"Assignee" redirects here. For the racehorse, see Assignee (horse).
An assignment (Latin cessio) is a term used with similar meanings in the law of contracts and in the law of real estate. In both instances, it encompasses the transfer of rights held by one party, the assignor, to another party, the assignee. It can also be a transfer of a benefit, including an equitable interest, according to established rules (at common law or in equity). The rights may be vested or contingent. The details of the assignment determines some additional rights and liabilities (or duties).
Typically a third party is involved in a contract with the assignor, and the contract is, in effect, transferred to the assignee. For example, a borrower borrows money from a local bank. The local bank receives a mortgage note and can thereafter transfer that note to a financial institution in exchange for a lump-sum of cash, thereby assigning the right to receive payment from the borrower to another entity. Mortgages and lending contracts are relatively amenable to assignment since the lendor's duties are relatively limited; other contracts which involve personal duties such as legal counsel may not be assignable.
The related concept of novation is not assignment. Rather than assigning only the rights to another party, novation involves the replacement of the original party with a new party or the replacement of the original contract with a new contract. Since novation creates a new contract, it requires the consent of all parties, but assignment does not require the consent of the nonassigning party, but in the case of assignment, the consent of the nonassigning party may be required by a contractual provision.
The assignment does not necessarily have to be in writing; however, the assignment agreement must show an intent to transfer rights. The effect of a valid assignment is to extinguish privity (in other words, contractual relationship, including right to sue) between the assignor and the third-party obligor and create privity between the obligor and the assignee.
Liabilities and duties
Unless the contractual agreement states otherwise, the assignee typically does not receive more rights than the assignor, and the assignor may remain liable to the original counterparty for the performance of the contract. The assignor often delegates duties in addition to rights to the assignee, but the assignor may remain ultimately responsible.
However, in the United States, there are various laws that limit the liability of the assignee, often to facilitate credit, as assignees are typically lenders. Notable examples include a provision in the Truth in Lending Act and provisions in the Consumer Leasing Act and the Home Ownership Equity Protection Act.
In other cases, the contract may be a negotiable instrument in which the person receiving the instrument may become a holder in due course, which is similar to an assignee except that issues, such as lack of performance, by the assignor may not be a valid defense for the obligor. As a response, the United States Federal Trade Commission promulgated Rule 433, formally known as the "Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses", which "effectively abolished the [holder in due course] doctrine in consumer credit transactions". In 2012, the commission reaffirmed the regulation.
Assignment of contract rights
Assignment of rights under a contract is the complete transfer of the rights to receive the benefits accruing to one of the parties to that contract. For example, if Party A contracts with Party B to sell Party A's car to Party B for $10, Party A can later assign the benefits of the contract - i.e., the right to be paid $10 - to Party C. In this scenario, Party A is the obligee/assignor, Party B is an obligor, and Party C is the assignee. Such an assignment may be donative (essentially given as a gift), or it may be contractually exchanged for consideration. It is important to note, however, that Party C is not a third party beneficiary, because the contract itself was not made for the purpose of benefitting Party C. When an assignment is made, the assignment always takes place after the original contract was formed. An Assignment only transfers the rights/benefits to a new owner. The obligations remain with the previous owner. Compare Novation.
When assignment will be permitted
The common law favors the freedom of assignment, so an assignment will generally be permitted unless there is an express prohibition against assignment in the contract. Where assignment is thus permitted, the assignor need not consult the other party to the contract. An assignment cannot have any effect on the duties of the other party to the contract, nor can it reduce the possibility of the other party receiving full performance of the same quality. Certain kinds of performance, therefore, cannot be assigned, because they create a unique relationship between the parties to the contract. For example, the assignment of a legal malpractice claim is void since an assignee would be a stranger to the attorney-client relationship, who was owed no duty by the attorney and would imperil the sanctity of the highly confidential and fiduciary relationship existing between attorney and client.
Torts are not assignable as public policy, and various statutes may prohibit assignment in certain instances. In addition, the Restatement (Second) of Contracts lists prohibitions in §317(2)(a) based upon the effect to the nonassigning party (obligor), with similar prohibitions in the Uniform Commercial Code §2-210. For example, UCC §2-210 states the following:
|“||Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreementotherwise [sic].||”|
Requirements for an effective assignment
For assignment to be effective, it must occur in the present. No specific language is required to make such an assignment, but the assignor must make some clear statement of intent to assign clearly identified contractual rights to the assignee. A promise to assign in the future has no legal effect. Although this prevents a party from assigning the benefits of a contract that has not yet been made, a court of equity may enforce such an assignment where an established economic relationship between the assignor and the assignee raised an expectation that the assignee would indeed form the appropriate contract in the future.
