We are all being told that 2017 is the year of EdTech. So what implications does that have for new types of arrangements between universities and the providers of EdTech services?
In this article, we look at some of the issues that a university should address when it decides to deliver its courses online. A later article will address the data privacy issues raised by the increased use of data analytics to support teaching interventions and create new services.
The Approach to Negotiations
Many EdTech companies are early-stage businesses. A number of them have started out in the US or another country and are not familiar with UK contracting. Where this is combined with negotiations by academics who also have little commercial experience there is a risk that any agreement may overlook important considerations for the university.
Often, the EdTech partner will produce its standard contract on the basis that other institutions have signed up to it and that it will not negotiate them. The contract may be based on US law and be inappropriate for use in the UK. It is not generally in the university’s interest to sign such documents but it may require sensitive negotiations to secure a more satisfactory one.
We have seen contracts ‘negotiated’ in this manner and presented for “sign-off by legal” within a very short deadline. Often the draft fails to deal with such key issues as who is to own the intellectual property (IP) rights in the new online material, how the EdTech partner’s performance is to be monitored and who may exploit the material commercially after termination - and how. This inevitably leads either to delay in finalising the contract or to execution of a document that puts the university at a disadvantage. Neither is ideal in terms of building a long-term relationship between the university and the EdTech business.
It is helpful either for the procurement or legal team to be involved from the outset, or to have a set of negotiating guidelines for staff to use that cover the significant contractual issues.
The main considerations fall into four categories.
Many universities are considering whether they are still subject to the public procurement regime, on the basis that the bulk of their income now comes from fees paid by the students themselves or from other non-public sources. Regardless of the procurement obligations on the university, value for money requirements will generally point to a competition for the contract.
It is sometimes argued by tech companies that they are providing unique IP and so the contract can be exempted from the public procurement rules. In the light of the rapidly-expanding numbers of businesses with offerings in the EdTech sector, and the limitations on so called "single tender actions" under the procurement rules, this argument is hard to sustain.
Performance of the Contract
Generally, the agreement will be for the university to provide video and written teaching materials (ie content) and the EdTech business to incorporate that content into its online delivery format. There may also be additional services, such as the promotion of the online courses and the enrolment of students, especially those who reside outside the UK.
It will be key for the university to ensure that there is clarity around who provides which services when the courses are up and running. For example, who collects the fees; registers the students; validates the course; and assesses each student’s performance for degree award? Are there regulatory requirements that may impact on performance obligations? And don’t forget Bribery Act and other anti-corruption provisions. How will you ensure that the EdTech partner performs? The incorporation of service standards and/or milestones should help in monitoring the partner’s performance and provide clear remedies if the project goes off the rails.
When assessing the risks addressed by warranties and indemnities, bear in mind the potential impact on the university’s reputation of any breach, particularly relating to either personal data or IP rights.
Should there be a cap on liability for certain breaches or would you prefer an overall cap? Given its charitable status, it will very rarely be advisable for a university to accept unlimited liability for breach of contract.
Particularly where you are dealing with an early-stage company or a new UK subsidiary, consider whether it is good for any indemnities or whether you might want the security of a parent company guarantee. If that is unavailable or it seems unlikely to provide the required comfort, you may want to consider insuring the risk.
What will happen on termination? It is usual for original material to be returned to the party that created it but who can use the material created in the course of the contract? This raises several IP considerations that are dealt with below but there are also commercial issues such as whether post-termination exploitation will generate revenue for the university, require it to make ongoing payments to the EdTech partner, or both.
It is common to see provisions for each party to retain the IP rights in their own material. For this to work in practice, it is essential to set out what each brings to the table. An airy generalisation along the lines of “all IP rights in the product as at the date of this agreement” is unlikely to be much help to a judge trying to decide an infringement claim. A degree of granularity will not only help if you end up in court but will also make it clearer what material may require licensing for ongoing exploitation.
Perhaps the most fundamental issue is that of who owns the IP in the finished product and who is entitled to control its exploitation. If the university's name is to be used, it must also retain at least a degree of control over how and where that will happen.
Bear in mind that the university may wish to use the same base content in different ways. This could be by licensing its use face to face or it could be that the current EdTech partner will provide online lecture delivery and a future partner may offer a games-based product. Be alert to the use of the term ‘exclusive’ and ensure that it only attaches to material where you want to grant such rights.
A video is, in copyright terms, a film. This gives intellectual property rights to the producer and principal director. There are also likely to be performers’ and recording rights in relation to that video. Does the contract cater for these if they belong to someone not covered by the university's intellectual property policy? And does that policy cover these rights?
How will future commercial exploitation of the finished product, including by the EdTech business after termination impact on the university's revenue-sharing policy? Is that policy apt to cover these circumstances?
Finally, has the university granted licences for the use of its brand by the EdTech partner? Make sure that they incorporate the brand use guidelines. If the product is to be exploited in new territories, does the current trade mark portfolio provide the necessary protection? If not, who should bear the cost of extending it?
There are exciting opportunities for universities to extend the reach and scope of their teaching and to introduce new learning tools. Exploiting those opportunities may require some review of existing policies, practices and portfolios, especially in relation to intellectual property.
There are also new openings to generate revenue from data collected in relation to online teaching. Never undervalue it as the base for analytics and personalisation-whether by the university or a new partner.
First published in the March 2017 edition of University Business.