Patent Policy 8.2-1

Table of Contents

1.0 Preamble

2.0 Ownership Rights

3.0 Licensing Arrangements

4.0 Royalty Distribution

5.0 Patent Committee

6.0 Other Provisions

7.0 Definitions

1.0 PREAMBLE

The basic mission of Saginaw Valley State University (SVSU) research is the pursuit and utilization of knowledge, including the discovery of new ideas and information, and the application of knowledge to fundamental areas of social concern. In particular, University research has served as a critical source of new scientific, technological and social ideas and concepts which underlie major advances in industry and the quality of life. The constant flow of University-generated research ideas to new uses in industry and society is an essential requirement for economic growth and social well being.

Saginaw Valley State University has established a Patent Policy to support and stimulate the rapid transfer of useful knowledge to new social and economic applications. The specific objectives of this Policy are:

1. To serve the best interest of society in general;
2. To serve the best interest of society within the State of Michigan;
3. To support and stimulate further research and invention;
4. To provide recognition and incentives for individual inventors;
5. To protect and balance the equitable rights of inventors, research sponsors, the University and the public;
6. To expedite technology transfer and the dissemination of useful knowledge.

The SVSU Patent Policy is applicable to all full-time and part-time University employees, and to students and others who work on research projects, especially sponsored research, which might generate patentable inventions. Patents shall be subject to the ownership provisions set forth in Section 2. This Patent Policy applies only to patentable inventions. No inference in any form is to be made toward applying this Patent Policy to traditionally copyrightable materials or Copyright Policy currently in force.

2.0 OWNERSHIP RIGHTS

Saginaw Valley State University recognizes that research and invention frequently involve complex relationships among several parties, including individual employee inventors, individual student inventors, external research sponsors, and various units and departments of the University. This section of the Patent Policy is designed to clarify the rights to ownership of patents among these several parties and to provide guidelines for determination of ownership under various types of research arrangements.

2.1 Saginaw Valley State University will have right of first refusal to hold title to all patentable inventions made by employee inventors affiliated with the University, if such inventions are made with support of University funds, facilities or equipment. Title to patentable inventions made or developed under conditions described in this subsection shall be assigned to the University by the individual employee inventor(s). The University may elect to waive its patent rights, following patent evaluation procedures established by the President. If the University elects to acquire title to an invention by assignment, the University will cover reasonable costs of the patent application, patent development, and related activities such as travel and attorney fees. Such costs will be a prior charge to any royalty income. Any decision by the University to either acquire or waive patent rights under this subsection must be rendered within six calendar months following receipt of the report of an invention. Acquisition, assignment or waiver of patent rights under this subsection will be promptly reported to the Board of Control.

2.2 Inventions Made Without University Support - Employee Inventors

Patentable inventions will be owned by individual employee inventors if the patentable invention was made or developed: (1) without University support (including salary, funds, facilities, equipment or services not available to the general public); or (2) without the use of University funds (not including salary), facilities, equipment or services and outside the field of knowledge for which that individual is employed by the University; and (3) independent of any terms or conditions specified by a sponsored research or contractual agreement which provide for assignment of patent rights to an external organization (see Section 2.4). In general, patentable inventions made without University support, and thereby included in this subsection (2.2), must be initiated, and the work conducted and perfected while the inventor is outside normal University service, i.e., during an unpaid absence or unpaid summer periods. Under the aforementioned conditions, the inventor will report the invention to the University in accordance with the procedures established by the President. If an invention was made without University support, the inventor will inform the University of the invention, and of his/her intention to apply for a patent. The University shall review and make a determination of whether University support was used to develop the invention. If it is determined that University support was not used in the development of the invention, the University will inform the inventor in writing within sixty (60) working days following the report of the invention that the University acknowledges the inventor's ownership of the invention. The University may require a statement that the invention was made without University support. In case of disagreement between the inventor and the University with regard to inventions described under the terms of this subsection (2.2), the dispute will be referred to the Patent Committee as provided for in Section 5.0. Ownership of patentable inventions by individual inventors under this subsection will be properly reported to the Board of Control.

