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After One Year, RIT's 'Free IP' Corporate Research Program Attracts Six Partners


The Rochester Institute of Technology has inked research agreements with six companies under a year-old program designed to give industrial partners ownership of resulting intellectual property, a school official said last week.

The program, which is viewed as a departure from traditional corporate-sponsored research agreements, is meant to reduce the amount of time it takes to negotiate sponsored research deals by addressing IP ownership right from the start, according to some early company participants of the program.

In addition, RIT is betting that the program will serve as a stepping stone to develop closer relationships with industry partners and increase the number of companies the school can spin out.

RIT implemented the program in late 2007, a few months after current president Bill Destler took office. Destler ushered in the program with an essay entitled, "A New Relationship Between Business and Academia," which outlined the reasoning behind the program.

At the time, Destler told BTW that a deceleration of new product development and R&D at US corporations had weakened the US' position in the global economy, but that such innovation was occurring at US universities and research institutions (see BTW, 11/26/2007).

However, Destler also argued that corporations are often reluctant to enter into certain R&D agreements with universities because of the anticipated wrangling over rights to IP that might come out of the research. Under the Bayh-Dole Act, universities receiving federal research funding own any such IP, regardless of whether the bulk of the research was sponsored by a company.

Destler said that as part of its corporate program, RIT would relinquish all rights to future intellectual property generated under corporate-sponsored research in exchange for single, modest, up-front payments.

Since its launch, the program has been tweaked a bit, but has the same basic premise, Donald Boyd, vice president for research at RIT, told BTW this week. Under the program, which is outlined on RIT's website, the school provides a partnering company with a master's degree-level student and a faculty adviser to work on a specific research project.

The work is carried out over the course of a year at a fixed price, which the company pays in quarterly installments. As part of the up-front contract, RIT agrees to relinquish all ownership of potential IP to the company.

The cost of the research project to the company can vary depending on the nature of the project, but in general, companies can expect to pay in the low $20,000 range per quarter, Boyd said.

"We might add more to it for additional students, travel, or materials," Boyd said. "We don't get into whether these are science, engineering, business students, et cetera."

In all agreements made through the program, RIT requires the right to publish scientific results after the sponsor has had a pre-negotiated amount of time to review the discoveries, which is typical of most industry-university research agreements.

"We also require that the sponsor give us the right to use the IP for ongoing research at the university," Boyd said. "They own it; they pay for all the patents, so we have to get rights back from them in order to do that.

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This is all based on a master contract with the company. Once we have that signed, then it's just a matter of adding appendices to that."

Under the program, RIT pays an undisclosed portion of the upfront research fee to both the student researcher and faculty adviser. RIT also uses some of the research fee to recover overhead costs and some to support the program, Boyd said.

RIT has included "a little more incentive" to students and faculty by expanding the revenue-sharing portion of the program, Boyd said.

"The students receive something equivalent to a stipend," he said. The faculty can use it [discretionarily] to buy instruments, for travel to conferences, to maybe hire a technician for their lab. We didn't do that to begin with, and we decided that wasn't fair."

Boyd also stressed that before RIT enters into a contract with a company, it seeks approval from all participating researchers or faculty members.

"Before we give anything away, everybody has to agree that this is OK," Boyd said. "The faculty isn't always happy about giving away their IP. If they don't want to, we use our standard agreement," which is a typical corporate R&D contract. "We did have one case already where we converted to a regular contract because a PhD student didn't allow us to use [the corporate-program contract]."

'Lightning Fast'

Thus far, feedback about the initiative has been generally positive from industry, Boyd said, and RIT has already inked agreements with six companies: OrthoClinical Diagnostics, a division of Johnson & Johnson; CareStream Health, a medical imaging firm spun out of Kodak; Paetec, a communications and IT company; communications firm Harris; National Semiconductor; and digital media startup Entertainment Experience.

