University patent policies are not what they seem, and are shaped by the exploitation of ideas that have nothing to do with inventiveness, creativity, entrepreneurship, public use, commercial development, investment, economic vitality, public welfare, or even university mission. All these things are nice, feel nice, but are not the motivations for the changes in university patent law that have led to the bureaucratic, managerial, compulsory, expensive, complicated, embittering, bullshitting, non-compliant, and largely ineffective version of “technology transfer” that most university officials have adopted. Technology transfer professionals meet at AUTM conferences (mostly at university expense) to reassure themselves that everyone else is talking the same nonsense, and so are refreshed for another year of more of the same.
Let’s look at five forces that shape university patent policies. [And, special bonus, five more!]
1. Compliance. Faculty are told that to comply with federal law, with Bayh-Dole, universities must modify their patent policies to ensure that inventors assign patents to the university. This is nonsense. Bayh-Dole is implemented through patent clauses in federal funding agreements. The requirements to comply with those patent clauses do not assume either a patent policy or any obligation by inventors to assign inventions to the university that hosts their research. The compliance talk is merely there to compel changes in the patent policy that patent administrators want.
The compliance argument runs deep into a detail of inventions, and gets repeated like a good campfire ghost story. Because a subject invention is one that has either been conceived or first actually reduced to practice in the performance of work in a federally funded project, the complianators claim that if they do not require ownership of anything conceived or reduced to practice, the university could “violate the law” by failing to secure ownership of an invention. The scary scenario is that an invention could be made (conceived and constructive reduced to practice by documenting it and filing a patent application) and then in a federal project, the invention could be first actually reduced to practice and become a subject invention. If the university doesn’t own the invention, then it cannot grant a license to the government. Failure to comply. So the university must own all faculty inventions, just in case. More nonsense.
The scoping discussion in the implementing regulations makes clear that the work leading to the invention must be “planned and committed.” If an invention has already been made without federal support, it is not a subject invention. Building a prototype of an invention is not “first actually reducing it to practice” and is not the same as “making” an invention. Once an invention is reduced to practice (constructively, say), that’s the end of it. It cannot then be “reduced to practice” yet again (to be considered “made” afresh) by having a prototype built, even if a federal grant proposes doing so. The invention is background IP to the research, and Bayh-Dole is silent on background IP.
The other version of the compliance ghost story involves the fear of double licensing. If an invention is made and licensed exclusively to a company, and then the invention gets first actually reduced to practice (again, nonsense, but it sounds scary-possible) in a federally funded project, then the university would owe at least a non-exclusive license to the federal government–but it could not grant that license because it had already licensed the patent exclusively to a company. Double licensing. Failure to comply. Violation of law. Potential loss of all federal research support. Are you scared yet? Again, it’s not possible, has never happened, won’t. But university licensing professionals routinely put a federal rights carve out in exclusive licenses to inventions that have no federal funding, out of fear that perhaps “even $1” of federal money might touch the development of the invention and cause it to become a subject invention. All this is consternating to company attorneys, who can’t for the life of them understand why a university is fixated on a ghost story as if it is real.
The Supreme Court made all this clear in Stanford v Roche, but patent administrators latched onto a minority observation regarding the difference between forms of assignment and argued that this minority observation–not the ruling of the court–should control patent policy. So they introduced present assignments–requiring everyone to assign inventions before they have been made, rather than after they have been made and the circumstances leading to their creation and development can be reviewed. Typically, the changes introduced in the patent policy–or in practices–make a hash of the rest of the patent policy. Worse, because the present assignment claim lacks definite scope, it easily runs against public policy and in some cases, state law.
That’s the irony of the compliance argument–universities are routinely out of compliance with federal funding agreements, and yet fuss about compliance. Universities fail to implement 37 CFR 401.14(f)(2), they ignore 2 CFR 200.316, they prevent the operation of 37 CFR 401.9, and they don’t have ready for annual reporting the status of each subject invention for which they have elected to retain title, per 37 CFR 401.14(h). The (f)(2) agreement is the heart of the implementation of Bayh-Dole. It is how a standard patent rights clause reaches to inventors and has them become, as a matter of federal policy, parties to the funding agreement. The 200.316 clause in the grant funding agreement is at the heart of federal policy regarding the duty of a university that uses the fact of federal funding to acquire or develop patents. The university must act as a trustee–no mere self-interested, rent-seeking owner–for the beneficiaries of the grant work. The beneficiary is rarely the host institution, the trustee. Yet university patent officials routinely, chronically ignore both of these provisions, the ones at the heart of federal policy that routes billions each year to universities. And they still have the nerve to talk about compliance and try to change university patent policy with their rhetoric.
