Frequently with transactional R&D, consideration of the intellectual property (IP) position, as well as dealings with intellectual property rights (IPR), are not given sufficient attention.  Rightly, there is sufficient consideration given to other subject matters, particularly compensation (payment in layman’s terms) and indemnities. The position is reversed with collaborative R&D, where the IP position is given centre stage, arguably more bespoke, and its treatment determined largely according to a term sheet agreed between the parties in advance of a main agreement. Often it seems, the lack of sufficient attention with transactional R&D is down to a lack of understanding.
The objectives of parties involved with transactional R&D can differ quite significantly from those of parties involved with collaborative R&D. Transactional R&D may be a straightforward service in return for compensation, most commonly subject to multiple work orders and an overlying framework agreement, such as an MSA. Objectives with collaborative R&D may involve more: supplementing internal research efforts and resources; accelerating research programmes; achieving a commercial advantage; obtaining financial support to carry out research; publishing the findings of research; attracting better staff (and students); and increasing profile within academia or industry (or both).
IP and IPR
With transactional R&D and collaborative R&D, IP and IPRare used interchangeably and can be whatever the parties define them to mean. Legally, however, there is a significant difference between IP and IPR. For instance, any patent or application for a patent is personal property (without being a thing in action) , and rights in or under a patent or patent application may be transferred, created, or granted.  The right (the IPR) is the lawful means to have dealings with a patent or patent application  and not the patent or patent application (the IP) itself. It is common for definitions within transactional R&D to overlook the difference, possibly to the detriment of a party, when IP andIPR should be inclusively defined.
IP is intangible property and subsists within or is granted for something that is tangible. IP cannot exist without something that is tangible. Frustratingly and too often, IP is not identified with any tangible object in mind but instead treated in isolation, as if it floated in the air. Subject to qualifications:
- copyright subsists within literary, dramatic, musical, and artistic works;
- patents are granted for product and process inventions;
- design (unregistered) right subsists within the shape or configuration (whether internal or external) of the whole or part of an article;
- registered designs are granted for the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or its ornamentation; and
- trade marks are granted for goods and services.
With any transaction, it is best practise to understand the research undertaken and the expectations of the parties. Each aspect determines when and what may be some outcome of the research undertaken. Wrongly, it is said the results of research (Results) cannot be guaranteed. In fact, there can be no guarantee that research will lead to any particular Results. Results are the purpose and product of research, whether as raw primary information or as analysed secondary information(or both), like them or not. Accordingly, Results should be an item specified as deliverable. Parties should ensure that as well as the ownership of Results transferring between them, the ownership of foreground IP (IP arising from the research), expressly identified as subsisting within Results, is assigned. 
With any research agreement the starting point for capturing IP is the accurate interpretation of its terms, such as IP and foreground IP.  Items such as confidential information, know-how , and trade secrets are not IP. Although frequently included within the definition of IP, they are not property in law. They are specified types of information protected by rights arising out of a set of circumstances, most commonly contractual or in equity(or both). Accurate interpretation of terms creates certainty of contract. Unknowingly, parties and their advisors show a tendency to seek to capture IP, which the research will not nor be intended to produce, as deliverables in which such IP would subsist cannot be expected from the research undertaken.
Often terms are not defined at all, which by necessary implication creates uncertainty. It is surprising how few parties and their advisors understand the accurate interpretation of certain terms, such as know-how and trade secrets. 
Licence of IP
Quite often with transactional R&D, no express licence (Customer to Provider)  is granted for the use of backgroundIP in the course of research. By necessary implication, the law assumes a permission to use the background IP of theCustomer by the Provider, but unlike a licence, a permission to use is an informal, bare (unconditional) consent, with little actual control. A background licence should grant theProvider a revocable, terminable, non-exclusive, royalty free licence to use the background IP of the Customer, for the sole purpose of carrying out the research and for no other purpose. Upon completion of the research, such a licence should be expressed to terminate automatically.
Importantly, the Customer should obtain from the Provider anon-exclusive, revocable, terminable and royalty-free licence, with no right to grant sub-licences, to use the background IP of the Provider but only for such purposes as are necessary, in the reasonable opinion of the Provider, to allow the use and exploitation of Results or any deliverables (or both) by the Customer and for no other purpose. There is often disagreement over such a licence, namely with sub-licensing and control over the grant being with the Provider.
The parties should agree the Provider must carry out the research in compliance with all applicable laws and having obtained all necessary licences and consents. This is particularly significant in research requiring a cell line transfer and the Customer and the Provider must ensure that such transfers do not require a licence back of Results and provide end users, usually Customers but note the clients of Customers, with unconditional use of Results, achieved through the licensed cell line. Furthermore, it is common that cell line transfers permit only non-commercial exploitation of Results achieved through use of cell lines in research, which is problematic for the Customer.
In the course of transactional R&D, it is likely the parties will each introduce their background IP as part of the research. The Customer will seek ownership or a licence of foreground IP, and the Provider must ensure any foreground IP is expressly non-inclusive of process inventions. Process inventions are any alteration, enhancement, improvement, input, or modification to the know-how of the Provider, arising from and as a result of the research but should not include or be dependent upon the background IP of the Customer.
Transactional R&D features few IP warranties, as opposed to warranties in general. The most common is a warranty from the Customer that receipt, storage, and/or use of Customer materials by the Provider, in accordance with the research agreement, of any information, documents, materials, data or other items provided by the Customer, including the backgroundIP of the Customer, will not infringe third-party rights, which warranty is often coupled with a conditional indemnity  from the Customer in favour of the Provider.
The Customer may seek a warranty from the Provider that use of Results will not infringe third-party rights. Such a warranty is unreasonable. Unlike the use warranty given by the Customer, use of Results will not be within the scope of the research agreement and will be outside the control of theProvider. Such a warranty, if demanded, may be negated by wording that conditions the warranty upon the knowledge, information, and belief of the Provider. A more appropriate, warranty from the Provider would be that Results do not contain or depend upon any background IP of the Provider for their use or exploitation.