Los Cuatro Pilares de la Educación Superior:

CSIRO proposes the following principles for implementation in new standard form agreements for use between the Australian Government agencies and PFRAs. They would be applicable to all parties to those agreements:

A. Intellectual Property Principles

Applicable to both Investigative R&D and Consulting and Technical Services The “Intellectual Property Principles for Australian Government

agencies”5 should be adopted for the purpose of agreements between

Australian Government agencies and PFRAs that are also Australian

Government entities (e.g. as between Financial Management and

Accountability Act 1997 entities and Commonwealth Authorities and

Companies Act 1997 entities).

The Principles are recognised as being a broad policy framework which Agencies can implement in the manner that will enable them to achieve their business outcomes. For PFRAs, the business objective is to use intellectual property rights strategically to achieve the efficient and effective creation of impact and benefits for Australia. Whether for application to the areas of industry, society or the environment, implementation will include the identification of intellectual property and active management of the potential protection of this intellectual property. The business objective also requires the PFRA to commit to successful technology transfer and adoption to ensure the creation of impact from the R&D. There is intellectual property for which non-commercial pathways of knowledge and technology diffusion are the most appropriate pathway. For intellectual property that has strong commercial potential, commercial

5

http://www.ag.gov.au/www/agd/agd.nsf/Page/Copyright_CommonwealthCopyrightAdministration_St atementofIPPrinciplesforAustralianGovernmentAgencies

pathways are important as the route to maximising the social return. PFRAs need to be able to ensure intellectual property arrangements that permit commercialisation of that intellectual property on terms determined under market conditions. PFRAs will usually seek to share in equitable returns from the commercial benefits (including, in order to reinvest these revenues in further R&D activities - although the captured funds will only represent a relatively low proportion of R&D funding for PFRAs).

B. “Plain English” summary

Applicable to both Investigative R&D and Consulting and Technical Services The intended relationship between each party should be summarised in “plain English”, in order that expectations are made overt and project officers and research personnel may clearly understand:

o the obligations of the parties during the conduct of the R&D and their respective roles in managing the R&D process;

o the expected deliverables; and

o the intended use rights by each party for the R&D outputs, in particular

the planned pathways for creation of impact from the R&D.

Through this mechanism, the relevant project and research officers can: o Ensure in advance of agreements being executed that the expectations

of both parties as to the roles required to be played and the intended use by each party of the intellectual property are aligned and are capable of being delivered; and

o During the conduct of the R&D, be adequately informed as to their

roles and responsibilities regarding the use of the IP from the R&D. C. Licences to Background IP to be limited to that required

Applicable to both Investigative R&D and Consulting and Technical Services Licences for background IP required by Australian Government agencies should generally be limited to the extent required for the licensee to use the new IP for the specific Commonwealth Government purpose which is the outcome of the particular research project in the relevant field (that is, CSIRO generally agrees with Principle 3 of the Group of Eight supplementary submission).

D. Indemnities to allocate liability in accordance with the common law

Applicable to both Investigative R&D and Consulting and Technical Services The contractual allocation of risk as between Australian Government agencies and PFRAs should be aligned with common law. The common law provides a range of rights and remedies to a party which believes that it has suffered loss as a consequence of the acts or omissions of another party (including a contractual counterparty). These rights include the right to bring actions for breach of contract and negligence and the remedies include compensatory damages if such actions are successful.

Indemnities in many Australian Government agency funding agreements seek to extend the liability of PFRAs beyond common law liability. It is unclear why this is necessary or desirable in light of the Commonwealth Policy referred to below.

It follows that each party should be responsible for managing the risks arising from their use of the IP developed in the funded project (and any necessary background IP) and Australian Government agencies should not seek to transfer to PFRAs risks arising from such use. Conversely, nor should PFRAs seek to transfer risks conveyed from their conduct of the R&D to Australian Government agencies that are not involved in the conduct of the R&D.6

Additionally, in considering the warranty and indemnity provisions to be included in agreements between Australian Government agencies and PFRAs that are Australian Government entities, both parties need to respect the requirement of the counterparty to comply with Financial

Management Guidance No. 6 – Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort, September 2003. PFRAs that are Australian Government entities seek their insurance

cover from ComCover and do not have automatic coverage for contract indemnities:7, 8

We will not pay for liability arising out of any indemnity unless the liability

would have arisen in the absence of such indemnity (Clause 2.9.12).