2.3 Inventions Made by Student Inventors

Notwithstanding any other provisions of this policy except Sponsored Research (see section 2.4.1), ownership of any inventions made by a student while enrolled in any University program shall remain with the student. The University makes this exception based on the fact that the University wants to foster entrepreneurial conditions for the students in their college experiences.

2.4 Inventions Made Under the Terms of Sponsored Research Agreements and/or Contracts

In Public Law 96-517, "The Patent and Trademark Amendments of 1980," the federal government has given non-profit organizations and small businesses right of first refusal to title in inventions made in the performance of government grants and contracts with some limited exceptions. This act clearly sets forth, as the objective of Congress, the utilization of the patent system "to effectuate the transfer of government-funded inventions to the public."

Although it will be the general policy of Saginaw Valley State University to hold title to all patents emerging from sponsored research programs which utilize University employees, University facilities, equipment, services and/or staff, provision will be made for the assignment of patent rights to private sector sponsors under certain conditions. In particular, industrial sponsors may request the assignment of patent rights to the sponsor as a precondition for support of basic or applied research at the University. The Saginaw Valley State University President may assign patent ownership rights to private sector research sponsors. If the University elects to assign patent rights, such assignments will be explicitly stated in the sponsored research agreement and/or contract which is established between the University and the private sponsor. When assigning patent rights to an external sponsor, the University President will ensure that University equity in privately sponsored research programs is fully protected. Such protection may include any or all of the following arrangements: (1) payment of an initial fee by the sponsor to the University in exchange for assignment of patent rights; (2) payment of a specified fee by the sponsor to the University for each patent emerging from the sponsored research program; (3) guarantee by the sponsor that the University will receive an equitable share of royalty income generated from patents which are assigned to the sponsor; and/or (4) requirement that the sponsor grant to the University royalty-free license for use of the patent.

2.4.1 As a condition to participation in a sponsored research project where ownership of intellectual property rights is or will be governed by an agreement between the research sponsor and the University, a student shall agree with the University with regard to assignment of invention rights in a manner consistent with the underlying agreement with the sponsor. The student shall have the option to agree to such assignment or to decline to participate in the sponsored research project.

The specific arrangements itemized above represent attractive options that both protect University equity and return a benefit directly to the University research enterprise. In addition to these arrangements, other mechanisms whereby external research sponsors provide support for the University's educational mission in exchange for waiver of patent rights may also be acceptable (e.g., establishment of student fellowship programs, contributions to the University endowment fund, support of endowed chairs, etc.).

Any such arrangements which protect the University's interest in patents emerging from privately sponsored research will be made with the full knowledge of the principal University faculty researchers who are involved in the project. Such arrangements will also be explicitly stated in agreements and/or contracts established between the University and the external sponsor. All such contracts will be promptly reported to the Board of Control.

2.5 Inventions Made Under the Terms of University Off-Campus Developing Agreements

2.5.1 Saginaw Valley State University, or separate academic units within the University, may elect to establish Off-Campus Developing Plans whereby the professional, scientific and technical expertise of University personnel can be mobilized to provide applied research, testing and evaluation or other technical services for external organizations. The University will have right of first refusal to hold the title to all inventions developed under the terms of University Off-Campus Developing Agreements, unless there is prior waiver of University rights to patent ownership as provided for in Section 2.3.

2.5.2 The University is affiliated with a “business enterprise” entity that is an entity separate from the University. The business enterprise, from time to time, is interested in working with students to bring inventions into the commercial arena. If the student has an interest in working with the University as it interfaces with the business enterprise, then the student shall make such interest known to the University and a negotiated arrangement may be undertaken with the business enterprise, through the University, at the option of the University and the business enterprise.

3.0 LICENSING ARRANGEMENTS

Saginaw Valley State University will actively seek to license all patents to which it holds title. By mutual agreement with the inventor, the University may also license or arrange for licensing of patents owned by individuals who are employees of the University. The President may determine whether, under certain conditions, the University will contract with a competent agency or firm for the licensing of certain patents. The University President will also determine whether University-owned patents may be licensed to University employees.