2. Conflict of interest. Public university patent administrators exploit state ethics rules to make it appear that faculty, by claiming personal rights in inventions, software, data, or anything “non-traditional” by way of creative work or tangible materials are committing an ethics offense against the state and the public.
There are variations. If the faculty fail to report inventions and publish them, then the university (and the state) has lost the value of those inventions–the inventors have published to advance their careers at a loss to the public, a clear conflict of interest and ethics violation. The university, so the argument goes, must control whether to publish to prevent such a crime from taking place. Call it disclosure of the conflict and deferment of choice when conflicted. A second variation challenges any consulting that an inventor (or creator of any thing of value) might do following the publication or disclosure or dissemination of that thing. Again, if the thing had value, and the inventor released it in favor of personal consulting, that’s a conflict of interest and an ethical crime.
The benevolent patent administrators argue that they can make things right if only the inventors assign anything of value to the university. It’s a shakedown.
A third version simply asserts that any use of university resources or facilities (money, people, time, information, supplies, buildings, boats, instruments, laboratories….) where the ownership of any asset created is personal is simply forbidden. All work product created “under the auspices” of the university must be managed by the university as a public asset. Anything else is unethical, regardless of whether the asset created has value or not. Even personal ownership for sentimental reasons is clearly a crime. Now go watch Dr. Zhivago again to get the full effect of the rhetoric of the state. Personal ownership is just sentimentality for a past era of aristocratic domination.
These claims of conflict of interest arise, again with deep irony, from the university’s own unmanaged institutional conflict of interest. The university is premised (formally, in founding documents) on the provision of support to a faculty that in turn provides instruction and public service in the form of research and other endeavors to pursue new knowledge. The premise of the university is that it exists to provide benefits to faculty and students. It is not there to harvest the work product of these people as a condition for the provision of support. Just the reverse. The ethical position, the authority the university has, is to make resources available–classrooms, laboratories, shops, libraries, cafeterias, dorms, parking, and stipends–so that education happens, professional development happens, research happens, publication happens, and the public gains the benefit from these activities in whatever ways faculty and students choose to deploy their work. That’s the ethical position.
Anything that seeks to barter these resources for control of faculty or student work is unethical. Anything that threatens faculty and students with loss of access or privilege or damage to their reputations or careers is unethical. An institution that creates a compulsory patent policy to slurp up ownership of inventions as a condition of employment or use of university resources is fundamentally unethical. The institutional conflict of interest is that the university has already committed resources as a condition of appointments of faculty and matriculation of students. To withdraw that commitment to extract ownership of patents to try to sell off is just wrong.
Patent administrators at public universities also change patent policy and practices to create the appearance of personal conflicts of interest out of the control of the university. For instance, by demanding that all inventions be assigned outright to the university, and then insisting that any reassignment to the inventors must be subject to a contract between the university and the inventors, the administrators argue that ethics law prevents the inventors from participating in the negotiation because the inventors would then have a personal interest in a contract involving the state–as state employees, that would be an ethical violation. So then the patent administrators go out and try to get the ethics laws changed to permit (as an exception, though otherwise “unethical”) the university to negotiate with public employees.
A similar argument shows up for dealing on a license with a company that a university inventor or faculty member has started or has a financial or ownership interest in. The faculty member cannot participate in the negotiation, cannot attempt to influence what the university might do–to do so would be unethical.
More deep irony, as the whole notion of negotiating such contracts with employees is unnecessary and happens only so that the university can hold back a financial interest in rights that should be simply released–or never taken in the first place. Consider, for instance, patent policies that require the assignment of inventions prior to any review for university interest or capability. These policies start with a mistaken version of conflict of interest (requiring assignment) and create a new set of “ethical” problems in dealing with what the university acquires. The university cannot contract with faculty startups, cannot release rights back, cannot allow the faculty inventors to have any say.
