The Oh, Ass Moment
In The First Men in the Moon by H.G. Wells, the narrator, Bedford, a would-be businessman partnered with Cavor, an inventive genius with no social aspirations, finds himself in a bit of a pickle on the moon, having lost the direction back to the spaceship, and worse, which I won’t go into. In a moment of despair, Bedford regrets the vision of wealth that led him to assist Cavor to find a material “opaque” to all forms of radiation, including gravity:
“Ass! I said; “oh, ass, unutterable ass…. I seem to exist only to go about doing preposterous things. Why did we ever leave the thing? … Hopping about looking for patents and concessions in the craters of the moon!…
The “thing” is the spaceship, a sphere with shutters that when closed block out gravity “radiation” coming in the direction of the closed shutters, thus causing the sphere to be attracted by gravity from objects (such as the moon) in other directions. (The sphere figures, as well, in Contact, a sci-fi movie that draws on material from many other we-meet-aliens movies.)
Bedford’s observation on being an “ass” is directed at his own selfish motives. Once on the moon, he and Cavor start “hopping about,” looking for things that might reward them for their trip to the moon. That does not work out so well, and thus this lamentation with regard to the hope for patents and companies–and the wealth that might come from these.
There is a Line of Reasoning
American universities face much the same problem as Bedford has. No, they are not held captive by the denizens of the moon, but rather they are filled with an impulsive desire to use science to chase wealth, and for that seek patents and startups for the money that can be had from them.
There is a line of reasoning that makes this all seem perfectly rational, the thing to do, and why not? The reasoning goes: some universities have received millions from patents issued to faculty inventors; therefore, if we seek yet more patents, and do so systematically and comprehensively, then we will have a greater chance of making millions from patents, too.
The reasoning continues: it is important that we do this (seeking money from patents, implementing a systematic and comprehensive program as the way to get this money), for in our efforts we stimulate the economy, attract investment to research results, and produce products and companies that benefit people, and all of these things are fruits of doing research.
Indeed, the reasoning caps off, we university administrators have a duty to implement such a program, because faculty are inherently inattentive to money and business, poorly equipped for making decisions about inventions, investment, products, and the wily ways of business, and opportunities are missed, and research investment squandered, if faculty are allowed to fuss about or, more likely, ignore the financial implications of their work.
University-owned, university-licensed inventions, therefore, are not so much a matter of institutional self-interest as they are a public mandate to develop research results. The money is just a righteous by-product of conscientiously pursuing one’s duty.
All this reasoning sounds wonderful if one does not examine it carefully. Why should administrators have any better insight than faculty into what inventions might become valuable? Why not give faculty that training and let them be their own licensing officers, or let them contract with licensing officers matched to their areas of research or directions for product or company development? Why should an institution claim all inventions made by faculty? If its administrators are adept at picking the “winners,” then all other inventions should be turned away. But no, institutions claim everything, “just in case.” In that “just in case” is a world of logical hurt–“just in case” means “we haven’t really got a clue any more than anyone else, so we have to hold everything, you know, just in case.”
A Cognitive Anchor That We Won’t Let Go
The university administrative position functions as a cognitive “anchor.” While it makes no sense on examination, the position has “squatters’ rights.” Something must displace it, even if the squatting position has no legitimacy on its own merits. Having been baked into formal university policy, the idea that universities must own and seek to profit from research as a holy rite is not displaced simply by being informed of the silliness of the proposition, unlike the Royal Society for Putting Things on Top of Other Things. No, there has to be a compelling argument, or a wild protest, or a boycott, or a lawsuit, or a bigger financial prize, or a huge ego, or someone with a lot of money hinting at an institutional gift to create a change. Even a US Supreme Court decision bashing the silly arguments of scores of university administrators and a pile of their lobbying front organizations had no effect. This cognitive anchor is deep in the bottom mud!
