It is true that some criticisms of university technology transfer offices are misdirected. Criticism, however, is not merely a sign of ill will or ignorance or organized special interest lulz of everything good. Criticism also serves the role of debate about the future, accounting for claims, and responsibility for choices. In this form, criticism plays an essential role. Without criticism working through the issues, we get monoculture, whitewash, hand-waving, and self-interest covered by nice-sounding words.
The fact of criticism does not have much at all to do with the value of the portfolios universities hold. That is, the presence of criticism about how well university TLOs might be doing does not indicate that the TLO portfolios have a lot of intrinsic value and the disagreement is how to monetize that value for the patent owner.
The problem is that most university inventions, as held by university TLOs, have very little value. Value is not an intrinsic property of an invention, but rather arises as a function of who holds a property and what another would gain by access to that property. What value TLO invention holdings have is tied to their being withheld from general circulation in the hope that doing so might promote investment in products that otherwise would not be made, or not made so quickly or well. The most telling statement on the matter is here. If you get it from that, the rest of this essay is repeat. If you don’t, then please, read on, I’ll try to help you.
Consider: A thing is discovered or invented in research. A university claims ownership and hands control to the TLO. Title is assigned from inventors to organization. Value shifts from a possible relationship with inventors to a possible relationship with an office, one that typically has excluded the inventors by policy from various aspects of the future relationship.
Now in this, what is the primary contributor to “value”? Is it the utility of the invention for whatever purpose anyone wants (such as research of, on, or with)? Is it the relationship with an organization rather than individuals (for visibility, stability, risk management, access to resources)? Is it the right to exclude others once one makes an investment in the invention? Or something else?
We decide what carries value just as much as we discover what carries value. Value is social, not merely monetary. Certainly not legal. The premise of management, even, is that decisions matter more than discoveries, and that folks that make these sorts of decisions all the time do a better job.
If by reading a research publication, folks at another organization could practice the technology described, inventive stuff and all, does a claim of patent rights that precludes their doing so add “value” to the invention? Are they cheaters and thieves for thinking they might just mess around a bit with what they’ve read without the formality of a license? Without supplying a business plan? Without committing to sell product? Foolishly and selfishly wanting access to destroy the prospect for the university to get a deal for these rights with someone? Is exclusion the only source of value for the patent holder? Is an exclusive license necessarily a deal with a monopolist? Is the value then in the extent of the exclusion? I say non. How do you see it?
Most universities only reserve rights in exclusive licenses for their own internal use. Those that reserve more broadly generally do so ambiguously, in that they do not make it clear that they will grant rights for educational and research uses to other universities or non-profits, even if they are not willing to commit those rights to an exclusive licensee. Further, few university TLOs would commit to granting non-profit educational and research use rights up front, prior to any commercial licensing activity, and I don’t know of a one that would do this routinely as well for industry-based research.
The question to linger over is this: is the primary value created by a university TLO in the shift from the utility of an invention to the license of a patent? That is, the increase in the value of the patent, initially, is the cost to the research community generally in avoiding the invention until commercialization rights are disposed of. No question, that’s a way to increase the “value” of a research invention. University investigators might even feel this kind of exclusion helps with getting grants, keeping people from horning in to create improvements or call out problems, and the like.
Further, one can imagine that if folks in industry come to use the invention, the “value” of the patent rights will go up even more, as the industry users will be caught “using without a license” and that, my friends, is infringement. Industry is asked, then, by the TLOs to contemplate this uncomfortable situation, to look at the litigation brought against companies by universities, and take licenses to prevent such an outcome. That is, the “value” of the patent right is protection against future damage that the university is willing to cause. The aim to “maximize value” is to find a company willing to hold the right against all others, develop product, and share the upside of this position with the university. That’s the deal. That’s the monetization of patent rights for value play. It’s a sweet spot. It’s perfectly “legal” in the sense of what a patent owner can do to obtain payment from those exploiting the invention. It is worthy in its way.
Doing this, however, has next to nothing to do with promoting the use of research inventions as part of national research or innovation policy. The outcomes looks similar, but the pathways matter. The transition from using patents to promote use of inventions to using patents to make money is huge. The public claims TLOs make are consistently about inventions in use. The reality of their business models is that they have chosen monetization any way possible. They have no policy statements on when they will litigate for infringement. They have no policy statements on when they will grant exclusive licenses or for how long. They have no policy statements on contributing to standards, cross-licensing, releasing to public use. They have after 30 years few instances of practices that support such gestures. Few have any statement on humanitarian release in the absence of responsive action by a university or its licensees, even though that’s an express condition for March-In under Bayh-Dole (35 USC 203(a)(2)).
