University of Utah’s New Patent Policy, Part II

The University of Utah has updated its patent policy.  We have been through it recently.  I had such hopes that Utah would come to its senses and stop mending bad fences.  Sadly, instead they head into the void, with a goofball present assignment, leaving scope undefined, and ignoring both academic freedom and innovation, and taking advantage of the mess to leave it all in the hands of two administrators, to whom inventors and others are welcome to fuss all they want.  I guess when lemmings are this close to the cliff, open air smells like . . . victory.   Follow along to the edge of the cliff, if you want to see how they have screwed themselves up.

First, let’s be clear.  If a faculty wants their university to own all their work for the purpose of profit-seeking from monopoly positions, then fine.  They can sell their souls and their scholarship and work for a borg of a place.  And as far as I’m concerned, when they do that, the public has a right to defund them any way the public pleases to do so. If they are no more than a fussy body of monopoly rent-seekers, then they should be treated like companies, not public assets.   They may well survive, “run like a company”–it’s their choice, their cliff.

However, I’m assuming here, for the sake of argument, that the faculty at the University of Utah haven’t really chosen to submit to company serfdom, that academic freedom still means something, and that they haven’t decided that a bureaucrat touching every monetizable asset that they create is the best thing in God’s green earth for innovation.  Just for the sake of argument.  The Utah faculty can write to me and explain how it is so much better giving up academic freedom for the security of knowing that there are administrators in an office paid to make them rich.   Then I will be better informed.

The new Utah patent policy is not that much different from the old Utah policy.  The features of stupid built into it won’t come out with polishing.  Talk about making an effort to be part of a bozonet. Let’s go through it again, because I don’t know why . . . because it is such a good example of how university administrations have failed faculty, innovation, and, yeah, America.  And Utah’s policy is a leader.

First matter of scope:  Definition of “invention.”

Inventions” shall mean and include: inventions, technological advances, scientific discoveries and improvements (whether or not patentable); all trade secrets and know-how; trademarks and service marks; and the tangible and intangible results of research (including, for example, data, lab notebooks, charts, biological materials, cell lines and samples). “Inventions” shall also mean copyrightable works that include subject matter that is also patentable, as determined by the TCO Director, and software, notwithstanding the extent to which software may be governed by University Policy 7-003 (Ownership of Copyrightable Works and Related Works).

We have been through this–invention means invention and other stuff.  A truly bizarre expansion of the idea of invention to include non-patentable stuff–so inventions that aren’t inventions.  Also “results” and “data” and “know-how.”  May as well claim “all scholarship, except what we release.”  Or, “Invention means anything we call an invention.”

Second matter of scope:  “Area of Expertise.”  This was a great innovation in the new policy, to “better define” what the university claims:

Area of expertise” means, with respect to a faculty member (including regular faculty members and auxiliary faculty members), his or her specialized skills or expertise, as indicated by the instructional, clinical and research activities the faculty member performs, or has performed, on the University’s behalf.

Here we have a definition that defines a term in terms of itself, but with qualifiers that punt on the definition to a different discussion.   Taken broadly, this is simply a non-compete clause.  One cannot use one’s expertise in any capacity other than for the University.  Pretty bare.  But there is more–more that makes this all stupid. Expertise is expertise as “indicated” (to whom?  how?) by a set of activities (limited as instructional, clinical, and research) that are performed on the University’s behalf.

It is reasonable to ask what it means to perform an activity “on the University’s behalf.”  Is that because the University has required the performance of the activity, or entered into an agreement that expressly calls out that activity?  Or is the “on…behalf” an intention of the inventor–that the inventor has decided to perform the activity “on the University’s behalf”?  Is a “University behalf” something like, “as an agent of the University” or is it “for the benefit of the University” or is it “choosing to associate one’s actions with the University”?  There is no way to know.  It’s a definition that has all the gestures of precision that turns out to say absolutely nothing.  Or, perhaps, to be fair, the definition serves rhetorically to give the impression that it is claiming a whole lot, when in fact it may be claiming not much at all, for all its puffery.

