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MEEI Student Policy

Agreement on Commercialization and IP for the Master’s of Engineering Entrepreneurship and Innovation (MEEI) Program

available in pdf

Background

The Master’s Program in Engineering Entrepreneurship and Innovation (MEEI) at McMaster University is the first of its kind in Canada. The MEEI program was established through a $1 million donation from Xerox Canada in August 2004 directed toward the building of the new Centre for Engineering Entrepreneurship and Innovation. The first students were admitted to the program in January 2005. This program is a key component of the innovation activities at McMaster under the research portfolio.

Program Objectives

The objectives of the MEEI program are designed to meet a core focus on promoting the commercial success of technology innovation in North America through the development of highly-skilled entrepreneurs. MEEI provides the student with the opportunity to learn necessary skills and practice methodologies to translate scientific ideas into commercially viable goods and services.

The following general objectives exist for the MEEI program:

  • Train a new generation of scientists how to recognize and develop new technologies and to take the technologies to market
  • Apply industry proven commercialization processes within an academic environment
  • Provide business resources and network capabilities for student enterprise projects

McMaster Joint IP Policy

The Joint Intellectual Property Policy (approved in June 2004) covers anything created or discovered by any member of the three institutions (McMaster University, St. Joseph’s Hospital, and Hamilton Health Sciences) and is administered by the Office of Research Contracts and Intellectual Property (ORCIP). Intellectual property under the Joint IP Policy is defined not to include intellectual property that has not used significant institutional resources (the level of which shall be determined by the IP Board) or student works created independently as part of the academic requirements of a program or course of study (ref: 4.3(d)).

Patenting Activities in the MEEI Program

As a part of the MEEI program, students choose a project idea and see that idea through various due diligence stages of marketing and technical feasibility. Projects originate from a number of different places including:

  1. existing university or affiliated hospital research projects
  2. companies, organizations and institutions outside of McMaster from their own research projects (these include a relationship for example with the National Research Council)
  3. projects devised by the students themselves.

As part of the project, students are readying the project idea for the market. End results include venture capital financing for a new company, licensing of the idea or the adoption of a new product by the originating company, organization or institution. As part of the due diligence process, MEEI students will, at times, need to file patents on their project ideas to ensure their future competitive advantage or that of the groups they are collaborating with.

Rationale Statement

Rather than dealing with cases individually at the IP Board, it is useful to have a general agreement established that clearly defines the intellectual property (IP) rights between MEEI students and McMaster, in order to:

  1. motivate the students in their commercialization activities;
  2. clarify issues with external agencies, including government granting agencies, companies, and investors; and
  3. provide a fair distribution of economic benefit among all stakeholders.

Scenarios

Scenario 1 – McMaster owns the IP

Class of projects when this will happen:

  • In the class of projects where the MEEI project idea comes out of existing research at McMaster or an affiliated hospital and McMaster has been or will be paying the patent costs
  • In the class of projects where the student develops the idea independently, but chooses to have McMaster assist them with patenting costs or use significant resources of McMaster or the affiliated hospitals

How patenting and McMaster’s Joint IP Policy is applied:

  • University will assist in patenting and be responsible for costs.
  • Where the end result is a license to an existing company, distribution of such net royalty revenues are 50% to the original inventors; 25% to the MEEI student and 25% to the University (net royalty revenues will recoup McMaster’s patent costs prior to distribution among the parties). By using the percentages proposed, the original inventors do not see their percentage share otherwise available under the IP Policy reduced at all; the share for the MEEI student comes out of the University’s 50%. When the project is developed out of the student’s own IP, the student will be considered the original inventor and so will receive 75%.
  • Where the end result is a formation of a new spin-off company, the new company shall, over time, repay the University’s out-of-pocket costs for patenting and similar expenses. Additionally, the University shall receive a nominal stake of one percent (1%) non-dilutable shareholding in the spin-off in consideration for a license or transfer of the IP to the spin-off company. The non-dilutable nature means that the University’s share in the company is never reduced below one percent during the pre-IPO investment rounds in the company. The 1% share shall be in the name of McMaster only without further needing to share with anyone else under the IP Policy; it is expected that original inventors and anyone else who might share under the IP Policy would have received their own shareholdings in the spin-off company.

Scenario 2 – Student or Existing Company owns the IP

Class of projects when this will happen:

  • In the class of projects where an existing organization owns the IP
  • In the class of projects where the Student develops IP independently

How patenting and McMaster Joint IP Policy is applied:

  • If an existing organization owns the IP, it is expected that the organization will be responsible for patenting. In addition, the student should have entered into an agreement with that company, organization or institution that would have dealt with a number of the intellectual property issues including the payment of any patent costs. MEEI Program Administration and, in turn, ORCIP should be available to assist students in such negotiations. McMaster’s Joint IP Policy is not applied and there is no sharing with the University.
  • If the student owns the IP, he/she will be responsible for seeking and paying for independent patent counsel. McMaster’s Joint IP Policy is not applied and there is no sharing with McMaster.

Agreements Needed

In any case, where McMaster acquires equity in a company, McMaster will require a Shareholders Agreement, which will include terms normal for such an arrangement, including a method of valuing the shares at key events and milestones. In addition to the Shareholders Agreement, other required documents may include a license agreements and research contracts, if applicable.

Approval and Timeframe for this Agreement

This agreement has been approved for adoption by the IP Board on November 6, 2006. This agreement will be reviewed based on experience on or about June 30, 2009 by all parties involved and brought to the IP Board.