400 reasons to consider alternatives to the now standard model

The National Science Foundation has kept track of university expenditures on research in a detailed way since 1972.  The figures for 2011 include expenditures of $65b across all fields, from all sources of funding, with 912 universities reporting.  Nearly $35b of that was for work in the life sciences, $9.3b in engineering, and $4.6b in physical sciences.  By contrast, the humanities and arts, the source of the design, imagination, and creativity that fuels society, though not via laboratory research, but rather through performance, got a bit over $0.3b.  I guess that reflects the idea that somehow discovery is the work of the white coats and not, say, composers working with new audio formats or writers imagining possible futures, say along the lines of Neal Stephenson’s call for a new kind of science fiction.

All that aside, there is an oddity about the figures.  The federal government provides $40.7b of the total spent, and business only $3.1b.  Institution funds are listed as the source for $12.4b in funding–four times industry support.  The odd question is:  where are the universities getting the $12.4b to spend on research?  That’s not the indirect costs in the federal and industry awards–so where is this money coming from?  Donations?

Thirty universities account for $26b of the $65b in expenditures–40% of all university research.  97 universities have $200m or more in research expenditures.  They are the ones, generally, that are deeply invested in patent licensing as it is promoted by organizations such as AUTM and Technology Transfer Tactics.  Another 168 or so have expenditures over $20m.  Many of these have worked up patent policies imitating the big schools, picking and choosing statements that sound good.   Some have tech transfer offices, especially if their research base is north of $50m.  Some even do reasonably well.  At one point the University of Akron with its $50m annual research base reported licensing income of $6m, but that was 2007 and their web site now doesn’t given any fresh figures.  Makes one wonder about the structure of their portfolio.

Still another 225 or so have expenditures between $2m and $20m a year–enough for 1 to 10 inventions per year.  Not enough to be setting up a tech transfer office.  Not really worth a patent policy, for that matter.  But a great opportunity to be flexible, responsive, selective, and focused.

In all there is a pool of some 400 universities that have little reason, financial or otherwise, to create a technology licensing office, and certainly not one based on the dominant model in the literature, one dealing in exclusive patent licensing to make money on some nonsensical rationale, like a “return on the taxpayers’ investment” or “exclusive licenses are essential for innovation” or “commercialization–meaning royalty bearing licensing–is the only way inventions will get used.”  That’s 400 universities that should be exploring alternatives to the monopoly invention management shop, not because they are out in the cold, lacking the resources to play with the big, volume invention management offices, but because they are not burdened down with such a wretched way of doing things:  these 400 universities, colleges, and institutes can explore, diversify, delegate their way to the support of inventions.

Rather than attempting to imitate the big volume operations, which may get a lucrative deal once a decade or so, small research program offices ought to be looking to get lucky, delegating work to invention management agents, and feeding the research commons.  Do these things, and people will help the institution look after its money.  It might not be in a forced payment for a patent license, but it could be in the form of a big donation, or perhaps left in a will after all is said and done.   Small research programs can travel light, assist each other, and work to emphasize focused research services.  In any event, small school programs should have a few different, dominant models and should not consider making “mini-me” licensing offices that look and sound like a fat research program adopting the MIT style approach to invention licensing.

Even some of the big universities, if they saw the true structure of their patent portfolios and they listened to their research personnel discuss what they really needed, ought to take a frank look at how they have structured their portfolios, their policies, and their practices.  If they looked around, and into the past, and check the values that made them a university in the first place, they might actually have a bit of epiphany, or conversion experience, and actually realize they want something rather different than the road on which they find themselves.

A patent policy serves as a kind of narrative about innovation.  It does not operate directly, but rather establishes patterns of expectations about what is important, at least to an institution, when it comes to anything new.  In some universities, these expectations are quite clear:  money!  or ownership!  or protocol!  In others, anything useful is swamped out by bombast or obfuscation or handwaving–leaving the outcome to be something along the lines of:  we decide whatever!  None of these sorts of things is particularly useful to have around when something new is being developed.  If one wants to play a mean joke on a research team, make the first question to them one about money or ownership.  It will be like a sliver, slipped under the skin of the team, and it will fester there for days or weeks, irritating everyone.  A strong team will address these issues and get them out of the way; a weak team, one with dysfunctional members, will break apart.  I once had a team break up this way over a $50 difference in some future anticipated one-time royalty check, because if the check had been 1,000 times bigger, the difference would have been insulting.

