Introduction
Rights in Inventions
Patent Practice and Procedures
Copyright Practice and Procedures
Related Issues
Intellectual Property Office Functions
Revenue Distribution
This document is intended to serve as an overview of patent and copyright matters of interest to University personnel (faculty, staff, students, fellows, wage payroll employees, and persons on "visiting" appointments). The implementation of the policies and procedures outlined in this document should be subordinate to the University’s graduate and undergraduate education, research and service missions.
Inasmuch as the University only recently initiated a program to enhance its stewardship of its patent and copyright activities, the policies and procedures cited herein are subject to ongoing review and possible future modification.
The management of patent and copyright processes in a university setting is a complex, highly specialized endeavor. As the need for details regarding policies and procedures arises, University personnel are urged to contact cognizant University administrators (deans and department heads, program and center directors, office supervisors, etc.) and the University Intellectual Property Office for assistance.
Universities are major sources of fundamental knowledge underlying the new products and processes essential to economic competitiveness. In this context, facilitating the process whereby university creative and scholarly works may be put to public use and/or commercial application (i.e. "technology transfer") is an important aspect of the service mission of a land grant university. In turn, the protection of concepts with commercial potential (inventions or creations) via patents and copyrights is an essential aspect of the technology transfer process. Without such protection, companies are unlikely to invest the funds required to commercialize new technology.
Inventions with commercial potential may involve novel machines, devices, compositions of matter (compounds, mixtures, genetically engineered cells, plants, animals), genetic forms, software and computer systems, production processes, plant varieties, etc. Such inventions, and the patents and copyrights that reserve rights to them, are termed Intellectual Property. University personnel have an obligation to disclose promptly to the University (Intellectual Property Office) inventions developed a)with University resources (facilities, funds, or equipment), or b)within the fields of expertise and/or within the scope of employment for which they are retained by the University. This obligation is manifested in the patent agreement signed by all employees of the University.
University personnel who believe they may have developed an invention should immediately notify the cognizant University administrators, and the Intellectual Property Office. They will be asked to complete an invention disclosure form by the Intellectual Property Office. The invention disclosure defines the nature of, and provides the basis for a legal claim to, the invention in question. Invention disclosures are evaluated for patentability and market potential by the Intellectual Property Office. A preliminary patent search is generally performed using the computer facilities of the University Libraries. If this process suggests that the invention has significant commercial potential, the following sequence is set in motion.
2) In return for rights to an invention, licensees will be expected to file a patent application at their expense in the name of the University. If an invention requires further research to bring it to the point of commercial utilization, companies will be encouraged to provide the necessary research support as part of either a Research and License Agreement, or an Option Agreement. Where an option is involved, companies are offered an exclusive right to negotiate a license in return for a research commitment and/or appropriate payment.
3) The University (Intellectual Property Office in accord with the cognizant administrators) may, under certain circumstances, elect to apply for a patent concurrent with the search for a licensee. This option is very selectively applied as a consequence of the limited funds available for this purpose, and is restricted to unusually promising inventions in dynamic, highly competitive fields. Where this option is contemplated, the results of the University Libraries preliminary patent search will be submitted to a patent attorney in the appropriate art area for a patentability opinion. A decision to proceed will be based on a judgement that the invention is patentable, is not encumbered by other patents, and has sufficient commercial potential to justify patent expense.
4) If, in concert with inventors, the Intellectual Property Office is unable to identify a licensee in a timely fashion, the disclosure will typically be sent to Research Corporation Technologies (RCT) for evaluation. RCT may thereafter elect to accept the disclosure, file a patent application, and initiate the licensing process.
5) Inventors may petition the University for the assignment of invention rights to them when it
b) would advantage the transfer of technology to the private sector, and
c) is in accord with the University’s obligations to sponsors and other third parties.
For example, should the Intellectual Property Office fail to identify a licensee, and Research Corporation Technologies subsequently elect not to accept the invention, inventors may petition the University for the assignment of invention rights to them.
The foregoing procedure is based on the premise that a close working relationship between University inventors and the Intellectual Property Office is important for the successful management of inventions. The reasons are varied. Inventor’s knowledge of their research areas, and of companies active in related technologies, are key elements of the technical and market assessments for an invention, and of the search for licensees. In addition, inventions can serve as powerful catalysts for industrial research support. The search for such support is greatly enhanced by close collaboration between inventors and Intellectual Property Office staff. Finally, the search for licensees willing to underwrite the cost of concept refinement and/or patent prosecution represents a useful "market test" for an invention.
The University encourages faculty, staff, and students to create literary, scholarly, and artistic works, including textbooks and other instructional materials. In this context, copyright ownership of such works generally rests with the creator(s) unless they are generated within the scope of the creator’s employment, commissioned by the University, or are subject to a sponsor’s agreement which provides for a different ownership.
The copyright of literary, scholarly and artistic works, including books, articles, contributions to collective works, and other means of presentation, but excluding instructional materials, is considered to be outside the scope of employment and therefore owned by the creator, whether or not created on University time or using University resources. Conversely, copyrights in research or survey instruments (questionnaires, etc.), instructional materials (including videotapes), and in computer software created on University time are considered within the scope of employment and hence owned by the University. University personnel creating such materials are urged to contact the Intellectual Property Office, through the cognizant University administrators, for assistance in the copyright process and for subsequent licensing efforts.
