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Problematic Award Terms

Classified Information: MSU CANNOT accept classified projects or material.

Confidential Information: During the course of a project, researchers may exchange information which must be kept confidential in order to protect patent and licensing rights. The clause details the obligations required on part of the party receiving confidential information. Breach of the obligations may give the disclosing party the right to terminate the agreement and recover damages.

To protect the University, it is common practice to include a statement that the confidential information shall be marked as such. This places the responsibility on each party to make the determination of confidentiality for their own information. We must include language that confidential information may be released if required by law, and if we receive information which is exempt under FOIA, it remains exempt whether marked “confidential” or not.

Copyright: Title to any copyright or copyrightable material first produced by MSU in the performance of an agreement remains with the University.  MSU may grant to Sponsor an irrevocable, royalty-free, non-transferrable and non-exclusive license to use and reproduce copyrightable material for noncommercial, internal research purposes.

Governing Law: Agreeing to governing laws of another state can be costly in the event litigation. If Sponsor/Subcontractor will not agree to Michigan law, it is better to remain silent and exclude this clause altogether. To agree with laws of another state or country, we need approval by General Counsel and the department must agree to accept any potential expenses concerning litigation in another state or country.

Indemnification and/or Hold Harmless: To indemnify means to insure another against loss; to reimburse or make whole. When found in a contract it relates to claims brought by third parties who are not parties to the contract. When an outside party sues one party to the contract, the other party agrees to pay for the first party’s defense of that claim.

Typically state constitutions prohibit indemnification because the credit of the state shall not be granted to any individual, association, or corporation, and state institutions cannot assume debts or liabilities of another party. States often have immunity from being sued in their own courts without express consent of the legislature.
Intellectual Property (Copyrights, Inventions and Patents): Intellectual property (IP) is any work or invention that is the result of creativity, such as a manuscript or design, and can be protected by statute or legislation, such as patent or copyright. It includes inventions, discoveries, know-how, show-how, processes, unique materials, copyrightable works, original data, and other creative or artistic works. IP also includes the physical embodiment of intellectual efforts (e.g., models, machines, devices, apparatus, instrumentation, circuits, computer programs and visualizations, biological materials, chemicals, other compositions of matter, plans, and records of research).

According to the MSU patent policy, the university has the right to own any discovery or invention created using university facilities, equipment, or funds controlled or administered by the university. This IP is an asset that can potentially add great intellectual and/or monetary value to MSU, the creators of the property, and the region. Additionally, MSU is required by state and federal statutes, industrial research agreements, and other research relations to manage the IP that results from the university's research programs.

Intellectual property includes patents, trademarks and copyrights. This clause covers issues of ownership or authorship, whether the inventor or author has complete and singular rights to the intellectual property, whether they must share ownership or authorship with another party, and whether they must grant a form of license to the other party. If ownership/authorship of intellectual property is shared, or if a license is granted, then the intellectual property is considered restricted.

Licensing requirements are common in federal grants and contracts and often flow down to subrecipients. The federal government typically wants to use what is created during the performance of the federal grant or contract. This is achieved by requiring that the prime recipient or subrecipient grant the government a license to use its patents, copyrights, or data that was gathered or developed under the agreement for governmental purposes.

Participation Restrictions – Non-US Citizens: These clauses explicitly impose limitations on the involvement of individuals who are not citizens of the United States. MSU usually does not accept controls on participation of non-US citizens.

Publication Restrictions: A fundamental purpose of a research university is to disseminate research results freely and openly to the public and to contribute to general knowledge. For this reason, MSU usually does not accept award terms that allow the sponsor to determine what or when the awardee can publish.

Sponsors are concerned about protecting their intellectual property and commercial information and will try to control the information that reaches the public about their property. Publication restriction exists when the sponsor prohibits public dissemination of results, the sponsor has the right to veto or censor part or all of the content of a publication, or the contract imposes unreasonable delay in publication. Publication restrictions limit investigators’ academic freedom and are not in their best interest as they are expected to publish to advance in their field of work. Restrictions are inconsistent with non-profit tax laws, could jeopardize tax-exempt status, and result in unrelated business income tax. In addition, acceptance of publication restrictions can endanger the university’s fundamental research exclusion under export control regulations.

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