How to make money on intellectual property?

From Research Institute to LLC: another step towards independenceMarina Gordeeva, for STRF.ru
Research institutes and universities have the right to create business companies without coordinating this decision with the owner of their property.

Federal Law No. 217-FZ of August 2, 2009 "On Amendments to Certain Legislative Acts of the Russian Federation on the Creation of Economic Companies by Budgetary Scientific and Educational Institutions for the Purpose of Practical Application (Implementation) of the results of intellectual Activity" also secured for research institutes (universities) the possibility of contributing rights to the authorized capital of the company being created the use of the results of intellectual activity belonging to them, as well as funds, equipment and other property that they have in operational management.
(You can download the text of the law here – VM.)

Legislative innovationsThe essence of the innovations is that now research institutes (universities) have the right to create business companies at their discretion (or to be part of their participants / shareholders).

At the same time , the following restrictions are imposed on new companies:

– their main activity should be activities aimed at the practical application (implementation) of the results of intellectual activity, such as: programs for electronic computers, databases, inventions, utility models, industrial designs, breeding achievements, integrated circuit topologies, production secrets (know-how);

– Research institute (university) as a contribution to the authorized capital of the company makes the right to use the results of intellectual activity belonging to it;

– such rights will be introduced on the basis of license agreements, the exclusive rights will remain assigned to the Research Institute (university);

– funds, equipment and other property under the operational management of the Research Institute (university) may be made as a contribution to the authorized capital of the created business company in accordance with the procedure established by the Civil Code of the Russian Federation;

– it is allowed to involve other persons in the founders (participants) of business companies, provided that the share of the research institute (university) in the authorized capital of the JSC will be more than 25 percent, and in the case of LLC – more than 1/3;

– Research institutes (universities), when creating innovative enterprises, must notify the Ministry of Education and Science of the Russian Federation no later than seven days from the date of registration of the company as a legal entity. (This procedure is of a notification, not a permissive nature.)

Fitting a new law to the old onesAt first glance, the law is very useful from the point of view of expanding the boundaries of the property independence of institutions.

Let's analyze how it will work in practice.

Research institutes can contribute funds, equipment and other property that are under their operational management, in accordance with the procedure established by the Civil Code of the Russian Federation, as the new law says. The legal regime of the property under the operational management of the institution is determined in accordance with Articles 296 and 298 of the Civil Code of the Russian Federation.

Article 296 of the Civil Code of the Russian Federation establishes: "... institutions for which property is assigned the right of operational management, own, use and dispose of this property within the limits established by law, in accordance with the objectives of their activities, the tasks of the owner of this property and the purpose of this property." Thus, since the commented law has been adopted, budgetary institutions receive the right to contribute to the authorized capital of the created company funds, equipment and other property that are under the operational management of this institution, as well as the right to use the results of intellectual activity.

On the other hand, in accordance with paragraph 1 of Article 298 of the Civil Code of the Russian Federation, "a budgetary institution has no right to alienate or otherwise dispose of property assigned to it by the owner or acquired by this institution at the expense of funds allocated to it by the owner for the acquisition of such property."

Further, in accordance with the Budget Code, a budgetary institution may spend funds received from extra-budgetary sources only on the basis of a general permit issued by the chief administrator in accordance with the approved cost and income estimates. The expenditure of funds from budgetary sources is also carried out in accordance with the approved estimates.

Thus, paragraph 1 of Article 298 of the Civil Code of the Russian Federation (prohibiting a budgetary institution from disposing of property provided to it for operational management) is in contradiction with the very concept of the right of operational management (Article 296 of the Civil Code of the Russian Federation), and, as a consequence, with the commented norm of the new law. There is a discrepancy between the norms of the law, which in practice can lead to controversial situations.

Transfer of intellectual propertyThe main part of the scientific activity of the Research Institute (budget institution) is conducted in accordance with budget estimates, including in the framework of the execution of government contracts.

Thus, the main part of the intellectual property of the institute is created at the expense of budgetary funds.

Recently, the state policy has shifted the emphasis towards securing exclusive rights to the created results of intellectual activity for the direct executor, including those created at the expense of budget financing. This is reflected in the Decree of the Government of the Russian Federation No. 685 of November 17, 2005 "On the procedure for disposing of rights to the results of scientific and technical activities", then in the new fourth part of the Civil Code of the Russian Federation, then in the commented law. That is, the owner of exclusive rights becomes the only full-fledged administrator of them, regardless of their organizational and legal form.

