University-Originated Intellectual Property

• Author: Timothy Tracy
• Pages: 605-628

605

I. Introduction

University-originated intellectual property can be crucial for

commercial entities to successfully bring products to market. The

task of identifying and reducing risk in the acquisition of rights

to or ownership of university-originated intellectual property

(IP) can be complicated given the web of ownership, third-party

obligations, and third-party rights. Thorough diligence must

be conducted to address the unique risks that can arise from a

teaching-research environment.

The risks in university-originated intellectual property are

found not only in the creation phase but also in the commercial-

ization of products embracing the intellectual property. On the

creation side, due diligence efforts are focused on ensuring that

the university has title to all of the intellectual property that is

being licensed or acquired. If an inventor does not assign his or her

Chapter

University-Originated

Intellectual Property

By Timothy Tracy*

15

* Mr. Tracy thanks his Johnson & Johnson colleagues for their many collabora-

tions that helped to frame this chapter, and the late Karl Jorda and Dean Robert Viles

for their insights into contracting, licensing, and negotiation. Finally, he thanks his

wife, Jennifer L. Tracy, for her patience and advice.

The views and opinions expressed herein are solely those of Mr. Tracy and are not

to be attributed to Johnson & Johnson or any of its operating companies.

606 CHAPTER 15

rights in the intellectual property to the university, the acquiror

of the rights to or ownership of such intellectual property will not

have perfect title.1 On the commercialization side, due dili gence

should uncover obligations that run with the intellectual property

and any third-party rights to such intellectual property.

For example, if the National Institutes of Health funded the

research that led to the intellectual property, that intellectual prop-

erty may be subject to the obligations of the Bayh-Dole Act,2 which

includes the obligation imposed on an exclusive licensee to sub-

stantially manufacture the subject invention in the United States.

Failure to satisfy this obligation could result in the U.S. govern-

ment exercising its march-in rights to the subject invention. Due

diligence that does not uncover existing issues with title or obliga-

tions running with the intellectual property increase thelikelihood

that the acquirer of the rights to or ownership of theintellectual

property may be left with the proverbial pig in a poke.

In addition to title and obligations running with the intellec-

tual property rights, due diligence for university-originated intel-

lectual property often requires the practitioner to enter diligence

spaces that either do not usually show up or are not as prevalent

in industry-created intellectual property. These areas include:

• Employment law (e.g., why that undergraduate student

working on your project could unhinge your full ownership

of the resulting intellectual property)

• Regulatory law (e.g., why your company lost its exclusive

license to that federally funded invention)

• Patent law (e.g., why that graduate student inventor’s

poster presentation at the scientific congress rendered the

invention unpatentable)

1. See, e.g., Ethicon, Inc. v. United States Surgical Corp, 35 F.3d 1456 (Fed. Cir.

1998). Ethicon did not have an assignment from all inventors and the inventor that

did not assign to Ethicon licensed its interest in the invention to US Surgical, thereby

creating imperfect title for Ethicon and undermining Ethicon’s ability to sue U.S. Sur-

gical for patent infringement.

2. 35 U.S.C. §§ 200-212.