Cornell’s incompetent "procedural revision" of its patent policy

In 2013, Robert A. Burhman, Vice President for Technology Transfer at Cornell University, sent a letter out to faculty making a claim about Stanford v. Roche:

As you may also know, and as discussed in more detail at the end of this memo, a June 2011 Supreme Court decision (Stanford v. Roche), provided a ruling whereby university inventors could inadvertently and/or incorrectly assign rights to future inventions to a third party, that by policy, belong to the institution. To minimize the possibility of a similar situation occurring with a Cornell invention and to a Cornell inventor, President Skorton has recommended, and the Cornell Board of Trustees has adopted, a procedural amendment to Policy 1.5 whereby all new and all current academic and graduate student appointees are now required to complete a new Inventions and Related Property Rights Assignment form.

This account is goofy. The ruling in the case at the appeals court level was that the inventor in question had properly assigned his invention to the company that agreed to host him for a year to learn how to use their proprietary technology. Stanford knew of the situation. Stanford approved of the situation. The invention was clearly–so said the court–within the scope of the company’s patent agreement with the inventor. Stanford’s policy made clear that the situation was entirely proper–the post doc was working off-campus, at the company, and agreed that anything invented as a result of that work was owned by the company. The company would never have allowed the extended “visit” had the postdoc and Stanford been unwilling to agree to this condition.

The postdoc comes back to Stanford, joins a federally funded research project and immediately co-invents just what he had been working on at the company. The assignment document operates–as it was designed to do–and the company has rights in the invention. So rules the court. Stanford appeals that this cannot be so, that Bayh-Dole somehow vests ownership in federally funded inventions directly in Stanford, regardless of any contracts and assignments that provide otherwise. According to Stanford, all they had to do to break the assignment deal they approved for the postdoc with the company was to touch further research with the magic wand of federal funding. Then all prior deals are void, too bad boo-hoo for the company.

A bunch of other universities jumped in with amicus briefs offering alternative explanations for how Bayh-Dole operates. It vests title. Or, it gives a first right of refusal. Or, it prevents the inventor from assigning to anyone other than the host university. Or, it’s just magical. Or, the world will fall apart if title doesn’t vest. The US Supreme Court looked at this drivel and tossed it. There wasn’t a shred of text in the law to support Stanford and its university friends. Not even the one instance of “elect to retain title” being shortened to “elect title”–the effect of the wording was still clearly to manage the relationship between a federal agency funding research and an assignee of a subject invention. The wording had nothing to do with how the title to a subject invention was conveyed in the first place.

The Supreme Court ruling had nothing to do with inadvertent assignment. It had to do with whether Bayh-Dole vested title to a subject invention in the institution that hosted the research. Answer: no. The problem for Stanford was not how the invention was assigned, but the scope of claim made by Stanford’s IP policy. That scope was narrow–Stanford claimed only those inventions that Stanford was required to claim. Since Bayh-Dole and its standard patent rights clause do not require Stanford to claim ownership of inventions made with federal support, Stanford’s policy at the time did not have any claim to ownership of the invention made by the postdoc, and which was properly assigned to the company that permitted him access to its technology. Adding federal funding to the inventive work changes nothing with regard to ownership. The invention was outside the scope of Stanford’s policy claims. The only deep sadness is that Stanford, with one of the most innovation-favorable policies in the country, used this occasion to adopt a regressive, grasping policy.

Now Cornell, from which Stanford got its colors and much of its model for early academics, implements a similar policy move, using the same defective reasoning. Or, put another way–Cornell isn’t reasoning at all–it’s just taking the opportunity to claim more than it otherwise could.

Now back to the letter at Cornell. Following the letter proper is an equally garbled account of Stanford v. Roche and the reasoning, er, the rhetoric on why Cornell has to become more grasping. I guess the idea is that if one gets enough facts wrong in just the right ways, almost anything can sound reasonable. There’s not a good way to annotate this account to show how screwed up it is, so I’ll do it sentence by sentence. If you want to see the policy just before Cornell made its “procedural revision,” here’s an archived version.

A series of court decisions regarding the Stanford University v. Roche Molecular Systems case, culminating in a June 2011 United States Supreme Court decision, has prompted the review of the invention assignment language currently used by Cornell and the subsequent action by the Cornell Board of Trustees to alter that language.