However, the institute, as a contribution to the authorized capital of a new LLC, can only contribute the intellectual property in respect of which it has exclusive rights, which are confirmed, in particular, by the terms of a specific state contract, the availability of the institute's title documents (registration certificates, patents, etc.), internal accounting and tax records of the relevant objects.

Accordingly, the management of the Institute should clearly understand which objects the institute has exclusive rights to and whether there are any additional restrictions regarding their use.

The state contract for the performance of research works (during which, as a rule, an intellectual object appears) must necessarily provide for whom the rights to the created results are assigned: for the Russian Federation, jointly for the Russian Federation and the performer, or for the performer.

Legal relations arising in connection with the creation and turnover of the results of intellectual activity are currently regulated by the fourth part of the Civil Code of the Russian Federation. The issues of special legislative regulation of the procedure for transferring rights from the Russian Federation to end organizations for unified technologies created with the involvement of state budget funds are also reflected in the Federal Law "On the Transfer of Rights to Unified Technologies" (Federal Law No. 284-FZ of December 25, 2008).

In accordance with Article 1298 of the Civil Code of the Russian Federation, if the exclusive right belongs to the contractor, then he is obliged, at the request of the state customer, to provide the person indicated by him with a gratuitous simple (non-exclusive) license to use the corresponding object for state needs.

In practice, this means the following. For example, during the execution of a state contract, a certain object was obtained, the exclusive right to which is assigned to the executing organization. The owner of the exclusive right can use this object in any form and in any way that does not contradict the legislation. The only limitation is that, at the direction of the state customer, the copyright holder is obliged to provide the person indicated by the state customer with a simple non-exclusive license to use this result for state needs. This right is granted free of charge. The concept of "state needs" is disclosed in Federal Law No. 94-FZ of July 21, 2005 "On Placing orders for the Supply of Goods, Performance of Works, Provision of Services for State and Municipal Needs" (as amended on December 31, 2005, July 27, 2006, April 20, July 24, November 8, 2007 year), and is understood as ensuring the needs of the Russian Federation or its subjects in certain results of intellectual activity. In other words, the executor – the owner of the exclusive right – is obliged, at the direction of the state customer, to grant the specified person, free of charge, the rights to use the result obtained for the execution of another state contract.

How can this fact affect the interests of the new LLC?

Firstly, this obligation to conclude a license agreement must be preserved and fulfilled even when the owner of the exclusive right changes. And this limitation of the powers of the owner of the exclusive right reduces the commercial value of the object.

Secondly, a situation is possible when, as a result of granting a license to a person specified by a state customer, the latter's activity (products) begins to compete with the activity (products) of the owner of exclusive rights (the same is true for a new LLC). For example, this will lead to the production and sale of similar products.

It is possible to insure against these risks by detailing the final result obtained within the framework of the execution of the state contract: in particular, indicating which objects, the rights to which belong to the contractor, are involved in obtaining the final result. This will also be helped by limiting the limits of the use of these results by a third party by fixing in the contract the provision of a simple non-exclusive license for specific methods and purposes of use.

Sharing of intellectual property rightsBefore considering the case of securing exclusive rights to the final result jointly for the contractor and the Russian Federation, we will determine the limits of the contractor's capabilities to use such an object.

Article 1229 of the Civil Code of the Russian Federation establishes that the exclusive right to the result of intellectual activity may belong jointly to several persons. The Code establishes priority in matters of the use and disposal of rights to the results of intellectual activity belonging to several persons, by agreement between the copyright holders. That is, the parties can conclude an agreement between themselves that will provide for their interaction when using and disposing of the rights to the corresponding object.

The legislation does not establish any strict requirements for this type of agreement - the parties can determine for themselves which issues of interaction it makes sense to fix on paper. But we must understand that the more detailed the conditions of interaction between the parties are, the less likely it is that disputes will arise.

If such an agreement has not been concluded, then each of the copyright holders can use such a result for their own purposes (i.e., at will). In this case, the joint disposal of the right and, in particular, its alienation is carried out (regarding the terms of alienation, the parties must come to a single decision); and the proceeds from the joint use of the result of intellectual activity (if it is impossible for the parties to use this object independently) are distributed equally among all copyright holders.

