Saturday, legal issues according DESCA model contract Lecturers:

                                                  Saturday, 13
January 2018                                                                                                         

                                         

 

 

Take home assignment for course “Legal
Aspects for European Projects”

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Relevant legal issues
according DESCA model contract

 

 

 

 

Lecturers: Prof. (FH) Dr. Doris Kiendl-Wendner, LL.M.

    

Student: Karlo Ku?an

 

 

 

 

 

 

 

Table
of Contents
 
1.     Introduction. 2
2.     The
differentiations between DESCA consortium agreement model and Erasmus+
contract: 3
3.     DESCA
– Overview of the consortium agreement 5
4.     Intelectual
properties. 5
Conclusion. 10
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.   
Introduction

 

The consortium agreement is a private agreement
between the beneficiaries, to set out the rights and obligations amongst
themselves1.

Although the first consortium model agreements in EU
research area was introduced within 6th EU Framework Programme for Research and
Technological Development (FP6)2 and
during following years was developing,  it wasn’t till 2009. that European Commission introduced
DESCA model agreement – an newer and improved version of consortium agreement
that in its focus has intellectual property and confidentiality of details ,
rather than freedom of technology/IP transfer as it was the case in previous
versions of research related agreements.

The aim of this of assignment is to compare DESCA Horizon2020
(version 1.2., February 2016)3
and Erasmus consortia agreement and to provide description on DESCA contract specifically
 on clarity of language, due to
differences in partners’ abilities to understand agreement in English language.

 

 

2.     The
differentiations between DESCA consortium agreement model and Erasmus+ contract:

 

Criteria

DESCA Horizon2020

Erasmus+

Clarity

The language is
simple and understandable for users, even for “non-lawyers”.

Plain-style
drafting is used, the language is simple and understandable for users, even
easier then DESCA contract

Scope of the funding programme

Research and development

Mobility and education

Regulations of contract

The REGULATION (EU) No 1290/2013 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL of 11 December 2013.

Not defined

Definitions

Very detailed list in Section 1. Definitions

Basic definition list in Section 1.

Purpose of agreement

Basic information, very simple definitions, rest of
principles are defined in MGA

Basic information and simple definition

Duration and termination of th contract

Explained in Section 3. – includes also rules for
new entry and automatic termination, linked to General Grant Agreement.

Explained in Section 3. New entry and automatic
termination are not included. Procedures in case of termination explained
briefly.

 
 
 
Responsibilities of parties/third parties/ Structure
and internal organisation

Covered in Section 4: Responsibilities of Parties, Section
6: Governance structure
Governance structure is foreseen for small projects
and large or medium projects.
Acting in good faith in accordance to Belgian law.
Breach of Contract covered in Section 4. – DESCA defines procedures in the
case of breach. Involvement of third parties explained in Section 4.3.). In
Governance structure DESCA gives procedures for consortium meetings, which is
is not defined in MGA, Consortium plan or in the Grant Agreement.

Provisions for third parties entering the consortium
are set in Grant Agreement. Termination is not automatic, but defined.
Also, it is acting in accordance with recognized
standards (scientific and professional) and with no procedures for consortium
meetings. The agreement is not strict regarding entrance of third parties, so
the Lability declaration with third parties is not defined as in DESCA model.

Responsibilities of partners
 
 

Linked to MGA (MGA provides detailed explanation on
partners’ roles and responsibilities) and Consortium plan. General principles
for Section 4.

Responsibilities are set in Section 4, and it
includes general principles, breach provisions, involvement of third parties.
.

Distribution of funding

General funding distribution is defined by Section
7, and specific details are covered by Consortium plan and/or Grant
Agreement. The payments are linked to the approval of reports by the Funding
Authority. Cooperation obligations with regards to results dissemination are
set in 8.4.4. section.

