Research partnerships with private enterprises

In the event of any inconsistency between the Danish and English language versions of the document, the Danish version prevails

The Ministry of Science, Technology and Innovation’s guidelines of 21 January 2005 on university research partnerships with private enterprises

Guidelines on university research partnerships with private enterprises

These guidelines are issued to the universities covered by Danish Act no. 403 of 28 May 2003 on Universities (the University Act), as amended by section 8 of Act no. 1156 of 19 December 2003.

1. Contents of the guidelines

The guidelines contain the following sections:

1. Contents of the guidelines

2. Background

3. Project type characteristics

4. Right to inventions

5. Publication of research findings

6. State aid

7. Disqualification

8. Procedures for concluding partnership agreements

9. Accounting

  1. Public access to information on university partnership agreements

2. Background

In January 2000, the then Minister for Science, Technology and Innovation appointed a working group which was tasked with describing the rules applying to the universities' collaboration with the business community and preparing a proposal for the elements which should be included in agreements on co-financed research projects between universities and private enterprises, i.e. projects where both the university and the partner contribute funding or resources to the project. In August 2000, the working group presented the report ‘Partnership agreements between universities and businesses’ (Samarbejdsaftaler mellem universiteter og erhvervsvirksomheder) (‘the Partnership Report’). The Partnership Report (in Danish) can be found on the Ministry of Science, Technology and Innovation’s website (www.videnskabsministeriet.dk) under ‘Publikationer’ (Publications). At the same time, the Public Accounts Committee (Statsrevisorerne) requested that an investigation be conducted by the Auditor General into the Ministry of Science, Technology and Innovation’s management of the universities' grants and research. This resulted in ‘Report no. 1/00 to the Public Accounts Committee on the management of private research funding at Aarhus University and the University of Copenhagen’ (Beretning nr. 1/00 til statsrevisorerne om forvaltning af private forskningsmidler ved Aarhus Universitet og Københavns Universitet) (‘the Private Funding Report’). The Public Accounts Committee points out that the management of private research funding has been inadequate, and the Public Accounts Committee criticises the fact that the supervision carried out by the responsible ministries has been insufficient. The Private Funding Report (in Danish) can be found on the Danish National Audit Office’s (Rigsrevisionen) website (www.rigsrevisionen.dk).

These ‘Guidelines on university research partnerships with private enterprises’ are based on the Partnership Report and the Private Funding Report.

The guidelines should be seen in the context of the general rules and regulations which have an impact on the universities' collaboration with private enterprises, including, among other things:

  • Danish Act no. 403 of 28 May 2003 on Universities (the University Act) (Universitetsloven), as amended by section 8 of Act no. 1156 of 19 December 2003 (www.retsinfo.dk)
  • Danish Act no. 347 of 2 June 1999 on Inventions at Public Research Institutions (Lov om opfindelser ved offentlige forskningsinstitutioner) (www.retsinfo.dk)
  • Danish Act no. 483 of 9 June 2004 on Technology Transfer at Public Research Institutions (Lov om teknologioverførsel ved offentlige forskningsinstitutioner), which was implemented by Ministerial Order no. 1211 of 9 December 2004 (www.retsinfo.dk)
  • The Danish Competition Act, see Consolidated Competition Act no. 539 of 28 June 2002 (Konkurrenceloven) as amended, and the EC Treaty rules on competition.(Including Ministerial Order no. 622 of 16 June 2004 on Block Exemption for Categories of Technology Transfer Agreements (Bekendtgørelse om gruppefritagelse for kategorier af teknologioverførselsaftaler) and Ministerial Order no. 1212 of 18 December 2000 on Block Exemption for Categories of Research and Development Agreements (Bekendtgørelse om gruppefritagelse for kategorier af forsknings- og udviklingsaftaler)) (www.ks.dk)EC Treaty rules on state aid (www.ks.dk)
  • The EU public procurement directive, see Ministerial Order no. 937 of 16 September 2004 on Procedures for the Award of Public Works Contracts, Public Supply Contracts and Public Service Contracts (Bekendtgørelse om fremgangsmåderne ved indgåelse af offentlige vareindkøbskontrakter, offentlige tjenesteydelseskontrakter og offentlige bygge- og anlægskontrakter) (www.ks.dk)
  • Circular no. 159 of 17 December 2002 on Tendering and Challenging of State Operating and Construction Works (Udbudscirkulæret) (www.retsinfo.dk)
  • Circular no. 9204 of 22 March 2004 on Self-insurance in the Danish State (Cirkulære om selvforsikring i staten) (www.oav.dk)
  • Budget Guidelines 2001 (Budgetvejledning 2001) (www.oav.dk)
  • Price Calculation Guidelines (Vejledning om priskalkulation) (www.oav.dk)

