Helping charity-funded IP flow: A support manual for the community

Purpose and scope

This best practice manual has been produced by AMRC’s Intellectual Property Advisory Group (IPAG) which is comprised of representatives from charities, academic institutions and commercial organisations, with the aim to support effective communication and negotiation around the commercialisation of IP. It clarifies some of the more complex issues in the area and helps resolve common problems that arise across the community of IP generators, funders and licensees.

We recognise that the research community and the charity sector are currently grappling with the immediate impacts of the COVID-19 crisis. But we wanted to share this manual to aid any ongoing IP-related discussions during this challenging time.

All participants involved in the commercialisation of IP have a shared purpose: 

Sustainable translation of ground-breaking research into assets that transform patients’ lives and benefit society 

This manual is designed to help negotiations and transactions run smoothly across these groups which enable the IP to flow, and improve the lives of today’s and tomorrow’s patients. It does so by: 

  • increasing the shared understanding between the groups; 
  • providing best practice behaviours around what needs to be communicated and when; 
  • enabling all parties to obtain quality, timely independent advice on value and process steps. 

It is NOT designed to define or specify the  financial terms of IP-related deals. It is specifically intended to expand and support the sections relating to reporting and consent provided as part of the AMRC’s Guidance on intellectual property (IP) terms and conditions. 

We welcome feedback on how useful you find the manual and any other areas where you would welcome clarification.

In addition to this manual, we have a list of experts who have agreed to make themselves available to advise charities on matters related to IP arising from university research, knowledge exchange or the commercialisation of the results of university research. Please note that some advisors may be willing to give advice on a voluntary basis, but their time will be limited as they are likely to be offering their time in addition to fulfilling a full-time job. In other cases advisors may be able to offer longer term support but may need to charge for their services. If you seek their advice, please ensure that you are clear upfront on the terms on which advice is being provided.

Please contact our Research Policy Manager Mehwaesh to request the IP advisors list or if you have any feedback on this manual.

Executive Summary 

The impact of medical research on patients is at the heart of charity funding decisions. Research grants are given to generate knowledge and know-how, not with an expectation of economic return. All IP generated - whether economically valuable or not - should be used to increase societal benefit through research or product development. Any economic value derived from this IP is an important by-product of charity funding.   

In entering an agreement associated with IP commercialisation, it is vital that each party is aware that their contribution is a link in a larger ‘value chain’. That value chain includes charities, researchers, universities, knowledge transfer organisations, commercial partners, healthcare providers each of whom may be required to take risks in getting products to patients. Each party invests in long term infrastructure development and short-term specific projects. Each has reputation and sustainability at stake. Each link is important, and everyone involved has a shared interest in keeping the flow of delivery to the end beneficiary working. All parties should see themselves as ‘co-investors’ carrying elements of risk and opportunities for positive return. 

Negotiations across the chain must be pragmatic andrecognise the challenges all parties are facing,and the specific resources they are putting into creating or developing the asset in question. Wider investment decisions that each party makes – or the business models they may adopt - can form a part of the conversation but may be incidental to the specific agreement required at each link in the chain. Two key considerations in managing any discussion around IP are mutual understanding and effective communication. Communication must be clear, and timely, and those involved must be respectful of other positions. 

There is no one-size-fits-all solution, but there are some core principles that run through every negotiation to reach a successful agreement, which are: 

  • Be pragmatic 
  • Be clear from the start – including the lines you are not prepared to cross 
  • Understand other parties’ barriers 
  • Agree reporting needs and timings in advance 
  • Don’t delay the commercialisation process unnecessarily 

Two key challenges for charities and academic institutions are the issues of reporting on the status of the IP and of requesting ‘permission to commercialise’ the IP. This manual deals with both. It does NOT offer guidance on the economic outcomes of the negotiation. 

1) Reporting requirements: 

  • These generally occur in two phases: during grant giving, when charities may ask whether any IP is likely to arise from the research, and then at regular times (agreed in advance) once the IP arises. 
  • Any specific reporting needs (e.g. what should be reported and how often) should be agreed in the relevant charity terms and conditions of funding. 
  • Academic institutions should not be asked to report on information they would not normally gather as part of their processes to protect and commercialise IP. Only information that is readily available should be asked for. 
  • Standardised templates for reporting are useful but they are not yet commonplace. A potential template is attached in the appendices. 

2) Permission to commercialise IP: 

  • Charities should be notified of any proposals to commercialise the IP from research they have funded. This is particularly important so they can manage the expectations of their donors and trustees when the news becomes public. 
  • Permission should also be sought from the charity about whether or not to commercialise the IP. Most charities want or are required to be asked to give that permission before any agreements to commercialise are signed. 
  • Permission should not be withheld unreasonably. Charities should be clear on the stage at which they expect or require to be consulted and then give their answer within a recommended time frame of 30 days. Resource 3 helps to define reasons why permission might be withheld. 

The Value Chain 

This diagram shows how each member in the chain invests in long term infrastructures and short term projects. It shows how each participant takes and shares risk along the way. It demonstrates that there are more similarities than differences between the participants in the value chain, and supports the proposition that each should be treated as co-investors in any IP that moves along it. It can be used to better understand the issues faced by counterparts in any negotiation, and provides insight into how each party can help the other achieve their shared purpose. 

Why is reporting requested or necessary? 