Funding distribution covered in Section7: financial
provisions. Financial distribution and dynamic of payment is well explained,
not linked to Consortium plan or similar documents. Advance payment is
foreseen

 
 
 
Intellectual property

Intellectual property is covered by Section 8.
Results.  Results are owned by the
Party that generates them.  Linked to
the Grant Agreement and MGA.  In a case
of Joint ownership, DESCA suggests setting up Joint ownership agreement.
In dissemination (8.4.) an open access should be
ensured for all publications and results. Linked to MGA 29.3. This part sets
precise procedures for dissemination of results (including the time frame)
and also procedures for the case of breach.
 

The CA suggest IPR agreement to be signed among
consortium members.
Third party’s involvement is forseen and explained
in section 4.3.. Each party is solely liable for any loss, damage or injury
to third parties resulting from the performance of the Party’s obligations or
from its use of Results or Backgound.

 
Partner’s liability

Mentoned liabilities are defined within Section 5:
Liability towards each other 5.2 Limitations of contractual liability, 5.3 Damage
caused to third parties.
In DESCA procedures are defined and instructions are
given in order to adjust the limitations of contractual liability (5.2.)

Includes provisions for delayed delivery of outputs
(4.1), and procedures in a case of breach of contract (4.2.) Liability in
case of damages is defined in section 5 and  in the Grant Agreement.

 
Confidentiality obligations and access rights

Explained in detailed in section 9. Access rights
and section 10. Non-disclosure of Information. In addition to project
results, DESCA suggests setting up an agreement on Background within the
consortium. Background information should list confidential and non
confidential work.

Access rights for implementation are granted on a
royalty free basis to and by all Parties, and terminates upon competition of
the Action.
Confidentiality and non-disclosure is not defined in
this contract but it is covered by Grant Agreement.

 

3.     DESCA
– Overview of the consortium agreement

 

DESCA (Development of a Simplified Consortium Agreement) is a comprehensive research based
consortium agreement, created and developed by European Commission (EC) for
beneficiaries of Horizon 2020 programme. The purpose and aim of DESCA is to
specify the project relationship among Parties, in particular concerning the
organization of the work between the Parties, the management of the project and
the rights and obligations of the Parties concerning inter alia liability,
access rights and dispute resolution. Research and development projects
experience numerous challenges, the idea was that intellectual property
provisions must became more limited in access rights, and/or dissemination and
exploitation of project results. DESCA experienced changes from Fp7 – it has simplified
and facilitate the negotiation process, demonstrate best practices or
guidelines and serve as frame of reference and save time and cost..

Following legal main areas are included within the
DESCA model contract:

–        
Purpose,
terms and internal organization of the consortium

–        
Distribution
of the European Union funding

–        
Rules
on result transfer and dissemination

–        
Arrangements
for settling international disputes

Specific attention is given to the rules governing intellectual
properties (ownership regimes, and to the exploitation of research results
through contractual means) therefore, this assignment addresses DESCA’s main
parts of its purpose.

 

4.   
Intelectual
properties

 

 

 

1.1. Background
(or Result) Agreement

The consortium agreement sets out flexible
and efficient rules to encourage and support cooperation between the
beneficiaries as regards intellectual property, defines their rights in relation
to results, joint ownership, access rights and non disclosure. The contract sets well explained procedures to ensure
efficient and accurate project implementation. One of phases of Intellectual
property protection (access rights, confidentiality) is setting project Results
or Background agreement within consortium (attachment to the Consortium
contract, as set in H2020 MGA). The agreement may take any form; it may be a
separate agreement or may be part of the consortium agreement4.
The project “background” “means any data, know how or information whatever its
form or nature, tangible or intangible, including any rights such as
intellectual property rights.

