1. KEYS TO SUCCESS NCURA Region IV Spring Meeting April 27 – 30, 2014 © 2014 National Council of University Research Administrators National Council of University Research Administrators

2. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Dawn Underwood, Director, Office of Sponsored Programs Indiana State University Melony A. Sacopulos, General Counsel and Secretary of the University, Indiana State University

3. Terminology Grant, Contract or Cooperative Agreement? Participation differences.. Differences in deliverables… A contract is a “purchase” of good or services. Payment depends upon completion of milestones. @ 2014 National Council of University Research Administrators

4. Contracts with Industry Company wants all intellectual property rights Company wants university to agree to strict confidentiality clauses Company might expect insurance levels that universities don’t have Semester timeline and industry timeline issues Faculty are not hourly employees @ 2014 National Council of University Research Administrators

5. Contracts with States States often have contract boilerplate language Signatures may be delayed several months due to admin processes We cannot agree to jurisdiction in another state or to abide by the laws of another state @ 2014 National Council of University Research Administrators

6. Federal Contracts Some are cost reimbursement contracts, some are fixed-price contracts. The type of work to be performed is an important point to consider. Is it research? Is it a service?

7. Definitions FAR= Federal Acquisitions Regulations DFARS= Defense Federal Acquisitions Regulations Supplement Simplified Acquisition Threshold (SAT)= usually $150,000. For contracts and purchases less than the SAT, certain clauses do not have to be incorporated into the agreement.

8. FAR Clauses in Federal Contracts Contracting officers must follow prescribed rules for inserting or not inserting certain clauses into agreements. Go to http://www.acquisition.gov/far/ FAR matrix is 32 pages long. But are they applying it correctly to the project?

9. DFARS Contracts from the Department of Defense incorporate clauses from the FAR as well as the DFARS. In many cases, the clauses are nearly identical. However, sometimes they vary.

10. Contract Received, Now What? As with any contract, you will need to review the terms and conditions of the award. You will either accept the terms of the contract or negotiate more favorable terms. FAR and DFARS clauses are usually NOT written out in the contract document, but are incorporated by reference and listed by clause number.

11. Your Approach to Review You don’t want the government treating you like a vendor or a provider of a commercial service. If you do, you will potentially be subject to all sorts of things like export controls, excessive insurance requirements, intrusive inspections, etc. Universities don’t guarantee the outcomes of R&D efforts.

12. Sample Clauses Patent Rights 52.227-11, implements the Bayh-Dole Act Rights in Data- General 52.227-14, ask for Alternate IV, this alternate allows university ownership of copyrights for R&D. Patent Indemnity 52.227-3, you don’t want to agree to this! Instead, you want clause 52.227-1, Alt I.

13. Sample Clauses, cont. 52.215-2, Audit and Records, ask for Alt 2 to incorporate OMB A-133. 52.223-6 Drug-Free Workplace, generally acceptable. 252.223-7004 Drug-Free Workforce, generally NOT acceptable to universities. Requires random drug screens, etc.

14. Sample Clauses, more… 52.246-9 Inspection, this clause gives inspection rights to govt. DO NOT agree to 52.246-7 or 52.246-8, unless you have inspection systems, provide warranties of your work, etc.

15. Our experience ISU received a contract for services from a company, a subcontract of Department of Defense funds – 127 FAR and DFARS clauses incorporated by reference! – Contract document included indemnity clauses, professional liability insurance requirements, export controls, additional terms in the work order.

16. Negotiation Outcomes Indemnity Clauses modified Insurance requirements modified Export controls clause deleted FAR and DFAR incorporation reference edited to incorporate clauses “as applicable”. Collaborative discussion about concerns, with a follow up email Discussions with other institutions

17. TOOL FOR REVIEW http://www.ucop.edu/raohome/clauses/guidance.html Research Administration Office of the California System offers this database to assist in the review of FAR/DFARS clauses. Still, reading the clauses is often necessary.

18. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Some fundamental concepts in patents as they relate to university research: 1.Patent law stems from Constitutional authority, Article I, Section 8. The laws are codified in Title 35 of the U.S. Code.

19. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 2.A patent does not grant rights to the patent holder to produce or manufacture the product; it only imbues the patent holder with the right to exclude others from doing so.

20. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 3.Three requirements to be patentable: a.New: This means novel in relation to the prior art in the field. Prior art refers to information publically available prior to the alleged discovery by the inventor. b.Useful: This is a relative term, and even things that are amusing can be useful. This is not a difficult hurdle to jump.

21. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators c. Non-obvious: This means that the item must be non-obvious to a person of ordinary skill in the field. This requirement is treated virtually identically to the “new” requirement in that prior art is used to determine what might be obvious to a person skilled in the art.

22. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 4.There is no “work made for hire” doctrine in patent law. a.Employee who creates an invention within the scope of his employment is the inventor. b.Have to make specific, written assignment to employer.

23. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 5.Two types of application: a.Provisional: Place holder; contains no claims and a moderate filing fee. Establishes early effective filing date and have to file non- provisional application w/I 12 months. b.Non-provisional: This is a standard application and involves examination by the patent office. Patents are issued from non- provisional applications. 20 year life.

24. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 6.All joint inventors must sign the patent application, no more and no less. a.Even after issuance, patent can be deemed invalid if it does not properly identify the inventors, or does not list the joint inventors.

25. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 7.An inventor must expressly grant his rights in an invention to his employer if the employer is to obtain those rights.

26. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 8.In certain situations, Congress has divested inventors of their rights. a.Nuclear material and atomic energy b.NASA contracts c.Dept. of Energy contracts d.Executive Order 10096 – federal employees conducting research

27. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators 9.Bayh-Dole Act (1980) a.Promote utilization of inventions arising from federally supported research b.Promote collaboration between commercial concerns and nonprofit organizations c.Ensure Government obtains sufficient rights in federally supported inventions

28. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators The Bayh-Dole Act allocates rights in federally supported inventions between the government and the federal contractor. It applies to any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement.

29. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators The government receives from the contractor a nonexclusive, nontransferable, irrevocable, paid-up license to practice the subject invention. The government also possesses “march-in rights,” which permit the agency to grant a license to a responsible third party under certain circumstances, such as when the contractor fails to take effective steps to achieve practical application of the invention.

30. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators When the contractor does not elect to retain title to a subject invention, the government may consider, and after consultation with the contractor, grant requests for retention of rights by the inventor.

31. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators To elect to retain title to a subject invention: Contractor must disclose each subject invention to the agency within a reasonable time. Contractor must make a written election w/i 2 years after disclosure. Contractor must file a patent application before any statutory bar date.

32. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators It is very important to understand that an invention of the contractor in the context of Bayh-Dole does not automatically include inventions made by the contractor’s employees. The U.S. Supreme Court has held that the Bayh-Dole Act does not automatically void ab initio the inventors’ rights in government-funded inventions.

33. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Further, The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.

34. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators University rights in patents usually stem from university policies that require employees to assign inventions made in their capacity of employees to the university. Or, employees sign contracts promising to make such assignments.

35. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators But beware: a promise to assign is not the same as an actual assignment. “I agree to assign my right, title and interest in inventions resulting from my employment” doesn’t actually make the assignment. “I will assign and do hereby assign my right, title, and interest in....” is an assignment.