The existing practice of state contracts does not provide for the inclusion in the text of the state contract of provisions that somehow specify the rights and obligations of each of the parties to the final result when they are jointly assigned to the Russian Federation and the contractor. Consequently, the possibility of adding rights to such objects to the authorized capital arises for an institution only with the written consent of the state owner.

The order is carried out by common consent and in relation to a single technology. In this case, the legislator does not provide for the possibility of concluding an agreement between the parties on another way of resolving issues on the use of rights.

The powers to manage federal property are assigned to the Government of the Russian Federation, accounting and direct coordination is carried out by the Federal Property Management Agency. Thus, the issues of disposal of property transferred to the Russian Federation based on the results of state contracts will be resolved by the Federal Property Management Agency and (or) other executive authorities (that is, those who acted as state customers and to whom the corresponding rights to alienated technologies and other objects of intellectual activity were transferred).

In practice, not all the intellectual property actually created is listed on the balance sheet of many institutions. In order to reduce the tax base, some results of intellectual activity are also recorded at a minimum cost. There may be a situation when a certain object is not reflected in the internal accounting at all, or only individual costs for its production are reflected, which do not allow to specify it completely.

Property relations of the Research Institute and the Russian Academy of SciencesThe main question that has arisen before the leadership of the majority of research institutes is what can be transferred to the LLC?

The problem lies not only in the absence of the necessary legal norms, but also in the absence of transparent accounting of intellectual property of institutions throughout the entire period of their work.

In accordance with Article 75 of the Charter of the Russian Academy of Sciences, "The Russian Academy of Sciences, in accordance with the legislation of the Russian Federation, may dispose of intellectual property rights and other results of scientific and technical activities obtained at the expense of federal budget funds in organizations subordinate to the Academy. The Russian Academy of Sciences has the right to contribute to the authorized capital of commercial organizations created by it in accordance with this charter the results of scientific and technical activities in accordance with the legislation of the Russian Federation."

What can this lead to? Theoretically, the institute itself (by virtue of the law) and the RAS (by virtue of its charter) can claim the same object of intellectual activity, the exclusive rights to which belong to the institute.

But since the Russian Academy of Sciences can dispose of "rights" and "in accordance with the law", it is necessary to rely on the norms of the law and, therefore, the institute is entitled to dispose of its property – the one to which there are exclusive rights. As for the Russian Academy of Sciences, it is interested in receiving part of the income from the commercialization of the intellectual property of its institutions and in gaining control over the whole procedure for the disposal of its property by institutions.

Of course, the Russian legal system is not perfect and has a number of gaps that can lead to litigation in practice. On the one hand, the adoption of certain legal acts takes time. The "race" in the adoption of the commented law has led to the fact that the leadership of most budget institutions does not dare to work on it, fearing to take the wrong steps, fraught with lawsuits. On the other hand, if you don't start earning now, the financial situation of many scientific and educational institutions may become even more deplorable.

The conclusion is to conduct an audit of their assets (tangible and intangible), assess their commercial attractiveness, ensure transparency of accounting and the availability of guarantees of competence to dispose of them.

Authorized capital and net assets of the companyThe main activity of the new society should be the introduction of the results of intellectual activity.

This type of activity must be recorded in the charter of the LLC and entered into the Unified State Register of Legal Entities. There is no unambiguous definition at the legislative level, which type of activity is the main one for the organization. The organization determines this itself. Further, depending on the type of activity recorded in the Unified State Register of Legal Entities, statistical codes are issued to the organization, insurance premiums are accrued, etc.

The main type of activity does not mean the only one. Consequently, the LLC retains the opportunity to engage in other related activities. The only condition is that all activities, directly or indirectly, should be aimed at ensuring the implementation of the provided results of intellectual activity.

The new version of the law on LLC that came into force on July 1 of this year (the corresponding amendments were introduced by Federal Law No. 312-FZ of December 30, 2008 "On Amendments to Part One of the Civil Code of the Russian Federation and Certain Legislative Acts of the Russian Federation") allows payment of shares in the authorized capital with property rights.