3. Project type characteristics

The state subsidies which the university receives pursuant to section 19(1) of the Danish University Act must be used within the university's proper purpose. In order for the university to use funds granted for ordinary activities in connection with a research project, the university must have a research-related interest in taking part in such research project. The project must therefore fall within the university’s research objective as defined in section 2 of the Danish University Act.

On this background, a distinction can be made between the following three types of research projects:

a. Projects of research-related interest which are fully financed by appropriations for ordinary activities in the Danish state budget (Finansloven):

Projects which are fully financed by the university's ordinary funding are entered under ordinary activities. The university must have a research-related interest in taking part in the research project.

b. Projects of research-related interest which are fully or partially financed by an external source of financing:

The externally financed part of non-commercial projects financed fully or partially by an external source of financing are entered under grant-financed research activities. The university must have a research-related interest in taking part in the research project. If the university is directly or indirectly co-financing the project (i.e. a co-financed research project (samfinansieret forskningsprojekt) in accordance with the terminology used in the Partnership Report), the co-financing is entered under ordinary activities. If the external source of financing covers the full costs, these projects also belong under grant-financed research activities.

There is no access to co-financing of projects etc. if state appropriations and grant schemes are assumed to cover the entire project expense.

The detailed rules on grant-financed research activities can be found in section 2.6.8 of Budget Guidelines 2001.

c. Projects of a commercial nature fully financed by the orderer:

Projects of a commercial nature are entered under income-generating activities.Projects of a commercial nature are fully financed by the orderer. The project must be a natural offshoot of the university's ordinary activities and may in the circumstances be of research-related interest or consist of a purely commercial exploitation of the university's expertise or equipment. Pricing must take place in accordance with the rules on income-generating activities. Income-generating activities also include other (non-research-related) commercial activities.

The detailed rules on income-generating activities can be found in section 2.6.6 of Budget Guidelines 2001 as well as in the Price Calculation Guidelines.

Grant-financed activities, see section 2.6.7 of Budget Guidelines 2001, should be managed according to the same guidelines as grant-financed research activities; however, with the exception of the research-specific rules, particularly sections 4 and 5 of the guidelines. Research projects should not be entered under grant-financed activities which are used for other (non-research-related) grant-financed activities.

4. Right to inventions

The distribution of rights associated with an invention at a university follows from sections 7-9 of the Danish Act on Inventions at Public Research Institutions (Lov om opfindelser ved offentlige forskningsinstitutioner). The Act applies to inventions which can be patented pursuant to the Danish Patent Act (Patentloven) or be registered as a utility model pursuant to the Danish Utility Models Act (Brugsmodelloven).

Generally, the right to an invention belongs to the employee him/herself, subject, however, to the limitations following from the Act. Pursuant to section 8(1) of the Act, the university may thus in the individual case demand that the rights associated with the invention be transferred to the university if the invention has been made as part of the employee’s work for the university.

If research is being conducted in collaboration with or is fully or partially financed by a party which is not covered by the Act, the university may, pursuant to section 9 and subject to prior agreement, fully or partially relinquish its right to inventions produced in connection with the research. It is thus the university and not the employee him/herself which has the power to conclude an agreement on the rights associated with the invention. In connection with the conclusion of an agreement pursuant to section 9, the university must be particularly aware of the state aid issue, see section 6 of the guidelines.

In any case, the university should ensure that the distribution of rights is clearly specified in the partnership agreement to avoid any subsequent uncertainty in this respect.