The University will cover necessary costs leading to licensing of patents, and such costs will be prior charge against royalty income.

Disputes which may arise between the inventor and the University in connection with licensing of University-owned patents may be referred to the Patent Committee for resolution (see Section 5.0) at the request of either party.

If the University has not succeeded in licensing an invention within 24 months after patent has issued, the inventor may apply for reassignment of the patent. As a condition to reassignment, the inventor is required to reimburse the University for all sums expended by the University in filing and maintaining the patents. The University may wish to retain the patent at this time. However, none should be held by the University without good reason.

3.1 Exclusive Licenses

The University President may grant an exclusive license for use of University-owned patents to an external organization or to a University employee. Exclusive licenses typically will be granted for periods of ten years. They may include provisions for an option to renew the exclusive license for the remaining term of the patent. In all cases where an exclusive license is granted for a limited period, the University will retain an option to revoke the license in the event that the licensee does not demonstrate due diligence in the exercise of the license.

3.2 Royalty-Free University License

In keeping with the University's mission to broadly disseminate new knowledge and to protect the public interest, the University President will have the authority to retain royalty-free license rights for use of University-owned patents by the University.

4.0 ROYALTY DISTRIBUTION

All Saginaw Valley State University patents which are licensed to external users or to University employees will return to the inventor and to the University an equitable royalty income. Gross royalty income returning to the University will first be used to repay all costs associated with patent obtention and maintenance fees, licensing, legal work and other expenses related to patent application, marketing and licensing.

Following the deduction of such expenses, net royalty income will be distributed among the inventor(s) and other University units and the University according to the following formula:

The inventor's share of royalty income shall be fixed according to the above formula. Modification of this formula with respect to the share allocated to the Originating University Units and the University shall require approval of the Board of Control following the recommendation of the University President.

The inventor's share of net royalty income returning from patents involving more than one inventor will be divided equally among the inventors unless a written request to provide for some other division is signed by all inventors and filed with a designated University office thirty (30) days prior to the first payment of net royalties.

At least a substantial portion of the University's share of net royalty income will be used to support and stimulate further research, invention, patent development and technology transfer. Originating University Units will also utilize at least a substantial portion of their share of royalty proceeds to support research programs.

In the event that an inventor (or co-inventor) terminates his/her employment at Saginaw Valley State University for any reason, the inventor's share of royalty income will continue to be paid to that inventor (or co-inventor). If an inventor (or co-inventor) dies, the inventor's share of royalty income will be paid to the heirs and beneficiaries of the deceased. Upon employment termination, or in the event that an inventor (or co-inventor) dies, the University's share of royalty income will continue to be paid to Originating University Unit and University accounts at Saginaw Valley State University. The Originating University Unit and University shares of royalty income may not be transferred to any other institution, organization or individual in the event of an inventor's (or co-inventor's) employment termination or death.

Furthermore, any equipment or other resources purchased from the Originating University Unit or University shares of royalty income will remain the property of Saginaw Valley State University and will not be transferred to another institution, unless written approval of such transfer is obtained from the University President.

5.0 PATENT COMMITTEE

If there is a question as to the ownership of an invention or patent under the provisions of Section 2.0, the matter shall be referred to a committee of four (4) persons from the University community, not including the chair, to be named by the President of the University. The Committee shall be chaired by the SVSU Patent Policy Administrator or his/her designee. Two of the Committee members shall be members of the academic faculty of the University selected by the President.

The Committee shall make a careful investigation of the circumstances under which the invention was made in a hearing which may include professional representation and testimony for either side in the dispute, and shall transmit its findings and recommendations to the President for final decision. The hearing shall be closed to the public unless both sides mutually agree to waive this right.

Disputes pertaining to the licensing of University-owned patents under Section 3.0 shall also be referred to a Patent Committee. The Committee shall review efforts to license the invention and transmit its findings and recommendations to the President for final decision.

