The Free Play of Free Intellects

The Bayh-Dole Act has been championed as a great turning point in the federal government’s management of inventions made by university faculty (for the most part) supported by federal money. The impression meant to be left with us is that before this time, the government was doing a rotten job with such inventions and the private sector stepped in to show how productivity could be boosted with a bunch of motivating self-interest and professional focus. After Bayh-Dole, university patent administration has shown thirty years of constant “success.” Rebecca Eisenberg and David Mowery, in particular, have shown that this impression is not well grounded.

Universities were very active in patent matters before Bayh-Dole, and indeed their success was a foundation for the arguments in support of Bayh-Dole. It’s just that there success was based largely on a diversity of approaches, a great deal of faculty governance, and invention management agents that were highly selective. As Mowery has it, the agents “cherry-picked” the inventions they would work with.  Further, a number of federal agencies allowed contractors to own and management inventions made with federal support. Many of the patents held by the government were for weapons systems and other military uses, for which the contractors had chosen not to pursue patents. For such inventions, there may well have been no commercial products to be made, and if there were, then the military contractors were not the ones to pursue them, and it was just as well to place the science and technology for such uses in the public domain, or to make the inventions available on a royalty-free or FRAND basis as anything else. One might argue that the government was doing a pretty good job with inventions in this area, and that the perceived problems in “losing national competitiveness” or “economic slowdown” were not the result of invention management problems.

There were changes afoot.  Prior to 1950, the federal government funded very little of faculty research, and what funding it did provide was limited to a handful of institutions. The formation of the National Science Foundation changed that by expanding government funding to universities while increasing the number of universities involved. That in turn put pressure on universities to adapt their research and intellectual property policies and practices, even creating policies where before they had had none. The prospect of inventions made with federal support was not one that required immediate attention, as the defaults were generally assignment of inventions to the government, or publication. As government funding came to be the largest component of university support, however, it began to encompass the best research ideas across a wide range of possible subjects. In essence, the government bought up large tracts of research real estate, which became subject to federal agency claims on inventions. What had worked well for universities was not available as easily when the federal government became the dominant source of funding. This is not to say that technological discoveries made at universities were not available to the public–they were–and we have the digital computer and the internet as two such classes of technology that have been nothing short of amazing, and which were built on inventions placed in the public domain, early creation of standards, on top of which were built competitive patent positions.

Should universities have gotten rich from patents simply because they happened to recruit the right faculty coming free of their service to the government in World War II, and those faculty investigators continued to invent? I’m not sure it matters. What is clear, however, is that when the government, or any major player, buys out a lot of university research property, the movement of work to the public domain, and through a diversity of publication, consulting, and independent invention management channels, is affected.

Even if the total productivity of the system (say, by counting “patentable inventions” or some such proxy) remains the same, the movement of the work through institutional hands changes. The “growth” of university patent counts after Bayh-Dole is a measure of (1) the movement of more creative work through the university rather than other channels (2) the willingness of the university to file more patent applications than was the government or faculty inventors on their own or working with independent agents (thus, blocking movement to the public domain) and (3) the availability of funding for such patent work in the form of licensing income from, typically, a handful of deals paying substantial royalties. Patent counts on their own do not tell us about innovation, any more than the total hits in a baseball season tell us about wins, pennants, or entertainment value. However, patents that prevent inventions from being “worked” would appear to be operating against the basic premise of university-hosted, faculty-led research–that such research is a source of discovery and validation broadly available to all.

We need to be careful with the use of “university” in this context. The funding was *not* to universities but to the faculty at university, who were the ones proposing projects for government funding. Faculty members had the ideas for research, led the research, chose the personnel to work with them, and decided how to publish their work. The university served as an intermediary to manage the money and maintain the facilities, for which the university was compensated through indirect cost. Faculty members requested a release from their “official” duties in order to work on government-funded projects. A portion of their salary was–and still is–moved to grant accounts. While the money is administrated by the university, it is federal money held in trust.

This was the new shape of “basic” research that was intended to come outside of the defense classification scheme that had characterized similar work during World War 2. Vannevar Bush was adamant in Science the Endless Frontier that the classification of new technology needed to end (my emphasis):

Freedom of Inquiry Must Be Preserved

The publicly and privately supported colleges, universities, and research institutes are the centers of basic research. They are the wellsprings of knowledge and understanding. As long as they are vigorous and healthy and their scientists are free to pursue the truth wherever it may lead, there will be a flow of new scientific knowledge to those who can apply it to practical problems in Government, in industry, or elsewhere.

Many of the lessons learned in the war-time application of science under Government can be profitably applied in peace. The Government is peculiarly fitted to perform certain functions, such as the coordination and support of broad programs on problems of great national importance. But we must proceed with caution in carrying over the methods which work in wartime to the very different conditions of peace. We must remove the rigid controls which we have had to impose, and recover freedom of inquiry and that healthy competitive scientific spirit so necessary for expansion of the frontiers of scientific knowledge.