The real motivation in exploiting conflict of interest rules is to exclude faculty from anything having to do with the disposition of the intellectual property the university has claimed. The inventors are “public employees” and have a “personal interest” in the disposition of the inventions (through royalty sharing policy) and therefore must shut up unless asked to help. Further, they cannot consult in conflict with whatever the university does, cannot interfere, cannot complain. Essentially, the state ethics laws are read by patent administrators to free them from any accountability to university inventors for the disposition of work the university claims to own.
The licensing of faculty inventions began as an experiment by Professor Frederick Cottrell at the University of California to use an external licensing agents to manage rights. The licensing agent was accountable to the inventor via the agreement by which an invention was assigned or licensed to the agent for patenting, development, and licensing. When university patent administrators cut out the external agents and changed patent policy to do the work directly from the university, they created the very conflicts of interest that otherwise would not arise. If university policy directed inventors seeking commercial benefit from their inventions to use external agents, then there would be no assignment of inventions to the university, no contracts to be negotiated between the university and inventors or between the university and startup companies the inventors have an interest in. The patent policy revisions create the apparent conflicts of interest that then strangle personal initiative and launch endless, complicated fussing about conflict of interest.
The primary conflict of interest in most current university patent policies is institutional conflict of interest. University patent professionals, as a formal condition of their employment, should have absolutely no role in the formulation of patent policies regarding the compulsory assignment of inventions, or the reassignment of inventions to inventors. They are conflicted, institutionally, and have to step out of any influence over the university direction.
3. Trade secret. Universities have virtually no standing to create a trade secret based on what faculty create, yet patent administrators use confidentiality to create the appearance of trade secrets, and then use that appearance to alter policy to use the techniques of management that for-profit corporations use to manage trade secrets. Here’s how the scheme works.
There are a number of places where public disclosure is a concern in managing an invention at a university. First, there’s the problem of a statutory bar to patenting if an invention is publicly used, offered for sale, or disclosed before an application is filed (with some bits of grace period for US patent rights). If anyone is going to document an invention and provide to an agent (the university or otherwise), then folks have to keep the disclosure from the public while a patent application is prepared. Second, there’s the matter of scholarly publications. Many journals will publish only papers that have not been already published. So faculty authors may keep findings from the public until a journal has published–sometimes up to a year for all the editing, review, and preparation to get done. Then there are reasons to keep things quiet while competing for federal grants. Publishing an idea before getting funded is bad practice. Finally, if the invention is the result of student research, then it may be an “educational record” subject to the Family Educational Rights and Privacy Act and cannot be released by the university without the permission of the student. So, plenty of reasons to keep control over information involved in an invention.
Now, a trade secret is any information that has independent economic value, is not generally known to the public, and those holding the information take reasonable care under the circumstances to prevent public disclosure. Technically, a trade secret is not a statutory form of intellectual property, though we talk about a secret being “owned.” The means to preserve a trade secret is non-disclosure. Don’t tell anyone. But if others have a reason to know, then the instrument to use is a contract under which the recipient agrees not to further disclose the information, agrees to protect the information against disclosure (secure it, mark it, circulate it only on a need to know basis), and typically also agrees to limit use of the information to specific purposes (such as review for possible commercial adoption or deal-making). So trade secrets are creatures of contracting against disclosure and use.
Good enough. So how does the non-public status of invention information turn into a university trade secret? If a university doesn’t claim ownership of an invention, then it is the individual inventor that holds the information as confidential, and would be damaged by its untimely release before a patent application has been filed (assuming the inventor desires a patent). In the era of external invention management agents, it would be the agent that would be constrained not to reveal the information. The trade secret would be the inventor’s. When universities undertook management of inventions, they were stuck trying to navigate whether they were also agents representing inventors or whether they represented their own interests, and got rights from inventors not through a voluntary assignment but through some obligation the inventors already had to the university. They opted for the latter, though the royalty sharing schedules and gestures regarding being diligent in seeking licensees or offering rights back to inventors are remnants of the now largely dismantled external agent regime.
