What does Stanford v Roche mean for research enterprise?
1. Federal university research innovation policy favors freedom over compulsory practices.
Bayh-Dole rolled back agency compulsory invention ownership policies to create a powerful group of expert, university-based, independent investigators with access to institutional-scale facilities with which to conduct research to advance public interests. This may be America’s distinctive advantage in research infrastructure. The institutional facilities are paid for with the same research funding, through the roughly one-third of that funding that goes to indirect costs. This research is not conducted to create ownership positions in inventions for federal agencies, nor for universities.
2. Bayh-Dole places restrictions on university administrations; it does not grant benefits.
In the Standard Patent Rights Clause mandated by Bayh-Dole, paragraph (k) stands in for agency case-by-case review of university administrative behaviors when a university comes to own inventions made with federal support. It is university administrations that require oversight. Everyone else stands to be protected from potential misbehavior by administrators–the agencies, the inventors, American industry, small businesses, the public. That’s the whole point of paragraph (k). Bayh-Dole creates freedom and then aims to protect it.
3. AUTM, many university administrators, and a number of attorneys who work for them are unreliable voices with regard to Bayh-Dole and innovation.
These folks got it very wrong about Bayh-Dole and for a long time. Stanford v Roche demonstrates this in multiple ways.
(a) They thought Bayh-Dole was a law intended to commission them to make money licensing federally supported inventions. Stanford v Roche shows that this is not the case. Bayh-Dole is not a secret law to give universities discretionary income from licensing patents.
(b) They construed Bayh-Dole as a mandate to own all IP made in faculty-initiated research. Just the opposite. Stanford v Roche shows that Bayh-Dole is not a vesting statute, has no mandate that universities must own, should own, or must demand ownership. University administrators have misrepresented the law to faculty for three decades, claiming that the university must own inventions to comply with the law, or at least must have a policy in place allowing the university to claim ownership at will. All this is not true. Universities only have to require the (f)(2) agreement–which protects the government’s, not the university’s, interests. Oddly, this is the one thing that most university administrators have ignored and failed to implement.
(c) They thought Bayh-Dole was about moving the compulsory system created by the federal agencies to the universities. They thought the university argument was that they could do the compulsory system better than the feds could do it (because universities could license exclusively with greater self-interest and less forethought about national effects of doing so). But the argument actually was that universities, using the diversity of practices they had in place at the time, were doing a much better job than the feds with their process-bound, compulsory system. University assignment of ownership was generally voluntary. Often to an affiliated research foundation or some other agent, such as Research Corporation. That is, the case for Bayh-Dole was made by a free agent model with universities acting as supporters (as they were in research) and occasionally as stewards of inventions.
4. AUTM, universities, and their lawyer friends got it very wrong in Stanford v Roche.
The universities–over 70 of them–argued that Bayh-Dole was a vesting statute. They misread and misconstrued bit portions of the law to come up with a preposterous claim that Bayh-Dole secretly and without notice stripped inventors and any of their assignees of ownership rights in inventions, handing that ownership outright to the universities simply because they agreed to handle the money for federally supported research initiated by faculty members. Their claim was contrary to their own practices, where they routinely obtained assignments and advised each other in Practice Manuals and the like how important it was to have a policy that required assignments. Beyond that, they advocated that Bayh-Dole should be a vesting statute, that it was good to strip faculty inventors of their rights as expeditiously as possible because faculty were, you know, selfish, gullible, and inept, and administrators were smart, diligent, and public-spirited. The essence of their pitch was that compulsory institutional ownership was a good thing, and all Bayh-Dole did was to be switch compulsory ownership from federal agencies to self-interested, money-seeking university IP offices.
This goes far beyond merely making a mistake in the reading of a sophisticated law. This was deliberate. They got the purpose of the law wrong. They got the means by which law operated wrong. They got the model to be used wrong. They ignored their own practice in pitching for vesting. They disparaged their faculty in their vesting pitch. They pitched the idea that innovation worked best with compulsory ownership. They pitched the idea that innovation worked best when everything was handled by bureaucrats, as early and often and comprehensively as possible. If not, then the whole tech transfer system would fall apart. Well, it hasn’t. But it would be nice if the worser parts of the system built in the last twenty years and led by AUTM would fall apart. That would be a good start.
