Introductory aspects of a Consortium Agreement and Intellectual Property Rights (IPR)

The CRAFT Contract (Model Contract) only states the responsibility of the project towards the European Commission (see chapter 6). To define the Intellectual Property Rights (IPR) and obligations between the project partners, a Consortium Agreement should be set up. It is advisable to use external help as this is an important and complicated matter.

1. A Consortium Agreement increases the chances of a successful collaboration between the partners, due to the following:

• It acts as a good introduction to the participating partners and gives each partner a chance to assess the other partners' goals and ambitions.

• Each partner will be able to get a clearer picture of what is expected of him/her.

• A good Consortium Agreement will discuss the potential problems likely to occur during the running of the project and the exploitation of the project results. This will facilitate problem solving.

• A Consortium Agreement takes care of aspects not covered, or not covered in detail, by the CRAFT Contract between the project and the European Commission. One example is the ownership of the results.

While working out the Consortium Agreement one should have the CRAFT Contract in mind and, when relevant, make references between the two. It is not possible to make any restrictions on the CRAFT Contract. If the two contracts are in conflict with each other, it is always the CRAFT Contract with the Commission that prevails.

At the end of this chapter you will find a detailed check-list of the topics that could be addressed in a Consortium Agreement. The check-list could be used as an index for the Agreement itself.

5.3 Protection and exploitation of knowledge and IPR

Ownership

The know-how each partner brings into the project is called pre-existing know-how (formerly called "background"). It is necessary to describe each partner's input, and state the ownership of this information.

The partner bringing the information into the project is normally the owner. This must always be taken seriously, especially when patents are involved.

Results created by the project are called knowledge (formerly called "foreground"). For CRAFT Projects these results are the property of the participating SMEs. The results can be protected by confidentiality clauses in the Consortium Agreement or by patenting. Confidentiality is not always easy to control and the Agreement can be used to describe the degree of sanctions, if confidentiality is not adhered to. Confidentiality clauses are set for a fixed period of time.

The SMEs can choose joint ownership of the results, or agree on giving the ownership to one of the SMEs. Joint ownership of patents requires detailed rules on who pays for what and who manages the patent. Having only one owner simplifies this procedure and makes it easier to arrange exploitation of the results, i.e. licenses.

Management of ownership in order to ensure good exploitation

The Knowledge is owned by the SMEs. SMEs are therefore responsible for exploiting the results. The way to do this will vary for different types of CRAFT Projects. Three different examples are described below.

Project A: Optimisation of a production process

An RTD Performer develops a forecast model to be applicable in the production process of the SMEs. The participating SMEs are the first to use the new technology under favourable conditions.

Ownership: The SMEs jointly own the results.

Exploitation: Dissemination of the results is carried out within the sector. The knowledge is made accessible to the sector through workshops and training.

Exploitation of the results is the responsibility of the SMEs, but in this example it is not part of their core activities. Therefore the R&D partner can be designated to exploit the results after an agreement with the SME owners. Third parties will have to buy the technology and training at commercial rates.

Project B: Development of equipment for a specific branch of industry

The RTD Performer brings part of the know-how and experience of a technology to the project. The SMEs supply process knowledge and specifications according to their needs.

Ownership: According to the CRAFT Contract, the SMEs own the results. If they do not have the means to exploit the results, the R&D partner can take over the responsibility and possibly the ownership as well. This must be settled in the Consortium Agreement.

Exploitation: If the ownership of the results is handed over to the R&D partner, the SMEs must set up an agreement. This agreement should give the SMEs access to the knowledge for their own use and preferably at a favourable cost.

The agreement should include statements that the SMEs:

• will receive a commission for machines sold by the RTD Performer

• will receive a discount when buying additional machines

• will receive free maintenance services

• will work as sub-suppliers of new machines.

Project C: New applications based on an existing patent

The RTD Performer has a patent that has so far only been used in the laboratory. The project leads to several new applications that can be patented.

Ownership: First of all it is important to agree on the conditions for the use of the existing patent (pre-existing know-how). This is touched upon by the CRAFT Contract but should be further detailed in the Consortium Agreement.

An RTD Performer often likes to own new patents based on an original patent. This can be agreed upon in cases where the SMEs do not have the means to exploit the results themselves. An agreement must be reached before the project starts, as the CRAFT Contract otherwise gives these rights to the SMEs. If such an agreement does not exist, the SMEs can apply jointly for the new patent.

Exploitation: This is the same as for Project B.

More information on protecting intellectual property rights can be found in section 8.

5.4 Definitions and general terms in the Agreement

Below some of the more important definitions and terms in a Consortium Agreement are explained.

Purpose and parties

Included in the introduction to the Consortium Agreement should be a general description with room for describing each party's intentions. Each party should name its representative on the project. The duration of the Agreement is to be defined. If the co-operation continues into the commercialisation phase, the duration of the Agreement will be longer than the research project.

