Press Release - Waterford Institute of Technology - Development and Disposal of Intellectual Property in FeedHenry
13 November 2018
A report of the Comptroller and Auditor General titled Waterford Institute of Technology –– Development and Disposal of Intellectual Property in FeedHenry has been presented to the Houses of the Oireachtas today. The report examines issues relating to the development and disposal by Waterford Institute of Technology of its interest in a company called FeedHenry Ltd.
Development of FeedHenry
The Telecommunication Systems and Software Group (TSSG) is an internal research body within Waterford Institute of Technology. Following the completion of an EU-funded project in the area of mobile telecommunications systems in 2004, TSSG researchers developed a technology with commercial potential that became known as FeedHenry.
Enterprise Ireland supported the development and commercialisation of the technology by providing funding of nearly €1 million to Waterford Institute of Technology for FeedHenry-related projects.
In June 2008, a number of individuals, including staff at TSSG, registered a company called FeedHenry Ltd. Later that year, Waterford Institute of Technology awarded the company a trial licence to use the FeedHenry technology. In December 2010, the Institute transferred full ownership of the intellectual property (IP) to FeedHenry Ltd, in exchange for a 10.8% equity stake in the company.
Enterprise Ireland subsequently invested a further €800,000 in FeedHenry Ltd under its programme for supporting start-up companies with high growth potential. In 2014, FeedHenry Ltd was sold to a multinational company for a gross consideration of €63.5 million.
IP policy at Waterford Institute of Technology
The Governing Body of Waterford Institute of Technology adopted a policy statement dealing with commercialising IP and managing related conflicts of interest in February 2010. Significant agreements and decisions in relation to the assignment of the FeedHenry IP were made subsequent to the adoption of the policy.
An internal Commercialisation Committee established under the February 2010 policy held its first meeting only on 6 December 2010. The minutes of the Committee’s first meeting do not record any discussion of the assignment of IP to FeedHenry Ltd, which occurred on 15 December 2010.
The Institute’s IP policy indicates that a 15% equity stake in spin-out companies would usually be appropriate in exchange for transferring IP owned by the Institute. The Institute agreed to an equity stake of 10.8% when it assigned its IP to FeedHenry Ltd in December 2010. The basis for agreeing to accept the reduced equity share was not documented by the Institute.
Governance and management of conflicts of interest
Although the Institute’s Governing Body approved the IP policy in February 2010, it was not involved in any of the key decisions made during the commercialisation and assignment of the FeedHenry IP.
The examination found that neither Institute nor national policies deal with situations where staff members have significant personal interests in companies acquiring IP from their employer organisation.
Costs and benefits to the State
In the case of FeedHenry Ltd, there was no SLA or cost-sharing agreement with the Institute in place prior to November 2010, even though the company’s registered address had been on the Institute campus since 2008.
Following the sale of FeedHenry Ltd in 2014, Enterprise Ireland received €4.5 million for its interest in the company, while the Institute received €1.6 million. The Institute distributed around 40% (€639,000) of the amount it received to other beneficiaries under pre-existing arrangements. It paid €147,000 to a financial institution under a 2005 agreement, but the Institute was unable to locate a signed copy of that agreement when requested by this examination. A further €492,000, including employers’ PRSI, was applied to pay bonuses to 80 TSSG staff, as part of an incentive scheme under the February 2010 IP policy. Some of the TSSG staff who received payments under the incentive scheme also benefitted financially from the sale of shares they held in FeedHenry Ltd.
Notes for Editors
The full text of the report is available.
The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds. He reports to Dáil Éireann.
The sole and exclusive focus of the report is on public bodies, and not on staff members of those bodies or on any third parties. For the avoidance of doubt, the report does not make any criticism or comment or present any view, whether express or implied, with respect to staff members of public bodies or third parties, and should not be understood as doing so.
Enquiries about the report should be directed to Shane Carton at (01) 863 8665 or at email@example.com