One of the attractions of the line of reasoning, with its attached anchor, is that it starts from a single “big hit” and seeks ways of having a few more. For a university licensing program to be wildly financially successful, it needs only one “big hit” every decade or so. That is, one deal a decade accounts for 90% of total revenues. The rest is noise, so far as the money is concerned, or if the rest is expensive, actually diminishes the impact of the “big hit” deal. Since big hit deals may run for the life of a patent, or about 20 years, once one has a big hit, one has a couple of decades to get the next one in place. What sort of environment will provide a university with the best chance, over two decades, to replace one big hit deal with another one? Is it an environment in which every invention is turned over at birth to the university government, to be brought up as a potential millionaire? Is it an environment in which no deal can happen without an administrator’s thumb in the pie, to ensure that it has been properly baked and that most of it will be served to the administration first?
This is the policy most American universities have implemented. On reflection, it does not appear to produce an environment consistent with either a program that produces more money for the institution or stimulates the economy or boosts innovation. Nor do the “metrics” support its claims. Despite an all-out effort to control all faculty inventions, university rates of “big hit” deals do not appear to have increased. The University of California has calculated that its rate for licensed inventions to be developed into commercial products is on the order of half of one percent. When Bayh-Dole was being debated, the universities claimed more like 30% of what they touched resulted in commercial products. Those federal agencies that demanded federal ownership of inventions were the ones that were criticized as backward and anti-innovation. Now the tables have turned, and the universities are under fire from the same guns.
The point is: it is not the venue, but the program. The federal government has shown itself to be a valuable source of technology innovation, and so have universities–or, more precisely, creative people supported by the federal government have been innovators, as have creative people hosted by universities–as well as have creative people doing all sorts of other things as well.
The Problem is the Program
The problem is the program. When Bayh-Dole was passed, the program migrated, with all its slippery goo, from federal agencies to the universities, transmogrifying Bayh-Dole from a law that gave a robust, open, multi-agent program of selective patenting consistent access to federally supported inventions into a claim that the law forced ownership of faculty inventions onto universities, to be fingered by administrators–just as some federal administrators had argued prior to Bayh-Dole. Mindsets–cognitive anchors–do not simply vanish in a puff of smoke when a law is passed. They seek survival any way they can, turning their human hosts into policy zombies looking for ways to eat away at the insights that led to the new legislation.
Now look at the consequences of the program. It does not scale. In fact, it quickly destroys its own rationale for existence. When only a few university faculty are involved, and patenting is a highly selective activity, then there is a prospect for each patent to play a role in commercial development of new products. Other research wraps around each patent and creates a commons on which it may operate, quickly taking up the additional resources it needs to establish an investment-worthy commercial position. One might say, various inventors and technicians cooperate to create the conditions under which a few patents might play a pivotal role in focusing attention on commercial development. Even then, it is not at all clear that the role of these patents is to exclude all others–in a number of cases, it appear that the value of patents was to ensure that no company as minor patent holder could block all other companies working in the same area. That is, the patents established common tools, standards, and technology platforms, much as industry does with cross-licensing and standards formation now.
In situations such as the digital computer and the internet, the first move was to create a working platform free of ownership claims. That platform allowed private companies to develop hardware with patent claims that implemented the platform in various ways, but allowed others to implement in their own competitive ways. The patents that matter, that defined competition, came after there was an open platform, not before it. Thus, the companies involved understood that the platform defined the market, and the future value, not any one patent. Patents competed on ways of managing parts of the platform, not on trying to control the platform entirely.
When companies have tried to own an entire platform–Cre-lox, say, or BRCA diagnositcs–the research and commercial communities have rebelled. The patent work has brought income to its holders, of course, but the technology platform itself has been stunted by the effort. Similar stories can be told about xerography, operating systems, and 3d printing, among others.
When many inventors are involved and patenting is non-selective, so that many patents issue on minor parts of an overall area of research, then each patent works to block the opportunity for other patents, platforms do not form, markets do not form, and one is left seeking speculative “investors” hoping that when a market does form, if ever, they can troll it for royalty payments. Since there are various tiers of such speculation, the first-in speculators aim to sell to the bigger or more cautious speculators, timing their sales pitches with apparent research progress or shifts in the marketplace. The overall effect, however, is a stalemate created by claiming ownership positions prior to the formation of a platform of sufficient scope to support a marketplace.
