13 June 2023


In December 2022, the court considered whether Oxford University and Oxford University Innovation (“OUI”), the University’s technology transfer office, could validly claim IP rights to inventions made by Mr Bo Jing, a former intern and PhD student at Oxford University and current CEO of university spin-out Oxford Nanoimaging Limited (“ONI”).

Where university research is commercialised, the resulting company is called a “university spin-out”. In this case, whilst an intern and later PhD student at Oxford University, Mr Jing invented a specialised microscope which was later commercialised by ONI as the “Nanoimager”. ONI claimed that Mr Jing’s contract with Oxford University was unfair and, therefore, ONI did not owe OUI royalties, which in Spring 2021 stood at over £700,000 in value. OUI argued that it owned the IP because of its contract with Mr Jing whilst he was an intern and postgraduate student.

The court ruled that IP developed by Mr Jing as an intern was owned by Oxford University as his employer at the time, in line with s.39(1) of the Patents Act 1977. However, the court’s consideration of IP developed by Mr Jing as a postgraduate student involved a more detailed approach.

The court considered two questions through the lens of consumer protection law in force at the time:

1. Whether Mr Jing was a “consumer” against Oxford University for the purposes of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) when he entered into his PhD contract; and

2. Whether Oxford University’s IP terms were “unfair” under the UTCCRs.

Are undergraduate and postgraduate students "consumers"?

The judge, Mr Daniel Alexander KC, noted in his introduction that “there have been no decisions in England and Wales which deal with the applicability or impact of consumer protection legislation on terms relating to intellectual property rights of students or even how employed academics should be treated.”

In a first-of-its-kind ruling, the court distinguished between undergraduate students as consumers and employed post-doctoral researchers as non-consumers.

The categorisation of postgraduate students was less clear cut, with the judge noting that postgraduates shared similarities with both undergraduates and employed researchers. The court decided it was undesirable to consider whether or not the postgraduate student received funding and neither did the court take into account whether the student might be undertaking their educational qualification for the purposes of professional advancement. The court ultimately ruled that postgraduate students could be considered consumers, highlighting that “[PhD] students are not employees, they are not entitled to the range of protections available to those in employment.”

What constitutues "unfair" IP terms?

The judge then considered whether the IP terms for Mr Jing, as a consumer, were “unfair” under the UTCCRs, setting out the two tests:

1. Do the terms “cause a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”?

2. Are the terms “contrary to the requirement of good faith”?

With regard to the first test, the judge determined that most of the IP provisions were reasonable apart from one in force at the time which applied to IP generated by PhD students “in the course of or incidentally to their studies.” The judge noted that “this did create a potential imbalance between the student and the University…to the potential detriment of some” and that, referring to the drawing up of the contract, “they got it wrong in the drafting and they were over broad.”

However, the judge ultimately decided that this provision did not create a significant imbalance. In his conclusion on this point, the judge took into account that:

  • “Although the terms could operate in a way to be inappropriate…, there is no evidence that they have ever in fact operated in this way nor that Oxford University has regarded it as appropriate to make such claims”; and
  • OUI and Oxford University do not make their IP claim on the basis that the inventions were made “incidentally”. Mr Jing “was working on an existing lab project headed by an Oxford professor” and “this was work he was (in large part) there to do.”

The IP provisions were also found to be made in good faith. The judge concluded that the IP provisions were fair and “the University was properly entitled to claim (and OUI is now entitled to) the all of patent rights licensed under the Licence.” On 26 January 2023, ONI’s initial attempt to appeal was refused.

Next steps for universities and spin-outs?

The court made it clear in its judgment that it is in the public interest for institutions to review their “contractual terms to ensure the contracts for educational services they make with prospective undergraduate students from the UK and abroad do not contain terms which are significantly unbalanced and/or contrary to the requirement of good faith to their students’ detriment” and if not, to provide remedies for unfairness.

In light of the court’s judgment, universities and spin-outs should consider the following actions to protect intellectual property.

For universities:

1. Review IP terms and policies for fairness in agreements with undergraduate and postgraduate students, paying particular attention to potentially “over broad” terms.

2. Prepare for spin-outs asking for existing terms to be revised.

3. Be aware of contributions to inventions made by undergraduate (and potentially postgraduate) students.

For spin-outs:

1. Be clear from the outset who owns the IP rights in the technology underlying your business.

2. Revisit inventors’ postgraduate agreements to review whether terms are fair.

3. Check the scope of these contracts – is research carried out in the students’ own time or beyond the assigned research project covered under the terms?

Burges Salmon’s BScale platform has been set up to service emerging technology companies and can assist founders beginning the journey of spinning-out their research.

If you would like any further information, please contact David Varney.

This article was written by David Varney and Emily Fox.

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