When universities, after Bayh-Dole, took apart the external agent practice, they also turned the trade secret argument around. To do this, they again used Bayh-Dole. The law, they argued, required inventors to keep subject inventions confidential, so that universities could file patent applications on them. Any publication could cause a loss of patent rights and deny the government of its license to the invention (which it would not need, of course, if there were no patent), or even the right to the patent, should the university decide not to elect to retain title to the invention. Thus, it was the university that had an obligation to assert trade secret rights on an invention, to comply with federal law.
It is true that the standard patent rights clause authorized by Bayh-Dole does require a university to notify a federal agency if there’s a publication or pending publication of the invention, and to elect title at least sixty days before a bar date if the university is not going to pursue a patent, and to notify an agency at least thirty days before abandoning a patent application or issued patent. But there’s nothing in the standard patent rights clause to preclude public disclosure. It’s not in the law, either. It is not a violation of Bayh-Dole or a breach of the federal contract to disclose a subject invention and thus establish a bar to patenting or destroy a patent right. It’s just a missed opportunity–or it could be a deliberate decision. The only remedies for a federal agency are to request title to the invention (if there is one) within sixty days of finding out what the university and its inventors have done (or failed to do). Otherwise, even if there is a breach of the patent rights clause, there appears to be no penalty for it other than loss of rights to the patent.
So it is the university patent administrators, in seeking to preserve for as long as possible their options on filing a patent application, that want to prevent public disclosure of an invention. They then construe this suppression as an institutional right that supersedes the right of faculty to publish, and from there it’s an easy trot to the idea that any invention is the university’s trade secret, not a trade secret of the inventors. Creating a patent policy that defines invention broadly ensures that the university has a chance to identify possible inventions even where the faculty inventors, authors, developers, creators, compilers, assemblers, and makers do not recognize a patentable invention and might therefore not think to disclose the invention to the university. This is standard practice in technology-intensive industries–declare everything done within the company a possible trade secret, require disclosure of everything, and work through what is harvested to identify possible patentable inventions.
But universities are different places. The expansion of the definition of “invention” to include non-patentable “inventions”–such as software code, know-how, or data–and to place the same claims of “ownership” on these “inventions,” as if they too were subject to a statutory bar, aims to accomplish the same thing as asserting that the university owns all non-public information that might have economic value–that is, could be sold off in a licensing campaign.
The path from potentially patentable to potentially valuable is slippery but university patent administrators have been more than happy to take the slide. Using trade secret techniques, they argue–usually implicitly–that their efforts to make money from technology and information assets takes precedence over the faculty’s right to teach, use, disclose, or publish. For patentable stuff, for perhaps sixty days, they may have a point, if they are in a compulsory patent policy regime that requires university ownership of patentable inventions. For everything else, and for longer periods, they have much less basis for suppressing disclosure.
The fallback is to assert inventor conflict of interest and failure to cooperate in the technology transfer process, should an inventor publish. For the most part, however, in my experience, university patent administrators accept that faculty will publish and do not attempt to suppress disclosure or press sanctions for disclosure–but they do keep the trade secret apparatus in place, claiming ownership of a wide range of scholarly assets, and using that broad, compulsory claim to gain access to much of what they hope will be of value. As some administrators put it, using trade secret language is a way to prevent stuff from “going out the back door” where it might prove valuable to people who have no obligation to pay the university for the right to have it or use it.
Trade secret apparatus is used to expand the scope of what must be disclosed, just in case, and then it’s easy to also claim to own all that stuff by labeling it as an “invention,” even when it clearly is not.
4. Non-competition. Allied with trade secret and conflict of interest is the idea of non-competition. If a university inventor were free to deploy his or her invention without university involvement, then that inventor would be competing with the university’s own program of technology transfer, depriving it of income and damaging its ability to operate at scale. In the commercial world, non-compete covenants are common, other than in states such as California, where most non-compete agreements are invalid. Universities use non-compete expressly in only a few areas: a full-time faculty member may not be allowed to teach for any other organization, and faculty members are not permitted to seek research grants through any organization other than their own university (though SBIR/STTR grants via shell startup companies appear to be acceptable in some contexts).
