If a research project leads to potential financial benefits, who owns such benefits?

Question

I am deciding if I should follow the academic path or work in industry. One of the perceived benefits of academia is the ownership of your own work, be it papers or patents. I want to know how much academia and industry differ in intellectual property (IP) rights.

If a postdoc or a principal investigator (PI) works on a project and their work leads to results that can be monetized, who owns the patent and profit derived from it?

There seem to be four players at work: the postdoc, PI, the university, and the funding agency. Will the lowest ranks of these, the postdoc, be part of the patent owners?

I want to compare this to what happens in industry, so I asked a similar question at Workplace. In case the place is important, I am mainly concerned with Europe and North America.

Answer 1

This isn't a full answer, since it depends on the laws and regulations of the place of employment, including university contract rules. However, note the following.

There is a big difference between holding a patent and monetizing it. The latter is a business process, not a research process, and takes lots of inputs. Money doesn't automatically flow from the possession of a patent.

Obtaining a patent in the first place can be expensive since there are (varying) regulations governing it that normally require lawyers (plural perhaps, expensive usually).

Defending a patent against someone who wants to invalidate it can be very expensive. Even defending against someone who wants to exploit it without permission or license can be very expensive.

For university employees, as for employees elsewhere, there are often contract stipulations about patents. A typical contract provision gives the responsibility for obtaining, licensing, and defending a patent to the university itself. This is normally advantageous due to the costs entailed. Large research universities may have patent attorneys on staff or on retainer for this.

The patent may be applied for in the name of the researcher, or (perhaps), jointly in the name of the researcher and the university. Other contract arrangements are possible, and I don't know all of them. The researcher may be entitled to a portion of any profits that derive from the patent, but are normally protected against losses. The last is, potentially, a big deal.

I don't know of funding agencies who get involved in this, but that isn't outside the realm of possibility.

For your own case, if you are in a situation where it matters, start with your own employment contract. Or, consult a patent attorney.

While the patent may remain in your name only, you may be required by contract to assign some of the rights to the university (or company). Search for "Patent assignment" on google or other search engine. An example explanation is here: https://www.legalzoom.com/articles/patent-assignment-how-to-guide

Answer 2

In the US, the Bayh-Dole Act gives the university first shot at and practically encourages it to patent anything discovered using federal funding. My university organizes this in a way that the scientists that made the discoveries leading to the patent get a cut of the royalties from the licensing. You sign something when you join handing over some, but not all, of your intellectual property rights so that they can manage this.

Software is a bit different. My university mostly allows open-sourcing (good thing since the government is requiring that in some situations now), but I’ve also seen it support keeping something closed and selling licenses to companies and sharing the revenue.

Answer 3

In germany, if the inventor is employed the employer has certain rights to inventions connected with their business. This holds for both industry and academia.

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One of the perceived benefits of academia is the ownership of your own work, be it papers or patents.

This is a misconception. For many papers, the economic/exploitation rights go to the publisher (exception are the growing numbers of open access papers, where the authors typically keep these rights, but the paper being available open access of course limits the economic benefits you can get there).
Similarly, the economic rights to exploit a patent are with the owner (who can license them, again very similar to copyrigted material).

In germany, what will always stay with the author or inventor are the so-called moral rights. I.e. are and will always stay the author, you are and will always stay the inventor.

What is different is that an academic employer is far less likely to tell you to not publish your research as a paper (for inventions, they are legally forced to decide within short time whether they want to claim it or not).

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Again in germany, when you invent something, your employer (regardless of academia or industry) has the first choice for patenting it (unless it is completely unrelated to what your employer does - but you still have to give notice of this so they can decide that it is unrelated).

• If the employer chooses to patent, they will be the owner of the patent and they have to cover the costs of the patent. There is compensation to the inventor (fairly large set of rules, as a rule of thumb, the more you were expected to do this invention by your job, the more your salary is thought to be the compensation for your job as inventor. For academic research staff, there's often a percentage of the net gains the university has from the patent).

• If they choose to not patent, the invention is yours and you can decide whether to patent or not. You'll then have the full economic risks and chances.

• Public service employers (such as universities) have additional rights: instead of exploiting the invention themselves, they can claim an adequate share of the exploitation by the inventor.

• One point that needs to be kept in mind here: German universities by law do basic research - they are not supposed to do anything like industrial R&D. (That would have its place e.g. with Fraunhofer research institutes - whose patent business looks completely different)

  This inherently limits the economic perspectives of most university patents since they happen very early in the "lifecycle" of the invention.

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• A recent newspaper article about patents at German universities gives some numbers:

  84 % of the patents by universities cost more than they ever earn and the whole patent business is a net loss for universities. They say depending on how exactly the calculations are done [I assume, e.g. what staff costs and overhead are included] costs are up to 6x the income.

• I've been told by a university patent centre that their usual task is to convince academics that there is no point in patenting their invention - of which they have a hard time.

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The following is my very personal take on the situation:

I've seen some inventions patented in academia where the incentive was clearly to have a patent (for CV, institute statistics, ...) rather than economic perspective.
(E.g. one invention I'm thinking of is handy for some researchers working experimentally. However, the monetary value is limited and enforcement basically impossible unless they'd have been planning to crawl the basement labs whenever they visit another institute in order to sue institue or individual students [students are often are not employed])

OTOH, going for a patent means a patent on the publication list in addition to the paper once the patent is filed.

External costs for a patent are typically quoted in the 5 - 15 k€ range (depending on how work the patent attorney does). This is roughly 3 - 10 weeks of postdoc salary (employer's gross) - and the funding for this may even come from external sources (university budget rather than institute budget, grants). All in all (with the postdoc working a lot on the documents), the institute gets a fully counting additional entry on the publication list for less than half a year's postdoc costs, in some cases maybe much less. There are few papers to be had that cheaply.