Disputes pertaining to the waiver of University patent rights shall be referred to the Patent Committee at the request of the employee. The Committee shall review all aspects of the specific disputes under the same conditions as described about and transmit its findings and recommendations to the President for final decision.

6.0 OTHER PROVISIONS

6.1 Private Consulting

Consulting activities by employees of Saginaw Valley State University are subject to regulations under existing statutes, contractual agreements and such executive orders and administrative regulations as may be issued to implement existing statutes.

6.2 Waiver of University Patent Rights in Consulting or Temporary Employment Arrangements

The increasing necessity for complex relationships among universities, private industry and the public sector has heightened national sensitivity to the potential for conflicts of interest which may arise when university personnel are engaged in fee-for-service or equivalent activities with external organizations. Saginaw Valley State University wishes to encourage and promote university-industry linkages and the emergence of new technology-based industries, while simultaneously avoiding real or perceived conflicts of interest which might ultimately impair the University's basic mission and detract from its role in society. As a constitutionally autonomous public institution, Saginaw Valley State University has an obligation to ensure that its officers, faculty, staff and others acting on its behalf avoid ethical, legal, financial, or other actual or perceived conflicts of interest, and to ensure that the activities and interests of such individuals do not conflict with their obligations to the University or its well-being. The guidelines set forth in this Section are intended to preserve and protect the University's mission and social obligations, to maintain institutional independence and integrity, to assure impartiality and to keep the public trust.

Full- and fractional-time employees who enter into private consulting relationships or temporary employment arrangements with private external organizations which require employee assignment of patent rights to the external organization shall inform the University of this required assignment. The University, upon verifying the appropriateness of the consulting relationship or temporary employment arrangements, will inform the employee in writing that the University has no objection to the assignment of patent rights to the external organization in question, except under provisions described in Section 6.3, or where either of the following conditions apply:

1. The employee is a stockholder, officer and/or member of the governing board of that organization (see Section 7.0); or
2. The employee is permitted, via contractual agreement, to realize significant financial gain (e.g., monetary return that exceeds a nominal or token amount) as a result of patents assigned to external organizations.

Waiver of University patent rights under conditions described in Section 6.2 (1 and 2) shall be conditional upon a review of the potential for conflict of interest in each individual case, and a determination by the University President that such conflicts do not exist or can be avoided through special arrangements.

All requests for waiver of University patent rights under this subsection shall be approved or disapproved within ten (10) working days following receipt of the request. Disapproval by the University President of a request for waiver of patent rights shall be accompanied by a written explanation. Denial of University patent right waiver under this subsection (6.2) shall be referred to the Patent Committee at the request of the employee for determination as provided for in Section 5.0.

6.3 Waiver of Patent Rights During Consulting While Participating in a Federally-Sponsored Research Program

Public Law 96-517. "The Patent and Trademark Amendments of 1980" grants to universities the right of first refusal to hold title to inventions emerging from federally sponsored research projects (see Section 2.4.). Employees who receive federal support for research are obligated to protect the public interest in federally sponsored research by honoring the first refusal rights of Saginaw Valley State University. Working with an external organization in the same general research area as work being supported by federal funds and administered through the University does not necessarily constitute a conflict of interest. However, in situations where an employee is engaged in federally sponsored research in a specific research problem area and expects to enter into a private consulting arrangement in that same specific research problem area, and where, in the judgment of the employee, there is a reasonable likelihood that inventions or ideas which emerge in the course of the federally sponsored project might be "reduced to practice" or otherwise developed during the consulting relationship, it shall be the duty of that employee to request a written waiver of University patent rights before assigning patent rights to the private external sponsor of the consulting relationship. Saginaw Valley State University will normally grant such requests for waiver of patent rights provided that the proposed consulting relationship: (1) follows established guidelines for faculty/employee consulting; (2) does not constitute an actual conflict of interest; or (3) does not fall under the provisions of Section 6.2. Requests for waiver of University patent rights described in this subsection will be reviewed and acted upon within twenty (20) working days following their receipt by a designated University office.

