Showcasing the Best of Welsh Business

Legal Implications of Supporting Success for Any New Starter Business


This story has been submitted by Peter Lynn and Partners

Universities are increasingly experiencing rapid commercial growth. With more spin out companies emerging from these organisations, the question undoubtedly hitting our radar is “what are the legal implications and requirements to support success for a spin out or any new starter business?”

Methods of Commercialisation

When an employee or student creates research of value, it is likely that this will then be owned by the University, based on the employment or student contract. Therefore, it will typically fall to the University to manage the commercialisation of the new development. Two options emerge to achieve this aim:

  • Set up a separate limited company. This is often achieved in conjunction with the parties involved in the creation of the intellectual property.
  • Transfer the asset, typically the intellectual property, to a company through the use of a licence, to allow for the products or services to enter the market.

Key Players in Spin Outs

When a spin out is established, three key parties are usually involved: the university, the academic founders or tutors and the inventors themselves, where each has their own rights and responsibilities during the process. Universities gain strong reputational advantages for producing spin outs, yet they will still want to maintain a commercial benefit. Tutors or individuals, on the other hand, will typically be much more focussed on the business benefits, going forward. Balancing these two demands can be challenging, yet entirely feasible.

Key Spin Out Documentation

There is, of course, a variety of documents which can support this scenario, depending on the nature of the spin out organisation, but typically will include:

  • Technology Agreement: this could be a simple research and development agreement for collaboration within academia, or something more specific such as an assignment of patent or licence agreement.
  • Subscription Documents: for any established company, the key documents include shareholders’ agreements and articles of association. These documents are specific to the spin out situation and need to be considered carefully.
  • Additional Documents: such as consultancy agreements (with tutors or other third parties), research agreements and maybe even access to facilities’ agreements.

Spin outs produce real opportunities for all involved, but getting the legals correct from the start is crucial. Contact our specialist commercial solicitor to discuss your situation on 01792 450010 or email [email protected]