University technology transfer offices have rarely been productive places. Typically, one or two licenses a decade–if one can get them–cover most of the licensing income. The office will report the number of inventions, patents, licenses, and startups along with this income, leaving the impression there are many productive licenses, when often there are only a handful, often ageing, and much of the rest of the activity is ineffectual, however it is counted and presented to the public.
Indeed, the most productive thing a university could when it secures a “big hit” license is to shut down the tech transfer program for 15 years, live high on the hog with the royalties, and start up the program again a few years before the patent expires. Most big hit deals show up because the inventors and industry both want the university to benefit, not because there’s a patent policy that forces all inventions to university ownership. In fact, there’s a good argument that a compulsory, comprehensive patent policy actually makes the big deals more difficult to find, and sours the relationships with inventors so that such deals are more difficult to do, and may have less value than if the inventions had been voluntarily presented to the university for management. University patent administrators create most of their own complexity and mess, and then blame their problems on something inherent in the practice of technology transfer. There’s no question that patents, licensing, and introducing new technology are all challenging hard work–but university patent folks make it even more difficult as a defense mechanism. If it’s that hard, who can hold them accountable?
Universities deploy non-compete in patent policy indirectly. First, they demand assignment of all assets of potential value, they prevent anyone from acting on their own initiative. This means that all new stuff must move through the bottleneck of the technology transfer office and its disclosure process–fill out forms, complete assignment documents, get stuff entered into databases, deal with “non-confidential summaries” for marketing–and that’s before getting any patent application filed, often. But it also means they have a monopoly on management. Nothing getting away is better than something thriving without them. The basic model here is, “no innovation allowed unless a university bureaucrat benefits.”
Second, they impose terms in faculty consulting arrangements. This typically takes the form of a patent policy requirement that faculty must include in consulting agreements that university policy claims take precedence over any private disposition of rights to work that is done in the consulting relationship. Casting a patent policy broadly leads to the idea that if work is done in any area of one’s expertise, then it is the university’s. A company seeking to secure help from a university faculty member who is an electrical engineer is, in this view, seeking to convert to its own profit knowledge that ought to be the university’s to exploit. So, tort of conversion; tort of interference in a business relationship; tort of misappropriation. But actually, the policy that is being practiced is non-compete. No-one should be allowed to compete with the university’s monopoly on licensing.
The real fear–and it’s a real fear–in the university licensing crowd is that if faculty could do their own licensing (typically through agents of their choice, but also to their own startups and via their own legal representatives), then they might show up the university-based program for its inept, uncompetitive self. It’s not that all tech transfer programs are inept or uncompetitive, but the ones that have a fear of competition often are the worst. Non-compete keeps these programs in business when they should be shut down. But the sad thing is, competition is healthy for anyone in the tech management business. Competition allows one to focus on what one is good at, and if one is good at something, then opportunities show up, inventors want the program to take on their stuff. Competition creates status, creates selectivity, creates diversity of choice and method, creates efficiencies, weeds out the crap. If a university has a monopolistic patent policy, then it is a good bet the tech transfer program is crap.
5. Liability. Risk of loss is the great bugaboo in technology transfer. Liability was so touchy a subject that for years AUTM would not allow a talk on liability at its annual conferences. To admit to liability was to invite it, or something to that effect. For all that, I gave one of the first talks on liability at AUTM, back when I was a member. Patents deploy by licenses, but the primary means of creating value from a patent is the threat of litigation. A patent gives the owner the right to exclude others from practicing an invention, not some government permission to practice the invention. So sue, and expect to be counter-sued. Public universities have enjoyed a free ride here, as there are arguments from sovereign immunity that states cannot be sued in federal court unless they agree to be sued there. But getting sued is only a bit of the liability approach to patent policy.
The risk managers in a university worry about product liability, about breach of contract (a state thing, so open to litigation), and double licensing. Product liability is an odd thing. All the literature points to the idea that a patent owner has no product liability merely for owning a patent, or for licensing it. Someone damaged by a defective product might name a university as patent owner in a product liability case, but the indications are, the university would be able to extract itself from the case. But if the university has supplied specifications, or done testing, or provided design data, or otherwise participated in the development of a product (as is often the case when the development work is being done in a university-sanctioned shell startup company, sometimes even in university space), then it’s easier for product liability to catch the university.