A contract may contain a non-assignment clause, which prohibits the assignment of specific rights and some various rights, or of the entire contract, to another. However, such a clause does not necessarily destroy the power of either party to make an assignment. Instead, it merely gives the other party the ability to sue for breach of contract if such an assignment is made. However, an assignment of a contract containing such a clause will be ineffective if the assignee knows of the non-assignment clause, or if the non-assignment clause specifies that "all assignments are void".
Two other techniques to prevent the assignment of contracts are rescission clauses or clauses creating a condition subsequent. The former would give the other party to the contract the power to rescind the contract if an assignment is made; the latter would rescind the contract automatically in such circumstances.
Requirement of a writing
There are certain situations in which the assignment must be in writing.
- Assignment of wages; additionally, statutes may prohibit this assignment
- Assignment of any interest in real property
- Assignment of choses in action worth over $5,000
A parallel concept to assignment is delegation, which occurs when one party transfers his duties or liabilities under a contract to another. A delegation and an assignment can be accomplished at the same time, although a non-assignment clause may also bar delegation.
Legal remedies may be available if the nonassigning party's rights are affected by the assignment.
Assignments made for consideration are irrevocable, meaning that the assignor permanently gives up the legal right to take back the assignment once it has been made. Donative assignments, on the other hand, are generally revocable, either by the assignor giving notice to the assignee, taking performance directly from the obligor, or making a subsequent assignment of the same right to another. There are some exceptions to the revocability of a donative assignment:
- The assignment can not be revoked if the obligor has already performed
- The assignment can not be revoked if the assignee has received a token chose (chose being derived from the French word for "thing", as in a chose of action) - a physical object that signifies a right to collect, such as a stock certificate or the passbook to a savings account.
- The assignment can not be revoked if the assignor has set forth in writing the assignment of a simple chose - a contract right embodied in any form of token.
- Estoppel can prevent the revocation of a donative assignment if the assignee changed their position in reliance on the assignment.
Finally, the death or declaration of bankruptcy by the assignor will automatically revoke the assignment by operation of law.
Breach and defenses
A cause of action for breach on the part of the obligor lies with the assignee, who will hold the exclusive right to commence a cause of action for any failure to perform or defective performance. At this stage, because the assignee "stands in the shoes" of the assignor, the obligor can raise any defense to the contract that the obligor could have raised against the assignor. Furthermore, the obligor can raise against the assignee counterclaims and setoffs that the obligor had against the assignor. For example, suppose that A makes a contract to paint B's house in exchange for $500. A then assigns the right to receive the $500 to C, to pay off a debt owed to C. However, A does such a careless job painting the house that B has to pay another painter $400 to correct A's work. If C sues B to collect the debt, B can raise his counterclaim for the expenses caused by the poor paint job, and can reduce the amount owed to C by that $400, leaving only $100 to be collected.
When the assignor makes the assignment, he makes with it an implied warranty that the right to assign was not subject to defenses. If the contract had a provision that made the assignment ineffective, the assignee could sue the assignor for breach of this implied warranty. Similarly, the assignee could also sue under this theory if the assignor wrongfully revoked the assignment.
Occasionally, an unscrupulous assignor will assign exactly the same rights to multiple parties (usually for some consideration). In that case, the rights of the assignee depend on the revocability of the assignment, and on the timing of the assignments relative to certain other actions.
In a quirk left over from the common law, if the assignment was donative, the last assignee is the true owner of the rights. However, if the assignment was for consideration, the first assignee to actually collect against the assigned contract is the true owner of the rights. Under the modern American rule, now followed in most U.S. jurisdictions, the first assignor with equity (i.e. the first to have paid for the assignment) will have the strongest claim, while remaining assignees may have other remedies. In some countries, the rights of the respective assignees are determined by the old common law rule in Dearle v Hall.
- Earlier donative assignees for whom the assignment was revocable (because it had not been made irrevocable by any of the means listed above) have no cause of action whatsoever.
- Earlier donative assignees for whom the assignment was made irrevocable can bring an action for the tort of conversion, because the assignment was technically their property when it was given to a later assignee.
- Later assignees for consideration have a cause of action for breaches of the implied warranty discussed above.
Special rules for assignment of certain rights
See also: Rule in Dumpor's Case and Privity of estate
Real property rights can be assigned just as any other contractual right. However, special duties and liabilities attach to transfers of the right to possess property. With an assignment, the assignor transfers the complete remainder of the interest to the assignee. The assignor must not retain any sort of reversionary interest in the right to possess. The assignee's interest must abut the interest of the next person to have the right to possession. If any time or interest is reserved by a tenant assignor then the act is not an assignment, but is instead a sublease.