Consider as we read through this policy that if it is a contract, then it is interpreted against the drafting party.  That is, some employee forced to accept this policy-contract as a condition of employment or continuing employment, has a right to form a reasonable understanding of what is being required.  The binding contract is a meeting of minds, not the imposition of brute force of one on another.  All the more so for patent agreements, for which the Supreme Court is clear that mere employment is not sufficient. That, at least, should have been clear from Stanford v Roche.

Now the policy drafters must have realized that their definition of “expertise” is inadequate, so they add another provision to cover for this:

Questions regarding whether a particular invention arises within the scope of an inventor’s area of expertise for purposes of this policy will be referred to the Director of the Technology Commercialization Office (“TCO”), who will make a determination in consultation with the inventor and his or her department chair. In the event the inventor, the TCO Director and department chair disagree regarding the inventor’s area of expertise, the determination will be made by the vice president for research, in consultation with the inventor, the TCO Director and the department chair.

This is as much to read:  “we will tell you what we mean by ‘area of expertise’ when we see it, and if you don’t agree with an underling on it, then we will escalate it to a supervisor who will tell you what we mean.”  There is no appeal here to an independent body that could judge the contract itself or question the policy.  The policy amounts to a demand that the inventor agree to agree to whatever the university decides.  The appeals process is pure show-trial.  At best, it is an invitation to waste time and resources going through motions.  Do the thought experiment.  Why would anyone appeal?  At worst, it transforms the whole question of scope based on area of expertise into utter ambiguity.  The policy may as well read:  “you agree that the administration will decide, for any invention that it claims, whether that invention is within the scope of the claim it has made, and gosh darn it, if the administration has made a claim, then it must have already decided that the invention is within scope, so why the heck is an inventor challenging the claim?”  The appeals process is just another delay and expense before litigation.  Think of it as a moat filled with crocodiles, not a way to place a check on overreaching minor administrators.

By the way, in a contract an agreement to agree is not enforceable.  Basically, the Utah policy says, “we will know the scope of your employment for invention ownership purposes when we see it.”  All that’s been done is to draft a claim overly broad, and then leave it to administrators to release an interest when it suits them.  That’s a classic strategy, to take everything and figure out later what one doesn’t really want.  Magpies do it.  Has about that brain capacity–cleverness but no idea what is trash and what’s important or the damage done in collecting everything.  From a legal drafting position, let’s say it is “conservative.”  The definition of “area of expertise” introduces an ambiguity that is to be resolved by an administrator later deciding what he or she wants and doesn’t want. That’s some improvement, no?

On, toward the edge of the cliff, where the lemming feet have just trod.

In addition to the scope of claim that’s “invention + area of expertise” there is a parallel which is “invention + use of resources”.  Here the definition is about “non-incidental” use:

Non-incidental use of University resources” shall mean use of University resources (including, for example, funding, personnel time, property, equipment, facilities, supplies, resources or intellectual property owned by or paid for through the University) other than (a) property, equipment, facilities, supplies or other resources the University makes available either to the general public (for example, library facilities and resources) or to the inventor and his or her colleagues in the inventor’s department or unit (for example, office furnishings, office supplies, computers, communications equipment, and administrative support if such use is not in excess of the amount normally provided the inventor and his or her colleagues).  “Non-Incidental use of University resources” shall include the efforts and/or time of the inventor to the extent the University has compensated (or will compensate) the inventor for such efforts and/or time.

Again, a definition that uses what it defines:   A use is a use except for use that is not a use, except when a use that is not a use becomes a use because the university decides it is a use after all.

As a bonus, the parenthetical list of resources includes, for inclusiveness, “resources.”  In the patent policies from fifty years ago, when faculty were doing great innovative work, the issue was “significant use” not “non-incidental use.”  One can see how, uh, conservative drafting changes the area of “uncertainty” from what defines “significant” use to that of “just more than incidental” use.  It’s part of being grasping and unsure, which is often the typical lot of the university attorney who has to decide if he or she works for the grasping administration or the creative faculty.  Mostly, university counsel does not take up the concerns of faculty, despite the very real thought that the faculty are the core of a university and why a university is simply not a business and won’t be until they are gotten rid of, reduced to “employee” status.  “Your faculty service associate today is Dr. Jan, how can I help you?”