The commercial exploitation of inventions, in the form of products and processes for business and industry, is a highly competitive enterprise. It is therefore critical that inventors begin the disclosure process as soon as the possibility of an invention becomes evident. Delays give others an opportunity to establish a claim which may deprive an original inventor of his/her rightful recognition and compensation. Some other considerations follow.
2) Public disclosure of a concept in the open literature (in abstracts and texts of presentations at meetings, and in theses, etc.) generally precludes obtaining patent protection in most foreign countries. In the U.S., one may obtain a patent as long as the application is filed within one year of the date of public disclosure. The impact of the waiving of foreign rights for an invention depends upon the size of U.S. and foreign markets, the relative market shares of foreign and domestic companies in the technology in question, etc.
3) Rights to inventions arising from industrially sponsored research are usually prescribed in a research contract containing a work statement and other terms and conditions of the award. Sponsors generally receive the first option on a license to technology resulting from research which they support. As the contractor for the specified research, the University must ensure that it has not committed rights to technologies to multiple sponsors. In dealing with potential industrial sponsors, faculty investigators should thus be sensitive to this possibility. The consequences of commingling intellectual property rights can be substantial. Until such time as they are resolved, disputes over sponsor rights can limit or eliminate opportunities for additional industrial support for promising research areas. Unfortunately, such disputes can last for years.
4) Federal agencies allow contractors, including universities, to retain ownership of intellectual property arising from research which they sponsor. The government retains non-exclusive rights to such intellectual property for its own purposes. The University has a contractual obligation to inform sponsoring agencies of inventions within two months after they are disclosed to the Intellectual Property Office, to elect to retain title within two years, and to file a patent within one year of election.
5) Members of research consortia are typically given non-exclusive rights to inventions conceived in whole or part with consortium funds. Such arrangements can, unfortunately, seriously compromise the commercial potential of an invention. In particular, the resulting lack of marketplace exclusivity may deter companies from investing in the production facilities and marketing strategies required to commercialize an invention. Faculty concerned about this issue may wish to restrict the use of consortium funds to the support of pre-proprietary research.
6) Consulting contracts sometimes contain provisions which limit the disposition of research results, including intellectual property, in promising research areas. They should be examined to ensure that the assignment of rights to intellectual property evolving from consulting activities does not conflict with the patent agreement signed by all University employees. In general, faculty may, within the scope of a consulting agreement, assign rights to intellectual property in their fields of expertise where organizations engaging their services have legitimate prior claims to the development(s) in question. Examples include consulting activity leading to the refinement of an existing product or process, or to a development for which background patents or prior art claims exist. In any case, faculty should bring consulting contracts to the attention of cognizant University administrators prior to executing them.
The Intellectual Property Office provides assistance to University inventors and creators relative to the implementation of patent and copyright policies, provides counsel on intellectual property matters, and assists faculty and administrators with conflict-of-interest issues related to technology transfer and entrepreneurial activities. Mechanisms for assisting faculty with the patent and copyright processes, and subsequent licensing, are described in the PATENT and COPYRIGHT sections of this document.
Cognizant University administrators have a primary role in monitoring adherence to, and advising personnel on, University policies in these areas. In turn, administrators are encouraged to avail themselves of Intellectual Property Office services, particularly on the more complex issues. To enhance awareness of University policies and procedures, the Intellectual Property Office conducts an ongoing series of information meetings on intellectual property matters, conflict-of-interest, and technology transfer aspects of outside activities.
The Pennsylvania Research Corporation, a subsidiary of the Corporation for Penn State, is a nonprofit organization dedicated to advancing scientific research within the Commonwealth of Pennsylvania, and to supporting the development of inventions at the University. It serves as the University agent for managing the fiscal aspects of intellectual property issues. The Corporation thus distributes intellectual property revenues, with the distribution formula depending on whether the University (Intellectual Property Office) or Research Corporation Technologies executes the cognizant license. Intellectual property revenues derived from the liquidation of, or dividends from, University equity holdings will be distributed according to the formulas below.
The University will be the licensor for employee copyrights and patents when either a licensee has filed the relevant patent application in the name of the University, or the University has elected to file on its own. In either case, the inventor(s) will receive a $1,000 incentive payment at the time a patent application is filed. Note that these incentives do not apply to copyrights or registrations. After recovery of any direct patent or copyright prosecution, maintenance, or infringement litigation costs incurred by the University, royalty revenues are distributed as follows:
In the event that the Intellectual Property Office is unable to either identify a licensee willing to underwrite the cost of patent prosecution, or justify filing a patent application with University funds, Research Corporation Technologies will be given an opportunity to evaluate invention disclosures. The royalty distribution for patents which they elect to prosecute, and subsequently license, is as follows:
Research Corporation Technologies provides cash incentives to inventors when they accept a disclosure for patent prosecution, or request an extended period for disclosure evaluation. The magnitude of the cash incentives has varied in the past, but in no case has been less than $1,000 for inventions for which a patent application is filed.
University personnel whose invention is licensed to an entity in which they have a proprietary interest (i.e. company officer, founders equity position, stock holdings exceeding 10% of the total issued, etc.) will not receive the inventors share of University royalties derived from said license. They will, however, receive the inventors share of royalties from any other licensees.
The Pennsylvania Research Corporation’s share of royalty revenues is utilized to support research, and a portion of the cost of operating the Intellectual Property Office. Funds are also set aside to defray legal expenses associated with infringement actions and product liability litigation accruing to University patents and copyrights.
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