The liability of the assignee depends upon the contract formed when the assignment takes place. However, in general, the assignee has privity of estate with a lessor. With privity of estate comes the duty on the part of the assignee to perform certain obligations under covenant, e.g. pay rent. Similarly, the lessor retains the obligations to perform on covenants to maintain or repair the land.
If the assignor agrees to continue paying rent to the lessor and subsequently defaults, the lessor can sue both the assignor under the original contract signed with the lessor as well as the assignee because by taking possession of the property interest, the assignee has obliged himself to perform duties under covenant such as the payment of rent.
Unlike a Novation where consent of both the lessor and lesse is required for the third party to assume all obligations and liabilities of the original lessee, an assignment does not always need the consent of all parties. If the contract terms state specifically that the lessor's consent is not needed to assign the contract, then the lesee can assign the contract to whomever the lesee wants to.
Absent language to the contrary, a tenant may assign their rights to an assignee without the landlord's consent. In the majority of jurisdictions, when there is a clause that the landlord may withhold consent to an assignment, the general rule is that the landlord may not withhold consent unreasonably unless there is a provision that states specifically that the Landlord may withhold consent at Landlord's sole discretion.
A person can also assign their rights to receive the benefits owed to a partner in a partnership. However, the assignee can not thereby gain any of the assignor's rights with respect to the operation of the partnership. The assignee may not vote on partnership matters, inspect the partnership books, or take possession of partnership property; rather, the assignee can only be given the right is to collect distributions of income, unless the remaining partners consent to the assignment of a new general partner with operational, management, and financial interests. If the partnership is dissolved, the assignee can also claim the assignor's share of any distribution accompanying the dissolution.
Intellectual property rights
See also: transfer (patent)
Ownership of intellectual property, including patents, copyrights, and trademarks, may be assigned, but special conditions attach to the assignment of patents and trademarks. In the United States, assignment of a patent is governed by statute, 35 U.S.C. § 261. Patent rights are assignable by an "instrument in writing." Title in a patent can also be transferred as a result of other financial transactions, such as a merger or a takeover, or as a result of operation of law, such as in an inheritance process, or in a bankruptcy. An assignment of a patent can be recorded with the United States Patent and Trademark Office. Although such recording is not required, if an assignment is not recorded at the USPTO within three (3) months or prior to a subsequent assignment, the assignment will be void against a subsequent assignee without notice of the earlier, unrecorded assignment.
With respect to a trademark, the owner of the mark may not transfer ownership of the mark without transferring the goodwill associated with the mark.
Companies sometimes request from employees that they assign all intellectual property they create while under the employment of the company. This is typically done within an Employment Agreement, but is sometimes done through a specific agreement called Proprietary Information and Inventions Agreement (PIIA).
Personal injury torts
The standard rule is that personal injurytort causes of action are nonassignable as a matter of public policy. These should be distinguished from final settlements or judgments resulting from lawsuits brought on such causes of action, which may be assignable.
In the majority of jurisdictions, assignments of legal malpractice causes of action are void as against public policy.
An equitable assignment is an assignment, or transfer of rights, in equity.
There are numerous requirements that exist for an equitable assignment of property, outside the 'standard' clear and unconditional intention to assign. These requirements are fundamental characteristics of a statutory assignment: Absolute assignment (an unconditional transfer: conditions precedent or part of a debt are not absolute) and the assignment must be made in writing and signed by the assignor, and in particular, this applies to real property.
Assigning future property in equity cannot be gratuitous. The assignor must receive consideration for the agreement, otherwise the assignment will be ineffective. However, an absolute assignment does not require consideration to be given. Secondly, between the period of agreement between assignor and assignee and acquisition by the assignor, the assignees rights are not contractual, but rather a proprietary right to the property. This means the assignee has an interest in this future property, in the same manner any owner has over property.
In equity, these principles operate to protect both the assignor and the assignee. In Norman v Federal Commissioner of Taxation, a taxpayer attempted to assign by deed, to his wife certain moneys which he was eventually going to receive. This included dividends and interest due on loans. The court held the interest and the dividends were expectancies or possibilities which could not be assigned without consideration. The court's worry was that assignments without consideration might be used as instruments of fraud, to avoid creditors and tax collection.
Courts will not enforce a contract to assign an expectancy unless there is a valuable consideration. For example, under a settlement of property the respondent "the son" would have been entitled to an equal portion of properties along with his other siblings which was gained in a settlement by his mother. This portion was only his when allocated to him at his mothers discretion. Prior to this allocation being made, the respondent allotted his benefit to trustees for a voluntary settlement. He was assigning or purporting to assign something which he might become entitled to in the future, not a contingent interest. The judgment held it ineffective and elaborated on previous points to state the respondent cannot be compelled to allow the trustees to retain the appointed sum.