It’s all about the money arising from the patent, not the opportunity for public service arising from the invention, which might lead, as one outcome, to money arising from the patent. The public service piece, apart from hand-waving to assert the public should support, is empty of practice. Those who advocate for such practice are called idealists or ignorant or mistaken or leveled with the argument that everything a university does is in the public interest, so all licensing is humanitarian, end of discussion. I’m not making this up. I have heard it argued thoughtfully and persistently by representatives of elite TLOs. Ask anyone at a TLO for their position on Point 9 of Nine Points to Consider, for instance. Do they have anything in place in their licensing practice–in writing–in their training–that does this?
The difference between creating *any* value from a patent position and using a patent position to promote the use of inventions, which then gets reflected in “value” is what the discussion of the role of TLOs is all about. Criticisms that say, TLOs should be monetizing patent rights more aggressively lead to TLOs taking patent assert positions–against the research community, against industry users of rights, against commercial investment in products. It’s all legal. But it’s not good public policy for innovation–or at least that’s my claim. The idea that companies are stealing valuable rights from universities is an illusion, an artifact of patent ownership that goes away when the public research commitment of federal support is made primary. It may be that there are companies that are stealing from universities and exploiting positions they ought to be supporting, but that’s different, if you see what I mean.
Few TLOs make research support commitments primary. They do not want to talk about public service in their practice. Instead, they want their practice to be, by definition, public service. They want to talk about how to get ownership of patents more expeditiously, how to have a better shot at licensing exclusively and threatening to sue for infringement, so they and their monopoly partners can have the highest value patent positions by excluding the greatest number of possible users in deference to a supplied commercial product. In this, the disease assay patent licensing is not an anomaly–it is an expression of the goal. See here and here. The university in licensing such patents exclusively also places diligence clauses that demand that the licensee create “value” for the inventions. The licensee then can argue, it’s a public service to charge the price of an automobile for a test that should cost $20, because *the university has required us to do this*. Ah, service to the public.
There is a huge gulf between creating value through threats and exclusion and creating value through investment and collaboration. There is a difference between the money reported from licenses where industry has said yes, please file for us, and money from licenses where a company has said, yes, let’s go shakedown a market together, even if that “market” is other universities and companies using these “valuable patent rights”. This difference matters for public research. Without it, the government should not be letting universities claim patent rights in federally supported research.
The argument for Bayh-Dole was that the government was accumulating patents and then having a difficult time licensing (administrative rules), licensing exclusively (even more public policy problems), and promoting use (marketing and initiative). The university claim was that it could do these things better–license, exclusively license, and promote use. Look at WARF, at Stanford, and others, the universities said. But we have now essentially the same regime–accumulating a lot, licensing very few, with a lot of overhead imposed by university counsel or risk management, not enough time in the day to get to most of what is claimed. The very best TLOs appear to be doing one significant ($1m+ cumulative over 20 years) deal per 8 years or so. Whatever the benefit to support education and research (and virtually none of any university’s Bayh-Dole royalty income goes to education), it happens only rarely, and nothing folks have tried in 30 years has shown any way of improving the outcomes. Not grabbing inventions earlier, not grabbing more of them, not making invention ownership compulsory, not stocking up more folks in the OTL, not adding faculty oversight committees, not forcing decisions in arbitrary times, not making one-stop shops, not more “marketing”, not swapping in folks “from industry”, not adding teams of MBA students, not playing hardball or softball on license terms, not suing for infringement, not rewriting policies.
One might conclude university technology transfer is darned hard. And that would be true. But one might also conclude that whatever is happening does not generally benefit from a required bureaucratic step early in the life of innovation, no matter how that step is shod.
One might even begin to suspect that the direction of innovation (if it has a direction at all) is not generally from research out but rather at times, a lot of times, from the community in (perhaps), and that while inventors and investigators lack the resources of a “dedicated office” they may yet have the greater insight into the broader value their research work may have, quite apart from its abstract “commercial potential” via patents to license to monopolists to make money from the sale of proprietary product.
Further, inventors and investigators involved in public research may have a better perspective from which to choose the particular approach to take with a given finding–release it into the wild as an artifact, hold some portion back for validation or development, license to everyone (standards, platforms), or license exclusively to attract and reward investment. But here we are back to the subtle thing to linger over. Is the exclusive license for money or for promotion of use? That makes all the difference.
If licensing exclusively is what’s desired, then a TLO may be just the thing. For anything else, a TLO has next to no tools to help. That can change, but so far it hasn’t shown a lot of signs of doing so. TLOs do not know standards, they cannot do open innovation, they cannot mix research and IP, they have a terrible time partnering with other institutions, they cannot cede control to a mission-directed foundation looking to put together the pieces, they cannot integrate research and IP or development and IP. They cannot leave well enough alone. They have few funds of their own to support focused work.