The instructions for using the Backgrounds or Results
is set in DESCA section 9.1.1. „the
Parties have identified and agreed on the Background for the Project and have
also, where relevant, informed each other that Access to specific Background is
subject to legal restrictions or limits. Anything not identified in Attachment
1 shall not be the object
of Access Right obligations regarding Background” and 9.1.2 „Any Party may add further own Background to
Attachment 1 during the Project by written notice to the other Parties.
However, approval of the General Assembly is needed should a Party wish to
modify or withdraw its Background in Attachment”.  The section if followed by detailed opinion
that suggests that Background or Results agreement/document in addtiton to
positive list5
and negative list6
or project results (listing the project results without having written ageement
within consortium members was recommendation of FP7 CA).  Law experts agree „the background has to be considered with reference to the entire
university or company and should not be limited to the specific department
involved in the research”7
The provision is in line with Commission Recommendation for universities
and other public research organizations, on the management of intelectual
property in knowledge transfer activities8.

 

1.2. Ownership
 and transfer of results

Ownership
of results is briefly explained in section no.8 of DESCA, while more
information could be found in H2020 MGA 26.2. The general rule is that “Results
shall be owned by the participant generating them”.

DESCA
recommends development of joint ownership agreement for IP that aims to be
patented, written agreement on the allocation and terms of exercise of joint
ownership of results9.
In other hand H2020 MGA indicates that the agreement must be developed between
consortium members no matter of the following procedures concerning IP.

Furthermore,
if there is no written agreement (or unless otherwise agreed) DESCA suggests 2
options:

1)  „each of
the joint owners shall be entitled to Exploit their jointly owned Results on a
royalty-free basis, and without requiring the prior consent of the other joint
owner(s), and each of the joint owners may grant non-exclusive licenses to
third parties to exploit jointly-owned Results (without any right to
sub-license), if the other joint owners are given: (a) at least 45 calendar
days advance notice; and (b)Fair and Reasonable compensation”10.

2) „in case of joint ownership, each of the joint
owners shall be entitled to Exploit the joint Results as it sees fit, and to
grant non-exclusive licences, without obtaining any consent from, paying
compensation to, or otherwise accounting to any other joint owner, unless
otherwise agreed between the joint owners. The joint owners shall agree on all
protection measures and the division of related cost in advance.”

Since
innovation/research transfer from universtities to public and private sector is
highly advisable by European Commision (triple helix and other science
comercialization models11)
it is clear that the procedures are supported also by the legal framework.
DESCA’s article 8.3. explains procedures for ownership transfer indicating that
all Parties should be informed about the trasfer to third parties and each Party
should have possibility to object to a transfer listed in the prior notice.

 

 

1.3. Protection of outputs/results, exploitation and
licensing

The
benificiaries must, for any results that can reasonably be expected to be
commercially or industrially exploited examine the possibility of protecting
them and, if possible, reasonable and justified, protect them even if this
requires further research and development or private investment. If the Party
that is obliged by the Project to protect its work decides not to undertake
protection procedures, the right of protection should be offered to other
consortium members/Parties. Background or Results agreement (and the Grant
Agreement when rights protection is forseen by the project) lists work that
should be protected during the project and after the project closure, while the
usage of results is defined in Joint ownership agreement. In most cases the work
is protected from Third parities and their comercial usage of the project
results. DESCA advises that, under certain circumstances it may be appropriate
to interpret certain research activities on behalf of a third Party as
commercial and therefore to predict and implement appropriate measures to avoid
expoitation of results by third parties (whether they are public or private).
Protection of results is partly covered by MODULE IPR SC Specific Software
provisions (DESCA, Article 9.8. pg 51.) which provides more detailed provisions
regarding software (sublicensing rights, open source code software etc.).

