Research Agreements with Northwestern – A Guide for Industry
Northwestern University has a history of cooperation with industry in the support of research that is consonant with our missions of teaching, research, and public service. Cooperative efforts are encouraged because they produce mutual benefits as well as benefits to society. Industry support contributes to the education of scientists, engineers, and others and also to the development of technologies that can be put to practical use by society. Facilitating the transfer of technology is an important goal of the cooperative university-industry relationship.
One of the primary purposes of Northwestern University is to carry out research to advance the frontiers of science and technology and to further educational programs. Instruction and research are interdependent; both suffer when dealt with separately. Northwestern’s research projects should be of intellectual interest to the faculty and be conducted under the direction of the faculty.
Industrial sponsored research projects must maintain a balance between the university’s pursuit of research as an integral part of the educational process and industry’s search for useful knowledge to be applied toward the development of products, processes and services. A valuable benefit of industry/university cooperation is to provide additional research and thesis opportunities for students. Northwestern University does not enter into agreements to conduct “secret” or “classified” research.
Northwestern University is a private institution of higher education. All research agreements are to be issued to “Northwestern University.” Further, non-disclosure agreements are to cover and be signed by Northwestern at an institutional level rather than individual faculty investigators.
Authority to Contract
While initial discussions between industrial sponsors and Northwestern University faculty or senior research staff occur in a variety of ways, no program or project may be established or undertaken unless a carefully defined research proposal, including a budget, has been submitted through the university’s internal review procedures, and an acceptable funding agreement has been negotiated and signed by the authorized representatives of both parties.
Authority to negotiate and execute awards for research on behalf of Northwestern University is delegated to the Sponsored Research. The authorizing official for Northwestern University is the Executive Director of Sponsored Research or her designee. Northwestern University does not honor contracts or commitments made on its behalf by unauthorized individuals.
Standard Research Agreement
Northwestern’s Standard Research Agreement is available to provide to collaborators before formal negotiations occur. It offers terms that Northwestern could endorse with efficiency. Formal negotiations (including any negotiations involving detailed budgets) must involve Sponsored Research.
Negotiating Corporate Research Agreements
The Innovation and New Ventures Office (INVO) assists Sponsored Research with the review and negotiation of complex intellectual property language to ensure protection of intellectual property rights, but OSR is ultimately responsible for executing the agreements. If an invention stems from corporate-sponsored research, the PI is responsible for disclosing the invention to INVO in compliance with Northwestern’s Patent and Inventions Policy. INVO will send a copy of the invention disclosure to the sponsor within 30 days of receipt and follow-up with patent filings, when appropriate.
Publication Policy and Confidentiality
As a non-profit research university, Northwestern strongly adheres to the principles of academic freedom stated by the American Association of University Professors (AAUP). Our faculty is entitled to full freedom in research and in the publication of the results of sponsored research.
Thus, Northwestern does not enter into research agreements that prevent or restrict its ability to publicly disclose the methods, data, and results of research projects, either in the context of written academic publications or public presentations.
However, we understand that companies place significant economic and competitive value on their proprietary information. Frequently, companies sponsoring research must share their proprietary information with Northwestern in order for its faculty and personnel to conduct the research in question. Almost as frequently, we must share our own proprietary information with the sponsoring company for the same purpose. Thus, Northwestern and its sponsoring companies enjoy a relationship of mutual trust, and each endeavors to protect the other’s confidential information to the fullest extent consistent with the law and internal policies.
Our standard research agreement defines the scope of confidential information and establishes safeguards against disclosure. To qualify, information or documents should be clearly marked as confidential when disclosed. If the information is first disclosed orally, it should be confirmed in writing as confidential shortly thereafter. These requirements make sure that the relevant individuals know what particular information is confidential and should be protected. As the agreement explains, disclosed information may not be confidential or may subsequently lose its protection for a number of reasons. As a best practice, Northwestern and the sponsoring company will enter into a separate Non-Disclosure Agreement (NDA) specifying the parties’ non-disclosure obligations in more detail before sharing confidential information. The NDA should specify a clear end date for confidentiality and non-disclosure obligations.
To balance competing concerns of confidentiality and academic freedom, Northwestern provides the sponsoring company with a copy of any proposed publication or research presentation before submission to the public. The company then has a reasonable period of time to redact any confidential information (excluding the core method and results of the research, which are not confidential). If the publication contains information that may later form the basis of a patent application, the company may also request that we delay publication for a reasonable time. After that period, Northwestern submits its materials for publication or presentation, with confidential information redacted.
Although sponsoring companies have the right to redact their confidential information from proposed publications, the content of the publication is within Northwestern’s sole, objective editorial control and cannot be influenced or modified by the sponsor company.
Finally, there is a distinction between “publication” in the academic sense and in the broader business sense. Although our faculty has full control over academic publications, we welcome the input of sponsoring companies in the context of press releases, advertising and marketing materials, and public relations. The university understands that companies may want to restrict use of their name, trademarks, and products in Northwestern promotional materials. We do request, however, the ability to provide minimal information about the company and its funding for public reporting services such as university annual reports and information submitted to U.S. News and World Report.
A basic aim of Northwestern University’s intellectual property policy is to promote the progress of science and technology, to assure that discoveries and inventions are used to benefit the public, and to provide appropriate royalty revenues to the university inventor.
Generally speaking, ownership of inventions created pursuant to sponsored research should depend on which individuals that created the invention. That is, Northwestern solely owns all inventions developed solely by Northwestern personnel. The sponsoring company solely owns all inventions developed solely by the company’s personnel. And inventions developed by a combination of individuals from Northwestern and the company are jointly owned by the two parties. This rationale comports with the legal concept that each joint owner is responsible for conceiving some aspect of the invention.
