legal, equity, intellectual-property, partnership, licensingI’ve been designing and developing a startup for many years. Now I am a Ph.D. student and trying to commercialize the service I’ve been developing. Because of being a university employee (Ph.D. Student), the university owns the IP and licenses it to me.
First of all, they argue that because the courses I’ve taken and the projects I’ve worked on at the university have taught me how to improve the design of the startup that I’ve been developing many years before entering the graduate school, the university should own the IP. I don’t understand their argument. When other Ph.D. students acquire the same knowledge and work for Google or Microsoft after graduation, the university does not argue that they should share their salary with the university, but just because I’ve been smart enough to develop my own business, then I have to share my revenue with the university???
My second question is about the way they license it. What are the common licensing models? What are the best practices to work with them? What happens if after a couple of years the university decides to sell the IP to someone else instead of renewing the license with me?
My third question is about the way they share the equity. They do not have any reasonable metric for this purpose. There is an individual in the Tech Transfer office who evaluates the lines of HTML, CSS, JavaScript, or backend of the website you have developed while being a student, and determines their share. How can I convince him that this code is the result of many years of hard work on the design and development of the idea, business model, revenue model, … before being a student?
In general, is there any helpful publication about best practices to work with universities in this regard?
The University has a claim to ownership to what you do because you are an employee of the university. Similarly, Google has a claim to ownership of what its employees do even if they do it outside of work.
It sounds like the issue here relates to software that you wrote during your PhD as opposed to patents. I’ll also assume you are in the U.S.
Whether your employer owns software you write depends on a few factors, such as:
For example, if you are part of Google’s search team, and you write web search software on your own time, at home, on your own computer, then Google probably owns that software because it relates to your work (the first factor is very important).
But if you wrote accounting software, then Google probably doesn’t own it.
The argument about the coursework, however, is bogus. The university doesn’t own anything based on the classes you took. The university can’t claim ownership of the knowledge in your brain!
The best approach is probably not to deal with the university at all. Universities are notoriously difficult to work with. Their only claim is to the software you wrote while an employee. How hard would it be to rewrite the software?
If you do decide to rewrite the software, you do need to be careful to do it correctly. For example, if you memorize the code and simply type it in again you are not really rewriting it. If you do go this route, you should seek legal advice to make sure you are doing it correctly.
In the US - pretty much anything you create while under the employ of a company or university is under their ownership of intellectual property. There are a lot of reasons for this (too lengthy to get into, here). A few exceptions are: If the creation-work is done completely “after hours”, without using any of their resources, and isn’t in the field the company is in (or your work responsibility).
So, an employee of apple just couldn’t create a new kind of smartphone, for instance, without Apple owning the IP by default. Again, there are exceptions.
Inside a University - it is probably even more restrictive (again, for a lot of reasons - most that make good sense). If you are a computer science professor, or Ph.D. student - No - you cannot merely create some software and expect to commercialize it without the university claiming ownership.
Even the Google founders - who developed the search engine separate from their Ph.D. studies at Stanford - owed IP / licensing fees to Stanford - who ended up, if memory serves profiting to the tune of a billion dollars.
Most universities make a significant amount of revenue from technology licensing and patents. Often this constitutes 1/3-1/2 of their “revenues” (the rest usually comes from tuition, donations, and research and other grants).
While they go through great lengths, legally to protect their IP rights - most universities also realize that they are in the 21st century - and an idle patent portfolio is worthless. They make a LOT more money if they encourage the further development and commercialization of IP, Patents and ideas. So many many many universities have some kind of program (or programs) that help faculty, staff and students commercialize their IP and create spin-off products and companies. And many of them will provide extra funding, facilities, office space, mentoring and other help.
So instead of thinking of how to keep your “idea” (or IP) - try thinking about how you can work with the university to develop it into a product or a business. The prospects of success are much higher - and it’s much more fun!
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