University patenting, when comprehensive and unselective, blocks platform development. Platforms, not patents, are the early hallmark of innovation with commercial potential. A platform does not have to be without rights, nor even “open” in the sense of open source software–but it must be a platform that any player can gain access to without significant expense or delay. In this context, university administrators seeking to create “express” licensing programs for exclusive licenses miss the point. What does it matter if a fragment of a fragment of a platform that has failed to come together is shifted from one owner to another? Yes, there is money in the shift for the university–taking some piece of a speculator’s funds for the transfer. But the fragment is still a fragment unless one is selling to an aggregator who is buying up fragments, trying to put the egg together again, but now with an agenda to make everyone pay for access.
In nanotechnology, where there are hundreds to thousands of patents on every bit of new territory–7300 for graphene alone–the fragmentation amounts to at least a 20-year wait for a platform to begin to appear. Universities are not alone in creating this problem; industry does the same thing, and contributes to the fragmentation. No one can afford not to have a pantry of weapons in case anyone starts shooting. The university effort to patent early and often, however, increases the industry need to ensure fragmentation is complete, so no company emerges dominant. It is fascinating that many of the new “gazelle” companies that have developed into major players have done so without a serious patent portfolio. They moved into areas where no one thought to develop defenses to prevent their success.
Licensing a university patent to a university startup that itself lacks financing is an exercise in making the patent even less available for platform development. At least at the university a patent can be licensed non-exclusively on reasonable, non-discriminatory terms (RAND). Most exclusive licenses, however, forbid or place oppressive conditions on any form of cross-licensing, open licensing, or dedication of the licensed technology to a public standard. The university insists on getting money for its deal, not simply public impact. An exclusive license to an unfunded (or even poorly funded, under-funded) startup, when carrying oppressive terms with regard to platform licensing, is an attack on the formation of any such platform.
From a big picture perspective, the situation is clear. The adopted university patenting program has destroyed the prospects for platform formation in most areas that receive substantial federal research support. It is a Sheriff John Brown moment: “kill it before it grows.” The big hit deals came because there was a commons of resources, and platforms–libraries of tools, data sets, unencumbered expertise, willingness to teach and share–could develop, from which, with good timing, a patent might cap a line of development and shift rights to one or more companies. Warfarin, Cohen-Boyer, Axel. It is like a bicycle race, with the peloton reducing the energy cost for the few riders who at the end will sprint to the finish for their teams, one getting the victory.
But universities had something better than a bike race. They had Research Corporation, an experiment in faculty patenting. In this experimental regime, faculty contributed patents, Research Corporation, with industry folks on its board, distributed rights to companies willing to develop product, and Research Corporation allocated any royalty income on a national basis to support more research. An inventor’s success in Berkeley could provide resources for faculty research in Pullman. Everyone had the chance to share in the benefits of the few “winners.”
University administrators, however, did not want that system. WARF and other research foundations with direct ties to a single university sprang up to route all royalties back to the institution that sprang on patenting first. Many institutions might host research in a given area. The aim of the dedicated foundations, however, was to wrest control of the research for the benefit of a single institution. Wisconsin wins, no matter where the research has been developed, so long as WARF can claim patent rights that dominate not only industry but also the rest of the research community. At that point, it does not matter whether other universities do not have to take a license from WARF to continue to do research–the results, unless they find a way to design around WARF patents–cannot be used commercially except with WARF’s permission.
The Program Breaks Platforms
The program breaks the platforms. More so, the program destroys the collective interest in anyone’s success. It’s every institution for itself, against the interests of the broader research community, against the history of platforms preceding patents, against the idea that university administrations have a role to mediate interests rather than to be self-interested seekers of institutional profits.
Many universities, each pursuing their own self-interest, filing many patents on fragments of what otherwise would be potential platforms, have destroyed the opportunity. Yes, patent licensing still happens, and money is made. But folks are working against their collective interest, not for it. Money is fought over, institution by institution. Doing an “inter-institutional” agreement is often an interminable cat fight–months of administrative growling and howling interspersed with brief bouts of claws and teeth. There are technical details. Control of patent prosecution, repayment for patenting costs, inventor shares in the case of multiple inventors, relative value of each invention, royalty stacking, administrative fee for lead management role, agency with regard to possible licensing deals, approval process for licensing deals, confidentiality, agreement not to pursue independent deals, risk management, choice of law, venue for disputes, alternative dispute resolution, decisions to litigate patent infringement, timely notification, right to audit, pass-through clauses…. Oh, it goes on, and on, and on. My tail starts twitching just thinking about it.
