I have written previously about the State of Ohio’s effort to frustrate federal invention policy by asserting that public universities in the state own all inventions made in research done in state facilities or by university employees in the scope of their employment, using “funding, equipment, or infrastructure” provided “by or through” any public university.
Here’s the text from ORC 3345.14:
(B) All rights to and interests in discoveries, inventions, or patents which result from research or investigation conducted in any experiment station, bureau, laboratory, research facility, or other facility of any state college or university, or by employees of any state college or university acting within the scope of their employment or with funding, equipment, or infrastructure provided by or through any state college or university, shall be the sole property of that college or university. No person, firm, association, corporation, or governmental agency which uses the facilities of such college or university in connection with such research or investigation and no faculty member, employee, or student of such college or university participating in or making such discoveries or inventions, shall have any rights to or interests in such discoveries or inventions, including income therefrom, except as may, by determination of the board of trustees of such college or university, be assigned, licensed, transferred, or paid to such persons or entities in accordance with division (C) of this section or in accordance with rules adopted under division (D) of this section.
The law as I have it says “Effective Date: 09-07-2000”.
The State claims not only the work of employees acting within scope of employment (which does not address the question of what the scope of faculty employment actually is), but also using facilities (buildings), funds, equipment, and “infrastructure” (whatever that might mean). Furthermore, it claims ownership of inventions made in research facilities even when made by non-employees. Fancy that.
So, legal beagles, how does it come about that a state can pass a law that ignores the US Constitution and federal patent law to reach the conclusion that the state, not the inventor, owns inventions made by inventors working in its facilities? How does this get around the reservation of title to inventions for inventors in the Constitution? How is this not eminent domain taking of personal property for public use under the Fifth Amendment? Where is the due process and just compensation? How is this law not pre-empted by federal patent law, that says that inventors own their invention, following the Constitution on the matter, as it ought? We will not ask our legal beagles to opine on the matter of whether state ownership is good for innovation, for the usual reasons.
These are not rhetorical questions. Where did you go, Ohio? The Ohio law appears completely void and worthless (not to mention ill-conceived and badly written). Who could be behind such an attack on university faculty? I have a theory. University administrators advocated for the law. University administrators led the attack on personal rights, rationalized what they were doing, and have built themselves a nest of inventions with the claim that they, not the faculty, will lead the innovation renaissance imagined by Vannevar Bush.
Here’s how it worked (according to my theory):
1) University administrators misread Bayh-Dole Act to apply to universities (it doesn’t–it applies to federal agencies) and further misread the Act to mean that when a university “elects to retain title” it is in fact “vested with title” (it doesn’t, retain title means that the agency does not require the university to assign title if it happens to get title). This part appears pretty well grounded in fact.
2) Following this line of compound misreading, it is also federal law that university inventors must assign title to the university, but this assignment is a mere ceremony, because title passes to the university by the force of federal law. The actual paperwork does not transfer title, but merely fools the PTO into granting a patent to the university without all the bother and fuss of having to change its administrative practices (and in this way, Bayh-Dole meets its objective for reducing the administrative burden of invention management). This explains why even Stanford sought written assignments, but argued that title passed already with the federal funding, per the law.
3) Since it is federal law that universities own federally supported inventions made by their employees, then a state law that confirms this circumstance surely is valid. The state law merely brings the state into harmony with federal law. Clarity, progress, title certainty.
4) Oh, and since it is possible for the state to establish title in this way with regard to federally supported inventions, it must be possible for it to do it for all inventions made in research facilities, made by employees, made using any funds, equipment, or infrastructure. What’s good for the whole land via federal policy is surely good for public universities. It would be unfair to the rest that their inventions were not handled by the university as well. Take all of them! Protect the public from inept, selfish, gullible faculty. Consistency. Fairness. More progress.
If federal law permits vesting, the states should be able to do it, too. Forget the Constitution. Patent law must have been amended without notice. This is the federal government’s gift to the universities, so that they can make money by shaking down American industry, snooker private investors, frustrate experienced entrepreneurs, and raid state accounts for seed funding to support ever-available happy-for-the-handout entrepreneurs, and if there are not enough of those to go around, then students and faculty are to be recruited–starting companies to make state seed funding programs look good (omg–look at all those [paper] companies in those state-funded incubators! wow! what a great state seed program, much better than any private effort!) is surely much better than research, teaching, and getting that degree completed.
