|Summary of the key points that are considered during the contract negotiation stages
- We will make an assessment of the funder we are working with; this includes checks for trade sanctions and embargoes as well as reputational risks.
- We may also need to undertake credit or Companies House checks.
- Some funding terms restrict who we can work with, for example, the University receives funding from Cancer Research UK which specifically excludes us from receiving funding from tobacco companies.
- We will check the details of the project against those you provided to ensure that all parties agree on the work programme.
- We will, where possible, ensure that an agreed document such as the proposal or description of work is included in any agreement.
- Please remember that although we have extensive experience of negotiating contracts, and will have some information about your project, we may still need your input at this stage to ensure that our information is correct and complete. The smallest error can have substantial consequences on the project and its intended results.
Charitable status and public benefit
- The University is a registered charity which brings tax benefits. Under the Charities Act we must ensure that research is conducted for the primary purpose of advancing education for the benefit of the public.
- We undertake checks to ensure the research will qualify as charitable by meeting the following conditions:
- Subject matter is a useful subject of study;
- Knowledge gained is disseminated to the public;
- It is conducted for the benefit of the public (or a sufficiently large section of the public);
- Any private benefit is legitimately incidental:
- Necessary (either in furthering the charity's objects or as a consequence of doing so);
- Reasonable (in amount); and
- In the interests of the charity in the circumstances
- We are required to look carefully at the terms of research agreements and consider the restrictions on the ability for the University to publish and the ownership/use of IP.
- Projects which do not meet the definition of charitable research must be reported for Corporation Tax purposes. We work closely with the University Tax Team to provide this reporting information.
- We need to make sure the timescale for carrying out each stage of the project is adequate for the work that needs to be done. If timescales cannot be adhered to this could lead to delayed payments or, in the worst case, breach of contract and termination.
- We will use the information you have provided in the Initial Enquiry and in the Costing Tool to check this is correct.
- We will liaise with you if at any stage we are concerned that the timescale is too strict.
Financial and budgetary details
- We will check any figures against those entered in the Costing Tool to ensure that the award is for the correct amount.
- We understand that some funders may not be able to cover the FEC of the project, but we generally expect commercial organisations to fund a project at 100%.
- If the project costs are more than you have been awarded, and we would expect to recover FEC, then we will put your case forward for approval by your Head of Faculty who will consider, strategically, whether the faculty will agree to the shortfall. Where the funder has published rules on the funding reimbursement (charity, Research Council) we will not require faculty approval. The price a funder pays will have an impact on other parts of the agreement such as the ownership of intellectual property.
- We will also check that the payments are not linked to any outputs or results, since these may not materialise and thus leave the University in deficit on the account. Milestone payments against project deliverables are acceptable where the deliverables are achievable and not dependent on results such as submitting a progress report.
- Where the University has not worked with an organisation before we will carry out a full credit check to determine how payments will be required. For example, if you are receiving income from a new company then we will normally request payment in stages in advance, but if your grant is from a recognised charity we will accept payments in arrears.
Ownership of results and arising IP (Foreground IP)
- Research projects usually create new intellectual property (Foreground IP) and often use existing University IP (Background IP). As a minimum requirement the University must be able to use all the IP it generates from a project for non-commercial purposes to ensure researchers can continue to build upon information generated.
- The University acknowledges that where a company has commissioned a specific piece of contract research, they will normally seek ownership of the Foreground IP. We also accept that the contracting company will often be in the best position to protect and commercialise this IP. Provided the contractor has agreed to pay a price acceptable to the University, we will normally concede on ownership of Foreground IP.
- In circumstances where the interaction can be described as truly collaborative, with each party contributing intellectually and financially, the University has an obligation to the public interest (given that much of its funding is from government, research councils, Innovate UK etc.) and will therefore seek to protect its commercial as well as its academic interests. In these circumstances the University will discuss with the funder and any other partners involved in the project which party(ies) should own the Foreground IP and the terms under which any assignment of rights shall be made. Where a company provides the most appropriate route for exploitation we will seek to reach a fair compromise over ownership.
- In all situations, the University's primary objective will be to ensure that high quality research is carried out and the knowledge it generates is transferred for wider benefit, whilst achieving a fair balance in financial benefit for those parties involved in the research. Regardless of rights to commercially exploit Foreground IP, the University will invariably exercise its rights to use Foreground IP for internal teaching and research purposes as this enables us to fulfil our obligations to HMG in respect of maintaining academic excellence and meeting our charitable purpose of dissemination of findings for public benefit. This will be properly expressed in any contract or agreement and we will be receptive to allied confidentiality issues. We will also aim to ensure that no agreement requires any author to waive their moral rights in connection with any documents produced for the funder.
University know-how/pre-existing knowledge (Background IP)
- Often an organisation will wish to work with the University because we already possess know-how and pre-existing knowledge ("Background IP") necessary for the undertaking of a new piece of research.
