IP ownership and MSCA secondments

MSCA

Good morning everyone. This month we are bringing you an article on IP ownership in the framework of MSCA secondments when these secondments are carried out outside of the EU. We have received numerous questions through our Helpline on this topic and thought it might make an interesting article.

First of all, let me break down the rules and the options you have.

According to the default ownership rules applicable in Horizon 2020 (see article 41 of the Rules for Participation, reflected in the GA), each beneficiary owns the results that it generates in the project. This can result in the following scenarios:

  • Situation 1: results generated by the Fellow alone, while on secondment, are in principle meant to be owned by the beneficiary (home institution);
  • Situation 2: results generated by the partner organisation alone (via its own staff) can remain the property of this partner organisation (foreign University), since they were not generated by the Fellow / beneficiary;
  • Situation 3: results generated by the Fellow and partner organisation jointly could in principle be owned jointly to reflect the joint contributions made by the beneficiary and its partner. In such cases, joint owners should manage them via a joint ownership agreement.

Therefore, letting partner organisations own project results developed while on secondment, proportionally to their contribution, is something feasible and compatible with the obligations set out in the GA. This is not incompatible with article 26.1 of the  Model Grant Agreement since this article only concerns results developed fully by the Fellow / beneficiary. If results were developed partially thanks to the contributions of a third party, this third party is entitled to claim (partial) rights to them too.

That is why widely-known partnership agreement templates such as the one published by KoWI use this distinction in their ownership clauses (see article 8 of the KoWI model) – because it fully complies with the GA while at the same time providing a balance with the partner organisation’s interests. Nothing in the GA says that third parties contributing to results should relinquish all rights, otherwise this could deter most companies (and institutions) from taking part in such projects.  

What does this mean? In principle, results generated on secondment are rarely generated by the Fellow alone. If a Fellow goes on a particular secondment (training, use of certain facilities) it is usually because of the special contribution that the partner organisation can make. In most cases, you are most likely going to face situation 3 described above: while the Fellow is abroad, the results generated there will clearly be generated thanks to the input of the Fellow / foreign University (workforce, researcher’s skills, etc). This is the situation on which we are going to focus here.

In this case, you could establish that any results developed by the Fellow while abroad will be owned jointly by the Beneficiary and the foreign University. As mentioned above, the conditions surrounding the joint ownership would then have to be agreed upon by both joint owners – through a joint ownership agreement. Both entities are then free to decide, through this agreement, how the result will be used (e.g. commercial uses reserved to the foreign joint owner, uses for non-commercial purposes only for the home entity – or any other arrangement) and whether commercial uses by one joint owner should trigger royalty payments to the other one, or not. All these points are discretionary – there is complete contractual freedom here and it is up to you and your partner to negotiate and reach an agreement that satisfies both parties.

A second option – perhaps less burdensome once completed (joint ownership management can sometimes be a bit heavy) is to grant full ownership to the foreign University. This is possible under Horizon 2020 rules (including MSCA) but a bit more complex to put in place. In a situation where the result will most likely be jointly owned (since it was created through the joint contributions of the foreign and European entities), in order for the foreign partner to own the results, you would have to transfer your share in the results (e.g. its 50%, depending on the respective contributions) to your foreign counterpart. Transfers of ownership are allowed under MSCA but regulated – see articles 30.1 and 30.3 of the GA:

  • On the one hand, before transferring your share to the foreign entity, you will have to follow the procedure of article 30.1. You will have to inform the other partners (if any) that the result will now belong to a third party – in case they need to request access rights. Still according to 30.1, you will have to ensure that all your obligations in relation to the results are passed on to the new owner. This to ensure continuity even when the results change hands. This provision is usually not problematic as such as it can be implemented via a clause in the transfer / assignment agreement.
  • On the other hand, you will also need to comply with article 30.3, which submits transfers to third parties located outside the EU or associated countries to prior notification to the EC / REA. The issue here is that this provision creates a bit of uncertainty – there is always a risk that the EC / Agency refuses the transfer. 

As you can see, transferring full ownership to the foreign entity is possible, but it involves a few extra steps. If you choose to go this route, we would recommend informing the EC / Agency now about your intention to transfer the results to the foreign entity at the end of the secondment – to gain some time and speed up the process.

If you go for option two, provided that the EC / Agency gives you the green light, the foreign entity would then become the sole owner of the project results developed during the secondment. This is not a problem. Regarding the compatibility of this situation with article 26.3 of the GA (rights of third parties in relation to the results), you should make sure that the foreign entity grants you a licence – this licence can be limited (e.g. to the duration of the project + exploitation phase, and limited to e.g. non-commercial research purposes, depending on project needs) with a right to sublicense (also limited to project needs – to allow you to grant access rights to your partners and any other Fellows and if needed or to the funding authority).

To conclude: the two options described above are fully compatible with the GA. While the second option is more complex to set up due to restrictions imposed on transfers of ownership, it may be easier to manage once completed. There is also a third option that exists (if the foreign entity does not insist on ownership), where the European partner maintains full ownership and grant an exclusive or non-exclusive licence (commercial or non-commercial) to the foreign counterpart over the result.

If after reading this you still have some questions, do not hesitate to reach out via the Helpline.