- ^For the assignment of claim see Trans-Lex.org
- ^Australian Law Dictionary (second ed.). oxford university press.
- ^ abcNorman v Federal Commissioner of Taxation HCA 21, (1963) 109 CLR 9, High Court (Australia).
- ^Tips and traps in contracting: novation versus assignmentArchived January 26, 2013, at the Wayback Machine.. Association for General Counsel. (Australia).
- ^ abAssignee Liability: Through the Minefield. Arnstein & Lehr LLP.
- ^See 15 U.S.C. 1641(a).
- ^ abCommercial Paper: Holder in Due Course & DefensesArchived 2012-11-28 at the Wayback Machine..
- ^FTC Opinion Letter Affirms Consumers' Rights under the Holder Rule. FTC.
- ^ abcdStark T. (2003). Negotiating and Drafting Contract Boilerplate, Ch. 3: Assignment and Delegation. ALM Publishing.
- ^Chapter 18: Assignment and Delegation. LexisNexis study outline.
- ^Uniform Commercial Code § 2-210. Delegation of Performance; Assignment of Rights.
- ^Pony v. County of Los Angeles, 433 F.3d 1138 (9th Cir. 2006).
- ^Cowan Liebowitz & Latman, PC v. Kaplan, 902 So. 2d 755, 759-760 (Fla. 2005).
- ^Westbourne Grammar School v Sanget Pty VSCA 39, Court of Appeal (Vic, Australia).
- ^Conveyancing Act 1919 (NSW) s 23C.
- ^Federal Commissioner of Taxation v Everett FCA 39, (1978) 21 ALR 625 at p. 643, Federal Court (Full Court) (Australia).
- ^Northumberland (Duke) v Inland Revenue Comrs
Patent, Invention, and Copyright Policy
1. Patent and Invention Policy
|A.||This policy covers both patented and nonpatented innovations, including computer software with commercial value, and is applicable to all faculty, staff, and students. The policy is intended to show the University's positive attitude toward transfer of results of its research to the private sector.|
|B.||The purpose of university research is to seek new knowledge for the general benefit. Although university research is not directed intentionally toward inventions, commercially valuable inventions do often result, and it is generally in the best interests of the University and the public that patents be obtained and/or licenses granted as described in this policy. Inventions shall be promptly reported to the University's Office of Intellectual Property and Technology Transfer and all concerned shall cooperate to assure prompt initiation of appropriate technology transfer actions. The term "invention" means any invention or discovery which is or may be patentable or otherwise protectable as to ownership. An invention may be a process, machine, manufacture, composition of matter or design, or any new or useful improvement thereof. An invention is deemed to be "made" when it is conceived or first actually reduced to practice.|
|C.||University employees shall report all inventions and discoveries to the University's Office of Intellectual Property and Technology Transfer. As a condition of employment, and even if a specific patent agreement is not signed, University employees agree to assign all inventions in which the University has an interest to the University, to an invention management agency designated by the University, or to the sponsor if required under agreements governing the research. Employees shall execute documents of assignment and do everything reasonably required to assist the assignee(s) in obtaining, protecting, and maintaining patent or other proprietary rights. Students who are also employees, students working on a sponsored project, and students who have used University resources (other than for lecture-based coursework) shall also report all inventions and discoveries to the University's Office of Intellectual Property and Technology Transfer and shall assign all such inventions and discoveries in the same manner as University employees. Inventions in which the University has an interest but which do not meet University criteria for patenting shall be managed in accordance with policies and procedures determined by the University Office of Intellectual Property and Technology Transfer. If and to the extent permitted by state law and other University policies, those procedures may include:|
|1)||A mechanism by which the inventor(s) may personally pay patenting costs;|
|2)||The formation of a commercial enterprise to pursue commercialization; and, under very rare circumstances,|
|3) ||The transfer, for appropriate consideration, of the patent rights to the inventor(s). |
|These procedures shall be implemented at the discretion of the Vice Provost for Intellectual Property and Technology Transfer.|
Although all inventions and discoveries must be reported to the Office of Intellectual Property and Technology Transfer, there are instances when the University may choose not to assert ownership. The University will not require assignment of interests for any invention for which no equipment, supplies, facilities, or trade secret information of the University was used and which was developed entirely on the employee's own time, unless:
|1)||The inventions related:|
|a)|| Directly to the business of the University, or |
|b)||The University's actual or demonstrably anticipated research or development, or |
|2)||The invention results from any work performed by the employee for the University.|
|D.|| Research funded wholly or in part by an outside sponsor is subject to this policy as modified by the provisions of the agreement covering such work. Employees engaged in sponsored research are bound by the provisions of the agreement between the University and the sponsor. Title to any inventions conceived or first reduced to practice in the course of research supported by federal agencies, industry, or other sponsors shall generally vest in the University. In rare cases, an industrial sponsor may possess a dominant patent position in a certain technology area so that any patent the University might seek would be of little or no value. For this or other reasons, an exception to the University title policy may be approved by the University's Office of Intellectual Property and Technology Transfer when to do so will honor the general principles of this policy, protect the equities involved, and satisfy the requirements of the parties.|
