Before delving further, it is important to note the differences between university-based incubators and other traditional models. Such differences impact how legal matters are addressed. NUCEE operations director Greg Dalle-Molle enumerates three differences that are specific to Northeastern’s IDEA, but may resonate with other university programs:

I can’t speak for all university programs but as it relates to Northeastern’s IDEA Venture Accelerator I would mention the following differences: (1) Student led—the IDEA venture accelerator was founded by students seven years ago and has been student led ever since. Each year the faculty/staff advisors hire a student to be the CEO and that person, along with a team of about 20 student volunteers, is responsible for the day to day operations of the accelerator. (2) Educational mission—in a university setting it’s not enough to simply focus on launching successful companies. Having an education component to our mission means maintaining a balance between finding successful ventures and giving all participants the opportunity to learn by doing. (3) No equity taken—to keep the model open and accessible to all Northeastern community members, IDEA does not require that companies give up ownership to participate.

Of these differences, the one with the biggest legal ramifications is the fact that IDEA is student led. Considering IP law and a university’s relationship with its student entrepreneurs adds another layer of complexity that is unique to university-based incubators.

New Entrepreneurs’ Conceptions of IP Protection

At least twice a week, a student venture client would meet with the IP CO-LAB and ask about “‘patenting’ my business name” or “‘trademarking’ a device.” While anecdotal in retelling, these interactions underscore the importance of IP education in an entrepreneurial environment. In some instances, providing a memo on patents with information tailored to the venture’s industry served as an eye opener for the client. At the other end of the spectrum, one client had already filed a provisional patent application and was prepared to hire an attorney to file a utility application after receiving a memo with information detailing the concepts of patent-eligible subject matter, prior art, and disclosures. This poses a challenge for law clinics, as their clients bring a wide array of IP sophistication. Listening, researching, and providing digestible information makes the level of venture sophistication less of a factor for servicing law clinic clients on a day-to-day basis. This also helps ensure that each venture is getting what it needs depending on its understanding of IP issues. Another challenge in the clinic setting is managing expectations and being clear on limitations, because student clinicians only offer information. Student clinicians cannot give legal opinions, which the student ventures often sought.

Reinforcing the Importance of IP

Most university business courses do not cover intellectual property in a substantive manner. Thus, many of the student ventures’ first encounter with any legal help is with an attorney, law clinic, or a law student provided by the incubator. Northeastern’s IP CO-LAB offers business- and arts-focused IP lectures for both graduate and undergraduate business students. These include content-specific lectures for innovation, marketing, engineering, and film courses. More specifically, the IP CO-LAB offers utility patent lectures for use in innovation and engineering courses, and trademarks and copyright lectures for marketing, design, and film courses. The lectures are designed to make students comfortable with the appropriate IP concepts when starting a new venture or creating a product or artistic work. Emphasizing the importance of protecting intellectual property is the main concept. However, each lecture contains relevant facts about specific types of intellectual property tailored to each audience’s needs. The IP CO-LAB serves all of the colleges at Northeastern University including the College of Arts, Media and Design (CAMD), an audience where technology is not the main focus. One CAMD-related special lecture covered copyright protection for a filmmaker’s work. It also provided an introduction to licensing music to be used in a film. Another special lecture detailing copyright law and trade dress was developed and delivered to SCOUT, CAMD’s student-led design team that focuses on creating logos, marketing materials, websites, and packaging designs for student ventures in IDEA.

Outside of arranged special lectures, the IP CO-LAB allows law students to gain practical experience with building a client base by sending its members to events on campus where entrepreneurs and artists would meet. This often leads to an initial client interview of a student venture, after which the clinic decides whether it can take on the client. If a client is accepted into the clinic, the law student clinician schedules follow ups and check-ins as needed, culminating in a memo and closeout meeting at the end of the semester.

The joint legal officer position at NUCEE and IDEA is a little different than the IP CO-LAB clinic experience. “We hire a law school student to be our ‘Legal Officer.’ This role is designed to be the first point of contact for all legal matters. As a student, the Legal Officer can work with the venture to provide basic legal information and refer them to one of our partner law firms if advice or legal work is needed and appropriate,” says Dalle-Molle. The legal officer holds daily office hours for walk-ins and often has time-sensitive deadlines. Intellectual property is the focus of the work as it made up about 80 percent of matters (generally patent and trademark related), with entity formation accounting for the remainder. Still, like the IP CO-LAB, the legal officer is limited in how he or she can serve clients because law students are not able to give advice. Even with this limitation, the legal officer has become an integral role in the university’s entrepreneurship ecosystem because it provides IP education not offered in business courses. As Dalle-Molle notes, “Most frequently, [IDEA is] seeing a desire to pursue a patent or protect a brand.”

The ventures’ respective industries range from food and textile products to mobile apps and advanced medical devices. Despite the wide range of industry types, patents are often the topic of discussion. Nonetheless, a fair share of ventures are concerned with brand protections, particularly when it became clear that patent protection was not available at the stage of venture development. One such IDEA venture is Cardly, a cell phone pocket startup. This business was started by current Northeastern University undergraduates Giovanni Armonies-Assalone and Connor Gross in 2016. Cardly enjoyed first-year sales of $100,000. The startup found it difficult to navigate the trademark application process before utilizing the legal officer of NUCEE and IDEA and IP CO-LAB. “The process by which [Cardly] began to obtain [a trademark] became daunting once we visited the government site [to] register. The application process wasn’t that intuitive and the process on hearing back for confirmation or rejection felt like staring into an abyss,” recalls cofounder Gross. He continues, “When filing for a trademark, we weren’t sure if a design or basic text trademark would suffice, and working in a competitive field—we wanted to make sure that customers knew that they were receiving a Cardly product as opposed to an imitator knock-off product.” Cardly’s experience with filing a trademark application without any assistance compelled the cofounders to utilize the free legal assistance offered by IDEA, and they were ultimately referred to the IP CO-LAB by the legal officer. “We’ve been able to work with the IP CO-LAB here on campus to research new product ideas and explore any possible patents that might exist that would prohibit our ability to develop new products,” Gross explains.