5. We have work to do to step up to the challenges and opportunities that we see today.
The present university emphasis on compulsory ownership, administrative control, and fixation on “commercialization” as the first and primary goal of research work has to end. It is fine to have university ownership, when that is indicated, and it is fine to have people around who understand how to make products and start companies. But it is not fine for there to be a developing monoculture of compulsory controls, and it is not fine that commercialization dominates other means by which research assets play a role in community. Certainly this whole endeavor is not about making money for university administrators. That is the lowest goal of anything worth considering. In fact, university benefit is something chosen by the investigators and inventors who do the work, from among the various ways they can give back to community or to strike a deal in exchange for resources and services.
In the past, before university administrators misdirected Bayh-Dole, university research was largely free from university claims of ownership. University administration played a supporting and mediating role, looking out for faculty and inventors, and making sure that any commercial activity was consistent with broader goals of research and instruction. The Bayh-Dole Act has a tremendous upside, if it is permitted to have the effect that is possible. For this to happen, universities must scale back their demands for ownership of IP. There are times for it: when work is commissioned, when investigators decide that university ownership is a ground rule for a given project, when inventors request that ownership. But universities have no business, and administrators have no substantive reasons, to make university ownership of inventions or other works a condition of employment, a condition on the use of resources, or a general condition on involvement in extramural research.
The move to present assignments after Stanford v Roche shows how disconnected much of the present university administrative approach is to research, to science, to scholarship, to the role of the university in society, and to innovation. Present assignments work in the context of corporate claims of ownership, when surrounded by trade secret claims, non-compete covenants, hierarchical command structures that direct and approve work, and a premise that the work being done is for the benefit of the company. In universities, which do not have these other things, present assignments destroy the review process, encumber administrators with a bunch of assets that they should not want, do not have the resources to manage, and in many cases lack the expertise to manage.
Many university research administrators, along with AUTM, appear to believe that the culmination of best practice is to figure out how to be kind to university inventors, having taken ownership of their work. That’s a kind of Geneva Convention of innovation. How to properly treat captured inventions. Instead, we need a Bill of Rights, that places limitations on what universities may claim of federally supported inventions. Bayh-Dole got part way there, and then held off, to see how universities would respond. After thirty years, we can see very clearly what university administrators want–not all, but a lot of them–enough to dominate discussions about innovation and economic development, enough to hog the resources, publish aspirational (if not misleading) reports, and suppress other ways to deploy university research assets.
There’s a ton of work to do, and plenty of good work for university-based technology transfer offices, without the monopolicy of compulsory ownership and a fixation on making people pay for other people’s (investigators and inventors) rights. The general outline is there–that research assets are important to community development. But we have a much to learn, to do, to meet the challenges and opportunities that are sweeping past us daily. Innovation requires both freedom and support. Start with freedom. Start with an Innovation Bill of Rights. Roll back compulsory ownership policies at universities. Restore the administrative approach innovation strategies that we had in universities prior to the university response to Bayh-Dole. You know, the strategies that gave us the internet, gene splicing, wonder drugs, and fantastic crop yields. You can’t do it any better than that. Lord knows, administrators can’t. It’s good to have some commercialization folks, and some start up folks, and some processes for how that all works. But it’s also essential to have some open source folks, and some community practice folks, and some industry partnership folks.
Stanford v Roche means it’s federal policy for us to get on with things, not to turn faculty-directed, federally funded research into another form of institutional bondage. Stanford v Roche means that university administrators who insist that institutional ownership is the best thing in the world need to go back to school, study innovation, and then study the proper exercise of institutional resources to support innovation. It’s all too easy to turn research enterprise into a dumbed-down effort to grub money from IP positions, if not from royalties on sales then on speculation on future royalties on sales, and if not from speculation on future sales, then on speculation on the value of startups that someday might sell something, even if not whatever was licensed. Stanford v Roche was a huge wake up call for everyone to recognize the importance of freedom to collaborate, to innovate, to lead–even if this meant that a university doesn’t come away with a lot of money when there’s a successful use of research ideas. Bayh-Dole provided an opportunity for that freedom. Stanford v Roche confirmed it. Now, let’s do something about it.