The Supreme Court ruled Bayh-Dole does not vest title in a subject invention in the institution that hosts the research. The problem for Stanford was *scope* not *means*. The inventive work was obligated based on an agreement Stanford knew of and according to the court concurred with. Stanford’s policy did not claim a broad scope–something Stanford apparently has come to regret, but shouldn’t. So the problem for the Trustees is not the language in their policy, but rather how the university should manage how people join a Cornell-hosted research project with obligations to assign to anyone other than Cornell. This happens all the time when new faculty or visiting scholars or graduate students working for companies come to Cornell to engage in research.

But the Trustees take a unilateral action to alter the language of the assignment document. The Trustees might have done well to read the decision in Shaw v. The Regents of the University of California: if the policy is a contract, then the university cannot impose changes unilaterally on employees who have accepted a previous version of the policy. If the policy is not a contract, of course, then it is just a wish list that constrains administrators but not employee-inventors. Even if the Trustees want to impose the new policy on all employees, they still have the problem of consideration. If the new policy claims more rights than before, then there needs to be consideration for the new claims. Of course, if the new policy does not claim any more rights, then why the need for the change? Clearly, the Trustees are not offering faculty broader rights in their inventions!

Taken this far, the policy is challengeable on two counts–1) The premise for the change misrepresents the Supreme Court ruling; 2) The change is unilateral without added consideration. But there’s more.

Specifically, Cornell’s most recent practice required academic appointees to acknowledge that Cornell owns all rights and title of their inventions and related property rights that result from activity conducted in the course of an appointment with the university and/or using university resources, including but not limited to those resources provided through an externally funded grant, contract, or other type of award or gift to the university.

One has to read big, long hairy sentences like this one for all the restrictive clauses that come into play. The issue is not whether employees acknowledge Cornell’s rights–the issue is what rights Cornell has. Let’s set aside the apparent nonsense of “all rights and title” being distinct from “related property rights” (there are plenty of definitions in the actual policy–that way leads to yet other mindlessness–enough).  The logic of the sentence is

a) inventions that
b) result from activity
c) in the course of an appointment
d) or using university resources such as
e) extramural awards or gifts.

“in the course of” is language derived from liability law. An employer may be liable for the acts of an employee if the employee is engaged in activity within the “course of employment.” “Course” of employment is not “scope” of employment. An employee may drive a car for a work-related purpose (“course”) and be involved in an accident for which her employer is liable, even if the employee has never been assigned the task of driving a car (“scope”). Note that in copyright law, work made for hire is defined as work prepared within the “scope” of employment. Not “course” of employment.

But here, Cornell goes one step further–the issue is not employment but appointment. The “scope of employment” for a faculty member includes those work activities that the university has a right to control–for instance, teaching assignments or attendance at graduation ceremonies. Typically, a university asserts no control over a faculty member’s scholarship. While that scholarship may be reviewed as part of rank and tenure decisions, the scholarship itself is not controlled by the university. The university does not assign that work, does not review that work for acceptability, does not decide when the work will be published, does not decide who will collaborate, does not decide where the work will be done.

University employment, for faculty at least, is not the only basis upon which faculty members receive a salary from a university. The salary is part stipend and part pay. The salary is a form of support for scholarship as well as payment for “official” or assigned duties. If a patent policy claims university ownership of faculty work within scope of employment, there’s typically very little to claim unless the faculty member has agreed to accept, for a given project and for additional compensation (such as, say, figuring out how to make the air conditioning work properly in a nanofabrication area) university control over the work.

A faculty “appointment” is broader than “employment” just as “course” can be broader than “scope.” If one is appointed as a professor of engineering, one has a given status within the university. But what is the “scope” of that appointment? There is none, typically, given. Appointment letters typically specify rank and salary and a date on which the appointment becomes effectively, along with congratulatory language.

