Industry Funding / UW-Industrial TechTransfer

Introduction

Education and research are main elements of the mission of the University. Both activities are heavily supported by external sponsors through grants given to the University on behalf of Faculty, Staff, or Operating Units.

Several trends are driving an increase in the amount of industrially sponsored research being conducted at the University. These include:

  • Recent efforts by the Faculty to broaden their funding base;
  • A shift in the nature of industrial research and its role within companies;
  • A shift in the attitude of Congress and funding agencies towards enhancing economic competitiveness.

Of the current $1 billion in externally sponsored projects carried out at the University, only approximately $57 Million of the funding is from industrial sponsors. While this seems small, it makes UW one of the top ten recipients of industrial support in the U.S. The expectations and requirements that accompany support from industry can be very different than those from governmental funding agencies. These difference manifest themselves in the contracting process and, in particular, intellectual property (IP) issues surrounding research.

All grant activity, whether supported by the federal government or by the private sector, must have academic merit and be consistent with the mission of the University. This is embodied in University Policy University Handbook Vol. IV, Part II UNIVERSITY RESEARCH. The discussions concerning Classified & Proprietary Research, University Handbook Vol. IV, Part II, Chapter1, and in Grant and Contract Support of University Activities, University Handbook Vol. IV, Part II, Chapter 4 are particularly relevant.

As provided by policy:
Research is undertaken by the University under grants from or contracts with outside agencies, public or private, only when one or both of the following conditions are satisfied:

  1. The research involved is in the public interest, and the University's facilities are peculiarly suited to its successful prosecution.
  2. The nature of the research problem is such that if University funds were available, the department and/or staff member concerned might undertake the investigation on their own initiative without outside financial assistance.

Not only the Faculty, but also the relevant Chairperson and Dean, have a role in assessing the academic merit of any research to be funded under grant or contract. According to UW Policy, the review of the proposal, budget, and the eGC-1 by the chairperson and dean

relates to the substance and merit of the proposal as well as to budgetary and administrative considerations, and approval by the chairperson (dean) constitutes an endorsement of all aspects of the proposal.

Return to top

Intellectual Property (IP) Basics

Intellectual Property (IP) may be defined in various ways but within the University what one generally means is the results of research within the context of:

The issues that are of interest to Sponsors generally involve:

  • access to technical information, tangible research products and data, and trade secrets;
  • use, technical information, tangible research products and data, and trade secrets, patentable inventions, and copyrightable works; and
  • control of portions or all the IP produced with the help of their funding.

These issues led the University Board of Regents to establish policy that forbids granting industrial sponsors of research a license to the intellectual property generated in the research without further consideration than simply supporting the research. Part of the basis of the Policy is:

  1. The positive obligation of the University and its employees to act responsibly with State assets;
  2. The fact that industrial sponsors generally have not paid for the full cost of the research as is so often assumed by them;
  3. The need to act appropriately from the perspective of both State and federal Government with respect to the University's educational and research non profit status.

If a proposal is to be a subcontract in a Company's SBIR or STTR proposal to the federal Government, the PI must provide a Letter of Intent. An example of this document along with a model research agreement may be downloaded.

The Small Business Administration is responsible formally for all Small Business Innovative Research (SBIR) or Small Business Technology Transfer Research (STTR) programs.

For more information on general aspects of intellectual property, see the UW TechTransfer site listings.

Some Relevant UW Policies and State Laws

A large number of laws, policies and procedures can affect the conduct of research, the handling of intellectual property, and its commercialization. University operation procedures are available in the University Operations Manual available at reference stations such as the Departmental Offices. The policies that come into play in any given situation are fact-specific and depend upon the exact circumstances involved. Some of the most relevant are:

  • Classified and Proprietary Research, Handbook Vol. IV, Part II, Chapter 1
  • Patent and Invention Policy, Handbook Vol. IV, Part V, Chapter 7, Section 1 and Operations Manual Section D59.4
  • Copyright Policy, Handbook Vol. IV, Part V, Chapter 7, Section 2.
  • Direct Sale of Goods and Services, Operations Manual
  • Conflict-of-Interest, Handbook Vol. IV, Part V, Chapter 2
  • Outside Professional Activities, Handbook Vol. IV, Part V, Chapter 6
  • Deeper involvement than Consulting, Handbook Vol. IV, Part V, Chapter 6, Section 6.
  • Grant And Contract Support Of University Activities, Handbook Vol. IV, Part II, Chapter 4
Return to top

Federal Versus Industrial Agreements

The basis of sponsored research is an actual contract negotiated between the parties involved. The contract is a composite of the proposal written by the Principal Investigator (PI) and the terms and conditions negotiated by the University with the sponsor. The two must be viewed together as a single contract. The proposal defines the project’s technical scope of work, rationale for the scope, and project plan to implement it. The terms and conditions govern the flow and use of money in support of the activities defined by the proposal. The terms and conditions also define the obligations of both parties under law. Neither the proposal nor the terms and conditions are sufficient by themselves to define the responsibilities that the researchers and University accrue as a result of accepting funding.