Boyd said that RIT is also currently negotiating a project with Nenel Systems International, which works in fire and security systems.

The fact that just two of the seven companies working with RIT are in the biomedical space mostly reflects the fact that the university's research strengths have traditionally been in the engineering and IT space, Boyd said.

"We also have expertise in biotechnology, but we don't have a medical school," Boyd said. However, the school in December signed a strategic alliance with Rochester General Health System, "so we're trying to get more involved with that," Boyd added.

Representatives from CareStream Health told BTW this week that they already had an existing research partnership in place with RIT in the area of computer-assisted surgery guidance, but recently signed another agreement under the new program in the area of digital radiological imaging.

"I think from the sake of understanding the IP terms and negotiation standpoint, it was clear that CareStream would own IP resulting from this," said Mark Morita, director of external technology and IP alliances at CareStream.

"From our standpoint it was quick and easy to get this done," Morita added. "Typically these agreements can take six months to a couple of years to negotiate, but over the course of about one week in December, we got the IP terms in place, which allowed us to sign the agreement really quickly."

Lawrence Ray, a senior principal scientist at CareStream who is heading the company's research projects with RIT, agreed. "I've been involved in some situations where, when the tech-transfer staff gets involved, everything grinds to a halt. It is difficult to negotiate the terms around something when you don't even know what it might be."

Ortho Clinical Diagnostics, which has had close research ties with RIT for several years, has inked agreements for two projects with the school under the new program in the area of in vitro diagnostic analyzers, Ted Farrell, group director of R&D at Ortho Clinical Diagnostics, told BTW this week.

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The first project involves computer modeling fluid dynamics and chemistry interactions, and the second is in the area of measurement systems that will allow observation of mixing reactions in real time.

Farrell said that he and his colleagues at Ortho first heard about the new program at a scientific meeting last year, and "we acted immediately." Farrell called the negotiations for the first project "lightning fast," and said that there was basically no comparison to traditional sponsored research agreements.

"When we gave a copy of this to our legal folks, they groaned a little at first because it involved another contract from a university, but the IP considerations were very clear from the start," Farrell said.

Usually, he said, sponsored research agreements take months to negotiate. "I think both sides are pretty conservative usually," he said. "This allows RIT to focus on their interactions with industry, and allows us to get research done with a local partner."

Despite the positive feedback from industry, Boyd said that the program is not one-size-fits-all. He said that companies such as Corning and Hewlett Packard, with which RIT has consummated many research agreements in the past, "have not been remotely interested in this."

In some cases, a company might approach RIT about an area in which the school doesn't quite have the right mix of faculty, students, or expertise. Also, if a research project involves any kind of funding from the federal government, the corporate R&D contract would not be appropriate.

"If the funding is from a corporation … we're not trying to make a killing on our IP," Boyd said. "We think the relationship with the company is more important."

The response from the academic community has been generally positive, as well, Boyd said, although there are detractors.

"Some universities wouldn't even think of using this," Boyd said. "Those are generally the big research universities that can name whatever terms they want."

On the other hand, Boyd said, after Destler gave a talk on the new program at a December meeting of the University-Industry Demonstration Partnership in Washington, DC, RIT received multiple inquiries and positive feedback from both university and industry representatives.

"I didn't get any complaints, and mostly got university people asking more about what we were doing," Boyd said. "There seemed to be a fair amount of excitement. From our point of view, this has already helped us form relationships with companies we have never worked with before."

The relatively low cost of the research may also help RIT form relationships with companies spawned from its own internal research. Boyd pointed out that while the pricing and IP-ownership structures should be attractive to most companies, it could be particularly alluring to early-stage companies.

Thus, RIT thinks that the program might help launch more spinout companies from the school because entrepreneurial faculty members or students will know that they will likely be able to affordably continue research using university resources.

Boyd said that no RIT spinouts have yet taken advantage of the corporate R&D program, although he expects this might happen in the future.

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