International Journal of Intellectual Property Law, Economy and Management 1 (2005) 19–25

Recent Developments in the Business of Patent
LicensingTechnology Transfer from Universities and Research Institutions to Industryin Germany
Heinz Goddar
European/German Patent Attorney, Boehmert & Boehmert

1. Historical Development
Before early 2002, more precisely, before February 7,
2002, technology transfer, particularly by way oflicensing, from research institutions and universities inGermany to industry took place in a very indirect way
only. The reason was that until then, as it will be
explained in more detail below, inventions made byuniversity professors and other individuals of a similar
status belonged to such professors themselves. As aconsequence, the inventors and professors directly had
the right to transfer such inventions, e.g. by licensing,to industry cooperation partners. Typically, suchresearching professors had consultancy agreementswith industry partners, which provided for financial
contributions of the industry partner to the respective
professor, such financial benefits for the professor
either already including the remuneration for theinventions made by the professor under such a project,later on to be assigned and transferred to the industry
partner, or such cooperation and consultancy agreements including license regulations for such inventions.
As a consequence of the aforementioned“Professor’s Privilege,” universities and similar
research institutions did not acquire ownership of thesometimes most valuable inventions made at suchinstitutions by professors, rather, without leaving any
trace in statistics of patent offices listing patent applicants and patentees, as far as ownership of such patentapplications and patents by universities and research
institutions were involved, the licensing and technology transfer, respectively, took directly place between
the individual inventors (professors) and industry.
Things have changed dramatically since then,because on February 7, 2002, the Professor’s Privilege
was abolished. Since then, universities have the possibility to obtain ownership of inventions made by pro-ISSN 1349-7723© 2005 IPAJ All rights reserved.

fessors, too, like private companies from their employees, so that since then no direct technology transfer, inthe sense of purchasing and/or licensing-in ofpatentable technology, from university researchers,
particularly professors, to industry, can take place anymore. Rather, industry in general will have to conclude, as it will be shown below in more detail, anagreement with both the professor and the university,
namely with the latter to get hold of patentable inventions, and with the professor in order to get certain
rights and declarations from him/her which universities and research institutions because of the binding
provisions of the German Law concerning Inventions
made by Employees cannot get from the professor.
Technology Transfer from universities and research
institutions in Germany to industry being largely ruledby the last-mentioned law, in the following just designated as “The Law,” in the following the basic principles thereof will be described, as far as they are relevant for university inventions, followed by a proposal
for a “trilateral agreement” of the aforementioned
kind, well-known, in the meantime, in the legal art inGermany — and beyond — as “Berlin Agreement.”

2. Inventions made by University
Employees — Old Law
The “Old Law,” by the former version of Art. 42, provided for inventions of professors, lecturers and scientific assistants to be free, i.e. all such inventions were
not subject to the restricting regulations of The Law as
far as owner-ship and evaluation of inventions by
employees, whether in private or in public service, areconcerned. The aforementioned regulation privileged
the aforementioned group of persons to a high extent
and was the basis for most of the cooperations between
university institutes and private sponsors, in order tocreate “independent” inventions in the sense that the19

H. Goddar

sponsor could get hold thereof.
As a matter of course, professors only could use theaforementioned provisions fully if they made sure thatno other “normal” employees of the university wereinvolved in the coming into existence of inventions of
the kind in question. Very often this was done by making sure that contributions to the invention only camefrom students, post-graduate scholars etc., all of which
do not get into a regular employment arrangementwith the university and the professor, respectively,
rather only into a kind of private non-employment, butsponsored semi-tutorship under the respective professor.
If it was not avoidable that the university professor
etc. makes use of “normal” employees in public service, e.g. of the university, including public servants,
the above mentioned flexibilities of the Old Law had
to be taken into consideration, namely with regard toparticipation of the universities etc. in the profits madeout of such inventions.
It should be duly noted, however, that par. 42 of the“Old Law” even in cases of inventions made by professors etc. gave the possibility that the university in acase where specific university means were used for the
coming into existence of the respective invention, theuniversity might participate in the profit achieved by
the professor etc.
According to the personal experience of the author,
however, in most instances the aforementioned possibilities of universities to participate in the profit madeby “normal” employees, public servants and professor,
practically never were used.
Art. 42 of The Law was replaced, on February 7,
2002, by a new article 42.