|E.|| Industry supported research is valued by the University when it embraces a proper balance between the University's educational mission and industry's quest for the development of commercial products, processes, and services. Interaction with industry may take any of several forms, including grants, contracts, consortia agreements, and affiliate programs. Industry sponsors may be assured of at least a non-exclusive license to inventions conceived or developed with their support. Where the sponsor uses the invention entirely within its own operations, the license may be royalty-free. Where the sponsor, or a third party, manufactures and sells products, services, or processes based on the invention, reasonable royalty payments to the University, or its assignee, are required. If necessary for the effective development and marketing of a University invention, an exclusive license may be granted, usually for a limited time period. Where an invention is not identifiable in advance, the University may grant the sponsor an option to an exclusive license if the sponsor agrees to finance the cost of the University's patent application and observe certain diligence requirements that will assure promptly bringing the invention into public use. The patent financing may be treated as an offset against royalties payable when the invention is marketed.|
|F.|| The University retains the right to file patents itself or to use other patent management firms. The University has agreements with the Washington Research Foundation, Research Corporation Technologies of Tucson, Arizona and Battelle Development Corporation in Columbus, Ohio as patent and license agents.|
|G.|| Both the University and the inventor are entitled to a share of income from licensed inventions; the University on the basis of salary and facilities support for the inventor and the cost of patent or license administration; and the inventor on the basis of creative activity, documenting the invention, and assisting as necessary with commercialization. Thus, the University allocates a share of income to the inventor. The remainder is dedicated to further research by allocating shares to the college/department (or other unit) in which the invention was conceived or first reduced to practice and to the Office of the Provost.|
|H.||The University may take an equity position in a company whether or not license fees or royalties are paid to the University as part of a negotiated agreement. A typical circumstance under which the University might receive equity would be as part of an agreement licensing University-developed technology to a start-up or developing business venture. Another example might occur when an employee of the University utilizes the expertise and/or technology he or she has developed in the course of University employment and assists a business venture in the commercialization of an idea. (A business venture includes corporations, partnerships, or other commercial enterprises.) Such a commercial association with the University and its employees adds both value and credibility to the new business venture. To assure a balance of interests for the business venture as well as for the University, the University will generally require that it receive an equity position in such circumstances.|
The University's equity interests are managed and disposed of in accordance with guidelines established by the Treasury Office in consultation with the Office of the Provost and the policies and procedures stated in the Administrative Policy Statements, Board of Regents Governance, Employment and Administrative Policies, Faculty Code and Governance, Presidential Orders, and Student Governance and Policies. University employees may be eligible to receive a portion of the University's equity interest in accordance with the policies and procedures described in the University's Administrative Policy Statements and as allowed under state law and University conflict of interest policies. When such equities are liquidated, the net proceeds, after recovery of all University costs and after any distributions to eligible recipients, accrue to appropriate University accounts and are administered by the Provost to promote research and technology transfer across the entire University. If the proceeds from the disposition of a particular equity interest are unusually large, the Provost shall confer with the University Budget Committee, the Research Advisory Board, or other appropriate faculty bodies, on alternative uses for amounts in excess of a base figure (set at $3 million in 2000 dollars).
There may be situations in which both the University and its employees separately own equity interests in a business venture. In such circumstances, the employee's equity interest is considered to be independent of the University's equity interest and is not held, managed, disposed of, or distributed by the University. An example would be a case in which the University receives an equity interest in a business venture as a result of licensing certain intellectual property developed by one of its employees and in which the same employee also owns a equity interest as a result of being a founder of the business venture receiving the license. In this example, the employee's equity interest is not held or managed by the University, but rather by the employee, and the employee's status as a founder having an ownership stake in the business venture renders the employee ineligible to receive a distribution of a portion of the University-owned equity.
