Spinning a company out of university research

The chain that has to exist

Inventors → institution (under the IP policy, or by assignment) → company (by assignment or exclusive licence). Every link in writing, and assignments recorded with the Patent Office.

Where the research was funded, the funding terms sit on top of all of it and may impose licence-backs, working obligations or approval requirements. Read them before agreeing anything with investors.

An exclusive licence from the institution is common and workable, but investors will look closely at its term, its field, its termination rights and whether the company can enforce the patent itself.

What to sort before the first term sheet

Which patents and applications are in scope, by number. Who the named inventors are and whether the naming is correct. Whether any of the work has already been published, and when. Whether any foreign filing has happened where an India-resident inventor was involved - section 39 applies to them personally.

And what happens to future improvements made in the lab after the spin-out. That is the clause that causes the most friction two years later.

What to actually do

• Map the full chain from inventors to company, in writing.
• Read the funding terms before agreeing anything with investors.
• Check whether the enforcement right sits with the company or the institution.
• Agree now who owns post-spin-out improvements.