Industrial Property Code Reform in Italy: New guidelines for contractual relationships between universities or research institutes and private sponsors

The adoption of the Guidelines is the final step toward reaching the milestones in the National Recovery and Resilience Plan with the aim of reforming the Industrial Property Code to strengthen Italy’s competitiveness by protecting and safeguarding industrial property.

Abolishment of professor’s privilege and transfer of invention ownership

As explored in detail in our article available here, the amendment to Article 65 of the Industrial Property Code introduced by the law abolished what is known as “professor’s privilege,” transferring ownership of an invention to the inventor’s affiliated institution, without prejudice to the right of the inventor to be recognized as its creator. Accordingly, the amended version of Article 65 now states that when an industrial invention is made within the framework of a contract, employment relationship, or agreement, even one on a fixed-term basis, with a university (including non-state-recognized universities), public research institution, or scientific hospitalization and healthcare institution, the rights to the invention belong to the inventor’s affiliated institution.

Contractual agreements and the role of guidelines

Article 65 paragraph 5 specifies that the rights to an invention derived from performance of research activities financed, in whole or in part, by another party are governed by the contractual agreements between the parties, then adds that such contractual agreements are to be drafted based on the Guidelines.

At the outset, the Guidelines clarify that the criteria, principles, methodologies, and contractual regimes contained therein may be taken into consideration in cases of commissioned research activities, meaning the type of research financed, in whole or in part, by third parties and carried out in accordance with a purpose identified by the financing party to meet a need of its own. Therefore, the Guidelines do not address issues that are not closely related to the protection, exploitation, and dissemination of research results. The Guidelines further clarify that the parties remain free to identify the best set of interests for their contractual relationship according to the specific type of research and the actual interests involved.

The scenarios identified by the Guidelines

The Guidelines outline the various contractual scenarios that can be associated with commissioned research activities.

The scenarios can be broken down as follows:

1. Service activities, in which the funding entity acting as a client requests the execution of standard activities using established and routine technological expertise or capabilities and requires the delivery of the results of the activities performed. In this context, the research often involves routine activities that do not require inventive contributions from the researcher. Accordingly, results eligible for patent protection are unusual in such scenarios.
2. Development activities, which typically involve applied research on projects designed to optimize or select products/processes or applications already in development by the same funding entity, which often possesses proprietary prior knowledge and sometimes protected forms of proprietary information. In these scenarios, the funding entity has typically conceived the project idea independently and seeks qualified assistance for optimization, validation, refinement, or completion of the idea/technology. According to the Guidelines, in these cases, results eligible for patent protection are a possible outcome.
3. Innovative research activities, which typically are projects with a strong focus on innovation, such as research leading to the solution of a technical problem or the development of a new product or a new use for the funding entity’s product or application. In these scenarios, the research institution’s innovation contribution is particularly significant, and the generation of new industrial property is often expected. According to the Guidelines, in these cases, even if the funding and the general directions are determined by the funding entity, the resulting solution is the result of the researcher’s knowledge and inventive capabilities.

Mandatory aspects of contractual relationships

The Guidelines further provide mandatory aspects that the parties must govern in their contractual relationship in advance. Specifically, the parties must:

1. Identify the parties involved;
2. Clearly establish the objectives of the collaboration;
3. Define the key terms and expressions used in the contract;
4. Agree upon a detailed description of the subject and nature of their collaboration;
5. Determine arrangements for the parties’ prior knowledge and expected knowledge resulting from the commissioned research;
6. Establish the arrangement for dissemination and ownership of research results;
7. Identify the individuals responsible for each party involved in the collaboration;
8. Establish the financial aspects of the research (e.g., pre-determined funding, potential rewards and compensation, payment methods, and timing), the duration of the contract, and withdrawal and resolution clauses;
9. Include confidentiality provisions and material governing the communication of the research results, including via publication.

Recommendations and publication

In addition to these mandatory provisions, the Guidelines include relevant recommendations for properly defining the scope of a commissioned research contract, especially concerning the generation, exploitation, and dissemination of research results. These address the identification of the subjects involved in the research, the possibility of obtaining industrial property as an outcome of the research, the protection of confidentiality, the regime for the parties’ prior and expected knowledge, and the regulation of ownership of research results.

Finally, the interministerial decree that adopted the Guidelines, which has yet to be published in the Italian Official Gazette, also provides that examples of clauses that can be freely used by research institutions or funding entities in establishing their contractual relationships may be published in the future.

[1] Introduced by Law No. 102 of July 24, 2023.