Intellectual property (IP) is usually defined broadly to include inventions, discoveries, patentable works, know-how, show-how, copyrightable works, trademarks, trade secretes, and creative or artistic works. Intellectual properties include research papers, books, software programs, new inventions, journal articles, etc.

IP policy at Virginia Tech (Policy no. 13,000) provides that scholarship belongs to the author(s) and the results of research will be assigned to the university. 

Under federally funded agreements, ownership and rights to IP are covered by the Rights to Data provisions and the Patent clauses. Under non-federally funded research agreements, IP ownership is negotiated.  Virginia Tech retains ownership to its IP, but will negotiate terms and conditions for its use and licensing.  Virginia Tech can enter into these agreements on IP because Virginia Tech researchers are required to assign any ownership of research to the university. (See Patent Notification and Reporting)

VTIP is a separate not-for-profit corporation affiliated with Virginia Tech. VTIP was established to evaluate, protect, market, and license the IP that results from research. Virginia Tech assigns ownership of IP developed under our research agreements to VTIP for management.

VTIP assists Virginia Tech researchers in identifying and disclosing inventions. VTIP assists OSP by providing the notification and reporting to the federal government and sponsors that is required by our research agreements. However, remember that you may have additional annual (or other periodic) reports that you are required to provide under the contracts.

Virginia Tech retains ownership of any IP it creates; the sponsor retains ownership of any IP it creates; the parties have joint ownership of jointly created IP.  In regard to Virginia Tech’s IP, we will grant the Sponsor options to:

• Subject to sponsor defraying patenting costs, if any, Sponsor may obtain a nonexclusive, nontransferable (except to Sponsor subsidiaries), royalty-free license to any IPs generated by the project, or
  
  
• Subject to University's right to use for noncommercial and research purposes, Sponsor may negotiate a royalty bearing exclusive license on terms and conditions to be determined, for any IPs generated by the project. 
   
• The option period is 6 months.

State and federal laws place restrictions on the university’s ability to grant rights to intellectual properties that are developed under research agreements as discussed below.  Because of the federal IRS requirements, all colleges and universities have the same problem with assigning ownership of IP to the sponsor.  The language provided is drafted around the IRS requirements and gives an option to obtain a royalty-free nonexclusive license or to negotiate an exclusive royalty-bearing license when the technology is available. The laws which limit our flexibility on IP rights are:

1.  Virginia law:  Code of Virginia, Section 23-4.3 allows an institution to transfer rights to intellectual property to either Virginia's Innovative Technology  Authority or to an entity whose purpose is to benefit the respective institutions (Virginia Tech established a nonprofit organization for this purpose, i.e. Virginia Tech Intellectual Properties, Inc.--VTIP).  No other transfer can be made without the prior written approval of the Governor of Virginia.

2.  Federal law:  IRS Code restrictions on private research under 141(b) of the IRS code 1986.  The majority of the university's research facilities have been financed with income from state or local tax-exempt bonds.  The IRS code provides that there may be "private use" of property that would impact this tax exempt status.  Private use could result if the facilities are used to perform private research.  This would result in the bonds loosing their tax-exempt status. 

The IRS has provided two safe harbors from this rule in Rev. Proc. 97-14.

Private Sponsored Research   In Rev. Proc. 97-14, the IRS allowed exception from private use for corporate-sponsored research if any license or other use of the resulting technology by the sponsor is permitted only on the same terms as the recipient would permit that use by any unrelated, non-sponsoring party.

·         The sponsor must pay a competitive price for its use.

·         The price paid for that use is determined at the time the license or other resulting technology is available for use

·         Sponsor can get exclusive rights to the IP, but the price paid by the sponsor must be no less than the price that would be paid by any non-sponsoring party for the same rights.

Intellectual Property

1.      Title and Ownership

a.                  Title and ownership of any intellectual properties, whether or not copyrighted, patented or patentable, or otherwise, created solely by VIRGINIA TECH researchers shall remain with VIRGINIA TECH.

b.                  Title and ownership of intellectual properties, whether or not copyrighted, patented or patentable, or otherwise, created solely by Sponsor shall remain with the Sponsor.

c.                   Title and ownership of intellectual properties created jointly by Sponsor and VIRGINIA TECH researchers shall be owned jointly.

VT may, in its sole discretion, assign ownership of any or all of its right, title and interest in such intellectual properties to Virginia Tech Intellectual Properties, Inc. (VTIP, an affiliated co-party of Virginia Tech) subject to the terms of this agreement.

2.      Option

VIRGINIA TECH hereby grants Sponsor a 6-month first option to:

a.                  Subject to the Sponsor defraying patenting costs, if any, obtain a nonexclusive, nontransferable (except to the Sponsor’s subsidiaries), royalty-free license, to any intellectual properties generated by the research; or

b.                  Subject to VIRGINIA TECH’s right to use for educational, noncommercial, and research purposes, negotiate a royalty-bearing exclusive license on terms and conditions to be determined, for any intellectual properties generated by the research.

The option described above shall terminate six (6) months after the termination date of the project.