Scientific progress on a broad front results from the free play of free intellects, working on subjects of their own choice, in the manner dictated by their curiosity for exploration of the unknown. Freedom of inquiry must be preserved under any plan for Government support of science in accordance with the Five Fundamentals listed on page 26 .

While we are here, we may as well pause to over the five fundamentals that were to guide the National Research Foundation (as Bush called it). These are

1) stability of funding for long-term programs
2) citizen control over the funding agency
3) use of grants and contracts, not government labs
4) control over work left to institutions “of utmost importance.”
5) agency responsible to the President and Congress

Bush’s use of university in this passage moves between that of an institution and the key personnel–the faculty–that undertake its instructional and research activities. A “university” may be considered as an association of faculty assembled to provide teaching and research services in the interest of creating a better educated public. One might also see a university as a social institution that has existed for over a thousand years in Western society, one in which inquiry has been protected from the control of the church, and the state, while also serving the advancement of learning desired by both church and state.  Scientific research, however, was not restricted to university faculty and never has been. Holding an academic credential has never been a precondition to discovery. One can also see a university as having properties of a corporation, or in the case of public universities, that of a state agency.

These three views of the university are not mutually exclusive. That means, in particular, that university administrators, by having standing in the university-as-corporation do not necessarily have much standing at all when it comes to research. However, present university research and IP policies have come to be built around the idea of university-as-corporation, in keeping with the idea that contracts–for research and licensing–have to be between “legal” entities, as if the university has to become a company for company methods to be applied. If, however, company methods are not applied, then it may well be that the idea of “contract” is the one that breaks.

Government funding is careful not to consider that all forms of funding are “contracted.” There are grants, and awards, and cooperative agreements. These are not just happy names to give variety to our writing, but also ones that indicate differences in approach to the reciprocity expected for provision of support. A similar thing happens in donations. A donation may be “restricted” to a particular purpose, but the restriction does not turn the donation into a contract for consideration. The donor does not purchase the restriction, but indicates it. The recipient does not get to anything with the donation, but agrees to use it for the restricted purpose. If there’s a problem, then there may well be a discussion between donor and recipient, and the donor’s funds may be returned, or the donor may agree to a revised restriction, or whatever. The relationship is not one of contract.

Similarly, faculty may receive awards for their work that include money to support future work. These may be considered restricted donations and called grants, or may be recast as contracts, with the money being received in exchange for performance deliverables. It’s entirely possible to construct in this way a restricted donation to look like a contract, with a statement of work that says, the recipient will use the funds for the purpose indicated, where the purpose now looks like a contracted activity rather than a donation-supported activity.

The difference is both in the choice of the parties in how to manage their relationship and in whether the activity takes place only because the donor commissions it rather than simply enables or enhances it. If I am already studying snails, and it would help me to travel to Mr. Snail City, a donor may provide the funding, or a government, without turning that support into a contract that I conduct the trip as an obligation incurred for the benefit of the donor. This is a matter of intent. The editor and the co-author may perform roughly the same service in dealing with a manuscript, but they choose to serve in different roles, with different intents, and so frame their relationship with the author to accomplish their purpose.

In the matter of collaborative and supporting relationships by which creative people at universities and others get along, including those relationships for funding and those relationships for providing access to what is gathered, learned, and discovered, there is plenty of choice regarding whether contracts will be used, or not. A license can be a permission, or it can be embedded in a contract. A promise may be contractual, or it may not. An agreement may be oral or written, and may be contractual or not. These are choices that may be made. When a university administration insists that all relationships involving money provided for support of faculty research must be in the form of a funding contract, that is also a choice. It does not have to be. Indeed, government grants, despite the use of the word “contractor” in relationship to funding agreements, might be described as something more akin to governmental donations subject to regulations directed at funds management rather than performance. The government chooses such awards based on statements of purpose and capability, but the effort is no procurement of the known, but rather support to engage the unknown.

In such circumstances, a truly horrible outcome is to decide that the statement of work must be exactly what is done, as if what is to be studied is already so well known that it can be set forth as a procurement of duties. The horror, the horror. Yet this is pretty much what a university administrative policy demanding the use of contracts dictates. One very senior research administrator in a very large university once told me that there was no such thing in university policy as “relationships” with companies. There were only contracts with four corners. Everything else was a version of bribery, corruption, and failure. This is the tyranny of thinking that every relationship must be reduced to a contract, and that once a contract, what was proposed by a faculty investigator as a helpful extension of his or her work is turned by administrative fiat into a product specified for purchase by a sponsor-cum-customer.