In the big picture, American universities have fragmented their collective efforts to host research that might lead to social benefit. Each university claims for itself the financial rewards of being one bit of a yet-to-be-assembled puzzle. Each university aims to patent early and often ahead of its peers, to gain a better share than others, as if this is not only a right of being first but also an obligation imposed by society: that each university, in the interests of society, should shoulder out first the inventors and then all other institutions in an effort to bring the “maximum” money back to the university for its exclusive use. Gone is networked, non-market development. Gone is platform first. Gone is selectivity. Gone is national sharing. Gone is institutional mediation. Gone are the infrastructure and lessons of 75 years of patenting experiment.
The Poetic Justice Beneath
When one neighbor brandishes weapons, everyone gets armed. In this case, the weapons are patents and policies and licensing offices and license agreements. The result has been the destruction, over thirty years, of an infrastructure for innovation that led the world. Folks tried to take their piece at the expense of the whole. A few institutions got big hit deals. The rest built programs to see that such deals did not happen, so that only Wisconsin or MIT or Stanford or Columbia cleaned up while the rest were patsies happily publishing in the public interest, building platforms and commons that made the rich institutions richer.
Once the university-affiliated research foundation displaced Research Corporation, and Research Corporation itself cut deals with institutions to feed back royalties rather than allocate them nationally to all institutions, the conditions for fragmentation were in place. Institutional envy won out over collective benefit. Bayh-Dole was the coup de grâce, laying the pattern for everyone to scale their ownership claims, their patenting work, their institutional self-interest. Everyone staked their claims such that no one could transport any gold without crossing the claims of many others. Rather than negotiating a withdrawal, institutions would rather starve the commons than share. In this, there is something of a poetic justice. Why should faculty and their universities hand over the commercialization deals to the MITs and Wisconsins, when these schools show absolutely no interest in sharing the wealth? In this way, the growth of a fragmented, comprehensive, institutionally self-interested program of patent ownership represents a response of the faculty to the financial aspirations of a few universities aiming to take everything they can without giving back.
At the heart of the ruinous program that has unsettled research-originated innovation is a moral determination to respond to the avarice of a few universities. Once set in motion, there has been no stopping it. Once in place, there is no moral argument that allows faculty to make things open, so that an MIT, say, can file a pile of patents and lock up a financial interest in an area of research for its own benefit, too bad boo hoo to everyone else who might be working in the same area. This is not a commentary on the individuals working in such licensing shops, but it does call into question the innovation justice, as it were, of the overall effort.
What is needed is a bill of rights. A bill of rights functions to restrict power rather than to extend or proceduralize power. The restriction we need in the case of university research is not simply of each research university limiting its claim to own faculty work, but also all universities from using their interest in research results to cut out other institutions. A whole lot of money comes to universities because people decide that doing so is the equitable or socially meaningful thing to do, not because those people are threatened by patent rights, adhesion contracts, and lawsuits, or snookered by concocted claims of economic development. That choice reflects a confidence in society, as Vannevar Bush put it, rather than working on fear. Machiavelli argued that the way to stay in power is to choose fear over friendship, because another can readily withdraw friendship, but once it is in your power to preserve fear in others indefinitely.
We then have a choice regarding research innovation environments–confidence or fear, collective benefit or institutional self-interest. The present program all but ensures that most research work will be delayed by twenty years or more before being developed, especially where platform and broad access must precede any attempts at monopoly.
This is a tough lesson for administrators and faculty alike. Everyone wants their piece of pie, even if it is only a thin slice, without the ice cream. That is understandable. Until a set of institutions and their faculty choose otherwise, however, we have trench warfare on the model of World War I, a stalemate with a no man’s land covering two decades of patenting, over-gassed with threats of litigation, mind-bogglingly complicated negotiations, and utter lack of gestures to support more than one’s own institution.