As a rule, LLC seek to register the minimum authorized capital (since July 1, 2009, its size is ten thousand rubles) and pay it in cash. This is done in order to save money and reduce time for organizational procedures, as well as minimize the company's obligations to maintain the size of its net assets in accordance with the size of the authorized capital.

But for budgetary institutions, it is the contribution to the authorized capital that can be carried out without the consent of the owner. Therefore, let's focus on this issue.

The monetary assessment of the right to be made as a contribution to the authorized capital of a business company under a license agreement is approved by a unanimous decision of the general meeting of its founders. If the nominal value of the LLC participant's share in its authorized capital, paid by the right, exceeds five hundred thousand rubles, such a contribution must be evaluated by an independent appraiser (for other LLC, this limit for attracting an independent appraiser is twenty thousand rubles).

It should be noted that the increase in the cost barrier, which does not require an independent assessment in this case, is an additional risk for the other participants of the new LLC. After all, as a general rule, in case of payment of a share in the authorized capital by non-monetary means, the relevant participant of the company and an independent appraiser jointly and severally bear subsidiary liability for the obligations of the company in the amount of overestimation of the value of the company's property for three years.

In addition, a large difference between the book value of the IA in the internal accounting of the Research Institute and the value of the rights transferred under the license agreement to the LLC may raise questions not only from the other participants of the company, but also from the tax authorities. For example, an institute has a certain IA with a book value of one hundred rubles. When making a contribution to the authorized capital, it is estimated at five thousand rubles. Since the institute retains exclusive rights, this asset remains on its balance sheet. The profit on such an asset at the institute is minimal. But for the new organization, the value of the rights transferred under the license agreement exceeds the value of the exclusive rights by several times. Formally, there are no prohibitions on such actions. But the validity of such a difference in price, from the point of view of protecting the interests of future counterparties and the legality of calculating taxes from the institute during the creation and independent use of this asset, may require verification.

Therefore, when deciding on the approval of the cost of the contribution to all participants of the new company, it makes sense to analyze the institute's existing documentation on the relevant object (in particular, for the absence of copyright infringement during its creation, transparency of interaction with the state customer, correctness of accounting and taxation, etc.). After all, the size of the authorized capital of the company should be supported by the size of its net assets.

In accordance with the law on LLC, at the end of the second and each subsequent financial year, if the value of the company's net assets turns out to be less than its authorized capital, the company is obliged to reduce its size to an amount not exceeding the value of net assets and register such reduction in accordance with the established procedure.

And in case of inconsistency of the assessment of the contributed asset with its real value, the institute will be obliged to compensate the missing part with cash. Moreover, those that are obtained from commercial activities. And they may not be.

As for the issue of disposal of the Research Institute of its share in the authorized capital of the company, it is allowed only with the prior consent of the owner.

The income from the disposal of shares (dividends) goes to the independent disposal of the institute and is recorded on a separate balance sheet. The Institute has the right to use these revenues only for the legal protection of the results of intellectual activity, payment of remuneration to their authors, as well as for the implementation of its statutory activities.

Management of the companyCan the director of a research institute or university become the CEO of a new LLC?

There is an explicit restriction on such a combination in the law "On Education". Paragraph 6 of article 35 does not allow "heads of state and municipal educational institutions to combine their positions with other managerial positions." There is a well-known practice of including a clause in employment contracts prohibiting the rector from being a participant (shareholder) of any organization whose participants (shareholders) include the institute. But the position of the chairman or a member of the board of directors of an LLC is not a position. As for the Research Institute, neither the law "On Science" nor the charter of the Russian Academy of Sciences contain explicit prohibitions on combining the director of the Research Institute with senior positions. This requirement may appear in the charters of individual institutions and employment contracts. But, one way or another, the management of the Research Institute will be able to influence the activities of the new LLC at least as a representative of one of its main founders.

Risks associated with the creation of an LLCAfter the adoption of the above-mentioned law (No. 217-FZ), fears arose in scientific circles that in the event of the creation of a company and the transfer of tangible and intangible assets into it, the new company could become the object of forced takeover (raider attacks).

After all, not only the rights to the results of intellectual activity can be transferred to the new society, but also production funds, unique equipment and real estate – quite attractive assets. In addition, other members of the company have the right to pay for half of their share in the authorized capital of the company also with exclusive rights to the results of intellectual activity, the right to use the results of intellectual activity, materials, equipment or other property necessary for the practical application (implementation) of the results of intellectual activity.