Definitions

The important expressions used in the Consortium Agreement should be defined. Make references to expressions used in the CRAFT Contract (definitions in Annex II). Make sure that all parties understand the meaning of pre-existing know-how and knowledge.

Responsibility/liability

Responsibility/liability is to be considered between the project and the Commission, between the different project partners, as well as between the project and third parties.

The CRAFT Contract clearly states the responsibility of the project towards the Commission, but it does not specify how the liability is divided between the partners. This should therefore be integrated into the Consortium Agreement. A defaulting partner can be given the whole responsibility or the responsibility can be divided between the partners. However, it must not be in conflict with the CRAFT Contract. Indirect losses might occur during the period of the contract. If they are to be included in the Agreement, a clear definition must be added.

The responsibility/liability of the project towards associated partners and subcontractors can be agreed upon in the same way and in accordance with the same principles.

Organisation and administration of the project

How to run and steer the project is an important matter. Therefore the formal power of the project committee must be agreed upon by all involved. Committees and tasks should be defined withnames of persons, working routines and how to proceed if the partners do not find solutions that are agreeable.

Financial items

The sharing of project-related costs is described in the CRAFT Contract. The sharing of additional costs (e.g. related to commercialisation and income) should be addressed in the Consortium Agreement.

Governing law

Normally it would be logical to use the same governing law as used in the CRAFT Contract for the project. In most cases this would be the law of the Co-ordinator's country.

Language

It is important to agree on a language for the Agreement, both for publications and for the internal communications of the project.

Amendments to the Consortium Agreement

There should be a formal routine on how to treat possible changes in the Consortium Agreement. The routine should include a list with names of the different partners' representatives.

Resolution of conflicts Firstly one should have a set of guidelines for resolving a conflict internally. If the conflict cannot be resolved internally, it could be taken to an arbitration committee (specify where and how to choose judges) or to a national court. It is logical to choose the country of the Co-ordinator.

Additions to the Agreement

The CRAFT Contract and a project description (i.e. a technical annex of the CRAFT Contract) can be helpful additions.

Force majeure

Be aware that the expression force majeure is not interpreted in the same way in the laws of different countries. The CRAFT Contract also gives an interpretation.

5.5 Check-list for Consortium Agreements

The following check-list can be used as a starting point for drawing up a Consortium Agreement. All the items not have to be included.

• Introduction:
  • Recital

  • The history of the negotiations and the purpose of the Agreement

• The parties:
  • Names and, if so desired, addresses for communication

  • The parties' representatives

  • Co-ordinator

• Definitions:
  • The definitions in the CRAFT Contract

  • Compare particularly the definitions of knowledge and pre-existing know-how

  • Other definitions needed

• Purpose of the Agreement:
  • Name of the project and the RTD programme

  • Reference to the CRAFT Contract and the project

  • Only RTD or exploitation and commercialisation as well?

• Organisation and administration of the project:
  • Co-ordinator:
    • Obligations, possible deviations from the CRAFT Contract

    • Payment for the Co-ordinator's work

    • Any authority to bind or represent the other parties?

  • Project committee - administration committee:
    • Define possible forums for co-operation, information and control

    • The project committee's obligations and authority

    • The project committee's composition and meetings

    • The project committee's procedures for resolutions/decisions

• The duties and obligations of the contractors:
  • Part of the project programme

  • Additional work

  • Key personnel

  • Reports and accountings

  • Obligations to honour the CRAFT Contract and comply with the decisions of the project committee

  • Obligation to give notice

• Share of income and expenses/costs:
  • Sharing of actual costs

  • Sharing of income/royalties

  • Sharing of funds from the Commission

• Associated contractors and subcontractors:
  • Duty to notify the other parties and obtain their consent

  • Indemnity clauses

  • Confidentiality

  • Should they be bound by the Consortium Agreement?

• Ownership:
  • Introduction

  • Ownership of pre-existing know-how
    • Information brought into the project

  • Ownership of knowledge
    • Different solutions

  • Protection of rights
    • Patents

  • Confidentiality - publication

• Access rights:
  • Access rights
    • Compensation

    • Transfer conditions

    • Limitations on utilisation

  • Licensing
    • Conditions

    • Sub-licensing

  • Access rights to pre-existing know-how

  • Access rights to knowledge
    • Who has the right to exploit which knowledge

    • Joint exploitation

    • Royalties

    • Improvements

• Liability damages:
  • Liability towards the Commission
    • Joint and collective liability

    • Recourse

  • Liability between the parties

  • Default, remedies

  • Associated contractors, subcontractors

  • Limitations of liability
    • Claims from third parties

    • Indemnity clause

    • Force Majeure

• Duration:
  • Term and ordinary termination
    • Expiry date or specific circumstances

    • Compare the CRAFT Contract

    • Renewal

    • Termination on prior notice

  • Early termination
    • Consequences for the departing party

    • Consequences for the originator

• Variation of agreement, amendments:
  • In writing, procedures

• Final clauses/miscellaneous:
  • Governing law and jurisdiction

  • Language

• Resolutions of conflicts