3. University Inventions — New Law
The new Law, by the revision of Art. 42, has given up,
first of all, any distinction between inventions made, atuniversities, by “normal” employees, like workers, scientific personnel of a “non-professor” nature etc., provided that these employees have to do with researchmatters, and those of professors/assistants/lecturers.
All inventions made by employees, active inresearch, at universities are covered by the Law,
including those made by professors, assistants and lecturers, in the following just designated as “professors,”in other words, the so-called “Professors’ Privilege”
has been deleted.
Also the new Law, however, does not cover inventions made by “non-employees” at universities, likestudents, scholars etc., so that in these cases special

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regulations will have to be found on a contractual basis
between professors, universities, sponsors, etc.
All inventions made by university employees,
including professors, will now have to be notified tothe university, but only, if the inventor intends and isin agreement with, respectively, publication of her/his
invention. If the inventor does not wish to publish, e.
g. in cases where he/she considers a publication to be
detrimental to public security, health, morality considerations etc., there is no duty to notify the invention to
the university.
Two months after the notification of the invention to
the university the inventor is entitled to publish therespective invention.
Within the normal “claiming” term, i. e. up to fourmonths after the notification of the invention has been
received by the university, the university can unrestrictedly claim the invention and therefore acquireownership thereof, as in private practice.
Factually, however, the aforementioned four-monthterm which otherwise in private industry is available
for a decision on whether to claim an invention andpatent it or not for universities is restricted to twomonths, because of the regulation that the inventor“regularly” may publish two months after his notification of the invention to the university. That means, inpractice, that universities that wish to patent inventions
made by employees, such as professors, will only begiven two months for this decision process, including
formulation of a patent application and depositing it ata patent office, e.g. the German or the European Patent
Office!
If the university has claimed the invention and thereby has acquired property thereof, and if the university
later uses the invention e.g. by selling it or licensing itout, the inventor is entitled to 30% of the grossincome, as royalty income, from the university.
The new Law applies to all inventions, as alreadysaid, made by university employees after February 6,
2002. If carriers of the former Professors’ Privilege,
because of existing contracts concluded with private
cooperation partners, like industry companies, before
July 18, 2001, are obliged to transfer their obligations,
as it formerly was usually the practice in Germany, tothe cooperation partner, the Professors’ Privilege forsuch inventions is extended to be applicable until
February 7, 2003. Inventions made from February 7,
2002, till February 7, 2003, in other words, are still
subject to the Professors’ Privilege, if the aforementioned conditions are fulfilled. Even if existing agreements provide for differently, inventions made after
February 7, 2003, by professors will be subject to theRecent Developments in the Business of Patent Licensing

new law, i.e. the universities will also in these cases
have the possibility to acquire ownership of suchinventions by claiming, with the remuneration consequences as discussed above.
With all probability, the revision of the law which
has already taken place in Germany, ending nearly 60
years of the Professors’ Privilege, will lead to theresult that all inventions made at universities in future
will become available to the university for evaluation.
First experiences since the coming into force of the
new Article 42 of The Law have already proven this.
For evaluation purposes, universities in Germany are
now all provided with pullystaffed intellectual asset
management offices, as has been known for many
years from e.g. U.S. universities. In Germany, departments of this kind had very little to do in the past,
because the most valuable inventions, made by professors, were taken out of the universities’ hands by private cooperation agreements, as already discussed
above. This practice has now finished Private industry
has to negotiate with universities in order to get holdof e.g. by licensing, university-based inventions, even
if the cooperation partners of the industry company areprofessors, with whom otherwise a more or less “private” deal had been made in the past.
The rather high remuneration of university inventors, namely 30% of the gross e.g. royalty income of
the universities, which is distinctly higher than normal
remunerations paid for employees’ inventions in private industry, has already led to the result that many
more university inventions are notified to the universities, the latter taking care of all patent application andevaluation procedures etc.