5. Publication of research findings

If research is fully or partially financed by public funding, the research findings must be published, see section 2(3) of the Danish University Act. In specific situations, it may be necessary to exclude any confidential information which a partner does not want published, in particular pursuant to section 27 of the Danish Public Administration Act (Forvaltningsloven) and section 10(2) of the Danish Marketing Practices Act (Markedsføringsloven). Such exclusion, however, does not entitle the partner to stop the publication of research findings or influence the conclusions to be drawn from the research conducted. With regard to the issue of requests for access to research findings, reference is also made to the rules set out thereon in the Danish Access to Public Administration Files Act (Offentlighedsloven), see parts 2 and 3 of the Act.

No fixed rules have been set for the exact time of publication, and the time will depend on the specific situation, particularly in the interests of protecting intellectual property rights. However, it is clear that the publication must always take place within a reasonable time from the time when the final or publishable research findings are available.

As a general rule in relation to other areas, it should be mentioned that the issue in respect of teaching hospitals is handled in accordance with the 'Guidelines for teaching hospitals for entering into research agreements’ under which the teaching hospitals, when concluding research agreements, must ensure the right to publish without preliminary approval from the private party. Generally, the private party is granted up to 30 days to comment on manuscripts and decide whether patenting is required as well as an additional 60 days to file a basic application based on a claim of priority. Following negotiations, it may be agreed in special cases that publication will be postponed for more than 60 days.

If the research is being conducted as income-generating activities, it may be determined, in connection with the conclusion of the agreement, that the research findings will not be published.

As concerns the university’s right to order an employee to postpone the publication of an invention in the interests of protecting intellectual property rights, reference is made to the Danish Act on Inventions at Public Research Institutions, particularly section 11(2) and (3) of the Act.

The university should ensure that the issue concerning the right to publication is regulated in the partnership agreement in accordance with the above guidelines.

6. State aid

When entering into research partnerships with private enterprises, the university must take account of the rules on state aid applicable in Danish and EU law. The rules are found in particular in articles 87-89 of the EC Treaty and in section 11a of the Danish Competition Act.

Section 11a of the Danish Competition Act makes it possible for the Competition Council to order that any aid which is or has been granted in the form of public funding for the benefit of specific types of commercial activities must be terminated or refunded. Orders may be issued if the following criteria are met: The objective or effect of the aid must be to distort competition in the Danish market or a part thereof, and the aid must be granted or must have been granted without legal basis in public regulations.

Article 87 of the EC Treaty regulates the cases where aid affects trade between member states. The European Commission has exclusive jurisdiction to declare an aid scheme compatible with the common market. It follows from article 87 that the following conditions must be met in order for the aid to constitute state aid requiring notification within the meaning of the Treaty:

1. The aid must be granted by public authorities through state resources (in any form whatsoever).

2. The aid must result in a financial advantage for one or more enterprises.

3. The aid must favour certain enterprises or the production of certain goods (the selectivity criterion), i.e. this is not a general measure.

4. The aid must affect trade between member states and distort or threaten to distort competition in the market.

Based on the rules, the university should be aware that there may be a question of illegal state aid pursuant to section 11a of the Danish Competition Act or article 87 of the EC Treaty, for example if a research project co-financed by the university gives rise to knowledge that only benefits the enterprise with which the university is collaborating.

In line with the state aid issue, the university must be aware that the state subsidies may not be used in contravention of the objective of the relevant subsidies, including that, irrespective of the organisation of the project, it must be ensured that no direct or indirect transfer of the subsidies takes place to other project participants during the project.

As concerns information on state aid rules in general, reference is made to the Danish Competition Authority’s website (www.ks.dk). In addition, reference is made to section 5.7 and appendix 6 of the Partnership Report.

7. Disqualification

In accordance with section 1(2) of the Danish University Act, the universities are part of the public administration and thus subject to the general administrative law rules on disqualification, in particular sections 3-6 of the Danish Public Administration Act. When entering into research partnerships with private enterprises, it is crucial that the university, in accordance with these rules, assesses whether the partnership raises disqualification issues in relation to employees at the university.

Disqualification may, for example, arise in relation to an employee who has a personal financial interest in a product associated with a research partnership if the employee is involved in decisions relating to the product in question. The issue may become relevant, regardless of whether the project is ongoing or has been completed, for example where the employee, during or after the project, examines a student who has been working with the relevant project.