Typical grant terms and conditions known to most PIs are the defaults of federal support of research. These defaults are a result of federal law developed over the past fifty years. At the National Science Foundation website is an example of the terms and conditions governing a federal grant. In general, the defaults for working with the federal government are set out in the Federal Acquisition Regulations (FARs) or their Defense Department counterparts (DFARs) . The Office of Management & Budget provides certain guiding interpretations of the laws as well (OMB Circulars).

One result of federal law is that the organization to which the grant is awarded is allowed to retain ownership in the intellectual property developed under the award subject to various Government Rights. Government Rights seldom interfere with the University’s or a PI’s desire to deploy an innovation created under the contract in a commercial arena through licensing. Note: if money from a company is actually just a pass-through of federal money, then, with the exception of NIST’s ATP Program, the typical federal defaults apply by law.

Unlike the case of federal sponsorship of research, no specific body of law defines how industrial research contracts must be structured. Each side is free to negotiate on the various terms and conditions governing the conduct of the research and the benefits accruing to each party. Typically, the most contentious area is that concerning ownership or access to intellectual property developed under the award.

Attitudes towards intellectual property differ between the federal government and the industrial sector. Some industrial sponsors find UW’s standard agreement perfect, others feel that they must control everything resulting from their funding without further obligation. The difference in corporate attitudes generally arises from how each industrial sponsor views it will gain commercial competitive advantage through funding the research. Knowing whether the most important issue to the company is

  • access to technical information coupled with the freedom to practice the results, or
  • an exclusive control of the intellectual property results of the research,
helps the University and the PI set the potential sponsor’s expectations properly. It also enables contentious IP issues to be identified and resolved early.

OSP's website includes a Guide to Research Agreements with Industrial Sponsors or a PDF version can be downloaded at the Office of Technology Transfer website. This agreement is similar to those used by peer institutions such as UMN and MIT.

Return to top

Industrial Gifts and Grants Process

The process for securing industrial research support is similar in many respects to that for securing federal support. While some of these steps may be combined or unnecessary in a particular case, the general case steps are:

Identify a Sponsor and the Technical Contact

In doing this remember that the R&D budget for a company in total might range from 1% to 15% of Sales Revenue depending upon whether a company sells commodities or pharmaceuticals. One should not only ask about scientific interests but also about:

  • the budget limits;
  • the decision making process including the time to make decisions and who makes final decisions;
  • the company’s contracting process and contact for contract matters;
  • the company’s typical terms and conditions for sponsoring university research if available.

Engage in Technical Discussions

Usually this would include:

  1. Conversations to find an area of mutual interest. If a nondisclosure agreement is required a form is available at the UW Center for Commercialization website.
  2. Exchanges of an informal proposal, a "White Paper" or "Concept Paper," defining what the Research Group might be able to do. The specific work plan is variously called the "Scope of Work", or "Statement of Work" and abbreviated as "SOW."

    What will define the real contractual relationship is the final proposal in conjunction with negotiated terms and conditions. To help set expectations properly and to discover where expectations differ, you also should provide the industry partner a copy of the University’s standard industry research agreement with the concept paper. Print out OSP's Guide to Research Agreements with Industrial Sponsors or download a PDF version. If the proposal is to be a subcontract in a company’s SBIR or STTR proposal to the federal Government, an example of the necessary Letter of Intent, along with the model research agreement, is available at the UW Center for Commercialization website.
  3. Estimates of the research costs. Research budgets need to be approved by the Chair and Dean in the context of a proposal and the eGC-1 process. To avoid the embarrassing position of having a company view your estimates as the final word, it is important to include the following statement anytime you provide a cost estimate in a Concept Paper. This notifies them that the estimate is precisely that - an estimate.

    The cost estimate provided to you with the Scope of Work outlined in this document is provided as a Rough-Order-of-Magnitude (ROM) estimate only. It is provided for planning purposes only. The actual costs of providing best efforts research may differ. Offers to perform the research under a specified cost proposal are only valid when provided by an authorized contracting officer of the University of Washington.

