Generating IP in your lab after you form a start-up: how to support due diligence for your start-up and maintain clean IP

Imperial recognises and rewards collaboration as an essential part of its activities. It takes pride in bringing tangible benefits to society by making an impact in industry and encourages academics and research staff to work across departments, fields and institutional boundaries to tackle industry challenges. 

Who is this guidance for?

This guide supports you as an Imperial Start-up Founder who is also a College employee.  It is important for you, the start-up team, and your research group to establish a clear delineation and paper trail on the funding related obligations, development work, intellectual property (IP) ownership and rights to use IP arising from your work.

This is particularly important as it allows due diligence to be carried out prior to an investment or acquisition offer being made. An investment or acquisition deal may fall through if due diligence is either not satisfactory or impossible to complete to a satisfactory level. Due diligence includes obtaining documented clarity around ownership and rights to exploit IP.

What does this guidance cover?

As per Imperial’s IP Policy [College login required] unless specifically agreed otherwise, and in-line with UK law and standard practice in leading universities worldwide, IP generated by a College employee in the course of normal duties is owned by College. This is the default position understood by any potential investors/acquirers.

Option agreements

During pre-formation discussions with Imperial Enterprise’s Industry Partnerships and Commercialisation (IPC) Team, an Option Agreement to IP arising from your research group in a defined field can be discussed.

You may also decide to establish this option post-formation; a typical duration for an option is 24 months often with the potential for further renewals as appropriate and agreed. The Option Agreement will give any investor reassurances that newly unencumbered IP generated in your group in the field of interest will be offered to the start-up with first right of refusal.

Which license covers your new and/or existing IP?

As a rule of thumb, if the new IP constitutes an improvement of prior licensed or licensable IP, then the IPC team will consider bringing this under the head licence. If newly generated IP is likely to be exploited in a new product or service to be commercialised by the start-up, the terms might need to be reviewed and a new licence may be required.

One concern for College during the management of an IP licensing process, is to ensure that any inventors of IP who are not founders or directors of the start-up are appropriately rewarded.

College has a duty to guard against perceived exploitation of the work of other staff, students and postdocs for the benefit of start-ups without those students/postdocs receiving appropriate rewards as co-inventors of IP.

College also must ensure that the contractual rights of any funders and collaborators of the original research are respected and that the IP generated using College’s resources by College staff is governed by the College’s IP policy.

Step-by-step guidance on new IP discussions

Imperial Enterprise and the IPC team are on hand and excited to find new ways to turn your research into benefits for society.  We therefore recommend that you do the following:

  1. Imperial Founders, in their capacity as College employees, and any other College employees doing work for the College start-up should have a written consultancy agreement with the company which specifies the nature of the engagement and clarifies ownership for IP generated under said contract, which will be documented as part of the IP due diligence. This requires College staff and the start-up to sign the College’s Waiver for Private Work [Word], request Head of Department approval and a file a declaration in College’s External Interests Policy. The consultancy agreement can be bespoke or managed by Imperial Consultants (ICON).
  2. If the start-up wishes to patent the outcome of consultancy work, the start-up is obliged to follow the terms outlined in the Waiver for Private Work [Word] agreement and inform College via IPC team as patent agents will check with College (in any case) to ensure that there are no conflicts of interest in them taking on the work. College will not raise any objection provided that all the inventors are covered by consultancy agreements that have received Head of Department (HoD) approval and that said IP has been generated under these agreements and does not use College’s resources unless agreed ahead of time.
  3. Ideally, an IP Pipeline Option Agreement should be in place providing the start-up with first right of refusal on IP in the relevant field coming from the relevant research group over a defined period of time.
  4. If new IP is generated as part of a research collaboration, it must be declared to College via IPC team under an invention disclosure in the usual way. This will trigger a formal discussion with the start-up to assess whether this IP can be called under the Option Agreement. College (upon reviewing the exploitation plans) may then proceed to patenting and issuing a licence to the start-up.
  5. If the start-up is interested in contracting research at College, this should be discussed with IPC team and the Faculty contracting teams and is subject to the approval of the HOD. Negotiations on the collaboration terms cannot be handled by the College founders (who are also College Staff) as they are conflicted, having positions both with the company and College. The company must be represented by an independent negotiator. Use of background IP and the ownership of foreground IP will be part of this negotiation and will follow the College’s standard contractual terms with industry partners.
  6. It is wise to be clear on IP ownership from the start of a research project that relates to your company’s work. Mixed funding sources, vague or poorly documented involvement of different researchers and unspecified involvement of a start-up or other commercial organisation is likely to cause problems and delays with investors/funders. These are alleviated if a research collaboration or consultancy agreement is in place right from the start and all those involved are aware of the arrangement, including your HoD and the IPC team. We have had several cases of researchers claiming rights in cases where no agreements were in place, and it was difficult to assess and agree a way forward. Such cases can be very time consuming and potentially damaging to individual staff and a risk for both the company and College.