Guidelines for Industry Sponsored Research Agreements

Function:

Office of Innovation and Partnerships

Procedure

Related Policies: SUNY Patents and Inventions Policy; SUNY Policy on the Unrestricted; Dissemination of Research Activities; RF Guidelines for the Administration of Industrial Relationships; RF Signature Authority Policy

Contact:

Heather M. Hage

(518) 434-7156

Background

As SUNY’s exclusive agent for the management of sponsored research conducted at its state-operated campuses, The Research Foundation for The State University of New York ("RF") is responsible for the execution and management of myriad contracts with external entities. A common form of SUNY’s engagement with industry is through sponsorship of faculty research at campus locations across the SUNY system. These Guidelines for Industry Sponsored Research Agreements and their component Industry Sponsored Research Agreement Models are intended to support high-quality, focused and efficient service to the SUNY research community and are made available by the RF to assist administrators to document the conduct of industry-sponsored research at SUNY campuses in a manner that is clear and legally compliant.

Research and innovation professionals from across the system have collaborated to create the three Industry Sponsored Research Agreement (ISRA) models to which these Guidelines are directed. The distinctions between each of these models turn substantially on the treatment of intellectual property, although RF owns the research results from the project in all three versions. Specifically:

  1. ISRA Model 1: Traditional Option is a traditional ISRA in which the RF owns IP created, disclosed and assigned by SUNY investigators and the sponsor has an option to acquire a commercial license. No commercial license is granted to the sponsor for any RF intellectual property.
  2. ISRA Model 2: Commercial NERF grants to the sponsor a Non-Exclusive Royalty-Free (NERF) commercial license to the project’s research results with an option to negotiate an exclusive commercial license. This NERF does not include a license to any RF IP that is: (i) claimed in a patent or patent application, or (ii) embodied in software subject to copyright protection. Patents, patent applications, and software owned by RF should be licensed separately. For a sponsor preferring to determine license terms before the research is conducted, ISRA Model 3 may be a better fit.
  3. ISRA Model 3: Minimum Terms License grants to the sponsor a Non-Exclusive Royalty-Free (NERF) commercial license to the project’s research results, excluding patents and copyrights, and presents a set of pre-negotiated parameters for an exclusive commercial license, which the sponsor may elect to accept, avoiding the lengthier and more uncertain process of negotiating via the option presented in ISRA Model 2.

General Guidelines and Recommendations

Collaboration. While the approaches documented in RF’s Industry Sponsored Research Agreement models are consistent with best practices across modern academia, they are increasingly complex and require intensive collaboration between faculty, administrators and sponsors to ensure that our documents reflect the expectations among all affected individuals and entities. Research and innovation professionals across offices of sponsored programs, technology transfer and compliance are encouraged to work together to assess the impact of business decisions surrounding the treatment of intellectual property on the campus, the principal investigator, and the corporate partner, before making written commitments.

Signature Authority. The identification of an individual with appropriate signature authority should be carefully considered before executing ISRA Models 2 and 3. Specifically, the RF Operations Manager ("OM") or Deputy OM may have reserved, or have delegated to different individuals, the specific authority to execute contracts for research and contracts to license IP. Refer to your specific written delegation of authority to be certain you are authorized to negotiate and execute the agreement at hand.

Read and Understood. Note that the final page of each agreement model includes a page for internal use only to document the principal investigator’s understanding and acceptance of the terms embodied in the final agreement. Administrators are encouraged to engage the project team early and often as IP terms are negotiated to ensure that potential inventors are aware of and understand the downstream impact of terms affecting the ownership and licensing of IP before the agreement is executed.

Research vs. Testing. These materials are intended to document the conduct of research in which a SUNY researcher is conducting systematic investigation or study of materials and sources to establish facts and reach new conclusions. For the testing of materials; in which a SUNY researcher accepts material of a third party to conduct tests that require minimal creativity or inventive step, refer to the RF Guidelines for Materials Testing Agreements (link) and the RF Materials testing Agreement Model (link), for guidance.

Section-by-Section Guidance and Optional Clauses for Industry Sponsored Agreement Models

Section 1: Scope of Research

This section incorporates by reference Exhibit A, in which the scope of work for the Project is detailed. Any changes to the scope of work must be agreed to in writing by amending Exhibit A. The Project Budget in Exhibit B must also be amended in writing if changes in the scope of work necessitate changes to the Budget. If changes in the scope of work require a change in the Term of the Agreement, Section 3 should be amended as well. If there will be multiple projects covered under one Agreement, then alternative language may be used to cover separate scopes of work for each project.