Patent policies get written as comprehensive (all sorts of stuff under the heading of “invention”; all sorts of employees, non-employees, collaborators, faculty, students, staff, volunteers, visitors) and compulsory (assignment happens before review, or even before invention, invention taken broadly) in an effort to control the disposition of everything that gets created. The idea is, central control has a better chance of mitigating risk that individual control. Individuals, so the argument go, are inept, greedy, gullible, and hasty, while the university professionals are expert, public-spirited, skeptical, and methodical, and so there’s no reason to let individuals try to do anything. In one way, this is the nanny state run amok. In another, it is just bureaucrats run amok.
The history of innovation is largely a matter of the unexpected moving from the outside into an established order–an introduced change, not a self-conversion. When the first thing that happens to something new is institutionalization, and the biggest institutional concern is to avoid liability, the something new is often dead on arrival. At Xerox PARC, the word among researchers I talked to was that they hoped Xerox, in reviewing their work, would not declare it “strategic.” If they did, then they would wrap their corporate fingers around it, start a new business unit, and strangle it with proper management and procedures. If the work was determined to be non-strategic, then it had a fighting chance at life–and Xerox PARC produced some amazing stuff, such as ethernet, the mouse, graphical user interfaces, postscript. If universities took a lesson from all this, it would be to declare nearly everything “non-strategic” and let it find its own way out, unless inventors saw a need for university assistance.
Liability is a function of competition as well as of making things, especially making new things. A university would do well to stay out of the thinking space for liability, by not taking ownership, not being involved in patenting, other than where a patent is held for access by all, as in standards development (which, by the way, can lead to lucrative opportunities serving an entire industry rather than just some venture fund).
The biggest liabilities of all for a university are lost opportunity and lost goodwill. These rarely come up. When a university uses its patent policy to take ownership of most everything, and then puts it out to the public that it is making a pile of money from that ownership position, then the public in turn thinks that the university is doing fine for itself and doesn’t need further support, not from donations, not from taxes, not from tax-payer funded research. That in turn leaves universities hunting for money wherever they can–recently it has been to send students deep into debt, exploiting the easy credit made available to them by federal programs. It’s no stretch to pin a significant portion of student debt on university tech transfer programs as a front for research that loses hundreds of millions of dollars a year in administrative overhead, failed contracts, accidents and losses, disputes, worn out buildings and equipment, and many, many, many administrators, committees, and policy makers.
If universities lose opportunities and goodwill, they have lost their standing in society. They will croak on, like Maxwell House commercials, as if they still lived in the 60s, but it’s a long, painful decline. A first step to turning things around is to let go of the liability associated with owning and fussing over patents and other assets created by faculty. Maybe one a year is a good dose, maybe one every three years. Make it a good patent, make it something that industry and inventors want the university to have, to manage for everyone. There is some good in that. For the rest, move them out of the university via their inventors, whether through open release or external agents or startup companies or to standards organizations. The university will make more through donations than it would make through sitting on a pile of mostly unlicensed, rapidly wasting assets, less the cost of keeping those assets warm, worrying about getting sued.
What’s interesting is that the greatest effect liability has on university patent policy has to do with setting defenses to avoid getting sued by the university’s own inventors. In my experience, the most frequent threat of litigation comes from inside the university–for failure to follow policy, for messing up patent prosecution, for not pursuing patenting, for failing to adequately market a patent, for getting into a rotten deal with a rotten licensee (exclusively, of course), for screwing up the terms of a licensing agreement, for failing to enforce the terms of a license, for delaying royalty share distributions, for getting the distributions wrong, for allowing others to set unfair shares, for not dealing with conflicts of interest, for dealing with conflicts of interest in the wrong way; for not returning inventions that the university has failed to market or license; for placing unreasonable terms of the return of inventions–the list goes on.