Initiate the Contracting Process

Usually a difficult step in the mechanics is actually getting the contracting process started in the company. The following steps outline the most general approach and insure that both the company approval process and the University’s approval process are engaged. In the end, this is often the fastest way to get a contract through because it ensures all the necessary people are involved at the right time. The steps are:

  1. The company technical contact takes the concept paper and the University’s standard research agreement and uses it to initiate a Request for Proposal (RFP) or a Request for Quote (RFQ) through the company’s contracting authority, which is often the Purchasing Department. The RFP should be sent to the PI, or to OSP with the PI named in it. This step makes sure that the company contracting authority is primed to handle the proposal when it arrives, that the company approval process is engaged, and that OSP will know who at the company is their counterpart.
  2. The PI modifies the concept paper into a proposal in response to the RFP, creates a budget, and a eGC-1.
  3. The complete proposal package including the RFP moves through the standard grants and contracts approval process.

    Steps 2 and 3 engage the necessary approval process and contracting authority at the University.
  4. OSP processes the proposal and sends it out officially to the company’s contracting authority.
    This step makes the combined proposal and budget a valid offer by the University to the company for the PI to perform the research. It also gets the formal negotiations going.

Negotiate Any Agreement Terms

Any terms that differ between the University’s standard agreement and that of the company are negotiated by OSP through "Team C" which covers the the College of Engineering. Matt Hawkins is the engineering OSP contact and is responsible for OSP’s handling of the proposal and its processing after they receive the proposal. His group is responsible overall for negotiating the grant’s terms and conditions with the Company.

In cases where specialized intellectual property expertise is required, OSP calls on Dr. Fiona Wills of UW Center for Commercialization. She is responsible for negotiations at the request of OSP involving variances in IP terms.

The PI’s role in any negotiation is to serve as a technical advisor both to OSP and UW Center for Commercialization. In particular the PI helps OSP and UW Center for Commercialization understand how changes in terms and conditions may affect the research to be conducted, the ability of the research group to do further research, or to communicate to the technical personnel at the company.

In instances where difficult or unusual negotiations are anticipated, the PI should coordinate with Matt Hawkins and Fiona Wills early (contact info is at top of page). You can check the status of a negotiation, or a proposal, by contacting the Industrial Relations Section of OSP.

Another source of information is the OSP Proposal Writing Guide.

If the differences in terms are substantial, the negotiation may be difficult and take months. Factors that affect the progress of negotiating include, for example, the involvement of senior corporate counsel, the necessity for senior management approval, the workloads of both parties, or the necessity for access to existing intellectual property.

Some negotiations fail. The University cannot agree to certain terms by policy. When such terms are demanded by a company, signing of an agreement by the University is not possible.

Execute the Research Agreement and Other Related Documents

University agreements with industrial sponsors require at least two signatures:

  1. UW’s authorized signatory on research agreements is the Director of Office of Sponsored Programs, Lynne Chronister.
  2. Research agreements have an acknowledgment page requiring the PI’s signature.

Participation Agreements may be required in cases where the University is obligated to deliver specific intellectual property rights to the sponsor. Participation Agreements may include all researchers involved in the program.

Manage the Research

Well-written industrial proposals have a focused research plan and statement of work, but sometimes things evolve differently than envisioned or the company wishes the PI to do something different. If you begin to deviate from the work outlined in the proposal, add things on to the work, or somehow wish to use the money differently than defined, then:

  • Notify the technical contact at the company and agree on a new Statement of Work and any budget changes required to implement it.
  • Send the revised SOW and/or budget through OSP with a request that they ask the Company to amend the contract to the new Statement of Work and/or budget.

CAUTION - don’t play before they pay

Unlike contracts negotiated with the Federal Government, the probability that the University and a company fail to come to an agreement on the terms and conditions of the research agreement through negotiation is significant. About 5% of the agreements in negotiation fail to ever be signed. This means that if research is commenced prior to the actual signing of a research contract, the PI is funding the research AT RISK. Aside from the question about whether the source of temporary funding is appropriate or confuses the University’s and group’s obligations: Should the negotiations fail, all costs expended by the PI in anticipation of funding are the responsibility of the PI.

Gifts from Intel Corporation

There is a standard gift agreement template for gifts from Intel to UW faculty. For more information, please visit Working with Industry on UW's Office of Sponsored Programs website. David Iyall, Director of Corporate & Foundation Relations for the College of Engineering, manages the UW/Intel relationship and can answer questions (email iyall@uw.edu).

Return to top

A Checklist

  1. Company contact identified?
  2. Company decision-makers identified?
  3. Company budget process and signature authorities identified?
  4. Company contract authority and process identified?
  5. Copy of Company standard research agreement or IP requirements obtained, if available?

    If significant differences exist between the Company's IP clauses and UW's model SRTDA, contact Matt Hawkins at OSP and discuss with him the issues raised by the differences (contact info at top of page).