Optional Clause 1: Scope of Research. For use if there are multiple Projects covered under one Agreement.
Foundation agrees to conduct and carry out Project(s), each of which is described in a separate scope of work substantially in the form set forth in Exhibit A with a budget in the form of Exhibit B.
To the extent the scope of research is revised during the course of a Project, the relevant Scope of Work and Budget for that Project will be amended accordingly in a writing signed by both parties.

Section 2: Key Personnel

The Research Foundation’s Principal Investigator (PI) and the Sponsor’s Technical Contact are the Key Personnel for the Project. Those individuals are to be identified in Exhibit C, along with the other named Project contacts. If the RF PI is unable to complete the Project for any reason, the Project may continue with a new Principal Investigator, but only with the mutual agreement of the parties. The Sponsor may terminate the Agreement if a new PI cannot be agreed upon.

Section 3: Term

The Term of the Agreement will begin on the Effective Date and continue through the termination date stated in this section. If the Term needs to be extended or changed for any reason, the Agreement should be amended in writing.

Section 4: Termination

The Agreement may be terminated by either party upon 30 days written notice. Upon receipt of a termination notice from the Sponsor, work on the Project must stop immediately. In this case, the Sponsor must reimburse RF for costs and expenses for non-cancellable commitments through the date of termination.

Section 5: Compensation

Compensation for the Project will either be: i) on fixed price basis with an agreed-upon payment schedule, or ii) cost reimbursable with an agreed-upon ceiling price, payable in monthly invoiced amounts. The Budget for the Project and manner of compensation should be detailed in Exhibit B.

Section 6: Proprietary Information

If the parties have entered into a Non-Disclosure Agreement (NDA) that is intended to apply to the Project, then the NDA should be attached as Exhibit D to the Agreement, and those terms will supersede the terms of Section 6. The alternative language provided below may be used in this case. If there is no existing NDA, then the terms of Section 6 will apply. Under Section 6, proprietary or confidential information of a party must be marked as confidential, and may only be shared with individuals who require the information for the performance of the Project. Proprietary information must be kept confidential for three years following termination of the Agreement.

Optional Clause 6: Proprietary Information. For use if an NDA already exists between the parties for the Project.
The conditions of the existing Non-Disclosure Agreement, signed by both parties on (date), and attached hereto as Exhibit D, will apply to this Agreement.

Section 7: Intellectual Property

The Intellectual Property section of the Agreement is organized into three sub-sections:

Section 7(a) defines the IP-related terms that are used in the Agreement. The definitions in Section 7(a) are identical in all versions of the ISRA.
Section 7(b) sets forth the IP rights and obligations of the Sponsor, which are identical in all versions of the ISRA, with the exception of the commercial rights granted via the NERF license in ISRA Models 2 and 3,
and the rights of the sponsor to either (i) take an option to negotiate an exclusive commercial license in ISRA Model 2, or (ii) elect pre-negotiated terms for an exclusive commercial license in ISRA Model 3.
Section 7(c) sets forth the IP rights and obligations of the Research Foundation.