A similar thing is at work on the “licensing” side of the house. Here, work that otherwise would be published and taught as epiphany and discovery has imposed on it a claim of ownership which leads to patents. Even still, patent rights may be deployed without contracts. A patent owner may dedicate a patent to the public, or may give a general permission without any meeting of minds with any beneficiary of that permission. The patent owner that acts in such a manner does not need no stinkin’ contract. It is the recipient who desires to have assurance that the patent owner will not sue for infringement who will seek out a contract. Thus, counting the number of “licenses” one has issued tracks not productivity in the transfer of technology but rather the extent to which a wide range of engagement on matters of research work has been converted into the form of contracts. The use of patent contracts in the context of a relationship in which a range of assets are exchanged has the effect of shifting the chosen things of value from any of these other assets to that of rights in a patent. One may charge for a workshop and give away a right to a patent, or one may charge for a patent and offer a free workshop to those that pay the license price. Which thing carries the actual value of the exchange? Both are intangible assets. It may be that more people would attend a workshop and accept a patent license than would pay for a patent license and attend a workshop. Indeed, they may well have to have the workshop before they are willing to consider the patent license!

The university-as-company allows the importation of company methods for dealing with research (now construed as procurement contracts for services and products) and instruction in discoveries (now construed as patent license contracts made on the threat of exclusion, or at least the shared commitment to threaten to exclude others). When Bayh-Dole proposes the use of the patent system to promote the use of inventions made with federal support, Bayh-Dole is not mandating the use of contracts in the place of instruction, publication, collaboration, exchange, and permission. Contracts are of course one tool available. But university administrations, faculty investigators, the faculty generally as a collective body, and inventors all may choose what forms of relationship to use to promote the use of inventions by means of the patent system.  A patent may give visibility.  As a publication, if drafted in a university rather than clever corporate style, it may serve as a primary teaching document.  As a matter of establishing priority of work, it provides a review that’s often more rigorous than that of the typical academic journal.

These are not your usual royalty-maximizing uses of the patent system. They do not set up for litigation seeking millions, if not hundreds of millions in damages for use of inventions, er, infringement of patent rights. But they do use the patent system to promote use, and encourage free competition and enterprise, and are a sound basis for opening up collaboration between universities (that is, faculty at universities, despite the drafters of Bayh-Dole intending “university” to mean a corporation of administrators directing faculty to do research as an expensive but necessary means to obtain government funding) and companies.

However, there are ways to use the patent system to generate income that do not require contracts in the form of licenses. For instance, universities could form patent pools, such as the IBM Ecopatent Commons or the Apache Foundation code repository, in which the agreement is that one’s non-assert of patents against the practices of the group provides one with a reciprocal non-assert from everyone else who has contributed to the shared assets of the group. The value in such a relationship is in getting access without having to pay, or contract, for each right. It is a collection of non-asserts, rather than licenses. Yes, a non-assert and a license are in their hearts equivalent outcomes, but in terms of the social environment, one is the decision not to invade while the other is a treaty requiring tribute from the vulnerable party.  These, it is obvious, are radically different forms of relationship. To conflate them is foolishness. To demand a contract for a patent license is a matter of asking for tribute, or forming an alliance to ask the rest of the world for tribute. To respond to a request for access is a matter of trade, to anchor that trade in contracts may have nothing directly to do with patents on inventions: that trade could be in instructional services, testing services, competitive placement of students, consulting and technical assistance, custom development, construction of prototypes, collection and analysis of data, collaboration to compete for sponsors’ attention, access to new ideas and capabilities.

One reaches the conclusion that contracts are not necessary to either the funding of university (faculty) research nor to the deployment of (faculty) discoveries, whether patents are involved or not. Contracts are certainly useful for some exchanges, but in general, the need for a contract comes not from the university (faculty; institution) but from those that would “do business” with it, or with others in reliance on its assets. It is when university administrators impose a general, and largely arbitrary, requirement that relationships must be reduced to contracts that they disrupt the “free play of free intellects” (to use Vannevar Bush’s phrase).

It is not that play and intellect have no truck with contracts.  It is rather that the contract is part of the free play, used intelligently, and not a pre-condition of play. The contracts that matter are voluntary, not compulsory, whether between faculty and administrators, or between faculty and each other, or between faculty and invention management agents, or between university administrators and sponsors on behalf of faculty who are working on behalf of the public, or between faculty and companies directly. How such voluntary contracting is managed is the distinctive opportunity of university research and innovation management. The challenge for research and IP administrators is not the effort to twist universities into the shape of companies so as to apply company mindsets to university work, but rather learning to develop strategies that favor the historic and continuing strengths of universities as “wellsprings of knowledge and understanding” led by scientists–and others–free to pursue the truth whether it may lead, including into relationships that do not depend on contracts, but may benefit from contracts.


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