What might be done?
One, adopt freedom to innovate at the institutional level. Remove the institutional claims to ownership of faculty inventions and other assets. One might not get huge patent royalty revenues, but one should get a great deal more industry engagement, and will have a much stronger entrepreneurial environment. Freedom to innovate is a critical first step to restoring a national infrastructure for research-assisted innovation. It is as easy as snip-snip to adjust an existing patent policy, in consultation with faculty governance, to relax institutional claims to ownership. Replace ownership dynamics with equity dynamics. Costs and bureaucracy go way down. Selectivity goes up. Faculty who want to work with an institution’s tech licensing office will chose to do so, knowing they have alternatives. The working relationships that result are superior to most anything a compulsory system can produce. That alone should be enough for university licensing offices to advocate for freedom to innovate. They will still have plenty of business–and everyone they work with will have chosen them. It just does not get any better than that.
Two, freedom to innovate is not enough. Decades of damage has been done, and proactive action is required to deal with those institutions stuck on the old program, and to rebuild collective interest. We need a bill of rights at the federal level, to pack home the Supreme Court decision in Stanford v Roche. No new legislation is necessary. However, the implementing regulations must be revised to make clear the proper implementation of the law. For that, it must be made clear that no institution receiving federal funds for research has a right to require inventors to assign ownership of inventions to the host university as a condition of participation in the federally supported research. The institutional right to retain title to a federally supported invention comes only after inventors have freely chosen to assign to the institution. No matter if faculty are made to agree to assign inventions as a condition of university employment: federal support is no such thing–it is distinct from university employment, and carries its own conditions, not those of the employer. Make that clear for all institutions. Doing so will create opportunities for platform development ahead of patenting.
Three, create one or more national funds that participating institutions contribute to, that provides support for research, instruction, and entrepreneurship throughout the country, without regard for what institutions happened to host the research that resulted in patenting. Require faculty inventors and their contracted invention management agents (including the universities themselves) to pay into this fund a portion of their upside. Everyone should have an opportunity to benefit, not just the most aggressive and well-funded universities. Restore something of Cottrell’s vision for the original Research Corporation, as a national clearinghouse for the support of cool research, outside the requirements of either industry or the government. To push the matter, faculty at institutions that do not participate in these funds are excluded from access to them. A national fund is as simple as establishing it and inviting other universities to join. The bet is that any one success provides opportunities for everyone. It’s a nice feedback loop, one we have not had for decades. Time to share the wells, and reestablish trade routes, rather than live like war lords, each dangerous tribe to its bit of trail through the desolate hills.
Four, even if federal and national changes are not put into place, institutions can collaborate to create a mutual environment that supports common action. At the state level, public universities can establish funds available to any faculty or entrepreneurs or artists or non-profit organizations supporting community in the state. Not just research. Not just new ventures. But anything that develops community. Make the outcomes of research results a broad public interest, not a self-absorbed way of finding more and more research money. Decide to limit the monopoly on money, and make a portion available to all, for creative work of all kinds. A little help goes a long ways, builds good will, and creates a common interest in the support for research and a delight in successful commercial development. States can do this. Public research universities can do this without state action. It is a choice. The only question is whether the existing cognitive anchor holds too tightly to allow even the discussion to take place.
Research allows us to discover new things. It is not the only way to discover, but it is one way worth supporting. But before we race to claim the patents and concessions that might be possible, we should not lose sight of the social supports that create the conditions for both inquiry and innovation. In particular, we should be mindful of the platforms that often must come before proprietary positions. Create those platforms, and good things will happen–better things than are happening now. At some point, preferably not when held captive by Selenites, we in our administrative consciousness, have to get past the “oh ass” moment of realization, and come to a way of rebuilding a focus on the shared good of research, not merely a financial and property claim on the outcomes of research.
Set faculty free, pool a share of upside for national use, affirm Stanford v Roche in federal regulations, and coordinate regionally to support creative uses and community needs of all forms. This stuff is doable, and was done in the past. Time to abandon cognitive anchors that have sullied us and harmed our innovation capacity. Don’t you feel another renaissance could be just around the corner if we give it freedom to develop?