EIT heads reach agreement on IP and liability

CEOs of the five innovation clusters run by the European Institute of Innovation and Technology (EIT) say fundamental concerns over proposed changes to the way they operate have been properly addressed.

Several issues in a proposed new agreement, including the introduction of shared accountability among the five Knowledge and Innovation Communities (KICs), a reshaping of governance structures and a common policy for intellectual property rights management, were problematic and raised ambiguities, according to a letter from the CEOs dated 31 August.

These concerns have now been removed from a new seven-year agreement, which sets out the general rights and obligations of each party under the EIT banner, according to a more recent letter, dated November 16, which has been obtained by Science|Business. “The KICs have been able to jointly convince the EIT to adjust the [agreement] in order to take away the fundamental concerns, including those on liability, IPR and structure,” the letter says.

“The KIC CEOs, also based on the advice of the KIC legal advisors, as well as consultations with partners, are of the opinion that the [agreement] now presented by EIT in a proper way addresses the concerns of the KICs and thus forms a solid basis for the operation of the KICs in the next seven years,” it adds.

The letter is signed by all five chief executives of the KICs: Willem Jonker of EIT Digital; Bertrand van Ee of the Climate KIC; Diego Pavía who heads InnoEnergy; Sylvie Bove of EIT Health; and Ernst Lutz, of EIT Raw Materials.

There were “intense and constructive” talks between the KICs and the EIT following the August protest letter, involving lawyers from participating companies and universities.

A related letter addressed to the five CEOs from EIT Interim Director Martin Kern, dated 10 November, says, “We have addressed your key concerns through the discussions held in the last 2 months”. The latest version of the new agreement has been agreed with the European Commission, the letter adds.

EIT clarifies the major concerns

In August the KICs warned that the proposed new contract proposal would create major changes to the EIT-KIC structure, as well as ambiguity relating to the responsibility and liability of KIC legal entities and partner companies and universities.

It would have introduced “joint and several liability” clauses between the KIC legal entity and KIC partners. Under these terms, KICs would have been held jointly and severally liable for the technical implementation of any and all tasks of the KIC business plans, even those to which a KIC partner did not subscribe.

However, according to Kern’s letter, “It has... been clarified that there is no joint and several financial liability, as each KIC Partner has individual financial responsibility: in case of recovery, liability is limited to its own debt.”

Another objection raised was over changes to intellectual property rules, which the heads said threatened to remove the KICs’ autonomy. The new agreement suggested that instead of the five current autonomous IP policies there should be one common IP policy. This would drive away partners, the CEOs feared. 

Currently, the EIT has an exemption, or “derogation” in EU-speak, from applying Horizon 2020’s IP rules in full. The CEOs said this is justified on grounds that a straightforward application of these rules to KIC business plans would lead to burdensome requirements on KICs and their partners due to the fact that provisions “have to be taken across the board even in cases where individual partners are not involved in the action.”

Addressing this concern, Kern writes, “There are in-built flexibility provisions in the standard Horizon 2020 text – many of the standard provisions include a clause allowing to ‘agree otherwise’”. It will be possible for KICs to find arrangements on IP, “that suit the specific governance model of the KICs and their portfolio of activities [and] projects,” the letter says.

Finally, the CEOs were concerned the new agreement would create a de facto dual governance structure, which they said was unnecessarily complex.

The old set-up will be restored, writes Kern. “The main contact point for the EIT will remain the KIC Legal Entity in the future, similarly to all EU multi-beneficiary grants. Therefore, the three-layer construction as it is currently applied will be maintained.”

What are the KICs?

The EIT was launched in 2008 to stimulate innovation in Europe, by providing partial funding to a set of autonomous KICs, that each are separate legal entities with their own stakeholders and sector focus.

KICs are large consortia of universities, companies and others that band together under the EIT tent to make high-tech discoveries, start new companies, commercialise products and train a generation of budding entrepreneurs. The EIT central office in Budapest, currently co-funds five KICs, specialising in information technologies, energy, life science, raw materials technologies and climate change, each run by a CEO.

Each KIC has about around 30 core partners led by five or six co-location centres, or hubs, for the lab work, teaching and marketing of innovations. Around a quarter of a KIC’s funding comes from the EU’s Horizon 2020 research and innovation programme, the rest from national governments or private funders.

Every year, the KICs and the EIT have to agree annual budgets, and this year they are also negotiating new, multi-year framework contracts.