- In the majority of situations the Background IP required to undertake a piece of research is self-evident from the beginning and, where appropriate, we will undertake to identify it in the contract.
- Where our Background IP is required to commercialise Foreground IP, the University will normally undertake, subject to other third party obligations, to negotiate a fair and reasonable licence on that Background IP to a funder.
- The University understands that when working with other organisations the parties may need to exchange confidential and commercially sensitive information.
- We routinely issue and accept confidentiality agreements to protect early stage discussions and we ensure research agreements also cover provision for confidentiality.
- We need to ensure that confidential information is treated as such by all parties as there could be implications if applications are made for patent or other IP Rights protection if potentially valuable IP has been shared unprotected.
- In addition, we need to ensure that other organisations are aware that we are subject to the Freedom of Information Act 2000. More information on the Freedom of Information Act 2000 and the University obligations under this Act can be found at the freedom of information web pages.
- In order to maintain academic excellence, reputation and comply with our charitable status it is important that academic staff are able to publish the results of their research.
- The University will normally seek to reserve its right to publish the results of its research. We do however understand that in many cases the funder will need to use the Foreground IP commercially and we will normally agree to delay publication for a reasonable period to allow patents to be lodged and to liaise with the funder over the presentation of any commercially sensitive results that are in a proposed publication.
- We will also ensure that any students working on a research project are entitled to submit papers, including theses for examination.
- We make checks to ensure the university is compliant with EU State Aid regulation which is in place to ensure public money is not used to skew the market by giving an organisation or industry a competitive advantage.
- To be State Aid, a measure needs to have the following four features:
- there has been an intervention by the State or through State resources which can take a variety of forms (e.g. grants, interest and tax reliefs, guarantees, government holdings of all or part of a company, or providing goods and services on preferential terms, etc.);
- the intervention gives the recipient an advantage on a selective basis, for example to specific companies or industry sectors, or to companies located in specific regions;
- competition has been or may be distorted;
- the intervention is likely to affect trade between Member States.
- There are exemptions under the EU guidance which allow certain activities to take place under certain situations. Some exemptions are blanket exceptions such as funding from Innovate UK; other exemptions require documentation to be completed and are more complex to apply.
- The University can be a recipient of State Aid as well as a benefactor. Breaching State Aid regulations can result in financial penalties with reputational damage and potential sanctions. Guidance in the sector is developing but it is a relatively new and untested area. The value of 'subsidy' which a firm would need to have received for a State Aid breach is relatively small at 200,000 euros over three years. Potential for such breaches exists in many forms, for example if the University agrees a price below fEC for a significant project or suite of projects, or where we provide access to facilities (such as those funded by European Regional Development Funding (ERDF)) at below the market rate.
We review the terms of a research project to identify potential State Aid implications and, if applicable, work with external legal advisors to apply a relevant exemption.
- Certain activities and materials require export licences. We undertake checks and work with researchers to ensure research projects are export compliant.
- The consequences of non-compliance can lead to prison sentences.
Further information on export control
Warranties, guarantees, indemnities and liability
- As a University, it is our practice to use reasonable endeavours to ensure all work is carried out to the highest standard (that is how we maintain our position of excellence). However, results of research can never be guaranteed and it is our policy not to offer any kind of warranty or guarantee that specific research objectives can be met, but rather to undertake to work with the company to agree alternative routes when research generates unanticipated results. Furthermore, we will not normally accept any liability for use a company may make of the results of our research, although we will of course endeavour to work co-operatively to mitigate any problems they may encounter.
- We have had a number of organisations request indemnification from the University for claims of infringement of IP rights from third parties. This area of law is very difficult to regulate and therefore complicated and expensive to defend any such claim. In the event that an organisation requests such indemnity, we will normally suggest that we will ensure reasonable enquiries are made to establish whether any third parties may potentially have cause to claim but that we cannot provide an indemnity. We will ensure that all claims are limited to direct loss only. All these factors are important to ensure the University does not have to use its resources dealing with legal actions and can instead use those resources to maintain our position and reputation.
- The University insurance policies specifically exclude certain types of activity such as manufacturing products. We undertake checks on the nature of the project to ensure the University has the correct insurance cover in place and that the liability levels are appropriate for the project and do not exceed the University's insurance limits.
- We also make checks to ensure the obligations are with the University and the individuals involved in the project are not personally liable.
- Results of research are never guaranteed therefore it is vital that when things do not quite go as planned the parties discuss how to take the project forward.
- Sometimes the only solution might be to terminate the project. We try to ensure that all agreements allow termination to be imposed by any party but only after a reasonable period has been given for discussions and attempts to remedy any issues.
- We suggest all research projects to set up a project management group and procedure to make sure problems are identified at an early stage rather than once they can no longer be remedied.
- We need to check that contracts with Directly Incurred staff give sufficient notice periods for termination to comply with the terms of the contracts of employment.
- Normally where the funder decides to terminate a project for any reason other than failure by another party, they will cover all costs already allocated or incurred in connection with the project.