Section 7(a): Explanation of Definitions

  1. "Incidental Use of SUNY Resources": This definition is a variant of the definition used in the revised SUNY Intellectual Property Policy that has been proposed. It is intended to distinguish between use of SUNY resources that would result in RF owning the IP created by a Sponsor, versus non-essential uses of general business resources (such as meeting rooms, telephones, etc.) that would not result in RF owning IP that is created by a Sponsor.
  2. "Invention(s): The definition requires both "conception" and "reduction to practice" under the Agreement. The definition excludes, for example, inventions that are conceived prior to the Agreement, and those that are conceived during the Agreement, but reduced to practice at a later time. A broader definition may be used to include inventions that are "conceived and/or reduced to practice under the Agreement". This would, for example, encompass inventions that were conceived prior to the Project, but reduced to practice during the Project. This would also encompass inventions that were conceived during the Project, but not reduced to practice until after the Project was completed. Caution should be used in employing the broader "and/or" definition, as it may capture inventions that were not intended to fall under the scope of this Agreement. Definitions of "conception" and "reduction to practice" may be included if desired. Alternative language is provided in the optional clauses below.
  3. "Intellectual Property": Covers all forms of IP, including patents, copyright, trademarks, trade secrets, and related proprietary rights.
  4. "Background Intellectual Property": BIP is the IP of a party that was created prior to the effective date of the Agreement, is related to the Field, and is used on the Project. Sponsor BIP must be specified in writing in Exhibit A. If not specified in Exhibit A, then the assumption is that no Sponsor IP is being used for the Project. Foundation BIP is any BIP of Foundation known to the Principal Investigator. Each party owns its Background Intellectual Property. Alternative language may be used if: (i) no Sponsor BIP will be used for the Project, or (ii) you want to specifically define the Foundation BIP being used. [See optional clauses below.]
  5. "Other Intellectual Property": Refers to IP of either party that is neither Background IP nor an Invention.
  6. "Project Reports": The list of written Project Reports to be delivered under the Agreement should be listed in Exhibit A, �8. These are the only deliverables that will be owned by the Sponsor at the conclusion of the Project. If there are deliverables, other than Project Reports, that are intended to be owned by the Sponsor, the definition of "Project Reports" should be changed to a definition of "Deliverables" and Exhibit A, �8 should list all Deliverables.
  7. "Research Results": Research Results are owned by RF.

    Optional Clause 7(a)(2): Definition of "Invention(s)". For use to provide a broader scope for the definition of inventions.
    "Invention(s)" means any invention or discovery that is conceived and/or reduced to practice under the Agreement.
    If the parties wish to define the terms "conceived" and "reduced to practice," the following definitions can be used in the Agreement:
    "Conceived" means the formation in the mind of the inventor of a definite and permanent idea of the complete and operable invention. "Reduced to practice" means the actual demonstration of the operation of an
    invention through a physical embodiment or a completed patent application.

    Optional Clause 7(a)(4): Definition of "Background Intellectual Property". If there is no Sponsor BIP that will be used in the Project, then either:
    (i) Indicate "NONE" or "N/A" in Exhibit A, �6.
    OR
    (ii) Delete the definition of Sponsor BIP in the Agreement.
    If it is preferred to specifically identify the BIP of Foundation, then use the following revised definition and identify the Foundation BIP in Exhibit A:
    "Foundation BIP" means the Background Intellectual Property of Foundation known to the Principal Investigator and identified in Exhibit A hereto."

