The University of Wisconsin had a strong tradition of faculty ownership of IP and control over research activities. Faculty negotiated their own sponsored research agreements, for instance, with regard to IP. Wisconsin wasn’t alone in this. Until recently, Stanford had an IP policy that said that faculty should own their IP “whenever possible”. This was one of the educational moments for them in their case against Roche. They apparently didn’t realize that it was indeed possible for individuals to own invention rights with federal funding, as the Supreme Court made perfectly clear. Rather than learning from this, however, they have gone the other way and aimed to make ownership by the university not only compulsory but outright in advance.
Interlude. It’s really bad advice being handed out by law firms with regard to the use of present assignments as part of university IP policy.
1) The Stanford v Roche case did not turn on a present assignment trumping a prior promise to assign. It turned on a valid and Stanford-approved assignment trumping a later attempt by Stanford to reneg on the deal in favor of its own claims.
2) It is not the mechanism by which the assignment takes place but the scope of the claim that can be made. That scope is still restricted by California Labor law, and furthermore is subject to restrictions brought about by approval of outside consulting. If a university approves the outside consulting and the IP terms that go with it, the present assignment won’t help with a later invention that gets the university’s greed juices going.
3) To make the present assignment stick, folks are going to have to shut down faculty consulting and with it faculty choice as to where they conduct their creative work. Universities will have to restrict faculty communications to already published information and approve all disclosures in advance. This, in turn, will trigger US Export Control law, discriminate against foreign nationals, and make a hash of university academic freedom.
Link Back. The move to take all inventions from faculty runs against the past. In the glory days of faculty inventions, faculty presented inventions for management to the research foundations that they had set up for the purpose. The act of presenting an invention represented public commitment to develop a research idea, and a sharing of the benefits. That in turn revealed the character of those participating, and communicated to the public a real connection between research and industry. The personal choice to present an invention also built into the approach a degree of selectivity. If the inventor saw value in commercial use, then it was up to the inventor to take action to develop that value. Otherwise, everyone moved on.
Now, of course, inventions are taken in by university offices, and that’s where they die, and inventors if they are bright hope that the university offices will think the invention is worthless and hand it back, and the university offices, knowing in their hearts how dumb they really are, suspect inventors of holding back the important information and therefore refuse to hand things back, because inventions can’t be worthless until they have withered for a few years in a tech transfer office, the research set up has been broken down for another use, and there’s little left to demonstrate, extend, or adapt.
Wisconsin, in 1984, had the start of a different way of doing things. (Revised 1985 policy here). Not fully fledged, but in the right direction. Wisconsin divided inventions into “restricted” and “non-restricted”. Federally funded inventions, as a result in part of the misreading of a coordinating conjunction, were “restricted”. For these, however, Wisconsin gave inventors a limited set of choices:
The reporting procedure designates the dean as the recipient of invention reports. The dean reviews the report to determine if any obligation exists to a sponsor, and forwards the disclosure to the Chancellor for final review. (What Chancellor these days would bother with 200 invention reports a year?–no, it’s not that important anymore, really). It’s sort of odd, however, that researchers would wait for the Chancellor’s office to inform them whether they were funded by a federal grant. There is depth to this problem, however, and we will pause again to develop it.
Longer Interlude. If you think that federal law strips private property rights and hands them to your institution, then there exists a remarkable institutional conflict of interest in determining whether something has been invented with federal support. The implementing regulations at 37 CFR 401.1 clearly anticipate that a contractor will be motivated to claim that an invention has not been made with federal funds, and the agencies are given the right to dispute such a claim, and contractors may appeal the agency determination.
Universities who do the Wisconsin misreading go just the opposite direction. If they have a policy that provides that inventors own “whenever possible” and they also want as many inventions as they can get, then the administrators want to find federal funding whenever they can. They do this “just to be safe” and make the argument that “even $1 of federal funding triggers Bayh-Dole” (even though the Supreme Court has rejected this view–what is the Supreme Court to get in the way of a good hearty conflict of interest?) The moment the administrators find federal funding, then they invoke the federal law, inventor property rights are restricted and stripped, and the university is entitled to take ownership–all without giving up on the idea that inventors can own, provided there’s no restriction on the invention.
In this way, Bayh-Dole, the Wisconsin misreading, and the rapid growth of federal funding for many universities, and a few “big hit” licenses in biotechnology created the incentive for university administrators to make a compulsory claim way more frequently than the default condition of inventor ownership. Thus, folks could leave in place the gesture of faculty independence from administrative claims, and yet expand tremendously the scope of those claims, all the while threatening inventors with administrative discipline if they tried to claim something hadn’t been funded with federal funds when the administrators clearly wanted to find for such an outcome. Only personally conflicted, greed, deceptive folks would deny the government (and the university, by federal largesse) rights in such inventions.
A “subject invention” under Bayh-Dole must meet the definition provided by the law. That definition requires it to be 1) an invention (one that may be patentable) 2) of the contractor (that is, an invention becomes subject when the contractor has an ownership interest in the invention–“of” is not “by”); 3) conceived or first actually reduced to practice (that is, fully formed in the mind of the inventor in every element, or constructed and tested to evidence the function of every element, and recognized as an invention); 4) in the performance of work under a funding agreement (the work must be within the scope of the funding agreement, and if claimed as outside work could be shown to have distracted from or diminished the performance of work done with federal funding). This is actually a rather high, narrow standard. The government was not seeking control over every idea a researcher might have, nor treating as a deliverable anything that might arise on the side, but rather only what was fully conceived, or fully reduced to actual practice, within the scope and actual performance of a federal grant or contract.
