According to Penn State policy RAG-13, undergraduate students own any intellectual property (IP) that they may develop as part of a course (or research) project, including senior capstone design projects done in conjunction with the Learning Factory or any Penn State facility.
Some industry sponsors may request ownership rights of all IP that is developed by a student team during the course of the senior capstone design project. Students will be notified on the first day of class which projects, if any, have these restrictions on them. If students wish to work on these design projects (usually 20-30% of the projects each semester have IP restrictions), then they must agree to sign over their rights to any IP that may result from the project, in and outside of the classroom. The entire team must sign the IP agreement form before they can begin working on the project - this form will be administered to the team as soon as it is formed.
If the company decides to patent an idea that resulted from a senior capstone design project after the team signed off on the IP Agreement Form, then the team will be listed as inventors on the patent; however, they will not be entitlted to any royalties or payments that may result.
In the event that new IP is created on the project and the sponsor did not have the team sign an IP Agreement Form, then the students own the IP and can decide what to do with it. Some teams may elect pursue a patent - at their own expense - and then license it back to the company; others may try to sell the IP to the company for a one-time fee. The staff in Penn State's Intellectual Property Office can discuss the available options and costs and recommend legal counsel as requested.
Some sponsors may provide confidential data or information for a project, or they may have filed a provisional patent and want to protect their idea. Students will be notified on the first day of class which projects, if any, have these restrictions on them. If students wish to work on these projects (usually 10-20% of the projects each semester have these restrictions), then the entire team must sign a Confidential Information Disclosure Agreement, which obliges students to observe due diligence in protecting the confidentiality of company-provided information (data, drawings, design intent, etc). Otherwise, project data is not sensitive or have to be kept confidential.