A Good Policy for a Patent-Trolling University

Let’s continue the discussion of how university-owned patents might differ from other patents. We have considered the idea of “first use exhaustion” under Bayh-Dole: if the express purpose of Bayh-Dole is to use the patent system to promote utilization of subject inventions (inventions made by contractors with federal support), then once utilization has taken place, the owner of a patent on a subject invention is limited to actions that will promote use, not exclude use or tax use. Once there’s use, suing to stop use is not an option.

Except, of course, many university administrators and the attorneys who advise them don’t see any difference. For them, a patent is personal property, a right, not a privilege, a shotgun to shoot off whenever someone strays near university property. For such folk, Bayh-Dole’s statement of objectives is just so much Congressional fluff, having no meaning other than to say feel-good things about the law.

But Bayh-Dole is made part of federal patent law. And federal patent law (35 USC 261) says that a patent has the *attributes* of personal property, subject to the conditions of federal patent law, and thus also subject to the conditions of Bayh-Dole, and therefore also subject to the conditions of every part of Bayh-Dole, including its statement of objectives. For a patent on a subject invention (also defined in federal patent law as a new class of invention) to have the attributes of personal property, the patent must be used within the conditions of Bayh-Dole. Otherwise, the patent does not have the attributes of personal property, and there is no action available for the infringement of that personal property right.

Let’s consider some other ways that university-owned patents might be managed differently from other patents. There are two practices, in particular, that we should consider: 1) nonuse; 2) trolling. With nonuse, a patent owner refuses to license others to practice an invention (and may threaten with infringement anyone who does), effectively keeping the invention from use by others. In the “patent-is-a-right” camp, such actions are entirely proper. If a patent owner wants to use a patent right to prevent anyone from using an invention, so the argument goes, then that is the inventor’s right.

Somehow, the Constitutional intent that Congress might promote the progress of the useful arts can also pass through patent owners determined to delay such promotion–and somehow that, too, is also promotion of the useful arts. One has to think cleverly to think this way–but university patent administrators are in the habit of doing so. In many university intellectual property policies, “intellectual property” is defined to include stuff that’s not intellectual property and not even property; “employee” is defined to include non-employees; “agreement” include non-agreements. Promotion of the useful arts includes delaying the useful arts for the 20 years of a patent, if one wants.

But what happens when a university owns a patent and excludes all uses of an invention? Even if in some attorneys’ eyes this is perfectly proper, is it really?

Consider university policy statements (often made contractually part of employment or appointment agreements with faculty). Those policy statements, including preambles to patent policies, typically assert that the purpose of the policy is to promote the use of university inventions. Other than in the twisted administrator’s mind that “promoting use can include preventing use, too,” a university by its own policy has no authority to exclude others.

Consider this bit from Santa Clara University’s patent policy:

The University expands the boundaries of knowledge and insight through research, artistic expression, and other forms of scholarship. Inventions may emerge from basic and applied research endeavors. Patenting an invention is often an essential step to fully realizing societal benefits emerging from new knowledge and technologies. Through this patent policy, the University seeks to encourage the development of new inventions and patents and to recognize that it is primarily through discovering, communicating, and applying knowledge that the University exercises institutional responsibility as a voice of reason and conscience in society.

I’ve highlighted parts to add some relevant tone to the prose. Given that the policy asserts that SCU is “a voice of reason and conscience in society” and that patents are “often essential steps to fully realizing societal benefits,” is it within the scope of SCU patent administrative authority to sue everyone to prevent the use of an SCU-owned invention?

Let’s rule out the idea that SCU is buying up all patents relating to sinful behaviors and playing the superego here. Let’s also not read the policy to give effect to modifiers as clever weasel words–often an essential step, fully realizing, seeks to encourage, primarily through discovering. Let’s also not argue that when there’s a list of items, the policy is fulfilled if any one of the items is fulfilled. Thus, developing new inventions and patents is not satisfied with just the development of patents (one must also develop the inventions); nor is the voice of reason exercised by discovering knowledge (one must also communicate it and apply it). If we don’t rule these readings out, then the policy statement is meaningless, like a pretty jacket to be worn in a hurricane. All those nuanced adverbs and lists of possibilities would be just pretty trinkets of rhetoric, designed to fool folks into thinking there was something meant, when there wasn’t.