As for the drafting, does the highlighted terminal constituent “owned by or paid for through the University” modify just the last element in the list or all the elements?  How is “funding” “paid for” by the University?  What does it mean for the University not to own something that it has “paid for”?  What is being said here, about sale, or ownership?  What is meant by putting the proper adjective “University” ahead of “resources.”  Is a “University resource” anything (in the list at least) that is “owned or paid for through the University”?  It would appear that each faculty member, then, according to the policy, is a University resource. One uses oneself to invent, and boom, it’s the University’s, unless using oneself to invent is something normally provided by the University to faculty and therefore might be worth an exception, except that this is the policy bit that is aiming to claim everything and so has the burden of not making that the exception.

The paragraph makes no sense.  It appears to state something vague about the University calling pretty much anything a resource that’s non-incidental, unless someone can show otherwise.  Lots of luck on that.

Look carefully at the last sentence.  Here it is again.

“Non-Incidental use of University resources” shall include the efforts and/or time of the inventor to the extent the University has compensated (or will compensate) the inventor for such efforts and/or time.

This is the edge of a mighty cliff. The definition of “use of resources” includes the inventor using the inventor’s own time and effort!  And this use of “resources” is “non-incidental” if the University has paid for it, or, wait for it, will pay for it.  The basic bargain here is that the University seeks to acquire valuable inventions for something like the hourly rate at which a faculty member (or student employee) is compensated for teaching, or washing lab glassware, regardless of whether the inventor was hired to invent or not, so long as the University reserves the right to change the scope of the employment (see above) and then pay out for that employment at the existing rate.

This definition suffers from the same insufferable drafting as that of “area of expertise.”  How is the University to compensate expressly for “efforts and/or time” and just what “efforts and/or time” are these?  If I am fussing around with my butterfly collection and I think up a really neat way of putting butterfly wing patterns on smartphone wallpaper, what time and effort has the University compensated me for?  Did I stop for a minute and go, “yes, that’s it, I’ll try it out when I get home”?  Was I fool enough to try it out right there in the lab?  Again, where is the compensation for “efforts and/or time.”  And what exactly is the difference between compensating for “time” and compensating for “efforts”?

This is HR-speak language but it is not coherent in context.  In an “efforts” based arrangement, one gets paid based on activity milestones.  In a “time” based arrangement, one gets paid based on time.  If one is working the counter on an efforts-based arrangement, one gets paid, say, by the number of sales one makes.  If one is working on a time basis, there’s a clock to punch and the number of sales is someone else’s problem.  So what is it here, for University of Utah faculty?  Are they compensated based on time?  on efforts?  In their inventing and discovery and creative work?  If so, how does such compensation get directed to what they happen to “invent”?  That is, unless they have agreed expressly to compensation in exchange for time and/or efforts directed toward inventing “on the University’s behalf” what exactly does this addition to the definition of “non-incidental use of resources” mean?   Next to nothing.  But the rhetoric has a purpose–and that is to create the prospect of doubt, confusion, and questions, which get addressed in the next section:

Because the determination of “non-incidental use of University resources” depends, in part, on facilities that are customarily accessible to similarly situated faculty members, non-faculty academic employees, staff members and student-employees, the standards may vary from one department to another according to local culture and tradition. It is the responsibility of the TCO to consult with the dean, chair, or equivalent supervisor of the inventor in making a determination of whether the inventor has made non-incidental use of University resources in connection with creation of the invention. If the parties disagree with the determination of the TCO, the matter shall be referred to the cognizant vice president or similar administrator, whose decision shall be final.