When patent administrators get the chance, they push for provisions in policy that get them relief. They make disputes resolve exclusively with the university administration; they make it clear the university has no obligation to inventors, either to patent, or license, or make money on licensing; they set defaults in stone in favor of the institution and remove opportunities for negotiation or exercise of judgment. They make it appear that university ownership of inventions is a fact of employment, not a bargain following invention. Pre-Bayh-Dole university patent policies rarely considered these matters–dispute, institutional liability, messing up. They routinely anticipated negotiation, reasoning based on circumstances, and the involvement of faculty to determine what interest, if any, an institution should have in an invention for the support it had provided. The support was just support; how that support was recognized was a matter of reason and goodwill.
It’s not that faculty inventors follow through on their threats–sometimes they do, and often they are right about their issues, and often win their cases. But doing consumes time and money and energy, and most faculty inventors don’t have the space in their lives to pursue problems with patent administration. But the worries persist and policy gets changed–lengthened and made more ambiguous and the patent licensing office becomes less accountable. Again, if the university got out of the patent management business, except on a mutually voluntary basis, and then primarily to protect public and common industry interests and not to pursue exclusive licenses to maximize possible revenues, patent policy would greatly simplify, the relationships between invention management staff and faculty would strengthen, the tech transfer office would be able to focus on what it does well, and inventors who would rather release with patenting, or pursue commercial interests on their own, could do so.
The old-fashioned approach (and much more effective approach than today’s corporate-style smothering blanket of usually badly conceived and drafted policy) was for the university to refrain from making any ownership claims, allowing faculty to participate in negotiating IP terms in research agreements, assist as requested with inventions that might benefit from university resources, and request faculty to decide when the additional support provided by those resources warrants the university to receive a reasonable share of income from successfully commercialized inventions.
In this old-fashioned approach, patent policies were remarkably short, readable, clear. Universities focused on providing support, and expected an interest when there was a successful transfer that the university had clearly helped to bring about. In this approach, a university could be a trustee for the public interest, an advocate for their faculty inventors, and a beneficiary of largesse when anyone was successful. It was the metrics of this approach that advocates for Bayh-Dole cited in getting the law passed. But once Bayh-Dole was in place, the advocates took apart that approach and, over the next thirty years, have replaced it with a corporate-style, much less effective approach.
[What’s missing from this list? Ah, yes!
6. Money. This may be the single greatest but not publicized motivation for university patent policies–and for university administrators. They have been told that licensing income will be a significant new source of revenue that can transform university operations. Mostly, such promises turn out to be untrue. Mostly, licensing programs cost more than they bring in, and the effort to make money turns out to be one of the biggest ways not to make money. Moreover, by trying to make money from licensing, university administrators often destroy other assets that would further the university’s mission or create opportunities, destroying goodwill while trying to count dollars. Finally–moreover, moreovers–even when, once every twenty or thirty years, a university does land a lucrative license deal, it is not clear at all that the money from that deal ends up supporting a university’s general operations. Tuition is not reduced. Faculty are not hired to fill empty positions. Mostly big doses of licensing revenue go to expand research infrastructure (build new buildings, mostly, that then have to be maintained from other budgets, and for bridge research funds to cover research teams between federal grants), expand technology transfer (hiring, pay increases, filing more patent applications, covering litigation expenses), and get used as administrative slush funds by deans and department chairs.
Money is perhaps the single most important metric of technology transfer success. Whatever the happy talk about public benefit or university mission and values, behind the scenes, university licensing offices are evaluated on the basis of money. It does not matter whether IP management has created opportunities for small businesses or contributed to the dissemination of research tools, or helped companies create new products–what matters is what the university has got in return, in the form of cash.
One of the most difficult things about discussing public policy of university IP is that administrators say one thing in public–and disavow their interest in money–but they are consumed with it when out of the public eye. How can anyone discuss the merits of an IP policy with such duplicity?
Finally, and here’s the clincher–university administrators not only want money from licensing but they have been persuaded that exclusive licensing, especially of biomedical inventions, will be the way to that money. And if not biomedical patent dealing, then startups, especially in biomedical and anything green. The reality is that neither exclusive licensing nor startups are a reliable source of money–and can be a huge drain on goodwill, working relationships with industries, and even on university budgets.