    Section 7(b): Explanation of IP Rights and Obligations of Sponsor

    1. Ownership of IP: The IP owned by Sponsor is defined in this section.
    2. Invention Disclosures: The default position in the agreement is that Sponsor must disclose to Foundation any inventions disclosures for a Sponsor Invention or Joint Invention. If the campus does not wish to receive invention disclosures for Sponsor Inventions, this requirement may be deleted. Receiving copies of disclosures for Sponsor Inventions may reduce the likelihood of a later dispute between the parties regarding inventorship and/or ownership of a patent that results from the Project.
    3. Sponsor Inventions: The Sponsor is responsible for its own prosecution of patents for Sponsor Inventions, and the costs associated therewith.
    4. Joint Inventions: If any Joint Inventions are developed under the Agreement each party will have the right but not the obligation to use and license nonexclusively the subject inventions. The Sponsor is granted the right to prosecute and fund Joint Inventions. That is preferred given the time and effort to manage prosecution, consult with Sponsor, and process invoices and reimbursements. The Sponsor may also have preferred counsel. If the Sponsor elects not to prosecute and fund the patenting of a Joint Invention, Foundation may do so at its own expense with an assignment of full title of the Joint Invention to Foundation. The rationale for assignment is that if a commercial opportunity exists, it should not be limited or hindered in any way by Sponsor joint ownership. If the Sponsor does not value the patent enough to license it exclusively or at least fund a Joint Invention patent application, in all likelihood the Invention has little or no perceived commercial value to the Sponsor. Nevertheless, the Sponsor may push back on assigning its rights to the Joint Invention on the basis that they may need or want the IP at some time in the future. They may insist on continued joint ownership, a NERF, or a covenant requiring RF not to assert any patent rights in the Joint Invention against the Sponsor. Any of those may be acceptable negotiated outcomes depending on the circumstances and nature of the potential commercial opportunity.
    5. Optional Clause 7(b)(4). JOINT INVENTIONS: For use when the campus desires to control the patenting of Joint Inventions, but Sponsor will remain a joint owner of the resulting patents:
      Sponsor will cooperate with and assist Foundation in Foundation’s preparation, filing, prosecution, and maintenance of all United States and foreign patent applications claiming Joint Inventions. Sponsor will reimburse Foundation for all patent expenses for Joint Inventions [optional: and will pay to Foundation an administrative fee in the amount of ____________ to defray Foundation’s costs of managing Joint Inventions for the parties. Such administrative fee will be due and payable to Foundation by ________].
      Trade Secrets: Due to the difficulty in identifying and maintaining the confidentiality of Sponsor’s Trade Secrets, it is discouraged for any Sponsor Trade Secrets to be disclosed unless absolutely necessary and under the governance of special procedures that must be put in place in advance.
    6. Third Party Rights: Each party must disclose to the other any third party rights, known to the officials signing the Agreement, that impact the IP related to the Project.
    7. Research Licenses: In each model of the ISRA, there are reciprocal research licenses granted between the parties to IP that is needed for the performance of the Project. In addition, RF receives a research license to the use the Project Reports. The research licenses do not convey any commercial rights.
    8. Option for a Commercial License: In ISRA Model 1, section 7(b)(8) provides an option for the Sponsor to obtain a commercial license to the Research Results and/or any of Foundation’s IP rights related to the Project that are available for license. There is a 90-day option period to negotiate this commercial license once the Sponsor has notified Foundation in writing that it wishes to exercise this option.
    9. Non-Exclusive Commercial License (NERF): In ISRA Models 2 and 3, section 7(b)(8) provides the Sponsor with a NERF to the Research Results, with the exception of any Foundation IP that is: (i) claimed in a patent or patent application, or (ii) embodied in software subject to copyright protection, which must be licensed separately. The last sentence provides a mechanism to terminate the NERF if the Research Results are not used by the Sponsor: "The license conveyed under this section 7(b)(8) may be terminated by Foundation in the event that Sponsor (i) is not actively pursuing commercial use of the Research Results�" If the Sponsor does not license related Foundation IP, it could be disadvantageous to other commercial opportunities to have an open-ended NERF in effect with Sponsor that is not actively used for commercial purposes. As written, the provision is somewhat open ended. You may need to add a time frame or use milestones to define "use". If the Sponsor has a significant concern with this provision, it can be deleted all together if the business case makes sense.

    Optional Clause 7(b)(8) (Expanded NERF). If the parties wish to expand the scope of the NERF to include: (i) the Background IP of Foundation necessary for Sponsor to commercially use the Research Results, and (ii) IP of Foundation that is claimed in patents, patent applications, or subject to copyright, but necessary for Sponsor to commercially use the Research Results, then the following alternative language provided below may be used. It is important to note that thorough due diligence must be conducted before granting an expanded NERF to ensure that Background IP and other licensed IP is available for licensing and is not already subject to an exclusive license to another party or other limitations that would preclude the granting of an expanded NERF to the Sponsor.

    1. Non-Exclusive Commercial License. For the purpose of promoting the use of Foundation and University IP for the benefit of the public, Sponsor is granted by Foundation a non-exclusive, royalty-free, non-transferable, non-sublicensable worldwide license to use and distribute for commercial purposes the Research Results, including: (i) the following Background IP of Foundation: __________________, and (ii)the following Foundation IP subject to patent rights or copyright: ____________________________, (collectively the "Licensed IP"). The license conveyed under this section 7(b)(8) may be terminated by Foundation in the event that Sponsor (i) is not actively pursuing commercial use of the Research Results or the Licensed IP, or (ii) is in breach of the terms of this Agreement.
      In the alternative language above for the Expanded NERF, the Licensed IP should be identified with specificity, by including a title, description, RF Docket No, Patent Application Number, Issued Patent Number, or other identifying criteria.
    2. Option for Exclusive Commercial License. In ISRA Model 2, section 7(b)(9) gives Sponsor an option to negotiate for an exclusive commercial license. (This can be compared to ISRA v.3, section 7(b)(9) in which Sponsor may elect to take an exclusive commercial license on pre-negotiated terms.) If license negotiations are not successful, the Sponsor may ask for a right-of-first refusal to any third party license offer if the financial terms are more favorable than the last offer made in negotiations between Foundation and Sponsor. Although cumbersome to manage and possibly unfair to the third party, such a provision is an acceptable addition on a case-by-case basis.
    3. Exclusive Commercial License: In ISRA Model 3, section 7(b)(9) gives Sponsor an option to elect an exclusive commercial license on pre-negotiated terms that are set out in Exhibit E. It is still necessary to finalize a separate license agreement, but it is expected to decrease the transaction time because the majority of the terms are already agreed.