Certainly it’s possible to argue that a university exercises its voice of conscience in society through its technology transfer program (that’s a might proud thought for administrators, no doubt), and not through its patent policy (which need have no voice of reason or conscience, perhaps), but let’s not go there. Let’s say the policy means what it suggests–that SCU manages patents to promote development and use of inventions for societies benefit, as an activity of reason and conscience, and not for money-making or to toss around administrative swagger.

Here’s the thing with policy statements. Where there’s no policy statement, then things follow whatever practices and purposes people might have. Think of it as a form of “university common law”–or, “common policy.” But when a formal statement of policy is made, it is an act on behalf of the university as corporate entity. The policy replaces bits of the “common policy.” Thus, when SCU places in policy that tech transfer exercises institutional responsibility as a voice of reason and conscience in society, the statement constrains administrators. They don’t have the formal institutional authority to make up any other rationale for technology transfer. They work for the university; they have the obligation to follow policy; they have the obligation to manage technology transfer to exercise the university’s responsibility to society, as a voice of reason and conscience, to communicate and apply knowledge.

Now, does SCU patent policy delegate to SCU administrators the right to sue others to prevent all practice of a patented, SCU-owned invention? No, not hardly. So we might argue that the purpose statement in the SCU patent policy has a purpose. It limits the scope of property rights a university administrator has available. Any money that administrators might make from licensing patents has to come from something other than being paid to prevent all uses of the underlying invention.

A similar argument might be made for trolling. Once there is established use of an invention in industry (even in research), while just any old patent owner might feel free to sue for infringement, can SCU administrators do so, given their public policy position (and its implicit restrictions on their use of patents)? Once there is use, a university patent policy premised on social benefits arising from use of an invention beyond the university has achieved its purpose–it is, as we might say, exhausted. Either a patent gets licensed to induce investment, or the patent is no longer a financial asset, at least not one to be used to shakedown users.

It just can’t be that a university with a policy based on public use of inventions can troll industry (or other universities) who use, just because they never took a license. A university might have a patent policy that argues that patents may be needed to induce private development or use of an invention made at the university. As SCU’s policy puts it, “patenting is often an essential step.” But if patenting is not needed, because people are using the invention anyway, then in those cases, clearly, patenting is not an essential step. It is not even a non-essential step. It is a wrong step, a waste step. It is nothing. If the policy argues that a university patents when patenting is a necessary step, then when patenting is not a necessary step, university officials have no institutional authority to ignore policy and turn patenting into something else entirely–a legal weapon to extract money from industry. This has nothing to do with “protecting” the university’s “rights.” The university, by its public patent policy, has already abandoned those rights. These are not the property rights you used to justify having a patent policy in the first place. So you don’t get them along the way, as well.

Put it another way, if a university patent policy claims that patenting is an important way to induce private investment to develop a university invention, then university administrators cannot claim that the patent policy also, implicitly, grants them the authority to also use that same patent to prevent development, or to prevent all use, or to sue for money once it is apparent that folks are using and developing the invention without the patent. The patent was no inducement. The patent policy did not say: demand that people take a license to your patent or you will do the opposite of what your policy says your objective is–and must be.

When a university patent policy reads “patents are often necessary to develop inventions for public benefit,” the policy does not mean “university administrators are authorized to sue everyone to force them to take licenses to university-owned patents, to make it appear that every invention can be advanced only after a patent is licensed.” Furthermore, if the value of the patent turns out to be whatever a company is willing to pay to avoid litigation, then the patent has absolutely nothing to do with technology transfer, with development of the invention for public use. It is a shakedown. The university’s patent policy is then ignored, or was written to deceive, or was written by fools, or liars. If a university ignores its own policy, how can it enforce that policy on anyone else?

