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

The latest published version of this guidance is available here to download: Guidance on generating IP in your lab after you form a startup [Word]

It is also available here on Sharepoint (College login required)

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 Enterprise’s Industry Partnerships and Commercialisation Team (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.

The 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 Imperial 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:

Undertaking research in your lab with your start-up

  1. 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.
  2. 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.
  3. 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.

Working as a consultant for your start-up

4. Imperial Founders, in their capacity as College employees, and any other College employees doing work for the College start-up as an individual should have a written personal consultancy agreement with the company which specifies the nature of the engagement and clarifies ownership for IP generated under said contract. This requires College staff to request Head of Department approval and file a declaration in line with College’s External Interests Policy (EI Policy) The College’s preferred route for external consultancy work is through Imperial Consultants (ICON) to enable any contractual risks and liabilities to be managed appropriately.  If the work is not through ICON, College staff and the start-up must sign the College’s Waiver for Private Work, this is a requirement of the EI Policy.  It is advisable to seek legal advice before signing personal consultancy agreements with the start-up if they are not arranged by ICON.  The same EI Policy applies to College staff accepting Directorships with the start-up and Directors should also agree a consultancy agreement if they intend to work with the start-up.   

5. If the start-up wishes to patent the outcome of consultancy work, the start-up is obliged to:

a) If the work is through ICON, follow the terms outlined in the Consultancy Agreement with respect to ownership of Intellectual Property; or

b) If not through ICON, follow the terms of the Waiver for Private Work [Word] agreement and inform College via IPC team.  The College will then work with the start-up to commercialise the outputs for mutual benefit.  If College’s resources have been used in the generation of the IP then appropriate agreements need to be in place with the College via Imperial Consultants (ICON) before any work commences.

c) Inform College, via IPC team, as soon as possible because patent agents will check with College (in any case) to ensure that there are no conflicts of interest for the patent agent taking on the work i.e. the patent agent will seek confirmation that the College employee has the authority to instruct the patent agent to file a patent on a technology arising from their area of academic research. College will not raise any objection provided that (1) all the inventors are covered by consultancy agreements; (2) the inventors have HOD approval for the consultancy arrangements; (3) the IP has been generated under these agreements and (4) the consultancy work did not use College’s resources unless pre-agreed.

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.  

Contact Enterprise’s Industry Partnerships and Commercialisation Team for advice on collaboration agreements or Imperial Consultants (ICON) for consultancy and/or service contracts. 

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.