What are the issues higher education institutions should be addressing when considering online course delivery?
Negotiations with Education Technology Providers
Many education technology providers are early-stage businesses and are not necessarily familiar with UK contracts and procedures. When 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 your higher education institution.
Often, the provider will produce its standard contract on the basis that other higher education 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 your interests 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 then presented for sign-off by legal within a very short deadline. Often the draft fails to deal with key issues such as:
- who will own the intellectual property (IP) rights in the new online material
- how the provider's performance is to be monitored
- 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 your university at a disadvantage. Neither is ideal in terms of building a long-term relationship with your provider.
Ideally, your procurement or legal team should be involved from the outset, or should at least set negotiating guidelines for staff to use that cover the significant contractual issues.
The Main Issues to Consider
Regardless of your procurement obligations, value for money requirements will generally point to a competition for the contract. Providers sometimes argue that they are providing unique IP and so any contract can be exempted from the public procurement rules. However, given the growing number of providers in the sector and the limitations on 'single tender actions' under the procurement rules, this argument is difficult to sustain.
- Performance of the contract
Generally, the agreement will be for you to provide content (eg video and written teaching materials) and for the provider to then 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. You must ensure there is clarity around who provides which services. For example, who is responsible for collecting the fees, registering students, validating the courses and assessing each student's performance? Other regulatory requirements and provisions relating to the Bribery Act and anti-corruption should also be included. 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.
- Protecting the institution
When assessing the risks addressed by warranties and indemnities, bear in mind the potential impact on your university’s reputation of any breach, particularly relating to either personal data or IP rights. You may want to consider the additional security of a parent company guarantee, particularly if the provider is an early stage company or a new UK subsidiary. You should also think about whether there should be a cap on liability for certain breaches or an overall cap. If you have charitable status, you should not accept unlimited liability for breach of contract.
- Intellectual property
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 your 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 you may wish to use the same base content in different ways. Be alert to the use of the term ‘exclusive’ and ensure that it only attaches to material where you want to grant such rights. How will future commercial exploitation of the finished product, including by the provider after termination impact on your revenue-sharing policy? Is that policy apt to cover these circumstances? Have you granted licences for the use of your brand by the provider?
How We Can Help
There are exciting opportunities for institutions 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.
For more information please contact Serena Tierney, in our Commercial team, on 0207 665 0817.