Now I don’t have any information about SCU’s patent management behavior. I doubt they have sought to prevent all uses of the patents they own (the USPTO lists five). I doubt they have sought to troll industry. But there are other universities out there that do troll industry, and it might be worth looking at their patent policies.

Here is a policy bit from Caltech, a trolling university:

It is the policy of the Institute that such patents be used for the public benefit. If there are innovations or discoveries that result in the filing of patent applications and the acquisition of patents, the Institute intends to serve the public interest by prudent and appropriate efforts to transfer the technology to those who will facilitate public use.

Of course, the Caltech patent policy web site is maintained by the Office of General Counsel, and it starts out with a double double claim:

Inventions made by employees in the line of Institute duty or with the use of Institute facilities may be patented in order to protect and benefit the Institute and the public.

That is, to protect and benefit the Institute, and to protect and benefit the public. Or to protect both the Institute and the public, and to benefit both the Institute and the public. Or, apparently, to benefit the Institute is sufficient (or benefiting the Institute must benefit the public because the Institute has more money to spend on publicly minded research).

But one wonders, if the policy is read properly, that all these purposes must be met, not just a self-interested one buried in a double list of possible purposes, then Caltech violates its own patent policy in suing, say, Apple for infringement. Its own patent policy does not permit Caltech to treat the patents it owns for its own financial benefit. Caltech’s patent policy restricts administrators in two express ways:

  1. patents must be used for public benefit
  2. patents must be used to transfer technology to those willing to “facilitate” public use of the

The Caltech policy at this point is not giving illustrative examples of ways patents might be used, leaving unstated all the others–such as suing companies that are using Caltech inventions for public benefit. The patent policy is being rather express about the uses that Caltech administrators may consider:

it is the policy of the Institute

the Institute intends

These are not statements that are easily turned into “it is also the policy of the Institute that patents be used to make companies choose between ceasing all use of underlying inventions or paying a potentially huge royalty to avoid being sued.” If the Institute intends, as a matter of policy, then university administrators can’t sue to prevent use. There has to be a public benefit in any such suit–that the inventions are being misused, or are harming the public, or aren’t being used at all, or are harming a company that has invested in reliance on the patent (in which case, let that company sue).

It may be strange to pin a defense of a claim of patent infringement on a university’s patent policy statements–but if those statements are enforceable against faculty, then they are also enforceable against administrators, and against the lawyers in the Office of General Counsel. No one gets a free pass to ignore the stated intent of a policy. And the public–and companies using university-produced technology–should be able to rely on this policy commitment.

If a court rules that Caltech has standing to sue anyone for infringement no matter what its patent policy states, then the court is in effect ruling that the patent policy is fluff, is not enforceable, is more like guidelines, is a ruse to justify taking ownership of inventions, but in its actual language, means pretty much nothing. If on the other hand a court holds Caltech to its patent policy–which restricts Caltech’s use of patents–then it should throw out Caltech’s trolling suits for infringement, because Caltech has not stated an authorized cause of action under its own patent policy.

What do we get from this part of the argument? That university patents are not ordinary patents when a university has a patent policy that states the purposes for which a university may manage patents. The policy restricts the university to those purposes. If a university wants to authorize litigation to prevent all uses, or to stop use if the university finds use taking place without the need for patents, then university administrators must include a formal statement authorizing such actions in patent policy (or remove all statements of purpose directed to public benefit or encouraging development or use of inventions).

For that, consider Yale’s patent policy, which has no smell of public purpose in licensing or encouraging use of inventions:

The purposes of this University Patent Policy are (1) to help assure, in the public interest, that the patentability (or other means of exploitation) and practicality of inventions will be evaluated by qualified persons, and that the income from inventions will be used to support further research or other desirable University activities; and (2) to define remuneration to the inventor or inventors (hereinafter the “Inventor”) and the University as long as the invention is productive of royalties.

Put simply, the policy states that it exists to force all inventions to the licensing office and to divide up the money from licensing. The public benefits when patent administrators see everything and there’s no fighting over money. Now there’s a well drafted policy for a patent-trolling university

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