Reproduced from the CAMBRIDGE UNIVERSITY REPORTER of 18 March 1987
Commercial exploitation of inventions funded by Research Councils:
Notice by the General Board
26 February 1987
In May 1985 the then Chairman of the Science and Engineering Research Council wrote to universities on behalf of all the Research Councils asking whether they wished to assume the rights and responsibilities relating to the exploitation of inventions arising from work funded by the Councils; and, if so, to provide information on the arrangements they had made or proposed to make. This enquiry was made as a result of the abolition of the monopoly previously held by the British Technology Group for arranging the exploitation of Research Council funded inventions. The University's proposals, outlined in a letter dated 17 October 1985 from the Secretary General of the Faculties to the SERC, have now been approved on behalf of all the Research Councils for a period of three years from 23 July 1986. The University is therefore responsible for ensuring that inventions of any kind derived from projects supported by any Research Council are exploited, to the benefit of the inventor and the University.
The General Board propose, in order to fulfil these responsibilities, to require all University officers and unestablished research workers to sign an appropriate undertaking when they accept an offer of a Research Council grant or an offer of appointment supported by such a grant, as the case may be. The undertaking will state that the person concerned agrees to consult the Wolfson Cambridge Industrial Unit on the possibility of exploitation of any invention before disclosing it, and, if requested, to assign his or her rights in such intellectual property to the University or its nominee in return for an equitable share of the proceeds of exploitation. The Wolfson Unit will, in consultation with the inventor(s), arrange for inventions to be offers to appropriate organizations for feasibility studies, market research, and patenting. The Unit has already developed links with a range of such organizations. If a way of exploiting any invention is not found within a reasonable period, the rights will revert to the inventor.
The Board do not propose to make any change in the present policy of the University that it should not itself hold patents. Members of the University may, however, arrange through the Wolfson Unit for patents or copyright to be assigned to the University's company, Lynxvale Ltd. A note on the operation of Lynxvale is attached as Appendix A to this Notice.
The Board believe that it is important that the arrangements made by the University for the exploitation of inventions should provide a significant incentive to the individual inventor, as well as a financial benefit to the University itself. They therefore propose that income received by the University from commercial exploitation, in the form of royalties, licence fees, etc., should normally be divided between the inventor, for use at his or her discretion, the Department or other institution in which the work was carried out, and central University funds. A proposed division, similar to that recommended by the Research Councils, is given in Appendix B. Income received by a Department would be allocated at the discretion of the Head of the Department, in the same way as income from overheads is at present. The Board intend that a significant part of any additional income received by the University should be used to allow some improvement to be made in the provision for expenditure on equipment, minor works, and other items of research support. The Board expect to keep under review the development of these arrangements and the level of income received, and to given further consideration to the use of such income for specific purposes should it increase to a substantial level.
The Board have noted that the Research Councils expect universities also to undertake the exploitation of inventions made by students (except in the case of those holding industrially-sponsored studentships, where the existing arrangements for exploitation by the industrial partner will continue to apply). Although students do not have the same contractual obligations to the University as employees, the Board believe that it will be helpful in ensuring that students are made aware of the University's responsibility for developing the exploitation of research results if they are invited to sign an undertaking similar to that required from members of staff. The Board therefore request that Heads of Departments should arrange for the necessary form to be given to all Research Council supported graduate students when they take up their awards.
Finally, the Board hope that members of staff and students whose research may produce results having commercial potential, whatever the source of financial support for the research, will seek advice from the Wolfson Cambridge Industrial Unit on the ways in which any invention may best be exploited. In the present financial climate it is increasingly important that no source of income for the University should be neglected. With this in mind, members of the University should ensure that valuable intellectual property is not made worthless by public disclosure before protection for it has been sought.
APPENDIX A
Lynxvale Ltd
Lynxvale Limited is wholly owned by the Chancellor, Masters and Scholars of the University of Cambridge. The Company was established to protect the University from liability to tax which might otherwise have arisen as a result of trading activities, such as the sale of computer software or the collection of royalties arising from the exploitation of inventions. Lynxvale covenants all its profits to the University, which is then able to recover the income tax deducted by the Company from the covenanted profits. The use of Lynxvale also protects against any possible claims for damages associated with the goods traded.
Except where the University has had a direct interest, the use of Lynxvale by inventors has, hitherto, been on an entirely voluntary basis. The typical procedure is for an inventor to assign his or her rights to Lynxvale. In return Lynxvale makes an agreement with the inventor about the way in which income arising from the exploitation of these rights shall be distributed. This usually provides for income to be collected by Lynxvale and then covenanted to the University. Distribution of the covenanted profits is then a matter for the General Board. In exchange for the rights Lynxvale also agrees to take such steps as may be necessary to exploit the invention., This may involve negotiating a licence with a third party or, in the case of software, it may involve only the sale of copies of the program. Lynxvale has no employees and negotiations on its behalf are undertaken by the Director of the Cambridge Wolfson Industrial Unit. He is able to call upon the support of the staff of the central administrative offices as required. In its last financial year Lynxvale covenanted about £275,000 to the University. Although Lynxvale cannot distribute profits until the end of the accounting year, the General Board can make arrangements for Departments to anticipate up to 70 per cent of the money which will eventually be distributed.
The facilities offered by Lynxvale will continue to be available to members of the University on a voluntary basis. However, in the case of inventions arising from work supported by the Research Councils, it is intended that rights to inventions should normally be vested in Lynxvale. The Director in Industrial Co-operation will continue to advise Lynxvale on the most appropriate channel for exploitation in each individual case.
APPENDIX B
Suggested division of income from commercial exploitation
| Inventor | Department | University | |
| Net income | (%) | (%) | (%) |
| First £10,000 | 90 | 5 | 5 |
| Next £20,000 | 70 | 15 | 15 |
| Next £20,000 | 50 | 25 | 25 |
| Excess over £50,000 | 33.3 | 33.3 | 33.3 |