1.4. Dissemination

DESCA
indicates that „main new features of
H2020 is the obligation to make all publications of results available under
open access, Article 29.2 MGA, and that open access to data may be foreseen,
optional clause 29.3 MGA. The Open access is sugested by the European
Commission in order to encourage collaboration, speed up innovation and involve
citizents and society. ” Open access
for Horizon 2020 projects „refers to the
practice of providing online access to scientific information that is free of
charge to the end-user and reusable. ‘Scientific’ refers to all academic
disciplines. In the context of research and innovation, ‘scientific information’
can mean: 1. peer-reviewed scientific research articles (published in scholarly
journals) or 2. research data (data underlying publications, curated data
and/or raw data).” 12
However, open access does not mean that all the results should be published,
but it concerns only those results that are chosen by consortium/Parties. Therefore
this provision addresses only those results that are marked as „free for use”
in Backgroung and Results agreement. The dissemination measures should be
consistent with the ‘plan for the exploitation and dissemination of the
results’ and proportionate to the impact expected from the action.

If
the project results are confidential (linked to Joint ownership agreement and
project Background) DESCA advises to limit the time of the restriction (1-4
years). Consultation among consortium members/Parties before publishing the
work is mandatory. The Parties receive the work at least 45 days (optional
number of days) before the publication, and if no objection is made, the publication
i permitted.  If objection has been
raised the involved Parties should discuss how to overcome the justified
grounds for the objection. The time of publication should be limited to the
certain number of days (Article 8.4.2.3.).

Article
8.4.5. use of names, logos and trademarks should be improved by inserting
project/programme visibility elements and other visibility statements13,
in line with Grant Agreement. Since Grant ageement does not include opinion on
procedures, it would be appropriate if those were inserted in the Consortium
Agreement.

1.5. Access rights

Section
9. Access rights sets legal provisions on project results usage. The rules and
procedures concerns only those project resutls listed in Background or Results
agreement/Attachment 1, however, since Attachment 1 is a vital document,
another project result can be added anytime within the project implementation
(adding another result/work should be confirmed by the project consortium). DESCA
suggests provision of oppen access rights for the project implementation
purposes „Access Rights to Results and Background
Needed for the performance of the own work of a Party under the Project shall
be granted on a royalty-free basis, unless otherwise agreed for Background in
Attachment 1″. As for IP exploitation of the third parties, DESCA advises
including granting the access on Fair and Reasonable conditions14
„unless the beneficiary that holds the background has — before acceding to the
Agreement — informed the other beneficiaries that access to its background is
subject to legal restrictions or limits, including those imposed by the rights
of third parties”15.
On other words – Open access rights are limited to non-commercial and non-competitive use, while other forms of usage can be
restricted and/or limited.

Section
9.5. Acess Rights must be given to Affiliated Entities established in an EU
Member State or ‘associated country,16
in accordanceto the Grant Agreement (25.4) and Consortium Agreement. Access
Rights to Affiliated Entities shall be granted on Fair and Reasonable
conditions and upon written bilateral agreement.

In
the further articles DESCA defines a) additional access rights – 2 options are
provided, b) access rights for parties enetering consortium (any new Party
should be included in Background or Results agreement), c) access rights for
parties leaving consortium (defaulting and non-defaulting Party). Access rights
for Software is precisely defined in Article 9.8. and Module IPR SC.

1.6. Confidentiality

Section
10. of DESCA defines “Confidential
Information” as any type of information which is disclosed by a Party (the
“Disclosing Party”) to any other Party (the “Recipient”) in connection with the
Project during its implementation and which has been explicitly marked as
“confidential” at the time of disclosure, or when disclosed orally has been
identified as confidential at the time of disclosure and has been confirmed and
designated in writing within 15 calendar days from oral disclosure at the
latest as confidential information by the Disclosing Party. The obligation is
not to disclose confidential information to anybody (whether inside the
consortium or not). Commitment of non-disclosure under the Grant Agreement is
set for a period of 4 years after the end of the Project.17
Article 10. Defines what does not apply for disclosure under this agreement (if
there is different explanation in the Grant Agreement, if confidential
information becomes publicly available etc.)

