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University of Wisconsin–Madison

Background Intellectual Property

Background IP has been created by university inventors using funds from other sources than a newly proposed sponsored project. These earlier sponsors may include the Federal Government, State of WI, University, other commercial sponsors, and WARF. In addition to a breadth of funding sources, other university inventors including faculty, staff and students may be associated with background IP.

The identification of background IP and the provision of appropriate rights to use these earlier inventions are important issues for both sponsors and the University. However, the identification of background IP during negotiation of a new sponsored research agreement is a difficult undertaking because WARF holds a diverse portfolio of potentially related IP, including that of inventors not involved in a newly proposed sponsored project. Forward projection on creation of new IP also gives significant uncertainty regarding the scope of background IP rights needed, the inventors involved, and their value.

Broad requests for background rights that may include any IP owned by WARF, any IP in a certain technology area, or any IP in which a particular researcher is named as an inventor are not appropriate. For example, granting a broad nonexclusive license to all background IP in a certain technology area may inadvertently and disproportionally benefit the researcher receiving the industry sponsorship at the cost of other inventors of included background IP. Also, in order to maximize the opportunity to encourage investment in early stage technology, which is the typical status of nearly all University-created IP, exclusive rights are often necessary. This is especially true for start-up companies. A broad nonexclusive license provided to another industry sponsor undercuts this opportunity.

Consequently, specificity in the identification of relevant background IP is needed. UW–Madison and WARF agree that providing appropriate licenses to companies to practice unencumbered background IP is good policy and provides an opportunity to enter into new licensing relationships. The following guidance on background IP is given.

  1. Background IP should be licensed in an agreement separate from the sponsored research agreement. Granting any rights to background IP in a separate license has been acknowledged as a best practice among technology transfer offices, ensures that all inventors are included in consideration of the background IP, and makes the license easier to track and update as needed.
  2. The scope of the license should be defined in terms of type (research versus commercial), field and duration such that the sponsor requests only what it needs and intends to use. Tailoring the scope of the license further permits any payments or other considerations to be more easily assessed and appropriately adjusted and thus more easily understood by both parties.
  3. A license must be in exchange for fair consideration. While granting cost-free background IP licenses to for-profit corporations in order to encourage sponsored research funding benefits the individual researchers receiving such funding, it is potentially to the detriment of another inventor of the background IP. It also negates the revenue stream normally associated with licensing of IP, which benefits the entire University community through the WARF gift.
  4. Because identifying background IP that may be relevant to a proposed scope of work is challenging, the inventor, WARF and sponsor have a shared obligation to determine what background IP rights are needed.