Now we turn to Stanford v Roche. The Supreme Court turned this sophisticated misreading of federal law on its head and threw it out the door. Bayh-Dole does not apply to universities, but to agencies. Bayh-Dole does not vest in universities title to federally supported inventions. The Constitution lives. Federal patent law applies. Bayh-Dole does not have to be read cross-eyed. Inventors own their inventions until they assign them, and the means to assign is a written agreement, privately negotiated and personally executed.
We may now ask, what does this mean for the Ohio law? If a misreading of Bayh-Dole–totally wrong, against the Constitution, patent law, and good sense–fueled the rationale for the law, then what happens when that misreading is shown for what it is? Should not Ohio Revised Code 3345.14(B) be thrown out as void? One would think so. If Bayh-Dole is not a vesting statute, then Ohio has no window through which to come in to take personal property by force of law. At best, the state might require universities to require assignment of title to inventions under conditions appropriate to the mission of the university. But the transaction by which the state acquires title to inventions will be by written agreement, and for that agreement to be valid, it has to be either voluntary (as in days passed, when universities were the powerhouses of innovation, not just loud voices about it) or there has to be “just compensation”. Thus, Ohio has a choice–undo the law and follow federal policy, or fix a technical detail in the law (revise “shall be the sole property” to “shall be assigned to… as a condition of…. “, making assignment a condition of anything one can imagine and get into the law).
Even if one goes for the technical fix to save a position made from a flawed argument, how does that deal with “just compensation”? Assignment can be imposed based on employment, access to facilities, or permission to participate in extramural research, or a share of royalty income after expenses even if no royalty income is ever received or no license ever transacted. Perhaps that’s enough to meet “due process”. But it’s still personal property. It’s still being taken outright and upfront, before anyone could possibly know the value of the property or what would constitute “just compensation”. (Note, there is a different issue for private universities–they are not out of the woods on this point, but their problem isn’t a public taking–and there are other issues as well for all universities–not just this bit I’m beating on now).
We can work through each of these rationales in detail sometime–but for faculty, in particular, the rationales don’t hold up as compensation, let alone just compensation (unless just = $0). Universities don’t assign and direct faculty research, there is nothing in the employment agreements to indicate that research is conducted for the benefit of the university-as-employer (except, of course, for the claims made by the tech transfer office), the permission to work on extramural research is there precisely to provide release from the duties of employment-for-the-university to pursue something proposed to an external sponsor, and failing to pay because one didn’t find a way to make money isn’t “just compensation” when it is *imposed*.
In any of these instances, if the arrangement is voluntary–both the university and the inventor agree without any threats or demands–then sure, be fool enough to assign your patent right to an organization that has no obligation to license your invention, or if it licenses it, to try to get more money than it has spent, or on the other hand steadfastly refuse to make the invention available broadly to all to encourage use without trying to make a lot of money on it. But if the “compensation” is imposed, then there had better be some “due process” that shows that a) it is compensation for the taking of the property and b) it is “just” under the circumstances. Getting nothing more than anyone else has who is employed, using facilities, and participating in research doesn’t sound much like “compensation”. I am sure there are folks who will argue whatever they are paid to argue. But what of it? Isn’t this stuff pretty starkly plain? The Ohio law after Stanford v Roche is broken, worthless, void. Except it’s still on the books until the legislature acts or it is challenged in court.
Here is an example in the wild of how it is used by Ohio State University:
9. Per Ohio Revised Code § 3345.14, all rights to and interests in discoveries, inventions, or patents which result from research or investigation conducted in any experiment station; bureau; laboratory, research facility, or other facility of The Ohio State University and/or OSU, or by employees of The Ohio State University and/or OSU acting within the scope of their employment or with funding, equipment, or infrastructure provided by or through The Ohio State University and/or OSU, shall be the sole property of The Ohio State University.
