf ).
Formal University processes for managing conflicts of interest related to commercialisation are evolving. Check the Research Ethics web site for the latest processes.
17. Revenue Distribution
17.1 How are licence revenues distributed?
RIC is responsible for managing the expenses and revenues associated with technology agreements. The proceeds received by the University from such agreements, following deduction of expenses incurred by the University, are shared with the creators. In the absence of any other agreement, 20% is retained by the University central administration, 40% is distributed to the creator’s faculty, and 40% is distributed to the University creators. The principles behind this are described in detail here: http://research.unimelb.edu.au/partner/technology-licensing/for-researchers/intellectual-property-policy-ownership.
17.2 What if I receive equity (shares) from a company?
University policy is that University creators of IP owned by the University share in any financial reward resulting from the commercialisation of their IP via distribution of 40% of net proceeds obtained by the University, or via the creators taking equity in a company (e.g. a staff start-up) commercialising their IP, but not both. In other words, University creators taking equity in a company waive their rights to licence revenue or any other proceeds paid by the company to the University.
15.3 What are the tax implications of any revenues I receive from the University?
Licence revenues paid to creators are generally taxable as income. Liquidation of equity can also incur capital gains tax. Consult a tax advisor for specific advice.
15.4 How are creator revenues distributed if there are multiple IP creators and/or multiple items of IP in a licence?
The University’s view is that the creators share in the returns in accordance with the contribution they have made to the creation of the IP. This might include contributions that are not recognised in any application for IP protection. Recognition of these contributions, and the allocation and distribution of the proceeds, will be based on the written agreement of all the creators. If the relevant parties do not agree, then these issues may be referred to the creators’ Head of Department and/or to their Faculty’s Dean, and ultimately, if necessary, to the Vice-Chancellor, for advice and mediation. In the absence of agreement, the decision of the Vice-Chancellor will be final. More detail is in Section 13— Intellectual Property of the University Statutes (http://www.unimelb.edu.au/governance/statutes ).
15.5 How is equity from a licence distributed?
A licence might carry an equity component, so that the University owns shares or options in the licensee company, particularly with staff start- up companies. This equity is typically held by the University in a commercialisation trust until a liquidity event occurs – for example, the company is listed on a stock market and the shares sold, or the company is purchased outright by another company – at which point the proceeds are distributed in the same manner as licence revenues. In most such cases, the IP creators have taken personal equity in the company, and so waived their rights to revenue paid by the company to the University, as an earlier section explained. In this case, the creators’ share of the proceeds is allocated to Faculty or Faculties in which the creators worked.
15.6 Reinvestment and relationships
RIC manages a portfolio of over 200 University innovations. It manages relationships with over 800 partners, including multinational companies, governments and government agencies, SMEs, University spin-outs and staff start-ups. In the period from January to August 2017, RIC facilitated more than 350 external partnerships, and booked $44 million in revenue. This revenue is shared among University Faculties, IP creators and partnering institutions. Much of this revenue is reinvested in additional research and education, fostering the creation of the next generation of research, researchers and entrepreneurs. In addition, the resultant relationships created and deepened with these activities support our University missions. They result in additional research projects, broader educational opportunities and collaborative investments, and an enhanced ability to create, retain and share valuable resources that contribute to our quality of life.
University of Michigan
This booklet is based on the University of Michigan’s “Inventor’s Guide to Technology Transfer,” with adaptations for the University of Melbourne. We are very grateful to Ken Nisbet and the staff of the UM Office of Technology Transfer for their kind permission to use their excellent material, and to the University of Michigan for permission to use its copyright.