An exclusive license gets one at most a single relationship, at the expense of all the other relationships one might also have had for the same inventive work. That means there’s only one organization to teach what you have done, and every other organization has an incentive to find a way to work around your invention rather than use it, to undermine it rather than adopt it, and to exclude it from standards rather than accept it.
Instead of breaking up a relationship into interesting and useful parts, by focusing on exclusive licensing and attempting to make the license itself carry as much value as possible, university administrators walk away from opportunities to provide instructional and technical support (for a fee, even) and to serve an industry of companies rather than a single company. Worse and worse if that single company is a startup parked in the university’s own space–not even rightly part of the industry yet.
7. Petty power. This one is nothing new, really, but must be pointed out. The folks who develop IP policies at universities often are not up that high on the administrative ladder. They write policies to establish their authority over IP matters. If inventors could choose whether to work with their office, then they would be exposed to competition. The good stuff, they fear, would get away–at least from them–and others would get rich (see above–money). Worse, they might be exposed for not having the best expertise, methods, execution, or knowledge of what they are doing (which is invariably true for most any inventive thing, and *not their fault*–as no one in their position could possibly be the best at every possible inventive thing that might arise on their campus). So they write a policy that makes expansive claims on IP–defines IP to be nearly anything, claims a scope that includes not just work assigned but anything associated with one’s area of expertise, as if the policy was also a non-compete policy and ethics policy rolled up in one.
There’s more. The administrators who write policy also fear that they don’t know as much as they ought, so they write policy to be ambiguous, and then create a procedure by which appeals go up a chain of administrators–so essentially they write a policy that says if you find a logical flaw in our policy, other administrators get to decide what the policy actually means–you don’t. So the appeals process ends up being a–“the policy is what we later get to say it is”–policy. Really not a policy at all, but rather an assertion of administrative authority. “You don’t know what we mean, but we sure will if we get forced to.”
Studies have shown that people in low status jobs but having substantial authority turn out to have the least happy work practices. They tend to lord it over others and take the most adversarial and even abusive positions. Technology transfer jobs, much as they are important, simply don’t have that much status in a university. Some folks who work in those positions are really amazing people, work with integrity and diligence, and know what they are doing as much as anybody. But there are others that don’t know what they are doing, and don’t even know how little they know. They are the bozonet of university technology transfer. They talk in fantasy vocabularies, they tell fake histories, they pull things out of their posterior cortex about best practices, and they act all the upset prig if anyone calls them on their lack of skill, accuracy, or candor. Sadly, those folks also write and interpret university policy. Those folks will (and do) spend hundreds of thousands of dollars suing faculty and student and post doc inventors who dare challenge their authority, the abilities, and their practices. That’s the reality. University IP policy is drafted to help these people win disputes that challenge their authority.
8. Addiction to Process. This one is also pretty obvious. What would an institution be without attempts to suppress personal judgment and creativity with procedures and a demand that everything follow expectable, pre-determined steps. While following procedures is a great thing for landing an airplane or manufacturing a light bulb, following a process might well be the last thing one would want for dealing with “innovation.”
9. Consistency. Along with process comes consistency. Doing things all the same is put out as being “fair.” I’ve even encountered the argument that it is unfair to inventors that might own their own inventions that they are not subjected to the same inept technology transfer management as the university inventors who are forced to assign their inventions to the university. Thus, to be “fair,” all inventors must assign their inventions. Sort of awful isn’t it.
The flip side of consistency is a refusal to allow repeat exemptions to policy. I once had a licensing situation with a company at my campus. I discovered that the company had done a similar deal for a similar technology previously at another campus in the same university system, covered by the same policy. “Let’s just use those same terms,” said I. The company was elated–what a good idea. Except legal counsel blocked it–“That deal was done as an exception to policy. If we allow it again then we are essentially changing policy, and we cannot do that.” So much for the deal. Deeply stupid, but that’s a driver of policy.
10. Conformity. University administrators copy what other administrators put in policy until everyone pretty much has the same IP policy. Then they feel “safe” about what they have written–even if their newly revised policy has huge gaps and inconsistencies with other parts of their policy apparatus. At least it has the superficial appearance of looking just like other universities’ policies. ]