Negotiating Consultancy and Licensing Agreements with Universities

Author Andrew Woodvine Licence CC BY-SA 2.0 Source Wikimedia Commons

Jane Lambert

On Thursday I delivered a seminar on intellectual property law to the teams working on research, innovation, commercialization and partnership support for Bangor University.  I wrote about my visit in The Day I went to Bangor in NIPC News on 24 Feb 2023.  My audience included professionals who negotiate licence and consultancy agreements with third parties.

Licence agreements are made between owners of intellectual property rights and those who wish to use the technology protected by such rights.  Universities acquire considerable technical and scientific knowledge through research carried out by their academics and graduate students much of which can be useful for business. Where such research is protected by patents, unregistered design rights, supplementary unregistered designs, trade secrecy law or other intellectual property rights the university may license businesses and entrepreneurs to use the research.

Consultancy agreements are made between experts and those who wish to use their expertise.  Academics and graduate students often acquire considerable expertise in an area of science or technology through their research.   Businesses and entrepreneurs who wish to use such expertise may contract with the university to consult such an academic or student.  They may ask him or her to design or test something or carry out further sponsored research.

The licensing and consultancy services that are available from Bangor University are indexed on the Business Services page of its website.   These consist of a Collaboration Hub, Intellectual Property (IP) and Commercialization, Conferencing and Business Dining.  The services available from the Collaboration Hub that are most likely to interest businesses include knowledge exchange, collaborative research projects, consultancy and access to the University's facilities.  Those available from Intellectual Property and Commercialization are licensing and spinouts.

Most universities in Wales and indeed the rest of the United Kingdom as well as many more abroad offer similar services to businesses.   When negotiating with them, it is prudent to take the following steps.

• First, whenever you disclose confidential information to a third party make sure that he or she knows that the information is confidential and that you are confiding it to him or her in circumstances giving rise to an obligation of confidence.   You must set out precisely how the information may be used, who may see it and, in the case of a disclosure of documents when you need them back.   I gave a lot of information about this topic in  Trade Secrets and Non-Disclosure Agreements on 1 April 2018.
• Secondly, summarize the terms that you and the university may agree subject to contract in a document known as "heads of terms" or "heads of agreement".  Unless you and the university agree otherwise, most if not all the terms should be non-binding.  Even though the instrument should be non-binding it is a good idea for both parties to sign it so that there can be no doubt as to each party's understanding.   There is a good example of such an agreement and some explanatory notes on the Gov.UK website.
• The sample agreement is one of several that have been drawn up by a committee chaired by Sir Richard Lambert known as the Lambert Toolkit.   I attended and contributed to one of the drafting meetings of that committee.  The core of the toolkit consists of  7 draft agreements which are used by Bangor and many other universities.  Guidance on those draft agreements can be obtained from a "Decision Guide."
• A licence agreement is likely to be drawn up by one of the parties from scratch.   Tactically it is usually better for the licensee to draft it rather than rely on the university,   A typical licence will include the names and addresses of the parties, recitals on the background to the agreement, the grant, an interpretation clause, a description of rights granted, the territory and the term, the consideration for the licence, remedies for non-payment or delay, the licensor's obligations and the licensee's, provisions for termination, rights on termination, whole agreement, severance and other boilerplate clauses, provision for the service of notices and notifications, choice of law and jurisdiction.    

It is prudent to enlist the help of a lawyer or patent or trade mark attorney for at least some of the stages of the negotiation and drafting.   Such a lawyer can be a barrister specializing in intellectual property and technology law instructed under the public access scheme or a solicitor with expertise in those areas of the law.

Anyone wishing to discuss this article or its contents may call me on 020 7404 5252 during office hours or send me a message through my contact form at other times.