The effect of the policy is to create confusion, leaving it then in the hands of the technology transfer officer–someone who has nothing whatsoever to do with the supervision of faculty or student employees out in the university–to decide what the University has provided that is “in excess” of what is “normally” provided, or if that is irksome, what the inventor has “provided” to himself or herself, which the University may then choose to compensate the inventor for.  If this doesn’t work, then another administrator makes a “final” decision.  Again, it’s agreement to agree to an utterly incoherent definition.  May as well say, “you agree to whatever we tell you to agree to.”

Yes, there is also the prospect of “supplemental rules.”  We’ll leave that for now.  There is also a definition of “University research” which has its own neurosis.  (How is “supported” different from “funded”?  What is a research “project”?  What is the difference between “performing” a project and “managing” a project?  What is meant by “course of their University employment” and why is this not “area of expertise”?  Oh well, it is not meant to be competent.  It is meant to look competent to others who also are not competent, or who are but will be beaten back by still others who aren’t competent and don’t care to be.)

Now, to the air space out from the edge of the cliff.  Vertigo warning.

Upon agreeing to be bound by University Policy, and as a condition of the University’s provision of employment, services, facilities, equipment or materials to faculty, non-faculty academic employees, staff and student, (a) each faculty, non-faculty academic employee and staff member (including a student-employee having invented in his or her capacity as an employee) agrees to assign and does assign to the University title to all inventions he or she conceives, develops, reduces to practice or creates (1) that are within his or her area of expertise (as defined below), (2) in the course of University research, or (3) with non-incidental use of University resources, and (b) each student agrees to assign and does assign to the University title to all inventions he or she conceives, develops, reduces to practice or creates (1) in the course of University research or (2) with non-incidental use of University resources. Each faculty member, non-faculty academic employee, staff member, student-employee and student may be asked to execute an assignment of such inventions, to the University to confirm the University’s rights and shall do so on request.

Note the elements here:

(1) An action to “agree to be bound” to policy generally, even though it is an agree to agree policy with incoherent definitions.  So what action is it?  Accepting an appointment?  Signing a patent agreement?  The policy doesn’t say.  If something is to be contractual, then there has to be a meeting of the minds, and an indication that everything material to the arrangement is part of that agreement.  Here, buried in a big policy is a pipsqueak policy that says, when you agree to abide by University Policy generally, then you accept all the nasty bits of this bit of policy, however we choose later to interpret it.  That is about as far as one can get from a good policy statement.  It is something no one should agree to be bound to.

“Agreeing to be bound” makes it appear there’s a contract.  If there’s a contract within the policy, then the Shaw court analysis would appear to apply.  That is, the University may have the right to change the policy when it wants, but it does not have the right to change the contract it has with each faculty member that is based on a past statement of policy.  The faculty member has as much right to that contract, if it is binding, as the University does, no matter how it goes about changing the policy.  If the policy is not a contract, then, geez, how again is it binding on anyone?

The answer to this question may be in this statement from the explanatory letter:

Second, it was clear that the University was not in line with its peers with respect to the share of commercialization revenues that it was providing to inventors. As a result, the committee has proposed an increase to the inventors’ share.  The inventors’ portion of net commercialization revenues increases to 40% of the first $100,000; 35% of the next $200,000 and 33% of net income thereafter.  (Section III.G.1)

This change in the royalty policy is put in on the claim it’s “in line” with peer institutions.  But the actual purpose, I suggest, is to try to create something that would induce faculty to accept the entire policy in the hopes that the minor changes here, which may affect maybe 5% of the inventors at Utah in the next two decades, will be attractive.  Call this the “worm” provision.  However, this change in the royalty sharing is not a change in the consideration for the taking of inventions, because the taking is not based in the policy on such a quid pro quo.  The taking comes first and is independent of any sharing of royalties.  This is only a worm to get folks to accept the policy change, but it is not consideration for the change.