Conclusion

 

The
legal framework introduced by Horizon 2020, which had the aim of simplifying
the regulatory framework proposed by FP7, is still too complex and does not
fully clarify the problematic issues that the past experience of European
funding had shown: it is still quite common to those who deal with this kind of
issues to manage critical situations arising from practical scenarios18.

Aside
from the very few critics, DESCA is a positive mechanism for simplifying and
formalizing project implementation procedures. It saves time and cost,
facilitate the negotiation process, demonstrate best practices or guidelines
and serve as frame of reference.

 

1
Guidance How to draw up your consortium agreement, European Commission; http://ec.europa.eu/research/participants/data/ref/h2020/other/gm/h2020-guide-cons-a_en.pdf

2 The 6th
Framework Programme in brief,
https://ec.europa.eu/research/fp6/pdf/fp6-in-brief_en.pdf

3 DESCA –
http://www.desca-2020.eu/

4 H2020 AGA — Annotated Model Grant Agreement:
V2.1.1 – 1 July 2016 – http://ec.europa.eu/research/participants/data/ref/h2020/grants_manual/amga/h2020-amga_en.pdf

5 “Positive list” involved
listing any data (perscribed by FP7 CA), know how or information that is
intended to share  – Guarda P. (2015) Consortium
Agreement and Intellectual Property Rights within the
European Union Research and Innovation Programme,
University of Trento/Faculty of Law, Trento, Italy

6
“Negative list” provided the listing of only such information as you intend to
exclude from the project (perscribed by FP7 CA); Guarda P. (2015) Consortium
Agreement and Intellectual Property Rights within the European Union Research
and Innovation Programme, University of Trento/Faculty of Law, Trento,
Italy

7 Guarda P. (2015) Consortium
Agreement and Intellectual Property Rights within the European Union Research
and Innovation Programme, University of Trento/Faculty of Law, Trento,
Italy

8
Commission Recommendation C(2008) 1329 of 10.4.2008 on the management of
intellectual property in knowledge transfer activities and the Code of Practice
for universities and other public research institutions attached to this
recommendation

9
‘Results’ means any (tangible or intangible) output of the action such as data,
knowledge or information — whatever its form or nature, whether it can be
protected or not — that is generated in the action, as well as any rights
attached to it, including intellectual property rights (H2020 MGA)

10 DESCA
agreement

11 Cervantes M., Meisner D. (2014); Commercialising Public Research under the Open Innovation Model: New
Trends; 2014, and C. Godt (2015), Technology
Transfer: The hange of European governance of research from private law
perspective, University of Oldemurg, Germany , Springer International
Publishing Switzerland

12 European Commission ( 2016) –
Guidelines on Open Access to Scientific
Publications and Research Data in Horizon 2020 –
https://ec.europa.eu/research/participants/data/ref/h2020/grants_manual/hi/oa_pilot/h2020-hi-oa-pilot-guide_en.pdf

13 „All patent applications, standards,
publications or any other dissemination, including those in electronic form,
relating to results shall, if possible,
include a statement, which may include visual means, that the action received
financial support from the Union. The terms of that statement shall be
established in the grant agreement” – H2020 AGA — Annotated Model
Grant Agreement: V2.1.1 – 1 July 2016

 

14 ‘Fair and reasonable
conditions’ means appropriate conditions, including possible financial terms or
royalty-free conditions, taking into account the specific circumstances of the
request for access, for example the actual or potential value of the results or
background to which access is requested and/or the scope, duration or other
characteristics of the exploitation envisaged.

15 http://ec.europa.eu/research/participants/data/ref/h2020/mga/gga/h2020-mga-gga-multi_en.pdf

16 a non EU-country (third
country) which is Party to an international agreement with the Union

17 The source of this 4-year duration lies in
the MGA, Article 36.

18 Guarda
P. (2015) Consortium Agreement and
Intellectual Property Rights within the European Union Research and Innovation
Programme, University of Trento/Faculty of Law, Trento, Italy