For “course,” there’s more, for anything that a professor of engineering might do as a professor might be considered within the “course” of the appointment. But even here, there’s ambiguity. Is the operative term “professor” or “engineering”? If “engineering,” then anything the faculty member does in the area of engineering is also (arguably) within the “course” of the appointment. Combining the two, one arrives at the possibility that “course of appointment” could include a claim on anything a faculty member does regardless of the subject matter involved (that is, for our engineering professor, anything she does as a professor, including stuff that has to do with chemistry or art) as well as anything that has to do with subject area stated in the appointment (for engineering, then, any form of engineering, whether for teaching, research at the institution, consulting for others, or just for personal fun).

But Cornell has done more than that–they claim any invention that “results” from “activity conducted in the course of an appointment.” It’s one thing for an invention to be made in an activity (such as a defined project or an assigned task). It’s another thing for an invention to “result” from that activity. One could figure out how to make the air conditioning work in the nano lab, and later invent a gizmo that links multiple air conditioners so that each one knows what the other one is doing rather than waiting for a local thermostat to trigger. Is this later gizmo a “result” of the activity? It’s hard to say–or, rather, it would appear to be entirely a matter of interpretation.

If Cornell interprets its policy language to mean that its officials get to decide, then the policy in essence is an assertion of power. Whatever gets invented, Cornell will decide what it wants. When the scope of the claim is so broad that no one can know in advance, one doesn’t have a delightfully comprehensive policy, one has a fatally defective, ambiguous policy. In adhesion contracts, in which one party has no right to negotiate the language of the deal, a usual rule of interpretation is that the party without rights has the benefit of the interpretation. That is, the meaning of “results from” or “course of appointment” is up to each faculty member, not to Cornell officials. Not that Cornell officials want to see it this way.

A policy intended to be a contract that reserves to the university the right to interpret the policy later is merely an agreement to agree. That is, whatever the university later decides, the faculty member must accept. Such contracts are not enforceable as a matter of public policy. They are not contracts; they are power plays. University lawyers and administrators seem to think that drafting broadly, to cover all cases, is a great way to stifle dissent and defeat cleverness, all in the name of being clear. But this version of breadth and clarity comes at the expense actual contract requirements and public policy. “I want everything I decide I want and you have to agree to this” may sound great, but it’s not the basis for a contract, especially not one rooted in an employment agreement, and especially not when the employment agreement runs parallel to an academic appointment.

The upshot is that “course of appointment” has no definition. It’s not “course of employment” from liability law, where there is case law to go on, at least. There’s no clear limit to the extent of Cornell’s claim. It could be most anything. Claiming anything resulting from activity within a “course of appointment” amounts to a restrictive covenant on what a faculty member can do: everything you do, regardless of any stated scope of employment, will be owned by Cornell. In any for-profit workplace, that claim would be over-reaching. Some states have made express laws to limit employers from doing what Cornell has done. New York is not one of those states, but it would be interesting to see what a court in New York would have to say about Cornell’s ambiguous claims.

I wish we were done, but there’s yet more. Cornell adds another prong to the mess. Even if Cornell somehow fails to claim all of someone’s work by means of “course of appointment,” there is still the matter of using Cornell’s “resources.” At one time, university patent policies made a distinction between ordinary use of resources and “significant” resources. Typically significant resources were allocated expressly by the administration to assist a faculty member in an inquiry, in exchange for some sort of “equity” in whatever gets made, provided the faculty inventor decides to pursue commercial deals. But here, Cornell merely claims ownership if the invention “results” from an activity that uses Cornell’s resources. For material objects, it’s usually clear when an activity produces something. If one uses a Cornell laboratory to make a  air conditioning gizmo, then Cornell would have a claim on that gizmo.

But inventions are different. I can invent without being in a lab. I can invent while thinking about another project. I can invent without using any money whatsoever. When I use resources, it is not to conceive of an invention, but to actually reduce the invention to practice–to build it, test it, refine it. To reduce an invention to practice is to make it potentially patentable–that is, to make exclusive rights to the invention ownable under patent law. I can make an invention patentable as well by constructive reduction to practice. Rather than building a prototype, I can describe my invention in a patent application, and that’s good enough, so long as I have clearly taught others how to practice my invention. In the case of conception plus constructive reduction to practice, I use no resources of the university.