Licensing terms and restrictions will depend heavily on the circumstantial facts, including the likelihood of developing patentable inventions, the likelihood of commercial success, whether either party owns “background IP” necessary to practice the inventions, the nature of the sponsoring company, the scope of its field of use, and other current or future contemplated business plans.
At a minimum, it is imperative that Northwestern retain the ability to use university and joint inventions for research and educational purposes. Indeed, if funding for the research project flows from a federal agency or grant, Northwestern may retain such licensing rights under the Bayh-Dole Act (35 U.S.C. § 200 et seq.). Beyond that, our default position is to grant the sponsoring company a non-exclusive, royalty-free license to inventions and the option to negotiate in good faith an exclusive, royalty-bearing license. Any limitations to a license the parties can agree upon, such as restricting the license to the company’s field of use, will inform the negotiations and the reasonable royalty to obtain such a license.
Northwestern prefers to take the lead in prosecuting university and joint intellectual property applications. Our Innovation and New Ventures Office (INVO) maintains a knowledgeable staff of invention managers dedicated to prosecution and licensing. Given our status as a non-profit research institution, Northwestern prefers that prosecution and maintenance costs are covered, at least in part, by the sponsoring company. The degree to which the sponsoring company bears invention costs will help inform the terms of any licenses granted.
Northwestern prefers that the parties retain the freedom to grant sublicenses to their respective inventions freely and to joint inventions with the other party’s prior approval.
Further information about patent, copyright, and licensing policies can be obtained by contacting the Innovation and New Ventures Office (INVO).
Costs and Funding Options
Northwestern prefers a cost-reimbursable framework for funding research, under which the sponsor company reimburses Northwestern on a monthly basis for invoiced costs as allowed under the terms of the budget. This framework facilitates transparency in communicating costs and expenses and flexibility in planning to protect the quality of the research. Additionally, the final cost may be less than under a fixed price arrangement because unspent funds are retained by the sponsor.
Alternately, the parties can agree upon a fixed-price arrangement based on the best estimate of costs needed to complete the research, which can be adjusted if the parties agree or if the sponsor requests additional work. This approach provides the sponsor company with more financial certainty than a cost-reimbursable agreement. However, Northwestern would retain the balance of funds if the research is completed under budget.
Additionally, depending on the budget and the scope of investment needed, a technology fee comprising a certain percentage of the budget can be negotiated to provide the sponsor company additional rights to developed intellectual property and technology.
Regardless of the framework, industry grants and contracts which support sponsored projects should include both direct and indirect costs. Current fringe benefit and indirect cost rates and bases are available on the Sponsored Research website at http://osr.northwestern.edu/proposals/budget-fringe-rates. Where Northwestern is a subcontractor to an industrial firm under a federally sponsored program, the current federally negotiated indirect cost rates and fringe benefit rates will apply.
Liability, Risk and Reasonable Best Efforts
Since research by its nature is unpredictable and influenced by unknown factors, Northwestern conducts research on a reasonable “best efforts” basis and consistent with academic standards of quality. Northwestern cannot accept contract provisions that guarantee results, impose penalties for failure to make progress by firm deadlines, or provide for withholding of payment if the sponsor is not satisfied with the results.
It is the University’s expectation that each party will be responsible for and will indemnify the other party against its own negligent acts or omissions. Because Northwestern is a non-profit academic institution, its potential liability arising from any research agreement should be limited to the total amount of funding received in connection with that agreement. In addition, the University cannot accept contract provisions requiring the University to carry liability insurance in addition to the types and levels established by the University’s Office of Risk Management.
Northwestern is committed to openly conducting research that is not classified or secret and that falls under the fundamental research exception to United States export control laws. Nevertheless, it is the University’s expectation that each party will adhere to all applicable control laws and regulations and will be responsible for regulating its disclosure of controlled information as necessary.
The University’s policies pertaining to health and safety (such as those governing protection of human research participants, bio-safety, occupational and environmental protection and animal welfare) are applicable to all research conducted at Northwestern University. Projects are also conducted in conformance with equal opportunity and affirmative action principles. Northwestern University has strong financial management programs that insure careful control and accountability of all expenditures and high standards of performance in all research projects.
Conflicting Interests or Obligations
Northwestern’s conflict of interest policy and procedures govern requirements for investigator financial disclosures.
Northwestern University does not accept contracts with blanket provisions which preclude the investigator or the university from performing research for others in related areas. Any concerns about disclosure of proprietary information should be addressed in the research agreement and, preferably, a separate non-disclosure agreement.
Each party should be able to terminate a funding agreement freely and for any reason. In the event a funding agreement is terminated before the project is completed, the sponsor will be expected to reimburse the university for all costs incurred through the date of termination and for all non-cancellable obligations.
Governing Law and Dispute Resolution
Under University policy, Northwestern’s research agreements are to be governed by Illinois state law or, alternately, should remain silent on the issue. Given the large number of contracts and agreements that the University enters into every year and the limited resources of its legal department, it is not feasible for Northwestern to conduct business under 50 differing sets of state law or to risk travel costs for cross-country dispute resolution. Further, Northwestern’s primary goal is to facilitate industry partnerships, and given that only a very small percentage of research agreements devolve into litigation, we prefer to streamline the agreements where possible and address the logistics of dispute resolution in the unlikely event it later becomes necessary.