A recent study by the Centre for International Governance Innovation (CIGI) reports that foreign companies scoop up more than 50 per cent of the patents emerging from research collaborations with Canadian universities. With that metric, the centre argues that the university research collaboration process is broken, resulting in the surrender of too much valuable intellectual property (IP) to foreign collaborators which ultimately undermines Canada’s economic competitiveness.
The authors of the study, Jim Hinton, Mardi Witzel and Joanna Wajda, conclude that the underlying problem is that universities lack sufficient governance on IP matters, and recommend that government funders impose stricter controls of the management of IP by universities when it comes to international research collaborations.
To be clear, these recommendations have nothing to do with research security and the oversight measures imposed by Canada’s research funding agencies. Research security is a relatively narrow issue, targeting “bad actors” in the international arena, and the threat merits careful management. But the study’s recommendations focus more broadly on economic competitiveness and cover the entire range of international research collaboration.
Having led a team responsible for research contracting at a major Canadian university, I disagree with the conclusion that universities are not prudently managing IP in research collaborations with international companies. I think the authors of this study have underestimated the complexity of IP ownership negotiations in an academic environment and don’t understand the full value proposition of these collaborations. I also believe their call for stricter controls on university contracting is misguided and impractical.
All U15 institutions have a similar starting position in negotiating research contracts: the university owns the IP and industry partners get a non-exclusive right to use the IP. This approach conforms to institutional IP policies which ascribe ownership of new IP to either the investigator, the institution or both. Those rights cannot be waived without consent, and neither stakeholder takes the decision lightly.
When universities encounter an industry partner who demands control over IP rights, compromise can sometimes be achieved with some kind of shared ownership, cross-licensing arrangement or royalty scheme. These options take time to work out. Neither party is happy when negotiations get bogged down. The last resort for the university is a complete surrender of all IP rights.
If IP ownership has been completely surrendered by the university, the most common reason is background IP. Many research collaborations are built on sharing know-how or materials owned by the industry partner. For example, clinical research taking place in university hospitals across Canada often involves treatments or prototypes developed over many years at great expense by major international pharmaceutical or medical device manufacturers. When the research project involves tinkering with that existing proprietary IP, it’s very difficult for the university to argue for outright ownership on incremental improvements to the existing IP. Consequently, university researchers are faced with waiving their IP rights in order to participate in the project.
The CIGI study gives the impression that universities are selling out when they become involved in research work with international companies where IP rights have been surrendered. The authors suggest that the industry partner is getting a free ride, having access to our publicly funded infrastructure and taking ownership all the IP.
My response is that the value proposition for research collaborations has important dimensions beyond IP ownership.
University researchers understand that the advancement of scientific knowledge is a global endeavor and research often necessitates an international team effort. In order to remain on the leading edge, they need to be wired-in to that global network. Working with international companies is essential. In a dialogue with the company’s scientists, the university team often gains confidential insight into the company’s development strategy – what’s worked, what’s failed and what questions are driving the company’s future research initiatives.
These benefits are not peripheral – they are bankable contributions to Canada’s innovation economy. And the experiences gained from one project can often lead university researchers to future inventions in related areas and new spin-off companies.
The study acknowledges that the fundamental reason for Canada’s declining productivity is the fact that Canadian companies are not investing enough in research and development. Yet the authors arrive at the conclusion that it is the universities that must step up and become IP reservoirs to offset this deficit.
Canada’s universities can play an important role in supporting the R&D activities of Canadian companies, but they can’t be expected to compensate for declining R&D investment across the industrial sector. If industrial productivity is the problem, then let’s focus directly on that problem.
Imposing broad rules on universities around ownership of IP in complex research collaborations is not the answer. Yes, it has been helpful to have guidance from Canada’s funding agencies on research security, but the authors’ proposal tries to impose a solution where no problem exists.
The processes supporting university research collaborations are not broken. Being flexible with IP terms is part of the price universities pay for participating in the global race to advance scientific understanding and bring new technologies to market.
Neil Campbell is an independent lawyer and counsel for research services at the University of Calgary.