No, the first things that one needs to deal with when encountering something new is how those involved are going to behave with regard to each other, and how they connect to a broader community of folks who might take an interest in what they are doing–and respond in that interest in any number of ways, for helping to opposing to co-opting to making a hash of things.  A university has administrators like a house in Santa Cruz has termites, and administrators are members of a class of parties interested in a discovery that can put a creative team on edge about what will happen.  In almost every case, the administrators show up prepared to gnaw a lot of the fun and energy out of the activity by demanding everything stop until proper administrative formalities are undertaken, administrators are assured that their thumb will be in any opportunity pie, and administrators have been properly recognized as being the ones in charge of the situation.

This is all so very well captured in the movie Contact, when after discovering a message from space, the research team’s operation is taken over by the military, which while it can boss everyone around, doesn’t have the slightest clue what is going on, technically.  While military resources might be helpful, there is an essential difference between offering that help and asserting control over the whole situation in ensure that the help is requested and provided.  Same for discovery in a university setting.  Institutional help can be very important, but that is no reason to demand that the institution take over.  In practical terms, administrators demand institutional control so that they can then assert an even greater claim of “equity” in the discovery (though they rarely would use the word these days) and solidify the institution’s claim (and therefore their own administrative status) in the discovery.

When I think about the research teams that have done the best at developing their inventions in ways that have made a difference in people’s lives, two features stand out:  1) the team leaders take care of everyone in the team, are thinking about the team from the perspective of each participant, as to role, expectations, potential, needs; and 2) there almost always has been an absence of federal funding, or such funding has played a very minor role in the team’s work.  The first feature of successful teams is perhaps expectable.  When the leaders of team are in it for themselves, or are clueless about how the team operates, things fall apart, people do not collaborate or reciprocate, they do not volunteer their next idea.  The band breaks up on its successes, as on its failures.  The second feature, though, appears to run against a major narrative put forward happily by many university administrators–“look how frickin’ important we are–we have got all this federal funding!”  Yet the connection between federal funding and innovation is not entirely well formed.  First, we have studies like that of John Ionannidis, asking if the federal government is actually funding areas of research that turn out to be productive, in terms of fundamental discoveries.  Second, we have the quiet problem of the failure of SBIR Phase 2 awardees to actually make the transition from building a product to manufacturing it for sale in general markets.  Apparently it is more attractive to meet the conditions of the award and then try to get another award that it is to shift from federal funding to an exchange model with actual customers.

And this is also how it is with university research teams.  To keep getting federal funding, one has to keep getting it.  Every grant is the set up for the next one.  Drop out of the grant process for a couple of years, and it’s very difficult to get back in.  Lose federal funding, and lose legitimacy within certain political and administrative circles.  One of the brightest, talented, team-aware faculty developers I have worked with had to fight for tenure because, though he had done tremendous service to improve lab medicine training, and put the university’s lab medicine program on the international map as a key reference lab for certain kinds of tests and test training, for which his team had brought in millions of dollars, because this wasn’t federal funding, it was not considered legitimate.  He got his tenure, but there was a lesson in it about the game of academic showing off (funding, publications) relative to the very real impact of faculty efforts on behalf of the community, via technology transfer or otherwise.  Federal funding appears to counter-indicate technology transfer effectiveness.  This is not a narrative that is built into any patent policy I have seen.  Indeed, the Bayh-Dole narrative is one that claims exactly the opposite, that federal funding is the most important driver of innovation around.  I argue that the transition from federal funding to any other source of support is very difficult, and that federal funding, Bayh-Dole’s standard patent rights clause included, makes innovation from research more challenging, not because of the money, or even the particular nature of the funding agreement requirements, but because of the need to get the next federal grant, as well.

I have worked with major research consortia–STCs and ERCs–that run for 10 years, with a renewal at 5 years.  They will have a mandate to work with industry, and to that end will host events, build happy affiliates programs, and generally work on the basis of largesse.  They cannot find the time or motivation, however, to make the transition to work directly with companies on mutually engaging terms.  That is, they are unwilling to shift their focus from the federal grant program to service to industry participants.  Put it another way:  they view their work in the federal grant program as their service to industry, their sharing of federal largesse.  Anything else would threaten their compliance with their statement of work, hurt their progress toward grant objectives, and lose them favor with their grant officer.

When it comes up to year 9, then they show up asking if there’s something they have got that can be licensed to industry, or a way to get industry to pay to continue the center, and then they get the bad news:  even if something is worth licensing, the income that would make a difference is six years out or more; and they have just held a ten year party that attracted the folks interested in free drinks but not really in being your friend through thick and thin, and when your booze runs out, they depart too.   There’s no, but wait, we really like you bit at the end that will make them turn.  Even for this big, multi-million dollar centers, it turns out that it is more attractive to wind them down and get more federal dollars–hey, there is another $40b or more going to be available next year–than change the architecture of what they are doing to adapt to community-native activities rather than federal grant-native activities.