An assertion that something is a contract does not make it a contract.  An assertion that something is binding does not make it binding.  Labeling something an assignment does not make it an assignment.  This policy is wishful thinking by lazy, sloppy, incompetent, and rather mean-spirited folks.  The motivation appears to be money.  The point of weakness is administrative desire for money.  The mechanism is use of the power of the state and threat to employment to impose a demand.  The backstory is public benefit and compliance with contracts.  The outcome is assured profits for law firms and a change at profits for speculators who at least are willing to share some of their upside with administrators.  In all, a drink mixed in the bar for fools.

(2) A “condition of provision” by the University of a laundry list of possible deliveries–employment, services, facilities, equipment, and materials.  If agreeing to the general University Policy doesn’t work, the policy throws in something more.  Something that’s in policy, but apparently is extra to it, not mentioned elsewhere.  That’s this list of stuff that the University purports to provide, without ever considering whether the scope of employment has anything to do with the invention or with all that bother about “area of expertise.”  Further, the list here of

“services, facilities, equipment, and materials”

is not the list previously that belabored university resources:

“funding, personnel time, property, equipment, facilities, supplies, resources or intellectual property owned by or paid for through the University.”

(3) An assignment provision for inventions (broadly) but now newly restricted to those that one conceives, develops, reduces to practice or creates. And which fall into the ugly definitions that are proxy for whatever the administrators decide.   Now “conceives” and “reduces to practice” are terms of art in patent law.  Not at all clear that is the intent of the policy, however.  What does it mean to “conceive” of an invention outside of how the term is used in patent law, and what does it mean when the definition of invention in the policy expressly states that non-patentable inventions are included.  That means, the effect here is that when one “conceives” a non-invention, it is still within the claim of the University–that could be, essentially, any idea, thought, epiphany, business approach–basically anything.   It’s like trying to create a non-disclosure/non-compete/total control arrangement out of the terms of a patent policy, and then backing off that comprehensive claim, having never outed it, by only enforcing it when it suits.  Sort of clever.  Adverse to open scholarship and innovation.  Nasty with regard to innovation.  Seems rather counter to public policy, unenforceable, and, well, offensive.

(4) The kicker, the thing that sends this all out into space:  a present assignment of all of the above, as if it is bad enough that there are questions about the core definitions that shape the scope of claim:

agrees to assign and does assign to the University

The University general counsel explains the need for the present assignment in a letter to the members of the Academic Senate:

Invention Assignment Language.  The Policy’s invention assignment provision incorporates language required by the U.S. Supreme Court’s recent decision in Stanford v. Roche.  (Section III.B.1)

This is of course utterly false.  The Supreme Court did not require present assignments.  Bayh-Dole does not require present assignments.  Nothing about the fact situation in the Stanford case would have changed with a present assignment in Stanford’s policy statement.  It’s wrong.  At best it is a hysteria.  At worst it is university legal counsel trying to cover for getting Bayh-Dole so very and visibly wrong and that they were working against faculty interests and academic freedom.  Nothing, nothing at all *requires* the introduction of a present assignment here.

But no matter, the present assignment language introduced in the policy is not real.  “Does” is merely an auxiliary verb.  “Does” does nothing.  It does not make the assignment.  The University does not have power of attorney to make the assignment on the inventor’s (and, uh, non-inventor’s) behalf.  The expected wording would be “does hereby assign” where the “hereby” references the instrument that is signed by the inventor-or-uh-non-inventor-to-be.   The “does assign” is nothing.  It doesn’t operate, other than to reinforce how badly the University wants to own whatever the heck it is that the University’s policy attempts to claim–or at least reserve for certain privileged administrators to claim, as they want, when they want.

The “confirm rights” gesture at the end–as if this is a matter of bothersome technicality–is actually the only valid basis for the University obtaining title to inventions.  But here, it’s put deceptively as if the University already owns, through the operation of a magical policy that asserts that it owns, and asserts that faculty have already assigned for now and the future, once they agree to “be bound” by University Policy, in proper capitals.  Think I’m overstating it?  Consider the next section:

The signing of an invention assignment is an administrative convenience for confirming technology ownership rights, but the terms of this Policy are controlling and as with other University policies, constitute conditions of employment and participation in research.