However, Cornell appears to want “results from” to mean “if you ever used the resources of the university, and that use helped you in some way to define a problem or see a way of solving such problems or taught you to use some instrument or device or compound or cell, then anything you later do to invent necessarily ‘results from’ the use of those resources.” This version of things is about as mealy-mouthed as one can get. It’s not clear that Cornell officials have asserted this claim, but certainly they have not shown any inclination to draft to clearly rule out such stuff. Cornell consistently makes the broadest claim it can, regardless of public policy, contract law, the particulars of faculty appointments, or the narrow element of actual faculty scope of employment.

Typically, to construct a decent claim on a future invention through employment, one needs to specify the scope of work and require the work to be done in the employer’s facilities. Companies do this all the time. The scope is what the company does and foreseeably may do. The company can treat as trade secrets the information that it acquires in its operations. The company can require all work to be done in company facilities and all information to remain at the company. A university does not have these methods. A university does not require work to be done at the university. A university does not treat faculty work as trade secrets of the university–faculty can disclose and publish as they please. A university does not even have a clear thing that it does, other than teaching students and providing an infrastructure to support research (and maybe running a hospital or hotel). The research that faculty do is *not* the business of the university, nor its foreseeable business directions. Rather than construct a decent claim, university administrators resort to indecent claims.

Cornell wants faculty to understand that the university intends to own everything that it determines to be within the broad claims it has drafted. That part is easy. What is not so easy is understanding how such a broad claim put out unilaterally in a policy document could become an enforceable contract under which Cornell takes way more from faculty than any company could take from its employees. If Cornell’s approach actually operates–that is, if there’s no justice in the state of New York–then New York companies should add an “appointment” to their employment agreements and then claim anything in the course of appointment as well as scope of employment. That would be broader, that would be grand. I sure hope courts would toss it, as they should even more readily Cornell’s language.

The acknowledgment form that has been employed in recent years does not, however, require actual assignment of rights to prospective inventions to Cornell at the time of appointment, therefore allowing for the possibility that an inventor could, perhaps inadvertently, prospectively assign these rights to another entity before assignment to Cornell at the time of invention disclosure as required by Cornell Policy 1.5: Inventions and Related Property Rights.

Back in the old days, in the good days, when university inventing was cool, before Bayh-Dole made it bureaucratic, a university used an acknowledgement form to confirm with faculty that they understood the policy. The promise to assign was predicated on a disclosure of the circumstances of an invention, a review by a committee that included faculty members to determine the university’s equity in the invention, and a decision by the university president based on the recommendation of the committee. The acknowledgement directed the faculty member to the process: “if a committee that includes your faculty colleagues determines that the university has an equitable interest in your invention, and that interest rises to a claim of ownership, then you promise to assign your invention to the university.” The promise to assign is necessary because before an invention is made, the circumstances are unknown.

This approach worked great. Faculty could readily agree to a process that gave them an opportunity to state the circumstances and expect a reasoned review by other faculty as well as administrators. This process had other advantages for everyone involved, too. Only inventions for which patents were sought were considered. The university did not have to take an ownership interest in every invention–it could assert a financial interest (reimbursement, a share of royalties), or waive any interest at all. A university could focus on those inventions that mattered, relying on faculty to present them for review, and make a claim as circumstances required or allowed. But this approach is long gone.

Even in 1996, Cornell’s patent policy was much less grasping. Here’s the core claim on ownership (my emphasis):

  1. All patentable inventions conceived or first reduced to practice by faculty and staff [2] of Cornell University in the conduct of University Research shall belong to the University. The inventor shall cooperate and assist the University in all phases of the patent application process and shall assign such applications or any patents resulting therefrom to Cornell Research Foundation, Inc.

  2. Patentable inventions made by individuals on their own time and without the use of University resources shall belong to the individual inventor.

  3. In cases in which the University has an ownership interest in an invention pursuant to paragraph D(1) and either does not file a patent application within one year, or fails to make a positive determination regarding pursuit of a patent within a period of six months from the date of disclosure, all of the University’s rights shall be reassigned to the inventor upon request, subject only to such external sponsor restrictions as may apply.

The primary claim is restricted to “the conduct of University Research”–not anything resulting from an appointment, not just any research, not anything that’s not research. Yes, the primary claim suffers from the Bayh-Dole “conceived or first reduced to practice” virus, but I have dealt with that elsewhere. The 1996 policy defines “University Research”:

all research conducted in the course of an inventor’s employment with the University (including but not limited to the performance of a grant contract or award made to the University by an extramural agency) or with the use of University Resources.