Charities want to know that, at the point that an invention disclosure is made (an early step in the securing of IP), the role of the charity is considered by the funding recipient. They also wish to know when IP protection occurs, as this is an important milestone on the road to impact and early knowledge allows funders to monitor the impact of their funding portfolio. 

Many charities need evidence of the impact of their funding portfolio to show to their; 

  • Donors: to demonstrate that their donations are advancing knowledge from bench to bedside. 
  • Trustees: to demonstrate that the charity is deploying the donations it receives wisely and appropriately. 
  • Fundraising team: to support charitable fundraising activities. 

Charities can be useful partners in the translation of the research they fund;’ 

  • Some charities may be able to financially support the progress of the research, or may have existing relationships with supporters, financial investors or industry partners, who could invest in the research and help move it forward. 
  • Some charities can also provide direct access to patients (as the ultimate beneficiaries of innovations), providing useful early insight and market intelligence. 

When is it appropriate for reporting to occur? 

Reporting generally occurs in two stages: 

  • Stage 1: during the grant application phase, where many charities ask the applicant whether any IP is likely to arise or is already in development. As funders, charities need to be informed of the likelihood of IP being created. 
  • Stage 2: the institution and grant holders should notify the charity in writing when exploitable IP arises from the grant. In general charities should be notified via the annual progress report if new IP has risen during the previous reporting period. If any charities need to be notified promptly following the identification and protection of the IP, then the terms and conditions of funding should stipulate a period, following the protection of the IP, in which the charity should be notified. Charities should consider carefully the need for prompt notification (and what they will do with the information), as opposed to relying on the regular annual reporting option. For short term grants, charities should specify that they wish to be notified of any arising IP within a reasonable period of the end of grant. 

The frequency of reporting should be agreed between the charity and institution. It should consider the needs of the charity and the interests of both the funder and the institution – i.e. a funder would not generally wish the reporting burden to significantly detract from translating technology. As a general rule, most charities and institutions agree on annual reporting from the institution. Where charities are funding multiple activities at an institution it is easier for both parties if all the reporting can be combined into a single annual report. 

When IP arises under a charitable grant, it is generally accepted that regular reporting on that item of IP should continue until such time as the IP is either abandoned or handed back to the funder or inventors. This reporting obligation therefore applies before and after any commercialisation event. 

It can be a major exercise for institutions to pull together IP reports so they need to be assured that the charities will make use of them. It is also helpful for the same reporting format to be used across different funders to reduce the time required to compile reports, enabling the institutions to spend more time identifying, protecting and commercialising IP. 

Charities should consider whether they wish to know if no IP arose under a funded grant, as a 'nil' return can be informative to the charity and its research strategy. If charities wish to know this, they should make this clear in their terms and conditions of funding. The institution should then notify the charity that no exploitable IP arose during the reporting period or at the end of the grant. This notification might need to come from the Principal Investigator (for example as part of the final report), as the institutional Technology Transfer Office (TTO) will not necessarily be aware of the existence of the grant unless IP arises. It is generally accepted that when solely reporting a nil event, a simple notification statement (e.g. via email) from the institution TTO will suffice, and the use of a report template is unnecessary (unless the institution is simultaneously reporting on several other active IP cases). 

Institutions also need to notify charities when a commercialisation event (e.g. a transaction involving arising or previously notified IP) is planned or happening. It is assumed that such notification will generally trigger the permission to commercialise process. If a charity does not plan to implement a permission to commercialise process, then it should clearly request that any commercialisation events that occurred in the previous reporting period are also included in the relevant report (e.g. annual or final). 

What should be reported? 

If charities have specific reporting needs, these should be described clearly in the terms and conditions of funding. 

As funders, charities need to be informed of the process for protecting, managing and exploiting arising IP. Charities need to know about the creation of a new item of IP and the proposed commercialisation route/partner/strategy for taking a product or service (utilising such IP) to market. 

Institutions should generally be asked to report on information they have readily available in relation to the protection and commercialisation route for technology/IP. Institutions should not be required to collect and report on information they would not normally have gathered as part of the commercialisation process. It should also be recognised that institutions may occasionally have limitations on the data they can share. For example, third party confidentiality restrictions may not be easily amended to include the charity, or in-house academic subscriptions to certain databases may preclude sharing such information beyond the academic institution. 

It is expected that the information in the reports will allow the charity to track progress from the inception point onwards. Reporting therefore needs to include pre-commercialisation (e.g. invention disclosure, IP protection, translational funding, etc.) and post-commercialisation (progression of the technology in the hands of a third party) stages. Charities should recognise that, post-commercialisation, the institution may be subject to confidentiality limitations from a third party. However, where possible, institutions are asked to ensure third parties agree to commercialisation updates being forwarded onto relevant charitable funders (subject to equally restrictive confidentiality obligations applying to the funders). 

A suggested format for reporting is included in Resource 1. It is not mandatory that AMRC members adopt such format and charities should consider whether they need all the information in the template, whether they have special requirements for more specific information, or whether a lighter touch report format may be used. Some charities have adopted standardised reporting formats, for example the Wellcome Trust’s standard reporting format. Using a standardised format allows institutions to be clear about their disclosure requirements and increases the chances that they will request appropriate information from downstream commercialisation partners. 

Charities wanting to be more involved in the commercialisation of their funded research may seek to bolster the reporting and permission requirements. Charities in such a position are encouraged to seek external advice if they feel they need an independent viewpoint on the extent of the information they require notification of, and regular reporting on.