4. Agreements on Research Cooperation
between Industry and University — The“Berlin Agreement”
Immediately after the coming into force of new Art. 42of The Law, it became clear to universities, industry,and legal scholars in Germany that a prosperous futureof successful technology transfer from universities andresearch institutions to industry would depend on thedevelopment of a contract or agreement structure of atrilateral nature, namely between potential university
inventors, i.e. professors, universities, and industry, inorder to fulfil the following conditions: First of all,because of the binding character of new Art. 42 of The
Law, the agreement would have to regulate that inventions made under a certain research project between auniversity and industry were, a) reliably brought into
the possession of the university, by using the binding

provisions of The Law, which also apply in private
industry, (so-called “unrestricted claiming” of inventions), and b) would also regulate the remunerationindustry would have to pay to the university for suchinventions, as royalties, from which, on the other hand,again because of the binding character of new Art. 42of The Law, the university inventors are entitled to get
30%. Furthermore, industry would like to ensure thatthe inventing professors etc. would not only, maketheir inventions available to industry via the university,rather industry would also like to be sure that the professors would also give consultancy services, in connection with such inventions, to industry, and also
would promise to transfer to universities even suchinventions which they would not like to publish —otherwise, the professors according to Art. 42 of The
Law would be entitled to “hide” such inventions until
they choose to publish. All these legal effects can only
be obtained by an agreement between industry and theprofessor.
As a result, the necessity of having a trilateral agreement of the kind already discussed was acknowledgedby practically all interested parties in Germany.
As a consequence thereof, a group of experts fromboth the university environment and industry, namely,
consisting, as far as universities were concerned, of
TLO experts from Berlin universities, mainly represented through “ipal Gesellschaft für PatenverwertungmbH,” the central TLO for the majority of the Berlin
universities, and in the case of industry comprising a
number of large German companies, like BASF,
Bosch, DaimlerChrysler, Schering, and others, havenegotiated components of a master agreement which
can be used, and currently is widely used, in researchcooperations between German industry and universities. The result of the aforementioned discussions andnegotiations between universities and industry, moderated by the author of this article, has been the current
already rather famous “Berlin Agreement” or “Berlin
Contract,” details of which can be found under
www.ipal.de, including comments and updatings, byanybody interested in in-depth knowledge and additional explanations.
In the following, as already discussed in an article
written by the author of this paper and Mr. Hermann
Mohnkopf, IP Counsel for Rolls-Royce Deutschland
Ltd. & Co. KG, Germany, published in Les Nouvelles
December 2003, pp. 176 ff., based on the aforementioned paper the “Berlin Contract” will be discussed in
more detail.

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H. Goddar

4.1. Structure and Organisation
A preface dealing with the genesis and the proposed
practical application of the Berlin Contract is followed
by a brief introduction, which is intended to explain
how the Contract components are to be handled. Thisis then followed by differentiation indicia for theContract components in the Berlin Contract, which, it
is hoped, will facilitate assigning a specific jointresearch project between a university and industry to
one of the categories of a contract for work and services, research commission or co-operation on
research. These differentiation indicia should not be
understood here as alternatives, nor should they apply
cumulatively, but, as the very name suggests, they are
merely intended to provide the practitioner with pointers to help him make the appropriate assignment.
After the above-mentioned list of “differentiation
indicia” come Contract components for research commissions between universities and industry, followed
by appropriate Contract components for co-operation
on research and development, which is referred to in
the following as “research co-operation.”
4.2.

Pointers Helping to Differentiate between
Contracts for Work and Services, ResearchCommissions, and Research Co-operation
4.2.1. Contracts for work and services
If an industrial partner commissions a university tocarry out certain research work, with an unambiguous,
known objective and lays down a defined way of performing that work, the university will generally
demand that the entire costs are assumed. The university, in the person of the research worker — here andin the following usually understood to mean the “project director” responsible —, is not required to interpret data or results in any way; neither the university
nor the industrial partner has any interest whatsoever
in publication. The result of a contract for work andservices of this kind is an obligation owed by the university to the industrial partner. In this case, according
to the Berlin Contract — and one is tempted to say that
this ought to be self-evident! — all the results of theresearch, including any inventions that might be madeby the university, i.e. by the research worker or by anyother member of the university, belong to the industrial
partner without any additional remuneration, and it is
the latter which decides at its own discretion whether
to file applications for any industrial property rights, toengage in exploitation actions, etc. It goes without saying that any applications for industrial property rights
are filed by the industrial partner exclusively in its
own name, without any right whatsoever on the part of22