The language involves “course of employment” rather than “course of appointment” and expands employment to include extramurally sponsored research (at least with an extramural agency–nothing indicated about, say, foundations or companies). University Resources is not defined, but office space and library space is excluded, according to a footnote. What else is included or excluded remains a mystery.

The 1996 policy does two more things not in the current Cornell policy. First, the policy makes clear that a faculty member does have his or her “own time. ” Further, if Cornell cannot make a timely determination or file timely a patent application, the rights revert but for sponsor compliance. All this is gone twenty years later. Instead, Cornell wants the policy to read: “all your inventions are belong to us.”

The problem isn’t deciding on scope; the problem is trying to get rid of the last vestiges of review. To that end, Cornell, like other universities engaged in this same destructive effort, cites Stanford v Roche to justify implementing a present assignment–an assignment of equitable interest in future inventions within the scope of the claims of policy. Where a policy has clear boundaries, such an assignment does the job. For instance, a publisher may use a present assignment of copyright with an author, once they both have reached agreement on the nature of the manuscript to be prepared. A company may use a present assignment of inventions where the nature of the company’s business and the scope of the employee’s (or consultant’s, or visitor’s) work has been defined. However, if there’s no definition for what’s to be assigned upon creation, how can anyone know what the assignment pertains to? Without a clear objective scope for the assignment, the assignment can’t possibly operate. It’s another agreement to agree. It’s not an assignment. It’s a document labeled “assignment” but it operates as an agreement to agree.

The Bayh-Dole Act allows universities to “elect to retain title” to inventions from research funded by the US Federal Government.

But only if the universities first obtain title from inventors. Nothing in Bayh-Dole requires universities to obtain title. Nothing in the standard patent rights clause. Whatever triggers there are to a university claim on inventions made with federal support, they have nothing at all to do with the federal money. For all the feds care, the federal money is a grant–a gift with conditions that come into effect only if the university makes a move to own inventions made with the grant funds.

The June 2011 Stanford v. Roche Supreme Court decision determined that, contrary to Stanford’s assertion, Bayh-Dole does not automatically vest title to such inventions in the university nor does it allow universities to unilaterally take title. It further determined that an employee’s agreement to assign invention rights does not constitute actual assignment of those rights. Therefore, an employee must expressly assign his/her invention rights to the university in order for the university to own and subsequently elect to retain title to an invention.

This part of the explanation is decent. What’s amazing is that it states the well-known requirements of US patent law as if these are a revelation only made known in  2011. Of course a promise to assign isn’t the assignment itself. The issue that was raised by the dissenting opinion in Stanford v Roche was whether a present assignment in inventions that have not yet been made should be treated any different from a promise to assign. That is, should there be any difference, with regard to an invention that has not yet been made, between “I promise to assign” and “I hereby assign”? The argument in dissent that there should not be a difference.

In the Stanford v. Roche case, the university’s employment contract obtained an employee’s agreement to assign invention rights to Stanford.

Now we encounter the mealy-mouthed stuff. Stanford had a patent policy that limited Stanford’s interest in anyone’s inventions to those inventions Stanford was required to own. The “assign invention rights to Stanford” leaves out this restriction, making Stanford’s policy at the time appear to be a lot like Cornell’s, when in fact it was not like Cornell’s policy at all.

The employee, however, during a visit to the biotechnology company Cetus, signed an agreement in which he expressly assigned rights to all ideas, inventions, and improvements to Cetus for all subsequent work using Cetus resources including any knowledge gained as the result of that visit.

It was a nine-month full-time “visit.” The above description makes it appear that the post-doc was there only, say, for a day. The Cetus assignment was for ideas, inventions, and improvements that arise as a “consequence of” the work at the company. The difference between Cetus’s scope and Cornell’s is that the work involved in the “visit” is defined, and the activity a faculty member might do at Cornell is not.

The individual subsequently conducted federally funded research at Stanford that resulted in several inventions that were then patented by Stanford. Roche (to which Cetus was sold) used these same inventions in their HIV test kits.