  6. Concept Paper sent, including:
    • Focused Statement of Work?
    • Rough budget?
    • ROM Disclaimer with budget estimate?
    • UW model research agreement?
  7. Company RFP issued formally or informally?
  8. Concept Paper adapted into a proposal responsive to the RFP?
  9. Proposal eGC-1 and formal budget created?
  10. Proposal, eGC-1, and Budget submitted to Department for signatures and forwarding to Dean's Office and OSP? Include copies of any other documentation relevant to the proposal effort, such as the company's standard research agreement, the RFP, and correspondence with the company.
  11. Differences in standard terms requiring detailed negotiation. OSP and UW Center for Commercialization will iron out contract provisions in consultation with the PI?
  12. Documents executed (Agreement, PI acknowledgement, Participation Agreements)?
  13. Terms of contract met?
    • Participation Agreements signed by all research personnel?
    • Publication notifications being made and approvals obtained?
    • Intellectual Property being disclosed to UW Center for Commercialization for formal disclosure to Sponsor?
    • Reports provided?
    • Statement of Work completed? Any changes required in budget or SOW done through OSP so that contract reflects true obligations?
Return to top

FAQs for Industrially Sponsored Research and IP

This is a DRAFT WORK IN-PROGRESS comprised of short answers.

Questions? Contact Matt Hawkins (contact info at top of page).

What are some of the most common mistakes made in seeking, securing, and conducting Industrially-sponsored Research? What are the consequences?

Here are seven common mistakes:

  1. Failure by the PI to understand the corporate budgeting, contracting, and decision–making process - this mistake generally results in delays or loss of funding;
  2. Failure of the company to understand the contracting process of the University - this mistake usually results in delays in processing the proposal and signing the contract;
  3. PI’s negotiating terms and conditions with the company on research agreements rather than simply the technical content and estimated budget - this mistake generally creates confusion and delays any real progress on executing the contract.
  4. Failure to create and follow a sufficiently focused Statement-of-Work - this mistake generally obligates more to the sponsor than the PI intended and may prevent the PI from seeking support from other corporate sponsors.
  5. Failure to cost properly the Statement-of-Work - this mistake results generally in the inability to perform the research, a cost overrun, or the loss of follow-on funding.
  6. Doing all of the key research before the funding comes in - this mistake can cause the following problems:
  • IP obligations follow funding, the corporate partner may lose IP rights they were promised;
  • The research results may be obligated to two sponsors in an incompatible fashion leading to either a lawsuit for breach of contract or the necessity to refund all the support provided by one of the sponsors.
  • The negotiations on the contract may fail, leaving the research group to pay for funds spent in anticipation of funding;
  1. Failure to change the contract to reflect work actually done - this mistake may obligate the University to perform more work for the sponsor than the PI intended and cost the PI part of his/her discretionary funds.

Who owns the IP produced by the research conducted at UW?

It depends on the facts surrounding the generation of the IP and is case dependent. Generally when there is a contractual obligation to perform research and deliver results, the University owns the work product in order to fulfill delivery obligations.

To whom should one go with questions on industrially-sponsored research and corporate contracts?

In general, Grants and Contracts Services is responsible for all sponsored research agreements, that is, all Research and Technology Development Agreements (RTDAs). Within OSP, industrially-sponsored RTDAs are handled by a special section currently headed by Matt Hawkins.

As a longer answer, the exception is circumstances involving complex or potentially contentious intellectual property issues. Linden Rhoads, Director of UW Center for Commercialization, is responsible for the intellectual property terms and conditions of RTDAs. OSP and UW Center for Commercialization coordinate internally on negotiations involving IP terms and typically involve the PI. If a PI knows that IP will be an issue, or wishes to be better informed in case it is, Ms. Rhoads should be contacted early in discussions with the company. This can save an enormous amount of time later.

Who makes decisions on IP ownership arising out of research conducted at UW?

UW Center for Commercialization is responsible by University Policy for IP owned by the University. UW Center for Commercialization Managers determine if the University is not an owner, is a joint owner, or is the sole owner of IP developed by faculty, staff, and students at the University on the basis of:

  • the facts surrounding the generation of the intellectual property,
  • applicable University policies and operations procedures, and
  • governing laws.

What are the most common IP problems encountered between the University and Companies?

Ownership of, or free license to, IP developed with the aid of Company funds. The right to publish the University’s results. Confidentiality of results produced by the research. The conditions of use surrounding the University’s use of Company information.

What if a student or I want to commercialize the results of the research?

You may not be able to do so. It depends on the facts surrounding the generation of the IP and the terms and conditions of the contract that funded the work.

A company, for which I consult, wants to support research at UW, any problems?

There may be a conflict between your primary obligations to the University and the State of Washington, and your relationship to the company. It depends upon the nature of the proposed research and the details of your previous relationship to the company as they pertain to the research. Actions perceived by State as promoting a private gain by those involved at public expense are prohibited.