the university to participate.
4.2.2. Research commissions
In the context of research commissions, the industrial
partner places a targeted commission with the university to carry out certain research work, the result of
which is nevertheless open, but the way of performingthat work and the purpose of the study are defined. In
this case too, the university will expect the entire costs
to be assumed. The data or results have to be interpreted by the research worker. The industrial partner, having placed the commission, will as a rule be interested
in receiving the results at short notice or at least onschedule. The university, or the research worker, fortheir part have an interest in seeing the results published. In this case, no successful result is owed by theuniversity.
The parties involved in drawing up the Berlin
Contract are unanimous in their opinion that, when
research commissions are organised in this way, theuniversity has a fundamental right to remuneration for
any invention. The rights in the inventions concerned,
including the right to file the first application and tocarry out subsequent applications in other countries,
also need to be settled in detail.
4.2.3. Research co-operation
In the case of research co-operation, the industrial
partner places a research commission with the university, the objectives and results being open; the implementation is not defined in detail, and the intended
practical application is neither known in detail nor
definitively laid down. Both partners, i.e. the university and the industrial partner, contribute to carrying out
the research project on which they are co-operating by
providing personnel and/or assuming a share of thecosts. The industrial partner, having placed the commission, has a medium to long-term interest in the outcome, both partners have a pronounced — and possibly a joint — interest in publishing the results. In thiscase, the university has no obligation vis-à-vis theindustrial partner regarding the success of the research
co-operation agreement.
The parties involved in drawing up the Berlin
Contract are unanimous in their opinion that, in thecase of research co-operation, the industrial partner
has a separate obligation to remunerate the university
for any invention, the details of which need to be settled depending on the situation, as do the filing rights
with regard to patents, etc.

Recent Developments in the Business of Patent Licensing

4.3.

Features Common to Research Com-missions
and Research Co-operation
A common feature of the contractual arrangements
both in the case of research commissions and withregard to research co-operation is that, for the reasons
which have in the meantime already been discussed indetail in the literature, a “trilateral” contract between
the university, the industrial partner and the research
worker is necessary.
Briefly, this necessity is based on the fact that,
because of the pre-emptory provisions of the law onemployees’ inventions, it is only possible for the contractual agreement between the university and theindustrial partner to regulate the situation concerning
rights, and obligations to acquire the rights etc., ininventions which can be covered by patents or utility
models. Any additional know-how and advisory services which the industrial partner wishes to receive “inperson” from a specific research worker who is particularly important to him as a co-operation partner (e.g.
a professor) can only be reliably obtained by the industrial partner on the basis of an appropriate contractual
agreement with the research worker himself, since any“indirect route” via the university might in this caseaffect the research worker’s personal rights withregard to research and teaching, which are guaranteedby the constitution.
A direct agreement between the research worker andthe industrial partner is also needed if the research
worker is to waive his negative publication rights. The
same applies to any advance waiver of the research
worker’s right to take over any applications for industrial property rights or the industrial property rights
themselves and to file applications in other countries.
For the reasons explained above, the members of theworking party consider it appropriate, both in the caseof research commissions and with regard to research
co-operation, to conclude a “tripartite agreement”
between the university, the industrial partner and theresearch worker. “Research worker” here is understoodto mean the project director responsible who has been
appointed by the university and the industrial partner.
If — and this is likely to apply in most cases — othermembers of the university, whether students or university staff (employees), are involved in carrying out thework on the research project concerned, it needs to beensured in advance, by means of an appropriate declaration of association, that the obligations of the project
director also apply, mutatis mutandis, to that group ofindividuals.

4.4.

Contract Components for ResearchCommissions
According to the model contract, research results arising from a research commission belong exclusively tothe industrial partner, irrespective of the extent towhich the research worker or other “associated” members of the university is/are involved in the productionof the corresponding research results, especially inventions.
Regarding the filing of any applications for industrial property rights, referred to in the following as“patent applications” for short, it is envisaged that thefirst application is filed either by the university oralternatively by the industrial partner, though of course
in a manner to be settled in advance, but always as
joint applications on behalf of the university and theindustrial partner. This arrangement is intended to satisfy the universities’ interests in appearing in the relevant “ranking” lists with a corresponding number offirst applications. The industrial members of the working party accept the fact that “ranking” positions of
this kind are becoming more and more important inassessing the performance and the general reputationof universities for the sake of international comparisons.
It is the industrial partner alone which decides
whether to file foreign applications in the case of
research results based on research commissions, andany foreign applications are also filed solely by theindustrial partner in its own name.
The arrangement regarding remuneration in the caseof research commissions has the following structure
according to the Berlin Contract:
After the first application has been filed, the industrial partner pays the university a first remuneration
amounting to 2,500.00. This is then followed byremuneration payments according to the following
alternatives:a) 2,500.00 at the beginning of exploitation, thisremuneration rising to 10,000.00 if exploitation
begins more than 7 years after the first application;
the industrial partner may, however, redeem theobligation to pay the increased lump sum by paying
a further remuneration of 2,500.00 before theexpiry of the above — mentioned 7 — year period.
b) When certain turnover thresholds are reached, further lump-sum payments are made, though it isnecessary to lay down the details on this in the contract.
c) After exploitation has begun, an appropriate remuneration is paid, depending on the degree of
exploitation, which is subject to later negotiation.

