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For a technology business this is usually the most valuable term in a funding agreement, and reliably the least examined. A contribution worth tens of thousands can be paid for with something worth far more.
Arrange a Call →Intellectual property terms in funding agreements range from silence, through a licence back to the funder, to requirements that results be made public. The clause is often standard, and being standard is not the same as being acceptable.
Who does this work. Lexaltico LLP’s government funding and grants service is led by Mitch Parmasar, who is not a lawyer and does not provide legal advice. Where a matter calls for legal advice — a funding agreement, a governance question, a repayment demand — it is handled by a lawyer at Lexaltico LLP. The firm is responsible for all of the work described on this page.
It depends entirely on the agreement, and the range is wide. Many Canadian government programmes leave ownership with the recipient, which is the position businesses assume applies everywhere. Others take a licence back for government use, require results to be published or made available, restrict assigning or licensing the technology abroad, or — less commonly — claim ownership outright. Because the clause is presented as standard, it is frequently signed without being read, and it is the term most capable of making funding expensive.
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For a company whose value is its technology, the intellectual property created during a funded project may be the whole of what the business is. A contribution of a few tens of thousands of dollars, taken on terms that give somebody else rights in that asset, can be the most expensive money the company ever accepted.
The reason it goes unexamined is that the clause looks administrative. It sits among reporting and record-keeping provisions, it is drafted in the same register, and nothing in the document flags that this is the paragraph with the largest number attached to it.
Some agreements say nothing, leaving ownership to the ordinary rules, which generally means the party that created it. Some confirm the recipient owns it, which is worth having in writing. Some grant the funder a licence — often non-exclusive, for government purposes — which most businesses can live with once they know it is there.
Beyond that: requirements to publish or make results available, which can be incompatible with patenting; restrictions on assigning or licensing the technology outside Canada, which matter enormously on an acquisition; and occasionally an assignment of ownership. Each is a different commercial reality and they are not distinguishable without reading the clause.
Funded projects build on what the company already has. If the agreement does not distinguish background intellectual property — what existed before the project — from foreground intellectual property created with the funding, a term about project results can reach further than anyone intended.
The practical step is to identify the background assets before signing and make sure the agreement excludes them, in terms. Doing this later requires proving what existed when, which is why a dated record of the company’s position at the start of the project is worth keeping.
Where an agreement requires results to be published or disseminated, that can sit very badly with a patent strategy, because public disclosure before filing can destroy patentability in many countries. Canada and the US allow a 12-month grace period after your own disclosure, but many other countries do not.
This is the sort of conflict that is easy to manage in advance and impossible to repair afterwards. If the funded work might be patentable, the sequencing of any filing against any publication obligation needs to be worked out before the obligation exists.
A funding agreement may oblige the recipient to own or control the project results, and a company that used contractors may not. In Canada an independent contractor generally retains copyright in what they create absent a written assignment, and moral rights need a separate waiver.
So the chain matters: written assignments from contractors, appropriate provisions in employment agreements, and the same for students or researchers where an institution is involved, since universities have their own intellectual property policies. A company can find itself unable to give the funder what the agreement promised.
Funding agreements are less negotiable than commercial contracts and more negotiable than recipients assume. Clarifying that background intellectual property is excluded, narrowing a licence to the purpose actually needed, and adjusting the timing of a publication obligation are all reasonable requests that programmes deal with routinely.
The requests that fail are the ones made after signature. Raising them once the agreement is executed is asking for an amendment; raising them before is asking a question.
We read the intellectual property provisions against what the company actually owns and intends to do with it, identify what the clause reaches and what it should be asked to exclude, and say which points are worth raising with the programme.
This is legal work and is handled by a lawyer at Lexaltico LLP. The programme and application side is led by Mitch Parmasar, who is not a lawyer. Fees are quoted and agreed in writing before work begins.
Our lawyers offer an introductory call for most matters. Call, email, or book online. Do not sign anything before speaking with us.
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