A “PCP procures R&D services at market price, thus providing contractors with a transparent, competitive and reliable source of financing for the early stages of their research and development. Giving each contractor the ownership of the IPRs attached to the results it generates during the PCP means that they can widely exploit the newly developed solutions commercially. In return, the tendered price must contain a financial compensation for keeping the IPR ownership compared to the case where the IPRs would be transferred to the procurers (the tendered price must be the ‘non-exclusive development price’). Moreover, the procurers must receive rights to use the R&D results for internal use and licensing rights subject to certain conditions.”[1]

“To ensure that such an arrangement is beneficial both for the public purchaser and for the companies involved in pre-commercial procurement, R&D risks and benefits are shared between them such that both parties have an incentive to pursue wide commercialisation and take up of the new solutions. When benefits shared include IPRs, care must be taken that when IPR ownership rights are assigned to companies participating in the pre- commercial procurement, this is done in a way that does not give the companies any form of unfair advantage in possible future procurements and that enables the public purchaser to access a sufficiently large and competitive supply chain. E.g. the public purchaser can require participating companies to license IPRs to third parties under fair and reasonable market conditions. The public purchaser can also demand a free licence to use the R&D results for internal use.”[2]

It is clear from the above that a keyprinciple of a PCP is the application of risk-benefit sharing. This is because, in a PCP, the public procurers do not retain all the results and benefits of the development (including Intellectual Property Rights or IPRs) exclusively for their own use. This is the difference with exclusive development, where the companies that developed the product/service cannot re-use them for other potential clients.

An important part of the benefit sharing is, as cited above, the irrevocable, royalty-free, non-exclusive, world-wide access rights granted to each member of the Buyers Group to use the Results for their own purposes. On the other hand, the procurer is the owner of the developed solution, and can widely exploit the developed solution economically. This, again is the key part of a PCP.

[1] H2020 Programme Guidance PCP procurement documents Version 2.1 07 January 2020, p.18.
[2] COM(2007) 799 final, Pre-commercial Procurement: Driving innovation to ensure sustainable high quality public services in Europe, p.7.