Federal funding has created, and repeats each new grant, a set of social expectations and behaviors that make the federal funding more important than the stated policy objectives of that funding, whether they are transformational innovation, economic development, or whatever.  It’s not this way for every federal grant and every faculty researcher, but from the perspective of IP management, it appears the folks who are willing to do without federal funding are in much better shape to take on the transfer of their work to the public, to industry, to other researchers than are those fully committed to compete for more federal grants.

Yet no university patent policy would dare to base its narrative on addressing this problem.  University administrators make it a point of pride to get more money from federal sources for research, claiming this confirms the excellence of their faculty to win competed awards in areas confirmed by federal policy officers as to where the important challenges facing our society must be.   But this narrative may not be all that accurate, and it may in fact be damaging, along the lines of teens talking up how much booze they can consume as a point of pride, if not their version of entry to adulthood.   For such things, a worthwhile point in a patent policy would be that the university will have no public comment on the potential for “commercial value” of any invention made by its faculty, and refrain from offering any public comment that claims to connect the amount of federal funding its faculty receive for their research with public impact, academic excellence, reputation of the institution, and the like.  But no, that won’t happen either.

University patent policies are a kind of innovation fiction.  They are narrative artiface that sets up patterns of expectation about what the institution cares about.  Mostly these are money, control, and process–virtues of dull organizational managers, but not of discovery and innovation.  In short, like the science fiction in a funk about dystopias, the modern university patent policy can imagine only the dystopic properties of inventors and their inventors.  A patent policy exists, apparently, to protect the public, the university, and the faculty themselves from the evils of patents, industry, and personal initiative, which for all the money patents might make, are dystopic in the hands of those who might invent as part of their scholarship.

The WARF-led brief to the Supreme Court asking for review of the CAFC decision in Stanford v Roche laid out formally, and officially, such a dystopic, inventor-loathing view of innovation (see the “case of four university employees” starting on page 11).  Attorneys can make any crappy, inchorent argument they want to, to the highest court in the land no less, to try to get their way on a point they want to win, but to do so they have to paint university creative class workers as incompetents to do it.  I doubt that any faculty at any university reviewed these university-produced statements to the Supreme Court before administrators signed up as “friends” of the court–but not as friends of inventors.  That, essentially, is also what these attorneys have built as the default narrative into university patent policies, into their accounts of the Bayh-Dole Act, and their representations of the virtues of the “technology transfer system” that they have created in the US, having nearly destroyed in the process the diverse, flexible, responsive, peer-managed approahc that had developed, and which served as the foundation for the arguments in favor of Bayh-Dole, which sought to introduce federally supported inventions from certain agencies, especially the NIH, into just this inventor-favoring approach.

There are 400 colleges, universities, and institutes in the United States that have no need to copy the dominate inventor-loathing, dystopic, money-and-control-and-process laced patent policies in vogue at the aristocracy of research universities.  We don’t need more of the same.  Rather, we need a new innovation fiction in our patent policies.  The source of that new innovation fiction is to be found among the 400, not the 97.  Indeed, the 97 universities with $200m or more in research expenditures really do need a source for new ideas, because it sure as heck is not going to come from them!  Like the dancers in David Byrne’s audition, they have followed a simple set of rules and now are all locked into the same set of steps, hoping they will get the next big hit license.  But unlike the audition, their dance isn’t over in three minutes, to be reset, if not purged.  Instead, because of patent policies written the way they are, it goes on and on and on, like some song by Journey, which at this point in this essay, is dismaying enough.

The source of innovation in innovation policy is going to come from those without such a great stake in, or reliance on, conforming to their past policy statements that they can adapt, evolve, divide, reassemble, regroup–this is the great potential of the 400 schools that don’t have enough extramural funding or volume of inventions or desire for massive amounts of money that they feel the attraction of adopting a dystopian view of faculty inventiveness to justify taking on galactic emperor powers to bring order to distant planets and capture the value of their trade to the greater glory of the empire itself.  All that’s lacking are sith lords fixing for a fight–or, are those the university patent administrators who rather like working for the empire?

A new source of innovation fiction will show up in university patent policies, and in accounts of practice.  It will offer hope, and consider the values that attach to innovation, and challenge institutions, rather than values that attach to institutions, and which challenge innovation.  We have it all backwards in policy now.  Time for a change.  Time for new fictions, ones that restrain institutional value-assertion, ones that relieve the darkness of the implied dystopia of university inventors and discoverers working together on what they envision and have made, to make things happen in the world.


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