For many researchers considering building their own business, the biggest roadblock is often the transfer of intellectual property (IP). Questions around IP rights and ownership are rarely straightforward (and almost never quick).
A recent survey of 118 German spin-offs done by SPRIND and Fraunhofer ISI found that the average time from first contact to a signed IP-transfer contract was 18.4 months. On top of that, another study reports that there are no standard models for IP transfer. While some spinoffs secured full ownership of their IP, many had to accept structures such as licensing plus equity, or licensing paired with purchase agreements (source). Naturally, this raises questions for researcher-founders:
- How can I protect my IP from Day One?
- When should I start thinking about it?
- When validating my idea with customers, how much is safe to share?
In this third part of our series, The Researcher’s Guide to Entrepreneurship, we sit down with Dr. Michael Wehrheim, strategic and financial advisor with decades of experience guiding entrepreneurs through financing and M&A processes. Together, we create a checklist of what to look out for and share practical tips for researcher-founders.
1. Understanding IP in Research Collaborations
In many academic institutions, including Fraunhofer, many projects are done in collaboration with industry partners. These could be joint research projects financed by grants or even contract research. Once industry partners are involved, a cooperation agreement is almost always put in place.
Before explaining what a cooperation agreement is, it’s helpful to clarify what counts as intellectual property (IP) in a research setting. IP can include:
- Know-how: knowledge that is secret (unpublished) but possible to describe and essential for the startup
- Software: could be an algorithm or source code developed in the course of the project
- Patents: protected inventions or processes applied for or officially granted
A cooperation agreement defines the terms of stakeholders working together. It typically shows who owns what and who can use it. In certain cases, it distinguishes between:
- Background IP: IP brought into the project
- Foreground IP: the results generated during the collaboration
In many joint research projects, agreements often contain a one-year period after the research phase after which partners are allowed to freely use the IP generated.
The existing agreements like cooperation agreements matter. Speak with your legal team or Technology Transfer Office (TTO) early to understand the terms.
Dr. Michael Wehrheim
Another factor influencing IP usage is how the research was funded. If public funding is involved, e.g national innovation grants, restrictions may apply. Depending on the grant, this could influence:
- how IP is shared,
- whether exclusive licenses are possible,
- or whether IP must remain accessible to project partners.
If you’re unsure, your TTO is the first point of contact. A TTO supports researchers with contracts, IP assessment, licensing options, and negotiations.
2. Clarifying How You Can Use the IP
Once ownership is clear, the next step is asking: Can I use this IP for my startup idea? If so, under what terms?
At Fraunhofer HHI, for example, the accelerator program provides template contracts (including licensing agreements) to streamline this process and clarify the use of both existing IP and IP developed later. Not every institution offers this, so it’s important to ask the right questions:
Questions for your TTO or legal team
- What are the terms under which I can use the IP? Common limitations include sublicensing restrictions, fields of use, or geographic limits.
- What happens to new IP I develop? This relates to background vs. foreground IP and determines whether improvements belong to you, the institute, or both.
Most often, the path forward involves a licensing agreement. A licensing agreement grants you the right to use, commercialize, or further develop an institution’s IP under agreed conditions (fees, royalties, exclusivity, etc.).
3. When Should You Start Thinking About IP?
The answer is simple: As early as possible. Thinking about IP early helps you
- understand what you can and cannot commercialize,
- align your funding plan with IP requirements,
- avoid sharing sensitive information insecurely,
- know from early on what you should spend time building, and what you shouldn’t
4. What You Should Look Out For (The Checklist)
- Understand the process: Familiarise yourself with background IP, foreground IP, ownership, usage rights, licensing terms, and the general process at your institution.
- Understand the funding: Find out where the money came from, which rights the funding allows for, and whether commercialization pathways are restricted.
- In some cases, you may need to decide whether to file a patent. Patents provide protection, but they also make your intellectual property public.
- Patents are expensive. Michael highlights a common patent-filing journey that shows how costs add up over time. For example, the initial patent filing may cost around €10,000. A year later, you may file a Patent Cooperation Treaty (PCT) application, which can cost another €10,000. The following year, you may apply for protection in other countries, with each costing another €10,000. Over time, these costs add up.
As an early stage startup building hardware technology, filing for patents might be a great move. Even when public, they’re harder and more costly to replicate.
Dr. Michael Wehrheim
- When to disclose sensitive technical details
During early customer discovery, you rarely need to disclose sensitive technical details. Instead, you focus on understanding customer painpoints and if your solution solves their problem. However, later stage discussions with potential customers or due diligence meetings with investors may require deeper technical explanations. Here, an NDA is essential to avoid revealing your “recipe.”
Insights from Dr. Michael Wehrheim
Strategic and Financial Advisor, Silicon Allee at Fraunhofer HHI
Silicon Allee is the startup department embedded inside Fraunhofer HHI, Germany’s leading institute for AI, photonics, and telecoms. We work at the intersection of research and entrepreneurship by supporting internal researchers spinning out their work and external founders building with Fraunhofer technologies. Through our Talent Network, people can express interest in joining early-stage startups from our portfolio.
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