This is from an industrial affiliate agreement. It’s not even, apparently, sponsored research but rather attending affiliate short courses for training and information. The claim would appear to be more than merely saying, if our OSU folks report on their research, then we own it–it’s saying, if you think up anything while at one of these short courses, we may own that, too, if our definition of “research” and “investigation” can be stretched to include courses that take place in our facilities. In any event, the primary message is: “don’t bother to use anything unique to our research programs that you learn as a result of these courses–only companies willing to commit to make commercial products will get a license, and you can buy whatever they make from them, when we get around to finding them, negotiating a license, and seeing what if anything they do–and, oh, by the way, since that’s really unlikely, we probably will skip trying and just start a company with faculty or students and get them to try to sell you something, because we get more credit for the number of startups than for you using anything our people have discovered.”
None of this is of course *express*, but this is the *effect*. It has nothing to do with *intent*–because we know university bureaucrats routinely insist that they intend public service, the general good, and the very best for the university and community. It is this very sincerity, such as it is (and perhaps “very” is the wrong word here), that marks the intent out as bullshit (in the technical sense of the word–meaning, having no regard for the truth). Less edgily, such “intentions” obscure effects, degrade judgment, and contribute to the suppression of collaboration, goodwill, and getting things done.
We learn this about university administrators from Stanford v Roche–and this is administrators at a lot of universities. They were wrong about the case, wrong about the law, wrong about federal policy, wrong about faculty potential, and wrong on what they need to do to address things now. They have built their many wrongs into IP policies and research policies and consulting policies and use of facilities policies and visitor agreements. They have inserted their wrongs into sponsored research contracts and affiliates agreements. They have got laws changed to underscore their wrongs. They have, in short, metastasized these wrongs throughout the research enterprise. It’s a big mess to clean up. Time to get to it.
This is what Stanford v Roche does for us. It shows us how things have gone wrong. Now, to be clear, just because a person is wrong doesn’t mean the person is bad, or incompetent, or unfriendly. And just because a whole profession has been misled (or misled itself) doesn’t mean it doesn’t have a worthwhile function. Not everyone in university technology transfer has been wrong about this stuff–but way more have been publicly vocal about their wrongness than those who have spoken up questioning the positions taken by such groups as AUTM. There are some really great people in university technology transfer who have been on the wrong side of these wrongs, and have been sincerely wrong for a long, long time.
What reveals character, however, is how people respond to being wrong, and being wrong in a big way, like has happened with invention ownership, Bayh-Dole, and Stanford v Roche. What you’d like them to do is say, “whooo–I’ve been on the wrong side of this wrong–it feels more like a conversion experience or a confession than a progressive evolution of thought, but here goes–‘I was wrong about the case, about the law, about the public policy. I missed a key point that anchors the ship of federal research in the port of university innovation, and now things have to change. I will work to review our policies and practices and bring them into line with the law and federal policy, and from there we can see what yet needs to be done so that universities play the best possible role in encouraging innovation, jobs, goodwill, unicorns, and stardust.”
I’m hopeful I’ll see some of that. It appears, however, that some of those who have been wrong are not heading that way. Folks in particular at the University of California and the University of Washington, as a start. They appear to be doubling down. This is what the present assignment effort is all about. The Supreme Court said their claim for ownership was wrong. Bayh-Dole does not give them ownership. So rather than accepting that inventors own their inventions, and that Bayh-Dole leaves that as a private matter between inventors and employers, these folks are trying to find another rationale for university ownership to replace the one that got kicked out from under them. In other words, they want the case to be about a technical detail that forces a change in the *reason* for claiming ownership, not a stop-dead-in-the-tracks-and-rethink-it moment in which there *isn’t any reasoning available, only rhetorical posturings* for their present position. They want all those cancerous policy statements and employment agreements and training documents to stay “true”. They don’t want to revise them all to circumstances based on freedom, personal initiative and judgment, and informal collaboration as well as formal transactions. No, they want their autocracy, authority, and profits. They like what they have created. They think big fat fascist state-will-take-care-of-you-better-than-you-can-ever-do tumor cells in policy are rather beautiful, like the smell of napalm in the morning. You know, like “victory”.