6.4 Restrictions on the Public Dissemination of Knowledge

Saginaw Valley State University will not enter into sponsored research agreements and/or contracts which include provision for assignment of patent rights to the external sponsor if such agreements totally preclude publication and/or dissemination of research results gathered during the course of the sponsored program. All exceptions to this policy will require prior approval by the Board of Control following the recommendation of the University President.

The University President will have the authority to approve sponsored research agreements and/or contracts which require a reasonable delay in the public dissemination of research results, including a reasonable delay in publication, the delivery of lectures or seminars, and the release of other materials or devices which broadly disseminate information. For purposes of this policy, a reasonable delay is defined as a delay of no more than one year following submission of publishable material to the research sponsor, or six months following termination of the research contract, whichever time period is of shorter duration.

6.5 Administration and Procedures

Administrative systems and procedures to implement this policy shall be issued by the President of the University.

7.0 DEFINITIONS

Application (patent) - Complete papers submitted to the Patent and Trademark Offices of the United States and other foreign countries for the purpose of seeking a patent, including specifications, claims, drawing and the filing fee.

Assignment - Written contract that transfers title to and interest in an invention, patent or patent application. An assignor conveys title, an assignee receives title.

Consulting - See definition in policy establishing the University's consulting policies and executive orders implementing those policies.

Disclosure - Written description explaining the novelty, utility and explanation and importance of an invention to another person. The term also refers to the drawings and descriptions furnished with the patent application and found in the patent.

Exclusive License - An agreement granting to one party sole (exclusive) rights to use an issued patent, with the licensor giving up rights to offer or give a license on that patent to any other party.

Invention (patentable) - A novel and useful solution to a problem, including solutions relating to processes, machines, articles of manufacture or compositions of matter. The invention, which may embody a new idea or the improvement of a pre-existing approach, is generally not obvious to a person skilled in the pertinent art.

License - An agreement granting to another party the right to make, use and sell a patented invention without the transfer of title to the patent. A licensor grants the license; a licensee receives the license.

Net Royalty Income - Gross royalties minus direct costs of patent obtention and maintenance fees, licensing, legal work and other expenses related to patent application, marketing and licensing.

Non-Salaried Personnel (or other individuals affiliated with the University) - Includes but is not limited to, hourly personnel, part-time, volunteer, adjunct, co-operating and visiting faculty, as well as undergraduate, graduate and postdoctoral students.

Off-Campus Developing Plan - An arrangement between an employer and professional personnel which specifies terms and conditions under which those personnel may receive compensation for external consulting activities. Frequently, practice plan arrangements provide some organizational services to support remunerated external activities, in exchange for which professional personnel return some specified portion of their remuneration to the employer.

Part-Time Employee - Personnel employed for less than full-time at Saginaw Valley State University or under contract employment with SVSU are considered to hold part-time service positions.

Public Disclosure - Any disclosure in a form which is readily accessible or distributed to the public including presentations at technical conferences, publications in professional journals, news releases, news interviews, etc.

Report of Invention - Written description explaining the general nature of an invention to another person. The report should include the approximate date or time during which the invention was developed and the general circumstances surrounding the development of the invention.

Royalty - Payment to the owner of an invention for use of that invention, frequently in the form of a state percentage of sales.

Royalty-free - A license wherein the licensee is not required to pay royalties to the owner of an invention under specified conditions.

Stockholder - For purposes of this policy, stockholder shall be defined according to guidelines established by the State of Michigan Conflict of Interest Statute, e.g., ownership of more than one percent of the total outstanding stock of any class where such stock is not listed on a stock exchange, or stock with a present total market value in excess of $100,000 where such stock is listed on a stock exchange.

Unpatentable - An invention not involving sufficient departure from pre-existing knowledge in the art, or that for some reason is not the proper subject matter of a patent, but may nonetheless comprise a valuable trade secret.

U.S. Patent - A grant from the U.S. Government giving the owner of an invention the right to exclude all others from making, using or selling the invention within the United States, its territories or possessions, for 17 years. Patent protection in a foreign country is governed by the individual patent laws of that country.