|I.|| As a public institution, the University should undertake sponsored research only when the results can be published. Publication may be deferred for a reasonable time during which the University and the sponsor review the feasibility of patent coverage or other protection on an invention described in the publication. Likewise, graduate student theses or dissertations containing invention details may be withheld from the Library shelves for a limited period while this evaluation process is conducted. Some research agreements may involve University access to a sponsor's proprietary data subject to a clause defining the conditions under which such data will be identified, accepted, and used. Students should be able to participate in such research in a meaningful way without access to proprietary data. When publication of the research involving proprietary data is contemplated, the University may agree to provide the sponsor with advance copy prior to submission for publication to allow the sponsor an opportunity to identify any inadvertent disclosure of proprietary data.|
|J.|| Employee consulting with commercial enterprises can be of significant benefit to the University, the employee, the commercial entity, and the general public. However, such involvements include the potential for conflicts of interest, for the inhibition of the free exchange of information, and for interference with the employee's primary allegiance to the University. University employees should be guided in these arrangements by the policy stated in Executive Orders No. 32, No. 35, No. 43, and No. 57. Invention clauses in consulting agreements must be consistent with the policy of the University and with University commitments under sponsored research agreements. Questions concerning potential conflicts should be referred to the University's Office of the Provost and the Office of Research.|
|K.||Conflicts of interest are of prime concern when a faculty member is involved in "deeper than consulting" arrangements with business ventures. Although the faculty member may hold an equity interest or a management position in a business venture, he or she must do so consistent with the principles and procedures of Executive Order No. 57, Section 6, "Involvement with Commercial Enterprise, Deeper than Consulting." In situations where the employee is a board member, manager, or receives shares of stock, the option to purchase stock, or other equity interest in return for the use of his or her services and/or inventions in a business venture, approval by the Office of the Provost (after review by the dean and the chair) is required. The primary focus of the review by the Office of the Provost will be to ensure that potential conflicts of interest and exposure to liability are properly managed. For example, the interests of the graduate students involved in such cases must be protected, there must be no direct managerial involvement of the faculty member in the business venture, there must be an arms-length relationship between the faculty member's responsibilities to the business venture and the faculty member's academic responsibilities, and mechanisms must be in place to ensure that the research program of the faculty member is not distorted by his or her interests in the business venture.|
2. Copyright Policy
The University encourages the publication of scholarly works as an inherent part of its educational mission. In this connection, the University acknowledges the right of faculty, staff, and students to prepare and publish, through individual initiative, articles, pamphlets, and books that are copyrighted by the authors or their publishers and that may generate royalty income for the authors.
The variety and number of copyrightable materials that may be created in the university community have increased significantly in recent years as have the author-university-sponsor relationships under which such materials are produced. Therefore, the following statement of University policy on ownership and use of copyrightable materials is provided to clarify the respective rights of individuals and the University in this increasingly important area. The policy will be administered by the University's Office of Intellectual Property and Technology Transfer.
|B.||General Statement of University Policy on Ownership and Use of Copyrightable Materials|
University faculty, staff, and students retain all rights in copyrightable materials they create, including scholarly works, subject to the following exceptions and conditions:
|1)||Grant and Contract Limitations|
Conditions regarding rights in data or restrictions on copyright privileges contained in sponsored grants, contracts, or other awards are binding on the University and on faculty, staff, or student authors. Copyright works, with the exception of routine progress reports, prepared as required elements of such sponsored grants, contracts, or other awards shall be reported to the Office of Intellectual Property and Technology Transfer for review prior to any external dissemination of the work. If necessary to fulfill grant and contract limitations, authors shall execute an appropriate written assignment of copyrights to the University.
Materials shall be "University-owned" within the meaning of this policy statement if the work is a "work for hire" under copyright law or the author was commissioned in writing by the University (or one of its colleges, schools, departments, or other divisions) to develop the materials as a part of the author's regularly compensated duties, as for example, released time arrangements in the case of faculty members. As to a faculty member, "commissioned in writing" specifically does not refer to his or her general obligation to produce scholarly works.
Materials shall be "University-sponsored materials" within the meaning of this policy statement if the author developed the materials in the course of performance of his or her normal duties and utilized University staff, resources, or funding to develop the work. As to a faculty member, "normal duties" does not include his or her usual scholarly activity unless it involves extensive uncompensated use of University resources.
It is desirable to reach agreement in writing as to the rights of the University and of participants before work begins whenever:
|a)|| A question exists as to whether the materials will be University-owned or University-sponsored, or |
|b)||Copyrightable materials are likely to result from the joint efforts of persons in academic departments and University service departments. |
|As to jointly-developed materials, determination of rights in written form shall be accomplished no later than prior to sale of the materials in question. Questions concerning the interpretation and administration of this policy shall be resolved in accordance with Section 3.|
In case of materials developed in substantial part under commission and in substantial part through other means, the materials shall be regarded as "University-owned" in an appropriate proportion. In the case of materials developed in substantial part during the course of normal duties and with use of University staff, resources, or funding the materials shall be regarded as "University-sponsored" in an appropriate proportion.
|6)||Royalty-Free Privileges to University|
The University retains a right to royalty-free use of any copyrightable materials developed by University employees (other than books and materials available from a publisher through normal distribution channels) when the development of such materials was advanced through the use of University facilities, supplies, equipment, or staff services. This right exists even though the materials do not constitute University-owned or University-sponsored materials as defined above (e.g., where use of facilities by a faculty member was not extensive).