Thus, the administrators have to do something to respond to Stanford v Roche. They are hung out there. You would think they would just admit that they were totally, potentially destructively wrong on an utter core tenet of their professional lives. Or, they have to find an alternative, such as to make it all look like they were right all along but just didn’t get the technical details quite right and with progress things will be fine. The proposal to use “present assignments” at employment as a way to defend against Stanford v Roche outcomes serves this purpose. I couldn’t figure it out for a while, since the present assignment pitch doesn’t resolve Stanford v Roche circumstances at all, and actually makes things worse, in terms of open labs, collaboration, consulting, and the standing of policy, and moreover sends a huge nasty message to industry that the university intent is not to do the right thing, and not even to do a profitable thing, but to do a very wrong thing, and that is to lead collaborating companies on and then cut them off when there is a patent position that leaves them vulnerable to a shakedown for money. So why is the present assignment pitch so popular (beyond the obvious thing that university administrators must like a good shakedown if there’s money in it)?
It’s because it solves the problem of being so wrong for so long. The administrators don’t care about the technical details in Stanford v Roche situations, which would involve checking for outstanding commitments and background rights when people seek to join an IP-controlled project, not some poo-poo battle over competing assignment documents. They don’t care that they are shifting a huge uncertainty to industry and the community–including other universities–with regard to claims to inventions. They just want to look right about something, and they want people to think that the Supreme Court surprised them with an unexpected decision, and that they are doing the appropriate next thing to save university technology transfer as we know it from utter destruction. Remember, that’s what they argued would happen if they did not have “title certainty” from Bayh-Dole, the Vesting Statute. Well, they cannot afford to be wrong about that, too. They are not about to let university technology transfer as we know it suffer utter destruction, metastatic policy tissue and all. And they surely don’t want to wait until it’s clear that no destruction is going to come from the Supreme Court decision that teaches them a thing or two about reading the law and thinking about things.
They have to act. Admit being wrong and clean up the mess, or stonewall it and deal with damage control. What are you betting that they will do? If the former, then they have character, feel responsible to the public, have learned a big lesson and feel properly chastised, and are ready to start anew. If the latter, then we learn something sad about their character, all the worse because they are in positions of public trust, haven’t learned anything useful at all, and are going to work to make matters even worse, so long as they come out with status for their efforts. Are we going to have better innovation networks? or more bozonet behavior from the technology transfer community? Are they going to break their silence and tell their senior administrators and faculty and the public that they got it wrong, in a big way, and would like some time to work out how to change course? It doesn’t look like it. Not without a lot of help and prodding, anyway.
(Note–I have been snarky enough to this point that anyone who has supported Bayh-Dole vesting and has read this far really, really should consider doing the conversion experience thing–it will make you feel much better about yourself, faculty inventors will respect you for your strength of character. Honestly now, come over to the bright side, the side of freedom and mystery and the future shaped by everyone in their own ways, a side that will challenge every bit of your abilities and play to your best instincts. In a world full up with Keynes, can’t there be just a bit of Hayek?)
The argument that tripped the balance to general autocracy from personal initiative was that Bayh-Dole–federal law–required/mandated/vested university ownership. Without that prompt, few universities would have moved from a limited claim to inventions based on review and a narrow scope of interest to a comprehensive, compulsory policy claiming all possible outcomes of faculty work for the purpose of ensuring university money-making, public service be damned (or, even more arrogantly, university making money = public service!). Thus, my revulsion at something like a “Center for Commercialization” being the compulsory policy cemetery for all faculty inventions. The message is clear: we intend to make money from licensing–if not from companies then from investors, and all university research outputs as a matter of official university policy are first dedicated to this goal. You might expect the public to figure this out and feel the same revulsion. This is not some minor detail off in the corner. This is tied to the centerpiece of 30 years and hundreds of billions of dollars of public money dedicated to university research, all now twisted into a screwball claim that bureaucrats and their investment buddies will make money on faculty discoveries–have a mandate endorsed by policy if not state law to make this money–, that academic culture must change to support this money-making, and faculty are prohibited from doing anything that would frustrate this objective. Thus, present assignments are just the thing to seal the deal. And public university presidents can’t figure out why the public doesn’t support more state funds for universities. Go figure.