Stalemate in Cooperation: A Promising Scientific Research Achievement Falls into Deadlock

In September 2022, an agricultural technology enterprise focusing on the R&D of intelligent irrigation equipment approached our firm, hoping that we could provide legal support for its joint venture project with a scientific research team from a university. If this project could be successfully implemented, it would transform 5 patented technologies developed by the university team over five years into industrialized products, which is expected to fill the technical gap in the field of intelligent irrigation in China.

However, the seemingly promising cooperation prospect has deadlocked at the negotiation table. The two parties have serious differences on three core issues:

• Equity Distribution：The enterprise side believes it should hold a majority stake, while the university side insists that the value of technology should be given higher weight
• Intellectual Property Ownership：The two parties have different opinions on who owns the subsequent improved achievements
• Profit Sharing：There is a lack of consensus on how technical contributions can be continuously reflected in long-term benefits

The progress of the project has been hindered, and the scientific research achievements are at risk of "lying idle in the laboratory".

Professional Intervention: Deeply Understand Industry Characteristics and Identify the Key to Breaking the Deadlock

After accepting the entrustment, our firm's team did not rush to draft documents, but first carried out two basic tasks:

Thoroughly Grasp Industry Rules

We conducted in-depth research on the particularities of the transformation of agricultural scientific and technological achievements — long R&D cycle, slow market verification, and rapid technological iteration. Neither a simple "one-time purchase" nor "fixed profit sharing" can adapt to the characteristics of the industry.

Accurately Understand Laws and Policies

We systematically sorted out the "Law on the Promotion of the Transformation of Scientific and Technological Achievements", the "Patent Law" and relevant national policies encouraging university-enterprise cooperation to ensure that the scheme design is both innovative and in line with regulatory orientation.

Based on this, the team established three core principles for the scheme design: Clear Rights and Responsibilities, Shared Interests, and Dynamic Adaptation.

Innovative Structure: Hybrid Model of "Technology Investment + Cash Contribution"

To address the core differences between the two parties, the team creatively designed a hybrid structure of "technology investment + cash contribution" to realize the organic integration of technology and capital at the equity level:

Equity Structure Design

• University Team：Invest 5 patents and proprietary technologies valued at 4 million yuan, accounting for 30% of the equity
• Agricultural Enterprise：Contribute 6 million yuan in cash and production line equipment, accounting for 60% of the equity
• Option Pool Reservation：The remaining 10% of the equity is reserved as an option pool for incentive of core talents in the future

Agreement on Core Rights and Interests

• Exclusive Right to Use：The patented technologies of the university team are only for the exclusive use of the joint venture company to avoid technology outflow

• Complete Asset Injection：All contributed technologies, equipment and funds are fully injected into the joint venture company to ensure asset independence

Clear Rights and Responsibilities: Arrangements for Intellectual Property Ownership and Subsequent Improvements

Intellectual property issues are the most prone to disputes in university-enterprise cooperation. Our firm's team has established clear intellectual property rules in the scheme:

Ownership

• Original Patents：The ownership of the 5 patents invested by the university team still belongs to the university, but the joint venture company has the exclusive right to use them
• R&D Achievements：The ownership of new technological achievements generated after the establishment of the joint venture company belongs to the joint venture company

Right to Subsequent Improvement

For the subsequent improvement of the university's patented technologies, an innovative "shared by both parties" mechanism has been set up:

• Improvements made by the university team on the basis of the original technology are shared by the university and the joint venture company
• Technological optimizations made by the joint venture company based on production practice are also shared by both parties
• The industrialization benefits of the shared achievements are distributed in accordance with the agreed ratio

This design not only protects the technical rights and interests of the university team, but also guarantees the joint venture company's motivation for continuous innovation.

Innovative Profit Model: Dual-Drive of "Basic Dividend + Achievement Reward"

In terms of the profit distribution mechanism, the team abandoned the single equity dividend model and innovatively set up a two-tier structure of "basic dividend + achievement reward":

Basic Dividend

The annual profits are distributed in accordance with the equity ratio to ensure the basic investment return of all parties.

Achievement Reward

If the products of the joint venture company achieve technological breakthroughs and win national awards (such as the National Science and Technology Progress Award, Invention Award, etc.), an additional 5% of the profits will be extracted as a special reward for the scientific research team.

This design deeply binds the long-term benefits of the scientific research team with technological innovation achievements, encouraging them to continuously invest in R&D and pursue technological breakthroughs.

Institutional Guarantee: 12 Legal Documents Lay the Foundation for Cooperation

To ensure the stable and long-term development of the cooperation, our firm's team systematically drafted a complete set of legal documents, totaling 12, including but not limited to:

• Joint Venture Agreement：Stipulate the company's governance structure, capital contribution arrangements, and equity adjustment mechanism
• Intellectual Property License Agreement：Clarify the scope, term, fees of patent use and the right to subsequent improvement
• Technology Investment Valuation Agreement：Refine the basis for technology valuation, delivery standards and acceptance procedures
• Exit Mechanism Agreement：Preset rules for equity disposal and intellectual property disposition in case of withdrawal by any party

Each document has undergone multiple rounds of consultations and revisions to ensure that the rights and responsibilities of all parties are clear and risks are controllable. Subsequently, the joint venture company successfully completed industrial and commercial registration and officially put into operation.