Email list hosting service & mailing list manager

Re: IP Question James R. Brett 06 Dec 2001 17:37 EST


So far you have gotten fairly conservative advice on the IP question.
Here is a slightly different point of view.

The sponsor does not have a right to free use of the intellectual
property of its contractors, not even the federal government.  What is
in the contractor's head they pay for as Time; what is already built,
patented or copyrighted they pay for as Facilities, Supplies, and
Services.  It is frequently the case that professionals have developed
specialized tools, processes, survey instruments, etc., which are
patented or copyrighted for which there is an established value and they
have a right to receive that value.  And they do.

If the IP is to be improved as a stated goal of the project, then the
Bayh-Dole Act provisions will begin to apply, particularly if the
project requires that the IP be improved to successfully meet the
project goals.  If, however, the IP is to be improved incidentally to
the stated goals of the project, and if it is perfectly good for use in
the project "as is," i.e., as brought here from Sweden, then the PI can
charge for its use.  Bayh-Dole Act considerations may accrue, but are
post hoc considerations.

A conflict of interest develops in a context in which the financial
interest of the PI is seen to be greater than and/or interfering with the
project interests.  If, for instance, there were a couple of other
software products which met or exceeded the utility of the PI's
software, then he/she might be deemed to have a financial conflict
of interest.  But, if no other product is available, then the PI is
justified in using his own product and charging fair market value for
it.  After all, if the PI did not own this IP, then he/she would
necessarily have to employ someone else's product and pay for it.  I
think that common sense tells us that if the benefit of using the PI's
software is demonstrably greater than using rival products, the project
should use the software that works best ... and pay for it.  Mere preference

is not enough; there must be a demonstrably greater benefit.

Fair market value for unique products can be difficult to determine.  If
this product has never been sold on the open market, I would advise you
to do two things: first, get a reliable/expert third party to give you a
estimate of the value of the product based on "a closest approach to
function" of other regularly available products, if any, and two, to show
value only as cost-sharing on this project and perhaps the next one,
too.  If the feds don't require cost-sharing, then put it in anyway.  If
they object to the established value, listen to the reason for the
objection.  If you got good advice from your expert, you will have some
basis for continuing the conversation.  If the software has a substantial
recent sales history, use that value as a direct cost.  If the sales are
infrequent and not recent, put the value into cost-sharing.

Your PI will, no doubt, complain about the lack of consideration in all of
this.  My conservative colleagues are not wrong.  A good deal of the burden
of removing a shadow of conflict of interest rests on the person who might
benefit -- your PI.


Ruth Tallman wrote:

> Good Morning,
> We have a "sticky" situation regarding intellectural property and I
> would appreciate your counsel.  One of our faculty came to Lehigh with a
> commercial software product which he will be using and improving through
> his research activities at Lehigh.  The ownership of the product and
> future enhancements has been reviewed, discussed and documented.  The
> faculty member owns it and Lehigh doesn't want any rights now or in the
> future.
> Here's the sticky part:  the faculty member wants to charge his grants a
> license fee for two copies of the software each year.  I consider this
> "sticky" because I'm not sure that there is a large market for the
> software or if it is being marketed, at all.  Also, from the prior
> discussions, it was clear that the software will continually be enhanced
> and expanded through his work.  What should I do: make sure there are
> other customers for/users of the software and that the grants are not
> the only paying "customers"?  Confirm that the software is being
> enhanced though the work, and then restrict the license to only the
> first year for the initial "version" of the software?
> Your input would be appreciated.
> Ruth
> Ruth Tallman
> Office of Research and Sponsored Programs
> Lehigh University
> 526 Brodhead Avenue
> Bethlehem, PA  18015
> Phone:   (610)758-3024
> FAX:    (610)758-5994
> E-mail:
> ======================================================================
>  Instructions on how to use the RESADM-L Mailing List, including
>  subscription information and a web-searchable archive, are available
>  via our web site at (click on "Listserv Lists")
> ======================================================================

James R. Brett, Ph.D., Director,
Office of University Research
California State University, Long Beach
562-985-5314  562-985-8665 fax

 Instructions on how to use the RESADM-L Mailing List, including
 subscription information and a web-searchable archive, are available
 via our web site at (click on "Listserv Lists")