Creative COVID-19 Collaborations - IP Agreements that Work

May 7, 2020

By Noel Courage

McCartney & Lennon, Watson & Crick, Mary & Pierre Curie. We are all looking for synergistic collaborations. In life sciences, some of those collaborations may be with your employees, independent contractors or corporate research partners. This article will look at a few key IP issues to tie up in your COVID-19 research with others on patentable inventions. Being prepared for any outcome is important – not all the collaborations mentioned above had happy endings!

There is a particular urgency to collaborations relating to COVID-19. However, good practices must not go out the window. 

It is also good to be mindful of the opportunity not only to collaboratively develop, but also to collaboratively share, IP that you develop. It is possible to fully protect IP, and then either openly make IP available or do a controlled IP license for COVID-19. 

 

Due Diligence on Partners

There is much international collaboration happening to solve COVID-19 issues, in chemistry, biotechnology, high technology and mechanical innovations. This has helped make tremendous progress in a short time. It is still important to conduct fast, but thorough due diligence on all commercial partners. Suppliers must be able to deliver materials. No research project can afford to get ghosted on necessary supplies. R&D partners must also be open for business and able to execute – this includes their subcontractors, such as contract research organizations.   

 

Looking Past COVID-19 – Platform IP

Remember that an invention made in a specific context may have broader applicability. This is the concept of a platform technology, an innovation that can launch many projects. For example, a rapid, point of care diagnostic kit may be developed for COVID-19, but could be useful for many other diseases. Be aware of the full scope of the invention and capture and protect the corresponding IP from the collaboration.

 

Identifying Inventors

Going into a research project, there is an end goal and you may have a sense of who the likely inventors will be. However, there are usually a few unexpected problems to resolve, plans change, and perhaps there will be a touch of serendipity. Inventors may be owners by default so you need to control everyone’s potential IP. It is also important to properly identify all inventors on a patent filing and on related IP, such as copyright in written text and drawings. 

As an example, in a case that went to the Supreme Court of Canada, two NIH scientists tested samples of GSK’s AZT drug in a human HIV assay on a blinded basis. GSK controlled the scientists’ input for scientific integrity and to try to maintain sole inventorship. The NIH scientists were ultimately not considered inventors. So those doing outsourced work to verify efficacy, even with a complex assay, may not be inventors (the NIH invention was its assay, not use of AZT for treating HIV). Consider whether inventorship may have differed if the NIH scientists had been involved earlier in the project, and in more detail, knowing the drug they were assessing going in, interpreting results, and advising GSK on efficacy for treating HIV. Involve your research partners as much as you wish, but know the potential IP consequences on inventorship.

 

Tying Up Ownership with Assignments

Your employees and independent contractors should sign an agreement transferring IP to your company. If you are outsourcing research or clinical work on a fee-for-service basis, those partners should also agree that your company owns the IP. If your company is in need of a partner for complex analysis, solving problems, making an invention and commercializing it, then both organizations may expect to share in the ownership. Nonetheless, companies can make whatever ownership arrangements they wish, for example, having ownership follow inventorship or basing it on the subject matter of the particular invention made. As well, depending on the country, there may be restrictions on how each co-owner can commercialize or transfer their own rights to an outsider, so an agreement helps manage this activity.

In a recent case in Alberta, a disgruntled former employee tried to deny transferring his IP ownership to his company, for a sonic tool to improve oil well production. However, he had signed a broad agreement transferring IP, and the inventions he made fell within the clause, so the company owned his IP. The IP assignment stood up even though the inventor had never been fully paid.

 

R&D Agreements

The terms of a commercial collaboration should be in writing to ensure that expectations are managed, and everyone feels they are treated fairly going in. Agreements between companies collaborating on research projects are a rulebook, setting out the research milestones, commercial plan and sharing of proceeds. Confidentiality is paramount at the development stage. It is good to have agreements in place early on before revenue starts to flow, so that parties’ entitlements and obligations are clear before there is money on the table. These agreements will deal with IP in inventions, but may also deal with other types of IP ownership, for example, in written manuals, graphic design, software code and other work product. This ensures that the IP is transferred to the appropriate owner, regardless of who is the author or inventor. It is important to have clear financial terms, and to make sure everyone is on the same page with respect to when payment is due. 

In a case in Ontario, an inventor sold his invention (a cold air draft-blocker for a window) to a company that manufactured and distributed the product. The agreement was a bit ambiguous on when the royalty obligation ended, so the two companies ended up in litigation. The court fairly picked an earlier date to end royalties, and the inventor was cut off earlier than he liked. A clear agreement would have avoided litigation.   

 

Beef Up Boiler Plate

Performing on a contract can become a challenge during COVID-19 as supply chains, R&D facilities and commercial sales outlets are being exposed to physical distancing measures and other flux. Think more about boiler plate (i.e. ‘standard’ terms) that are typically buried near the end of your agreements. For example, in an international agreement, it may be more important to you to have your local law apply and be the exclusive forum for litigation. Force majeure clauses are also getting more attention – you might want to have a strict clause or a more lenient clause depending on which is more favourable to you in your own risk situation.  Consider all contract terms carefully for how they may impact you in the current environment and post-COVID. 

Use IP agreements early on and wisely in all your collaborations. Get good legal advice to make sure you dot all the i’s and cross the t’s. This expression sounds overly cautious, but there was a case just a few years ago where Rogers and Aliant litigated over the positioning of a comma in a contract clause, which affected liability for millions of dollars in royalties!   

Content shared on Bereskin & Parr’s website is for information purposes only. It should not be taken as legal or professional advice. To obtain such advice, please contact a Bereskin & Parr LLP professional. We will be pleased to help you.

Author(s):

Noel Courage Noel Courage
B.Sc. (Biochem.), LL.B.
Partner
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