    Section 7(c): Explanation of IP Rights and Obligations of Foundation

    Section 7(c) largely parallels section 7(b), with the exception of 7(c)(5) which preserves RF’s right of publication.

    Optional Clause 7(c)(4). JOINT INVENTIONS: For use when the campus desires to have RF control the patenting of Joint Inventions, but Sponsor will remain a joint owner of the resulting patents:
    Foundation will control the preparation, filing, prosecution, and maintenance of all United States and foreign patent applications claiming Joint Inventions, with Sponsor’s cooperation and assistance. Sponsor will reimburse Foundation for all patent expenses for Joint Inventions.

    Section 8: Warranties

    RF expressly disclaims all warranties in connection with the Agreement. The RF General Counsel’s Office may be consulted for guidance if a Sponsor is requesting that RF provide any warranties in connection with the Agreement. If requested by the Sponsor, it is generally acceptable to warrant that RF is authorized to enter into the Agreement; however other forms of warranties should be carefully reviewed with legal counsel. To the extent any additional warranties are approved and written into the Agreement, it is advisable to add a "Limitation of Liability" provision that would contractually limit RF’s liability in the event of the breach of warranty or representation to an amount not exceeding, for example, the amount of the contract. The RF General Counsel’s Office can assist with providing language in these instances.

    Section 9: Export Control

    Sponsor must identify export-controlled information and RF’s export control representative should be identified in Exhibit C.

    Section 10: Indemnification

    The indemnification section is essentially describing under what circumstances Sponsor will pay our legal fees if a third party claim arises. RF’s preferred indemnification clause requires that Sponsor pays if we are subject to a third party claim arising from Sponsors use of any deliverable, technology, or IP provided by RF to the Sponsor, except if the claim is due to RF’s gross negligence or willful misconduct. In this preferred clause, RF provides no indemnification to the Sponsor.

    There are several options such as including a separate paragraph under which RF provides indemnification to the Sponsor for our gross negligence or willful misconduct or a mutual indemnification for liability arising out of a particular type of conduct. Consideration must be given to the scope of work when crafting an alternative clause and we may agree to remain silent after all factors are reviewed. To the extent RF provides any indemnification under the Agreement, it is advisable to add a "Limitation of Liability" provision that would contractually limit RF’s liability to an amount not exceeding, for example, the amount of the contract. The RF General Counsel’s Office can assist with providing language in these instances.

    A sponsor may also offer an alternative indemnification clause containing procedural language that is onerous or puts the RF at a possible disadvantage when indemnification is sought. This may include:

    1) "Foundation shall notify Sponsor immediately of any such claim or action" where "immediately" should be changed to some reasonable time frame; 2) "Sponsor shall have sole discretion over settlement of any action or claim" and this should be changed to include approval of RF prior to settlement.

    The RF General Counsel’s Office may be consulted if a Sponsor is requesting that RF deviate from the standard clause for Indemnification under the Agreement.

    Section 11: Insurance

    RF must maintain the insurance identified in section 11. If a Sponsor requests higher limits or additional types of coverage, you should contact RF’s Risk Management and Insurance Coordinator.

    Section 12: Dispute Resolution

    Sponsors often propose various alternatives here and one of the most common is binding arbitration. This can be accepted but in limited circumstances such as when the Sponsor is a non-U.S. company and will not agree to NY law or to litigate in NY courts. Also, the clause should identify or reference procedures to be followed for selection of the arbitrator(s) and the arbitration itself, the RF prefers Commercial Arbitration Rules of the American Arbitration Association. The RF General Counsel’s Office should be consulted if a Sponsor is proposing a dispute resolution process that relies on binding arbitration or forecloses the right of RF to initiate litigation in the event of a dispute.

    Section 13: Assignment

    No assignment of the Agreement except with prior written consent of the other party.

Forms

ISRA Model 1: Traditional Option (link)

ISRA Model 2: Commercial NERF (link)

ISRA Model 3: Minimum Terms License (link)

Change History

Date

Summary of Change

October 1, 2015

New document.

 

 

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