Cardly’s main concerns were protecting its brand and learning about prior art when developing a new product. Many IDEA ventures have similar concerns, but the differing nature of each venture can unearth complicated university-specific issues. One recurring issue is ownership of intellectual property created with substantial use of university resources. The nuances of ownership and licensing often require ventures to critically look at the resources and/or input that went into creating their intellectual property.

University Ownership Issues

As mentioned, patent information ranks among the most requested types of information in a university venture ecosystem. Numerous ventures affiliated with IDEA work in the sciences. Engineering and laboratory-based ventures face the question of whether they must disclose their invention to the university so ownership can be evaluated.

This question is complicated by student service providers such as student-led engineering studios and student-led design studios. At Northeastern, these types of resources are part of a larger university network that are available to IDEA ventures for free. Generally, student service providers retain their IP rights even though they only use the works as part of their portfolio after providing ventures with agreed upon deliverables. The university has an agreement with each student service provider, and the student ventures are essentially given a license to use the deliverables subsequent to the agreement between the university and the student service provider. Even though this is a complex concept for most of the new entrepreneurs utilizing IDEA’s resources, there is a collegial understanding of the university’s startup culture, and issues appear to be few and far between.

Federal Funding Complicates Ownership

Universities across the nation take different approaches when assessing IP ownership,¹ but it is important to note that most institutions are not in the business of trying to own anything and everything students create even if they have the legal right to do so.

Still, complications do arise. For example, a student may use specialized machinery not accessible to most students to develop a product for a venture. An engineer might also need access to expensive or proprietary software that is not available to the majority of students on campus. On top of this, a faculty member may offer his or her expertise in a substantial manner and/or provide access to a federally funded laboratory. Each additional resource can seemingly add a layer of complexity when assessing ownership of intellectual property.

One of the more prevalent issues is the use of federally funded laboratories or specialized university resources that may give a university a stake in the IP rights. Or, such uses are thought to trigger agreement clauses resulting in an assignment to a university that is acting as a government contractor. There are usually measures in place alerting students as to when disclosure of their invention or work to the university might be necessary, and students need to work with a non-university attorney when navigating these matters.

These circumstances are relatively unique to university-based incubators, and each venture’s specific situation is dependent on factors that are often not evaluated in a new entrepreneur’s business plan. Assessing the ramifications of acquiring and using resources takes a backseat to the initial tasks of acquisition and use. The ramifications assessment is often made once an issue is already on the horizon.

From Campus to Court

Sometimes the complexity of IP ownership cannot be parsed out on campus and litigation becomes necessary, as was the case in Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc.² In this case, the United States Supreme Court affirmed the Federal Circuit’s holding that a research fellow’s federally funded HIV research and invention was not owned by the university because the Bayh-Dole Act³ does not trigger the vesting of an invention’s rights to a federal contractor (in this instance the university). Such vesting would disrupt “the basic principle of patent law that inventors own their inventions.”⁴ Thus, even in the university setting, in a federally funded lab subject to the Bayh-Dole Act, the need for a written assignment of rights by the inventor, who reduces the invention to practice, stands.⁵

This rule was recently applied in Allergia, Inc. v. Bouboulis, where the Southern District of California granted partial summary judgment for a defendant inventor claiming one-third ownership of a patent based on the fact that the defendant is one of the three listed inventors.⁶ While the defendant inventor had collaborated with the plaintiff, there was insufficient evidence at the time of summary judgment that the defendant had conveyed any rights to the invention over to the plaintiff in writing. Allergia referred to the Roche Molecular Systems Court’s assertion that “[i]t is a basic [tenet] in patent law that ‘the rights in an invention belong to the inventor.’”⁷ Roche Molecular Systems deals with a research fellow’s relationship to a university, but this scenario can be transposed onto a student venture situation if they are working with a research fellow or professor who is receiving federal funding—a scenario not uncommon in the life sciences or medical device fields. This decision might have ramifications as to how and if universities hire student researchers who have entrepreneurial aspirations.

Conclusion

University-based incubators breed complex scenarios like the one in Roche Molecular Systems. That case highlights how important it is for students and universities alike to be clear on who is considered an inventor, the terms and ramifications of any contracts and agreements, and what licenses are granted. Student ventures derive value from their IP assets, and it is important that they learn how their IP strategy can be complicated by the very resource that makes the venture possible, the university.

Endnotes

1. Bryce C. Pilz, Student Intellectual Property Issues on the Entrepreneurial Campus, 2 Mich. Bus. & Entrepreneurial L. Rev. 1, 22 (2012).

2. 563 U.S. 776 (2011).

3. 35 U.S.C. § 202.

4. Roche Molecular Sys., 563 U.S. at 793.

5. Id. at 789 (holding that employment is not enough “to vest title to an employee’s invention in the employer”).

6. No. 14-CV-1566 JLS (RBB), 2017 U.S. Dist. LEXIS 90844, at *22 (S.D. Cal. June 13, 2017).

7. Id. at *22 (quoting Roche Molecular Sys., 563 U.S. at 785).