No, the TLOs now have a pretty narrow model, and the more criticism of it, the more folks try to defend it and “make the model work” or at least “make the model appear to work” rather than relaxing it to allow more exploration, more initiative, and broader trading on invention utility rather than patent exclusion.
It is as if Bayh-Dole is interpreted to mean: federally supported research inventions will have more value if universities are permitted to shake down industry and force industry to take licenses. No, no cry the TLOs, that’s not what we *mean*. But is *is* what is meant. It is a responsibility of criticism to show that. That the actions of licensing show that. That the operating model shows that. That the little friendly diagrams for research inventors showing the “process” of technology transfer show this. That the annual reports of “success” show this.
Patent licensing is something that some time ago the government generally was not so good at. It is also true there are times when folks in industry are more than fine with walking all over rights positions when they otherwise could strike a deal, and patents are one way to anchor that discussion. But it does not mean that that infringement of patents held by universities really is the same thing as infringement by patents held in industry or patents held by non-aligned inventors and entrepreneurs.
That is, if under Bayh-Dole the primary mandate is to use the patent system to promote the use of federally supported inventions, then one has to subordinate patent to use. That is what a TLO is asked to figure out how to do. If someone is using, then that’s also patent success, not patent infringement. If the claim is, but wait, we didn’t get a chance to use the patent system to extract money from a user, so we will shut down that use until we get paid, then you have the aggrieved thoughts of a patent owner, to be sure, and words that may even reflect the hopes of inventors depending on that owner for licensing income, but you don’t have the words of a trustee acting on behalf of the public, industry, small companies, and workers.
If one goes to 2 CFR 215.37 (Circular A-110) where Bayh-Dole is implemented for university grants, trustee is exactly what a university acquring or improving IP made with federal funds is supposed to be. While there may be “remaining funds” after expenses to be used for scientific research or education, nothing in Bayh-Dole indicates that these remaining funds are the objective. Perhaps the secret objective of university patent administrators. Perhaps an obivous consequence of turning patent ownership loose for university control. But it’s not in the law. Few university administrators take any of this seriously.
We thus end up with 1) the TLOs don’t do a very good job either monetizing patents or promoting use of inventions; 2) more resources and more efficiency protocols don’t appear to help them; 3) the value of research inventions arises in many ways and no one TLO is going to be able to address more than a few of these; 4) all the other ways will appear to “compete” and therefore be suppressed by the TLO and university policies as exceptions or undesirable; 5) much of the value to industry in research inventions generally is (we might find) not tied up with monopoly university positions or creating new commercial product, but in informed use that shapes further research and development directions, and such uses are not typically advanced by a primary demand for royalty-bearing licenses, even if such demands are typical of private inventors, non-operating entities (trolls, accumulators), and assert licensing practices.
Where universities have the opportunity for really high value deals, they often crater them in politics, and where they have inventions they should handle some other way than seeking a high value deal, they cannot let go, cannot shift model, cannot let anyone else realize value another way. The top priority is to get a “fair share”, a “return for the taxpayers”, not to be a rain maker for others. There is an endemic envy construed as a public service mandate to demand anyone benefitting from a research publication take a paying license to the underlying IP.
The TLOs are generally incapable at both ends of this bimodal distribution. They do not have adequate positions with industry to support the high value deals, and they cannot support what for them are low value or even subsidized activities that lead to successful initiatives, just without money coming back to the university in the form of a patent royalty. This is so even when the university is asked to waive IP–it still wants its thumb in the pie, as a public mandate to do so, even when its only role is to be a dead weight–a source of complexity and uncertainty and liability and delay and expense.
The TLO is, as presently configured throughout the US, a hybrid plant, a cross between carrots and cabbages, ending up mostly with cabbage roots and carrot tops. It may be a vigorous plant, happy in its sun and water, full of growth. How can one criticize such a thing, unless one was expecting, say, carrot roots and cabbage tops?
We might expect after 30 years, the TLO is optimized by policy to preserve its role in the university. The argument is that monopoly licensing of research inventions taken by policy from research inventors is in the pubic interest.
If the discussion is why not?–why not let universities hold patents until someone from industry stumbles across their mine filed and can get sued? too bad for them–if it’s that, I don’t see what the public service is. I can see that as a sweet spot for a patent money play, to be sure. Very cool. I get that. But if that’s what is relied upon to create “value” for the public, then it is a sort of creepy public policy on innovation that the government and universities have worked out for their industry and entrepreneurial friends.