Students employed by the University in any capacity are covered by the terms of this policy. In addition, where a student receives financial aid or remuneration under a sponsored research, training, or fellowship program, his or her rights in copyrightable materials are limited by the terms of the University agreement with the sponsoring agency. The University has no ownership rights in copyrightable materials developed by students who are not employees of the University or in materials unrelated to their employment.
|C.||Types of Materials|
The types of materials to which this policy is intended to apply include:
|1)||Video and audio recordings, tapes, and cassettes.|
|2)||Film, film strips, and other visual aids.|
|3)||Books, texts, study guides, and similar published materials.|
|4)||Computer programs and software when copyright rather than patent or trade secret protection is relied upon as the primary source of legal protection. (When the primary commercial value of a computer program lies in its transfer in limited quantities under arrangements of confidentiality, it shall be treated as unpatented technology and be subject to the University Patent and Invention Policy.)|
|5)||Musical or dramatic compositions.|
|6)||Internet-based productions and multimedia products.|
|7)||Other copyrightable materials.|
|D.||Rights Involved in Use of University-Owned or University-Sponsored Materials|
|1)|| Two categories of use are differentiated for purposes of this policy: internal use and external use. Internal use refers to use by any unit of the University for instruction, research, or other educational purposes. External use refers to use by other educational institutions, government and other nonprofit institutions, and use resulting from lease or other contractual arrangements for commercial distribution of the materials.|
|2)|| Use of University-owned or University-sponsored materials under this policy shall be subject to the following conditions:|
|i)|| Each instance of use of such materials within the University requires the approval of the author and the department or college unless advance approval is waived through a prior written understanding or the author's consent is implicit in the terms of the grant or contract supporting the work. Internal uses of such materials will not involve a transfer of funds between departments unless the lending department incurs incremental costs in order to make the materials available.|
|ii)|| As long as the author or producer of such materials remains an employee of the University, the author may: |
|iii)|| If the author or producer terminates employment with the University, then the University retains the right to continue internal use of the material unless the author/producer and the University agree in writing on special conditions for subsequent internal use of the materials and the procedures for their revision.|
Licensing or sale of University-owned or University-sponsored materials for external use shall be preceded by a written agreement between the University and the author or producer specifying the conditions of use, and including provisions concerning the right of the author or producer to revise the materials periodically, or to withdraw them from use—subject to existing agreements—in the event revisions are not feasible.
|E.||Division of Royalties|
|1)||General Policy on Royalties|
As to University-owned materials, all royalties and income should inure to the University and its schools, colleges, and departments as such materials are prepared in exchange for agreed compensation. As to University-sponsored materials, a sharing of royalties and income is appropriate because of the author's provision of creative efforts on the one hand and the University's provision of salary, facilities, administrative support, and other resources.
|2)||Royalties on Sales to Outside Users|
Where University-owned or University-sponsored materials are to be sold or rented to outside users, the following guidelines pertaining to financial arrangements should be observed (subject to any limitations specified by granting agencies):
|a)|| All incremental expenses related to the distribution of copies will be recovered from each sale or rental. Original costs for production of the materials shall be recovered only if and as agreed to in writing prior to preparation of the materials by the author and the academic departments and/or other University units which incur those costs.|
|b)|| In the case of University-owned materials, royalty and other income from sale or use of the materials (after recovery of costs as specified in Subsection 2.E.1 above) shall be divided one-half to the University and one-half to the school/college/department of the author or authors. The University share shall be used to promote research across the whole University and shall normally be administered by the Office of Research. The school/college/department share shall be allocated to the dean of the college or school, and may be used for research, education, and communications. At least 75% of this share should normally go to the author's department for use there according to departmental and college goals. The dean should have discretion in distributing the remaining 25% to promote activities according to the nature and needs of the college or school in question.|
|c)|| In the case of University-sponsored materials, royalty and other income from the sale or use of materials (after recovery of costs as specified in Subsection 2.E.2.a above) shall be divided according to the Administrative Policy Statement 59.4, "Technology Transfer." In any given case covered by this subsection, the author may dedicate all or any portion of his or her allocation to the school/college/department, the Office of Research, or other administrative unit, subject to the provisions of Administrative Policy Statement 59.4).|
|d)|| In certain instances it may be advantageous to market University-owned or University-sponsored materials through outside commercial sources or the University Press. Net royalty income from such sources shall be divided as specified in Subsections 2.E.2.b and 2.E.2.c.|
|e)||Royalty and other income from updating and revision of University-sponsored materials shall be treated as income and royalty from such University-sponsored materials, unless otherwise agreed to in writing by the author/producer and the University before preparation of the original materials. The net income from such upkeep or revision shall be separately computed on an annual basis for the purpose of applying the distributions referenced in Subsection 2.E.2.c.|
|F.|| Protection and Liability|
The Office of Intellectual Property and Technology Transfer shall investigate allegations of unauthorized use or copyright infringement of University-owned and University-sponsored materials and shall recommend appropriate action. If such action is started by the University, all costs of such action shall be borne by the University. All proceeds in excess of such costs shall be shared as provided in Subsection F (subject to sponsoring agency limitations if a grant or contract is involved).