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H. Goddar

4.5. Research Co-operation
The research results arising from research co-operation
are in principle broken down into results achieved by
the industrial partner, joint results and university
results.
Results achieved by the industrial partner are
research results attributable solely to the industrial
partner’s staff. Joint results mean research results inwhich the university’s, or the university staff’s, shareof the invention is no more than 50 %. University
results are research results, in which the university’s
share of the invention is more than 50 %.
4.5.1. Industrial partner’s results
Research results which fall into the category of “industrial partner’s results” belong exclusively to the industrial partner. The latter has the sole right to file applications for industrial property rights, exclusively in its
own name where appropriate; the industrial partner has
no obligations vis-à-vis the university whatsoever to
pay any remuneration.
4.5.2. Joint results
In the case of joint results where the university’s shareof the invention is no more than 25 %, the industrial
partner has the right to file the first application exclusively in its own name.
If the university’s share of the invention is more than
25 %, the arrangement corresponds to the one forresearch results based on research commissions, i.e.
the first application is filed as a joint application either
by the industrial partner or alternatively by the university, in the names of the university and the industrial
partner.
On the whole, in the case of joint results, foreign
applications are filed in accordance with the arrangements regarding research commissions (see 2.4.), i.e.
by the industrial partner and exclusively in its own
name.
The remuneration for an invention which the industrial partner has to pay the university is settled as follows in the case of joint results: if the university’s
share of the invention is less than 50 %, the remuneration for the invention is paid in the same way as withresearch commissions. If the university’s share of theinvention is 50 %, the industrial partner pays the university remuneration for the invention as in the case of
the university results, which will be discussed below(see 2.5.3), but deducting 10 % from the remunerationagreed for university results of that kind.

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4.5.3. University results
University results, i.e. research results emanated fromresearch co-operation, in which the university’s shareof the invention is more than 50 %, belong exclusively
to the university. The industrial partner does, however,
have an option on taking out an exclusive licence onreasonable terms. The corresponding remuneration for
the invention may comprise one or more lump-sum
payments or a reasonable licence fee. The members of
the working party regarded the sample calculations
annexed to the Berlin Contract as being appropriate forthe standard situation.
In the case of university results. the university has
the right to file the first application in its own, exclusive name. After the option is exercised — and only inthis case does remuneration for the invention have tobe paid to the university by the industrial partner, obviously, the corresponding application rights revert to
the industrial partner in a manner to be agreed.
The full text modules of the “Berlin Contract” (or“Berlin Agreement”) can be found, as already mentioned, under www.ipal.de.

5. Conclusion
Technology Transfer in Germany between Universities
and Research Institutions, on the one side, and industry on the other side, has dramatically changed since
the coming into force of the new Art. 42 of The Law.
Since then, hundreds of successful cooperation contracts between university and industry in Germany
have been concluded on the basis of the text modulesof the “Berlin Agreement.” For the first time in modern history, German universities appear, in a significant number, in patent statistics of the patent offices ofthis world, due to the fact that technology transfer is
no longer taking place directly from university professors to industry.
As a result of the practice in Germany, one may statethat cooperation between industry and university, as
far as inventions by professors who already in the past
had successful working cooperation agreements withindustry, has not deteriorated. As a second, highly welcome effect, as acknowledged by many industry companies, many more inventions from the academic (university) world have become available for evaluation toindustry, due to the fact that the new system provides,a challenge to university inventors by its incentive
mechanism, which otherwise would just have published their results, in the hope of getting scientificacknowledgement, to make use of the new mechanisms for easily obtaining patent protection by univer-Recent Developments in the Business of Patent Licensing

sities and having their inventions evaluated by them,publication only taking place after “clearance” by therespective TLO.

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