E. Moral Rights

Applicable to both Investigative R&D and Consulting and Technical Services CSIRO supports the position put in the Group of Eight submission on moral rights (Principle 8 in that submission). Put simply, the legislated moral rights of authors/inventors need to be respected by both contractual parties. Agreements should not (whether for administrative convenience, or otherwise) seek to transfer from the Australian Government agency to the PFRA the responsibility for securing broad moral rights consents from authors/inventors in relation to the project outcomes – it is necessary that both contractual parties have responsibility for respecting the moral rights of authors/inventors.

6

Except for the limited case where there is an explicit, identified risk that the PFRA is better placed to manage than is the Australian Government agency, the PFRA is capable of effectively managing that risk and choses to accept an indemnity liability in relation to that risk.

7

http://www.finance.gov.au/COMCOVER/docs/MemberGuidanceIndemnities_04-05PDF.pdf

8

This is consistent with the Australian Government’s policy on issuing indemnities as outlined in

Financial Management Guidance No. 6 – Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort, September 2003

F. Ownership of IP from Consulting and Technical Services and Investigative

R&D

Intellectual Property is an important component of the capability of a PFRA. To maximise the use and impact of intellectual property arising from Investigative R&D commissioned by Australian Government agencies, ownership of that IP should be vested in the PFRA with the PFRA granting to the Australian Government agency a licence to the IP for appropriately specified purpose (which licence will commonly be for internal use within the Commonwealth including formulation of policy or guidelines, and reproduction of documents in an agreed form - but would usually not include commercial exploitation).

For Consulting and Technical Services agreements commissioned by Australian Government agencies, the known deliverable is embodied in copyright (for example a report and/or a computer program). Ownership of any novel IP that arises serendipitously from Consulting and Technical

Services R&D should be owned by the PFRA as the party best placed to

develop and exploit this IP.

G. Confidentiality and Right to publish IP from Investigative R&D and from

Consulting and Technical Services

Scientific publication of new knowledge is a critical objective of PFRAs. In the case of much of the knowledge arising from Investigative R&D commissioned by Australian Government agencies, dissemination of scientific results is a key pathway for the intellectual property to have impact.

CSIRO generally supports the position put in the Group of Eight submission on publication of new knowledge from Investigative R&D. To ensure that IP rights are not inappropriately jeopardised, each party should have a right to ensure that there is no publication or disclosure prior to timely completion of a decision process regarding protection of the intellectual property. Thereafter PFRAs should be entitled to publish research results, provided that no confidential information of the Australian Government agency or of any third party is disclosed. Australian Government agencies’ rights to keep information confidential should generally be limited to categories of information that are necessary for the agency to keep confidential, and should not generally extend to all research results.

H. Audit arrangements

Australian Government PFRAs are audited by the ANAO annually. For these PFRAs, the audit requirements that are found in standard form agreements from Australian Government agencies require a duplication of the auditing process that consumes significant administration resources. CSIRO proposes that for the purpose of improved efficiency, revised agreements provide for the Australian Government funding agency to be

able to rely upon the annual audit coverage by ANAO of the PFRAs rather than requiring a separate and additional audit process.

I. Operational issue during contracting: procurement issues arising from agreement provisions

During competitive procurement processes, bidders are requested to confirm that they will accept the Department’s standard form contract, which, currently, often include indemnities which expand the bidder’s common law liability. The refusal to grant a boilerplate indemnity may have an impact on the risk profile and competitiveness of a proposal from a PFRA, even though:

o It is as a result of Commonwealth policy (Financial Management

Guidance No 6) that the PFRA is precluded from being able to comply

with the Department’s standard form contract; and

o That in relation to such risks, ComCover would have a common

interest in the contractual risk and liability position of the parties. To facilitate Commonwealth entities working together on various R&D projects (where it is, in other respects, both natural and appropriate that they do so) and so that PFRAs that are Commonwealth Authorities and

Companies Act 1997 entities are not at a disadvantage in governmental

procurement processes as compared to competitors that do not need to comply with Financial Management Guidance No 6: it needs to be open to, and approved practice in, Australian Government agencies that during the evaluation of tenders a proposal from a PRFA that stipulates that it is only prepared to agree to indemnities that are restricted to those that comply with that PFRA’s obligations under Financial Management

Guidance No 6 would not be marked down, on this basis, in comparison to

a tender from an alternative supplier who provides indemnities that go beyond those permissible under the Financial Management Guidance No

6.