When there are allegations of violation of personal or property rights by the University, or by the author or producer of University-owned or University-sponsored materials copyrighted by the University, the University shall assume responsibility for the defense of any action and the satisfaction of any judgment rendered against the University or the author or producer (per Board of Regents Governance, Standing Orders, Chapter 5).
3. Interpretation and Administration of Policy
|A.|| The President has designated the Vice Provost for Intellectual Property and Technology Transfer as the officer of the University to administer, apply, and interpret the provisions of this policy. The Vice Provost shall have the authority to determine whether the facts of a given case merit special consideration.|
The President of the University will appoint an Intellectual Property Management Advisory Committee to review periodically the policy set forth in this statement and recommend such changes to the President as the Committee deems desirable. The Committee will also advise on broader intellectual property issues that arise in the promotion and protection of research. The Committee will report to the Vice Provost for Intellectual Property and Technology Transfer and consist of no fewer than five members, a majority of whom shall be chosen from the faculty.
|C.||Distribution of Statement|
When this statement becomes effective as University policy, the President's office shall see that all departments and administrative offices of the University are properly informed. Thereafter, the Vice Provost for Intellectual Property and Technology Transfer shall remind deans and department heads periodically of the existence of the policy, inform them about any significant interpretations of the policy, and invite comments or questions regarding it.
|D.||Duties of Vice Provost for Intellectual Property and Technology Transfer|
The Vice Provost for Intellectual Property and Technology Transfer shall manage the Office of Intellectual Property and Technology Transfer, which will represent the University in negotiating agreements with inventors, authors or producers, or licensees pursuant to this policy. She or he may consult also with department heads and the heads of production units involved in a specific technology transfer transaction, and she or he shall sign or recommend all agreements for signing consistent with delegated authority. Where copyright coverage should be obtained on University-sponsored or University-owned materials, the Office of Intellectual Property and Technology Transfer will facilitate the copyright application. The faculty or staff member who is the author of University-owned or University-sponsored materials shall execute a written transfer of copyright to the University when necessary or appropriate.
|E.||Inquiries on Status of Materials|
Any faculty or staff member who has a question as to whether or not particular materials will be considered University-owned or University-sponsored should initiate an inquiry to the Office of Intellectual Property and Technology Transfer as to their status. This inquiry, with all relevant facts, should be forwarded via the author's department head. Thereafter, the Vice Provost for Intellectual Property and Technology Transfer shall advise the author or producer as promptly as possible as to whether or not it appears that the materials should be regarded as University-owned or University-sponsored within the meaning of this policy. The Vice Provost for Intellectual Property and Technology Transfer's decision in such cases will be considered as an advisory opinion subject to final clarification when the work is completed. At that time, the faculty or staff member should either:
|1)||Indicate concurrence in the original decision, or|
|2)|| Request that the question of rights be submitted for decision to the Vice Provost for Intellectual Property and Technology Transfer.|
|In the latter case, the decision of the Vice Provost will be final unless the faculty or staff member requests arbitration of the question.|
In the event of any differences between faculty or staff members, on the one hand, and the Vice Provost for Intellectual Property and Technology Transfer, on the other hand, and when the questions cannot be reconciled by direct negotiation, the matter shall be submitted for binding arbitration either to a single arbitrator agreed on by all parties or to a special three-person panel consisting of one person representing the faculty or staff member, one person representing the University, and a third person designated by the first two. Knowledgeable members of the University community will normally be chosen for such panels in order to expedite a decision and minimize cost. In the event costs are incurred, they shall be divided equally between the faculty/staff member and the University. Decisions of the panel will be binding on both parties. The panel shall have full access to any pertinent records over which the faculty/staff member or the University has jurisdiction.
BR, March 1969; Executive Order No. 36 of the President: June 1, 1972; October 3, 1977; September 26, 1983; September 21, 1992; May 2, 2000, December 20, 2000; October 27, 2003; RC, May 7, 2015.
For related information, see:
- Administrative Policy Statement 59.4, "Technology Transfer"