And how does it come about that Cetus/Roche developed the same techniques? Well, the CAFC found that the “individual” came back with those inventive ideas from Cetus. The federal research did not “result” in inventions–the inventions were already there. It’s true that Stanford obtained patents. It’s not true that the federal research produced the inventions. There’s much more that’s murky and will never come to light. Were the Stanford-claimed inventions even subject inventions? Were those who claimed to be the inventors the sole inventors or were Roche employees also inventors? We’ll likely never know.

Stanford argued that Roche was infringing on Stanford patents. The Supreme Court disagreed, finding that the prospective patent assignment obtained by Cetus took precedence over the earlier agreement to assign obtained by Stanford.

This is just made up goofiness. The CAFC–not the Supreme Court–found that the patent assignment made to Cetus meant that Stanford’s later attempts to obtain assignment from the post-doc failed since the post-doc had no rights left to assign. The question before the Supreme Court was not infringement. It was whether the Bayh-Dole Act vested ownership with Stanford and therefore voided the valid assignment made by the post-doc to Cetus. The earlier agreement to assign was out of scope of Stanford’s patent policy. Even with federal funding, there was no obligation under Stanford’s policy to assign inventions to Stanford. Only if somehow Bayh-Dole required Stanford to own could Stanford have any chance of claiming that its policy obligation took precedence over the post-doc’s assignment to Cetus. Of course, if Bayh-Dole did do this, then all sorts of bad faith shows up in Stanford’s dealing–first approving of the post-doc’s months at Cetus, and accepting the conditions that Cetus required, and then trying to void that agreement by allowing the postdoc to work on a project supported with federal funds. Nasty if true.

To prevent a repeat of this outcome and to secure the ownership interest needed to comply with Bayh-Dole, universities must obtain express assignment of inventions before any inadvertent, or deliberate, assignment to any other entity occurs.

And now we are  in fantasy land. There is absolutely no obligation in Bayh-Dole or the standard patent rights clause authorized by Bayh-Dole that requires Cornell to take ownership of inventions. Cornell does not have to “secure” any “ownership interest” to comply with Bayh-Dole. This is beyond a technical detail. It is incompetence and malpractice. And as a representation by the employer with regard to the law, it’s at best an intelligent fraud. The Supreme Court in Stanford v Roche found no breach of Bayh-Dole in the events involved in the case. There is simply nothing in Bayh-Dole that requires university ownership of inventions made with federal support. There is no compliance issue.

In fact, Cornell here gets things totally ass-backwards. Cornell is obligated under the standard patent rights clause to require potential inventor-employees to make the (f)(2) agreement to protect the *government’s rights*. By requiring that agreement, Cornell delegates to its employees certain duties under the standard patent rights clause, and in doing so, Cornell makes its potentially employee-inventors parties to the funding agreement, and thus what they invent becomes a subject invention. But Cornell, like most other universities, refuses to implement the (f)(2) agreement.

Either way, an inventor of a subject invention has under Bayh-Dole absolutely no obligation to assign the invention to the organization that hosted the research. She can assign to anyone she wants, as far as the law is concerned. What happens if she assigns to some company instead of Cornell? If it’s the entire right, title, and interest, and it’s a subject invention, then the company also obtains the obligations under the standard patent rights clause. Simple. Not that most folks working in research administration or university legal offices have the ability to comprehend this–or want to. Some do, but there’s no way the lawyers at the universities are going to allow it.

The procedural revision of Cornell’s patent policy that has been implemented in response to the Stanford v. Roche decision is very similar to steps that have been, or are being, implemented at Cornell’s peer academic institutions.

The move to a present assignment from a promise to assign is not a procedural revision. It is a substantive change to the policy and to the contract that the policy seeks to form with the Cornell faculty. It is mealy mouthed to call it a “procedural revision.” If it were a procedural revision, there would be no need for anyone to agree to it, or have it imposed on them as something they must sign. It is of course true that other universities have done much the same thing. The University of California, for instance, has gone stupid with its demand that faculty agree to a similarly incompetently drafted and implemented change to the patent policy. But just because a bozonet of incompetent administrators and black knight attorneys who can’t accept their opinions were just plain wrong are all doing it doesn’t make it right, or legal, or good public policy, or a good innovation strategy.

[added a few clarifications, May 2017]

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