What should the new LLC and its founders really be afraid of?

Firstly, obtaining control over the company (purchase, redistribution of shares in LLC) by third parties.

Secondly, changes in the company's management bodies (making entries in the Unified State Register of Legal Entities).

And, thirdly, the seizure of LLC property (conclusion of contracts for the purchase and sale of real estate and other LLC property, modification of license agreements, etc.).

In order to protect yourself from possible attacks by "white raiders", that is, working within the framework of legislation, when creating a new organization and preparing its constituent and other documents, it makes sense to rely on such provisions of the commented law.

Fixing in the law the minimum size of the research institute's share of more than 1/3 is a guarantee for the institute that important decisions for the company's activities will not be taken without its consent, requiring a qualified majority of votes in 2/3 (or 3/4), for example, amendments to the charter, granting additional rights and/or obligations to a company participant, increasing the authorized capital of the company, etc. pr .

The law establishes a rule according to which if the charter does not contain such wording as, for example: "a participant has the right to withdraw from the company at any time regardless of the consent of its other participants or the company," it will be possible to leave the LLC either with the permission of the other participants and the company, or by selling its share to another participant or a third party. Thus, the following scenarios are possible.

The first is to fix in the charter the possibility of leaving the company. This will allow the Research Institute to withdraw from the membership at any unfavorable moment for it. LLC, in turn, is obliged to pay the Research Institute the actual value of its share in the authorized capital of the company, determined on the basis of the company's accounting statements for the last reporting period preceding the day of filing an application for withdrawal from the company.

The second option is, on the contrary, to prescribe in the charter restrictions on the exit of old and the admission of new members of the society. After all, the sale or otherwise alienation of a share or part of a share in the authorized capital of the company to third parties is allowed, if it is not prohibited by its charter. The Charter of the company may also limit the possibility of changing the ratio of the shares of its participants. These steps should be taken if there is an interest in "freezing" the initial alignment of forces between the founders.

When developing the company's charter, attention should be paid to securing a certain number of votes necessary for making key decisions for the company's activities (election of the executive body, amendment of the company's charter, decision-making on approval of major transactions, the procedure for alienating shares to third parties, etc.). On these issues, it makes sense to fix that their adoption is possible in in case of a unanimous decision of the participants or in the presence of a qualified majority of three-quarters of the votes.

The new law on LLC provides for the possibility for participants to fix in the charter the price at which the alienation of the share is possible (the so-called price pre-determined by the charter). This will protect against the possibility of obtaining only the nominal (minimum) value for the share when it is alienated.

As for the preservation of the rights of the Research Institute to the property contributed to the authorized capital of the company, it is worth thinking about the terms of the license agreement under which the Research Institute will transfer the rights to its intellectual property to a new LLC. The license agreement should provide for the possibility of its termination unilaterally by the Research Institute without imposing any financial responsibility on the institute for this. Naturally, the cases giving the right to terminate the contract should be clearly defined, and at the same time the interests of both the research Institute and the LLC should be taken into account. There can be no unambiguous interpretations here, since in each specific case it will depend on what rights are transferred, for what purposes, what agreements the parties have regarding business development, etc.

It should also be borne in mind that in the event of termination of the LLC's right to use the property before the expiration of the period for which such property was transferred to its use to pay for the share, the participant of the company (research institute) will be obliged to provide the LLC, at his request, monetary compensation equal to the payment for the use of the same property on similar terms for the remaining the term of use of the property.

When determining the scope of the transferred rights in the license agreement, it is also possible to think over the mechanisms for limiting them in the event of a change in the LLC's business or the layouts within it.

Since non-exclusive rights are given to LLC, the Scientific Research Institute must constantly monitor the correctness and effectiveness of the use of IA, including the execution of sublicense agreements.

In conclusion, I would like to note the following. The probability of raider attacks on societies created for the purpose of introducing the results of intellectual activity is small. The risks of various kinds of disputes related to copyright protection and the legality of the use of intellectual property are much higher. It is the correctness of the conclusion of labor, licensing, sublicense agreements, as well as the adoption of measures to protect intellectual property, that should be paid special attention to in order to protect yourself and your new business.

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24.09.2009