This statement is simply false.  On its face, it states that it is the policy of the policy to be able to take ownership of what faculty invent, and that actual assignment documents are unnecessary, are merely an administrative convenience and that ownership has already passed to the University by operation of the policy.  The conditions of employment are not the same as a patent agreement.  Mere employment is not sufficient to transfer ownership, and thus, a mere policy statement stating that mere employment *is* sufficient to transfer ownership is just plain bullshit.  I use the word in its technical sense–as a statement having no regard for the truth.

In university policy after policy we find this bullshit.  We find administrators drafting, perhaps with the help of mercenary legal counsel, bombast.  It’s clear that patenting folks want all the faculty work they can get, and want to decide later what work they will own and what they will release.  It’s also clear that they have no direct way to get to that outcome, so they have bastardized the patent policies with falsehoods, stupidities, and pomposities.  It is also clear they are so unsure of the quality of their services that they have to demand ownership rather than offer support.  It’s clear what they want.  It is not at all clear that they should get it, or have words on paper that do the job for them.

An agreement is a meeting of the minds.  To be enforceable as a contract, it must be in writing(if longer than a year), it must express the intent of the parties to be bound, it must have offer, acceptance, and consideration.  It cannot be against public policy, it cannot be fraudulent, it cannot be made under duress, it cannot pose as consideration what has already been obligated, it cannot be an agreement to agree.  It cannot be so defective that the actual obligations of the parties cannot be reasonably ascertained.

The Utah policy is no contract.  The Utah policy is not enforeceable as a contract.  That’s my take.  Utah counsel of course will see you in court if you take this line of reasoning. The Utah policy is a travesty of policy drafting.  It mistakes an administrative procedure for a claim.  It aims to change the conditions of employment by assertion.  Worse still it has to function as a patent agreement, not merely an employment agreement, so it is off on the wrong tack anyway.  It is ambiguous at critical points, and apparently by intention, so it can offload the whole burden of policy onto administrators who then may merely assert what they want with impunity.  That’s no contract.  That’s a shakedown.  The enforcement is not contractual, but by threat–of reputation, of employment, of academic freedom, of financial loss.

Bottom line:  a dysfunctional policy statement drafted cleverly but incompetently to set up the ability of administrators to threaten, bluster, and bully their way to ownership of rights to faculty work that they should not have any right to by compulsion.

The thing about shakedowns, though, is that if the cost to resist is greater than the likelihood of a good outcome, the shakedown continues.  It costs somewhere north of $100K to take out one of these defective policies through litigation.  Individual faculty members are not going to take that on personally unless they are driven to desperation.  And they should not have to.  Faculty governing bodies should be able to get the job done, and look out for the faculty, without resorting to litigation.  But it takes a working knowledge of how intellectual property is managed, a regard for academic freedom, respect for innovation, and a willingness to reject the bullshit that quack patent licensing speculators have fed to university administrators about instant wealth if only one adopts compulsory policies regarding ownership. That, more than anything, is the legacy of the Bayh-Dole Act–it gave voice to patent quackery, and university administrators have bought the line, and turned on their own faculty as a result. Not only has doing so been an assault on academic freedom, it has also harmed innovation and economic development, and undermined the public goodwill toward universities.  A handful of lucrative deals and ten thousand inventions held back in bureaucratic chains.

Have the Utah faculty chosen chains?  Is the hope for lucre from monopoly positions in their work taken by administrators really so much better than their own freedom and choices?  Is innovation really served by the creeping hand of bureaucracy early and often touching all creative work that can be monetized?  The only thing holding the Utah policy together, short of acclamation by Utah faculty that they welcome the holistic state to control their work in this manner, for this purpose, is the similarity the policy has with all the other similarly incompetent and nasty university patent policies being revised around the country, as if in zombie lockstep, to finish off faculty freedom, subordinate innovation from research to rainbow-chasing speculation, and undermine the public rationale to support faculty at research–because they are independent, not slaves to institutional or monopoly interests.

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