Whether disqualification is an issue in individual cases is subject to a specific assessment at the university.

8. Procedures for concluding partnership agreements

The university management should establish written procedures for the conclusion of partnership agreements between the university and private enterprises. Publishing the written procedures, for example via the university website, would be expedient. The following should appear from these procedures or from the university's general administrative guidelines:

  • that the rector, or the person to whom the responsibility has been delegated, must approve, in writing and in advance, agreements on the conduct of research projects which are fully or partially externally financed, see section 14(8)of the Danish University Act and the comments on section 17(2);
  • how it is ensured that the rector, or the person to whom the responsibility has been delegated, actively assesses whether a project is of research-related interest as well as according to which guidelines such assessment should be made, such that the university’s funding is used solely for these projects, see section 3, a and b;
  • how it is ensured, through documentation and data recording, that there is a general overview of all projects and the university's obligations in relation thereto;
  • that, in connection with agreements on co-financing, the university must be responsible for the management of the projects or subprojects taking place at the university, unless special grounds exist for joint project management, or if specific authorisation has otherwise been granted for alternative project management;
  • that it must be ensured, in the individual partnership agreement, that the university is not liable in damages in the event that the project does not lead to the desired result, that the project result cannot be used or that it is not possible to comply with the timetable;
  • that, as a point of departure, the partnership agreement must prescribe that Danish legislation must be used in connection with any disputes. If legislation other than Danish legislation is used in the specific situation, the universities’ procedures for concluding partnership agreements should describe how a clear understanding of the legal position in connection with the use of the relevant foreign legislation is ensured; and
  • how the legal quality of the individual partnership agreement in general is ensured, including ensuring that the individual items of the ‘Proposal for agreement on a co-financed research project’ (Forslag til aftale om et samfinansieret forskningsprojekt) prepared by the Legal Adviser to the Danish Government (Kammeradvokaten), and entered as appendix 1 to the Partnership Report, are considered in connection with the conclusion of the individual partnership agreement.

When planning its internal procedures, the university must also be aware of the rules on the scientific ethics committee system, see Danish Act no. 402 of 28 May 2003 on a Biomedical Ethics Committee System and the Processing of Biomedical Research Projects (Lov om et videnskabsetisk komitésystem og behandling af biomedicinske forskningsprojekter) and the rules on the Danish Committees on Scientific Dishonesty, see part 7 of Danish Act no. 405 of 28 May 2003 on Research Consulting (Lov om forskningsrådgivning mv.).

9. Accounting

The university procedures must ensure:

  • that a budget and a grant approval or other legally binding commitment from any sources of financing are available for each project as well as, to the extent possible, a project plan with milestones and clearly defined start and end dates;
  • that the project documents account for the costs, including payroll costs, which the university undertakes to pay in connection with the project;
  • that a separate project account is kept for each project;
  • that ordinary documentation is available for all entries in project accounts;
  • that procedures are established to ensure that projects are completed in accordance with the timetable;
  • that the transfer of overhead contributions from grant-financed research activities and income-generating activities to ordinary activities takes place in step with the draw on the joint expenses, normally in step with expenses being incurred in the project; and
  • that the rules of management of subsidies for grant-financed research activities must be followed, including:

1. The subsidies received must be registered in special holding accounts in the university’s accounts. Subsidies in connection with the project must be recognised as income in the accounts in step with expenses being incurred.

2. Interest income must be used within the objective for which the underlying funding is granted, unless otherwise agreed in writing with the source of financing. It is not a requirement that the interest accrued must be distributed on the individual projects. In connection with the annual closing of the accounts, a statement must be provided on the use of the interest.

10. Public access to information on university partnership agreements

As institutions within the public administration, the universities should comply with rules corresponding to the ‘Guidelines on public access to information about private financing of research at government research institutions' (Retningslinier for offentlighed om privat finansiering af forskning ved statslige forskningsinstitutioner) issued by the Ministry of Science, Technology and Innovation on 13 January 2000. The guidelines (in Danish) can be found on the Ministry of Science, Technology and Innovation’s website (www.videnskabsministeriet.dk) under ‘Lovstof’ (Legislation).