Ofwat to unify innovation competitions and trial intellectual property rights change

Ofwat will increase the funding available to projects, unify the application process and trial a change to intellectual property rights (IPR) when it launches the second round of its Innovation Fund competitions on 11 October.

The second round will bring together elements from the first Innovation in Water Challenge (the smaller competition, IWC 1) and the first Water Breakthrough Challenge (the main competition, Breakthrough 1) to provide a unified and streamlined process, to be known as the Water Breakthrough Challenge 2 (Breakthrough 2). Water companies will be able to access funding through two streams:

• the Catalyst stream for projects seeking funding of between £100,000 and £1m and

• the Transform stream for projects seeking funding of between £1m and £30m.

IWC 1 opened in January 2021 and made £2m available for entries up to a value of £250,000 each. Eleven winners were announced in April. Breakthrough 1 opened in May, with £40m available in pots of between £1m and £10m. Ofwat will announced the winners at the end of September.

Ofwat will also trial a change to the background IPR arrangements deployed. It explained: “The feedback received, in respect of both competitions, has suggested that the current IPR policy, especially in relation to royalty-free access to background IPR solely to the extent necessary for water companies to receive the benefit of the foreground IPR, is a disincentive to some innovators, particularly very small and early-stage innovators, and those proposing digital, data-driven and AI-focused innovations, where revenue is often closely tied with IPR.

“This feedback is reflected in the projects which were entered into the IWC and Breakthrough 1, with some water companies indicating that there were projects which they did not put forward because of the existing IPR requirements. Water companies indicated that a change to background IPR requirements may alter the projects they bring forward to a second round.”

The plan now is for half the funding available for the Catalyst stream and all the funding for the Transform stream to stick with existing rules, and the other half of the Catalyst stream funding to trial enabling owners of background IPR to charge a licence fee at a fair, reasonable and non-discriminatory rate for the use of the background IPR solely to the extent necessary for water companies to receive the benefit of the foreground IPR.

Entrants will be asked to choose at the entry stage which IPR terms of the Catalyst stream they would like their entry to be considered against.

Ofwat is welcoming comments on the proposal until 6 September.