As it is a ‘medical device’ I would say the whole thing is a corrupt system of patronage that will make you device cost 5x more than it should and since your royalties will be inflated by said corruption you can afford to pay the trolls.

My main fear for you is that if you get the technology transfer office involved they might try to stop you from getting a patent because they might make a calculation that it is not worth their while even if it is worth your while. Don’t let them torpedo your getting a patent or let your resentment get in the way of getting the patent.

[1] Funny I worked on a search engine for patents and one of our customer persona was a TTO that wanted to catch any affiliates who filed a patent without telling them. I’m willing to bet many of them were too cheap to buy it, just as they are often too cheap to do the work to get a patent or that they make patents that would be cheap expensive and decide not to file them because of bloated process and gold plated IP lawyers.

Forty percent of royalties sounds pretty good. I think that's similar to what my US uni gave me after getting a patent 20+ years ago during PhD research in engineering.

WRT to the patent, consult an IP attorney. IANAL, but I suspect their advice is going to be get your PhD, separate from the university, start a company, apply for the patent as part of that company. The university may, or may not, sue you for royalties. Ask your IP attorney now what that means - because obviously there are expenses to running a company and you shouldn't have to give up 60% of your income and pay your expenses from what's remaining.

Don't ask randos on the internet for legal advice. Take everything I've said with a grain of salt - you really need to see an IP attorney.

2) Does the university actually claim all of the IP? 40% might be OK if it would provide you support from now that it had not before. It might also negotiate on your points if you don't go in like a bear with a sore head. I don't expect university IP people to be reasonable, but sometimes they are. And if you walk away from this then it is less likely to go anywhere good, and the university loses too.

3) You can't open source what is not yours. If the university does have an IP claim and you put that IP in public you could be in serious legal do-do. You might have your PhD award blocked/withdrawn at a pinch.

4) It is pretty well always possible to work round a patent. I have some patents to my name, and they were helpful in the sale of the business IP, but I remain sceptical of patents' inherent worth in the main.

So, I suggest, get through your viva, and negotate hard in good faith for a better deal.

And this will not be your last idea.

Doesn't this mean that you get 40% back on the licensing fees you pay them to commercialize, but you keep everything else for actually making and selling it? And if GE Healthcare licenses it you get 40% of those royalties?

Rather than looking at what you might not get, what might you actually get? Is this really worth something? And did you get your PhD only to make a boatload of money, or to make a difference?

1) If it's serious, you need to lawyer up. It might not be now but if you can get some investors involved they could help with getting legal resources. If it's medical devices, you'll need investors anyways. One issue is this gives investors a lot of leverage to negotiate their interests against you.

2) The university office absolutely does not care about how "little" they gave you. Their perspective will be they've given you plenty, as office/lab space and anything else were not part of the deal (unless you have it in writing), and they've subsidized your funding. It's not "fair" but it is what it is.

3) This scenario is quite common, and one of reasons I tell grad students to negotiate this stuff first and pick your school wisely. Some schools are way better than others in allowing their academic staff commercial freedom.

4) You can make it a PR issue for them, to push the narrative of "university stifles innovation via obscure bureaucracy" but it's a risky strategy.

There are usually always room to negotiate/maneuvre, but you need the right contacts and political support within the university to pull it off.

Good luck!

Confrontation is expensive. Not just financially when it involves lawyers, but also temporarily and emotionally.

Particularly if you are up against a well funded institution that is free to act amorally (which is not the same as immorally).

With regard to the IP claim, its validity simply doesn’t matter. You can’t afford to show its invalidity because the university has lawyers on staff (and if it has a law school alumni in the bar and on the bench). And of course many many other parallel claims to motivate resource allocation.

Get your degree and get on with life whether that involves trying to start a company or getting a job.

And if you are going to start a company, this is the sort of thing you will probably face regularly. Good luck.