Dividing the IP pie

Universities provide a nurturing environment for innovation and a clear path for the commercialization of inventions. In exchange for these services, university-based inventors are obliged to give the university a share in their IP rights and revenue. But do universities get more than their fair share? And is the division especially unfair to students? These questions were wrestled with in the landmark case Oxford University Innovation Limited v Oxford Nanoimaging Limited [2022] EWHC 3200 (Pat).

The claimant, Oxford University Innovation (OUI), sought unpaid royalties of over £700,000 from Oxford Nanoimaging (ONI) in respect of a patents for a nanoimager developed by Mr Jing, now CEO of ONI. The nanoimager, which is a type of microscope, was developing during Mr Jing’s time as an intern, and subsequently DPhil student, at Oxford. Mr Jing then left Oxford to develop spin-out ONI based on the nanoimaging technology, with the help of OUI. Oxford’s IP provisions gave OUI entitlement to the patents, which were licensed to Mr Jing in return for a share of the royalties. However, Mr Jing refused to pay outstanding royalties to OUI, arguing that the university’s IP provisions were unfair to students.

Oxford’s IP provisions currently require that OUI receives 30% of the royalties, with the remainder being split between the inventors, a general fund, and the department where the invention was made. The inventors must agree on how they divide their share of the royalties, and Mr Jing alleged that the split he agreed to (ultimately a 45:45:10 split to him, his supervisor, and another academic) was unfair. 

Mr Jing also criticized the equity share that OUI has in ONI. At the time the nanoimager was being developed, Oxford’s equity policy set out a 50:50 founder equity split between the spin-out founders and the university. Although this allocation was ruled to be fair, it is notable that since 2021, OUI has changed its policy to give the university a much lower equity share of 20%, or in some cases 10%.

This case opens up the question as to whether student inventors may be incentivized to exploit their invention using a different avenue than their university technology transfer office. This may only be feasible in limited cases, however. For example, the Oxford IP provisions stipulate that in most cases, OUI is entitled to an invention developed by a student as part of their research if the research received research council funding. This encompasses pretty much the majority of DPhil students doing scientific research.

While the law relating to employee inventions is well established, this case was the first of its kind in the UK courts to consider student inventions. With very little precedence from the UK Courts to go on, it was ruled in the end that Oxford’s IP provisions were fair. However, the decision was by no means clear cut, and we will have to wait and see if ONI appeals the decision. It is notable that Oxford is the top university in the UK with regards to number of spin-outs (between 2011 and 2022), and it will be interesting to see if this case forms a springboard for other university v student disputes.