Furthermore, the standard patent rights clause does not require an (f)(2) agreement from non-employees or from clerical and non-technical employees. These individuals, too, in inventing can be shown to be working outside the “planned and committed activities” of the grant. One might say that “actual reduction to practice” within the “planned and committed activities” of a federal grant would mean, at least, that there is a written record in the statement of work for the grant that indicates that an invention is intended to be reduced to practice. How much further might the government push this? Clearly, the guidance in 37 CFR 401.1 indicates that an invention made in the course of applying discoveries made in the performance of a federally supported investigation to expand knowledge does not result in a subject invention, because the federally supported work did not “plan and commit” to making applications of the work, even though it is clear that the applications arose because of the discoveries made in the federally supported work.
University administrators, however, decided they wanted instead a low, broad standard. Any inclination toward federal funding meant federal funding and the resulting stripping of rights. A low standard meant a constant flow of invention disclosures, and for each one, the opportunity to claim outright ownership, using the Wisconsin misreading. This low standard extended in all directions–things that weren’t patentable (like much software); things that shouldn’t be patentable (like gene sequences); things that were related to federally supported research (applications of discoveries); things that were just partial ideas (not fully conceived or reduced to practice); things that had been invented already but had been used or tested or developed further in the context of federal funding.
To determine whether an invention was made within the performance of work under a federal funding agreement is not necessarily an easy thing. This cuts both ways. An agency would have to demonstrate that the invention was within scope, that the performance of work to produce it was under the federal grant and not some other, similar grant funded by other sponsors. A university, taking the opposing view, would have to show that the invention was not within scope, wasn’t a deliverable, and the work didn’t distract or diminish from the performance of the federally funded work.
This may seem tractable if one imagines that an invention must be a kind of widget that one fusses over building and finally completes and voila, an invention. But inventions in research are often not of that nature at all. Someone is working along gathering data and they figure out a different way to gather data. Not within scope. Someone is working on the properties of a material and they meet someone who realizes an application for the material. Not within scope. Someone is working on rat behavior and realizes one could apply similar approaches to game design. Not within scope. Yet a university in all of these situations, to underscore its claim of ownership, may very well assert that each was a subject invention.
An invention is not a subject invention because a university claims it is. It is subject because the facts of the invention meet the definition in the law. The burden is on the agency to challenge a finding of private funding. Yet an audit of inventions reported as “subject” by universities will show, I am sure, that universities are over-reporting inventions as subject when they are not, or at least, where there is no evidence to support the claim: Disclosure forms with reports of inventions that fail to lay out the invention in full, or provide a manuscript without identifying the elements of the invention as distinct from other material, or report something like a material or a software code that might have a function that’s inventive, but no one actually knows what that might be.
From these points, one can see how the Wisconsin misreading has in turn created an institutional conflict of interest that reverses the expectations of Bayh-Dole–that universities rather than seeking private ownership of inventions instead seek to find federal funding and use the misreading of Bayh-Dole then to circumvent the default openness of the university’s patent policy. Once most inventions could be claimed as long as federal funding was topically somewhere nearby, it is an easy step to simply change the default and make the privately developed invention a special case–or seek to eliminate the special case altogether. That is what is happening now, without a lot of discussion, press, attention, or explanation. It is purely a matter of administrative convenience joining with institutional conflict of interest, motivated by the now totally discredited idea that federal law strips inventors of property rights and hands those rights to university administrators. Yet the administrators persist: they think it is a good thing to strip faculty of property rights in inventions. They think there is a valid analogy with corporate methods of dealing with employees.
Link Back. Yet here in all this misreading, Wisconsin offers its inventors a choice. They can have the invention assigned to WARF, or request that Wisconsin assign the invention to the Government. So far, so good. At least the inventors have a choice. The options, however, carry with them the strangeness of the Wisconsin misreading. Although under (f))(2) inventors are to agree to be prepared to establish the rights of the government, under Wisconsin policy, it appears that the university insists on first taking ownership of each invention and then assigning the invention either to WARF or the Government.
Under the standard patent rights clause, Wisconsin has no need to take ownership of inventions. In designating WARF to manage patent matters, the university could have asked inventors to assign directly to WARF. Similarly, if the inventors did not want WARF to handle their invention, then under the standard patent rights clause, they could take up the matter with the funding agency. Here, however, is another significant defect in the Wisconsin approach. Bayh-Dole anticipates that if a contractor does not require its employees to assign an invention, then the inventors and the funding agency are free to discuss disposition of the invention. The agency may take title, requesting that the inventors honor their (f)(2) agreement, and may file patent applications (again, requesting that the inventors honor their (f)(2) agreement–regardless of whether they are still employees of the contractor), or may allow the invention to enter the public domain. Or the agency may allow the inventors to retain their title, requiring at least the minimum obligations set out in 37 CFR 401.9. This discussion takes place outside the standard patent rights clause, and is not part of the funding agreement between the university and the government. It is enabled because the funding agreement requires the university to require its possible inventors of subject inventions to agree to have this discussion.
The Wisconsin policy, however, disables this discussion between the inventors and the Government. Inventors have to assign to the university, and the university either assigns to WARF or the Government. There’s no option for the Government to agree that the inventors can keep their property under 37 CFR 401.9. This, while the university makes a big deal about its tradition of allowing inventors to own their inventions otherwise.
The plus side of this policy is that it shows that inventors can be given choices. The minus side is that Wisconsin couldn’t get its act together, can’t manage to recite the Act accurately, and does not allow the Act the range of possibilities that the Act anticipated universities would benefit from. If Wisconsin were to correct the misreading of Bayh-Dole written into policy, especially now after Stanford v Roche, remove the institutional conflict of interest in asserting an ownership interest in all federally supported inventions, and expand the range of options available to inventors, they would have, once again–I am very sure of it–the leading IP program in America.