Listing Our Way to a Uniform Compulsory University Patent Policy

I have yet to see a cogent argument for comprehensive, compulsory invention assignment policies at universities.

There was a time, years ago now, when most universities had no patent policy at all. Time goes by, and Archie Palmer rallies universities to write patent policies. A wide range of responses. Some university policies–especially those written by medical faculty–forbid patenting. Many others authorize use of university resources to assist inventors, create committees to review circumstances, and expect an equitable share of any patent income. Most policies refer invention management to one or more external invention management agents. Often, Research Corporation. Bayh-Dole hits, and university patent administrators assert that federal law now vests with the university ownership of inventions made with federal support. (It wasn’t true.) They insist that patent policies must change to “comply” with the law. So university patent policies are changed to require assignment of inventions made with federal support as something of a scavenger hunt paperwork formality for filing patent applications.

At the same time, the argument is made that it would be unfair and unmanageable to have one policy for federally supported inventions and another for all the rest, so for administrative convenience (and “fairness”) policies were expanded to include all inventions. If university ownership of inventions was federal policy and the law of the land for federally funded inventions, it must be good for all inventions. And, for completeness, the definition of invention was expanded to include most anything except “traditional scholarly materials.”

In 2011, the US Supreme Court ruled in Stanford v Roche that the Bayh-Dole Act does not vest ownership of inventions with universities. If universities want ownership, they need to get it the normal way, by written assignment. University patent administrators and their legal advisors have argued to the Court that if inventions don’t vest with the university, there will be economic disaster leading to the end of the world. The Court was not amused. So administrators and advisors fixated on a bit of musing in a minority opinion about the difference between the wording of a promise to assign and a present assignment (using “hereby assigns”) and asserted that to assure compliance with federal law, a university must impose a present assignment in place of a promise to assign future inventions. This, too, is untrue. But this is where we have got to.

It’s difficult to find the actual arguments that university administrators and their lawyer friends have made to justify the move to a comprehensive, compulsory invention assignment policy. No doubt there are minutes to regents meetings and reports and legal opinions buried in university archives. Archie Palmer, of course, provides an account of arguments both for and against university patents in his reports. See especially his 1948 report.

It appears that there were three rather skew starting points for arguments for university ownership of patents. Universities should:

  • use patents to mitigate the formation of monopolies that prevent university research from benefiting the public;
  • make money for university research from the licensing of inventions to industry;
  • own patents when such ownership is equitable–when the university has hired for invention, has commissioned the work leading to an invention, or has provided substantial resources that have enabled the making or developing of an invention.

The first rationale argues for a kind of “pa-taunt”–use patents to prevent the abuse of patents. The idea is that university management of patents should be fundamentally different from that of the ordinary patent owner. A university patent should mark an area of technology available to all, on the condition that anyone using the technology does not block access by others to it. This form of university ownership focuses on conditional sharing–non-exclusive licensing, royalty free.

The second rationale argues that universities deserve financial recognition for the inventions made by faculty that the university hosts. There still may be some suggestion that a university patent is different–serving some social good, managed for social benefit–but the idea of making the invention available to all is subordinate to the idea that first someone ought to pay for it–licensing exclusively for manufacture and sale, licensing non-exclusively for a royalty. The social good, according to this rationale, is realized in the research use the university puts its royalties to, along with any public benefit from the use of products licensed by the university. The university’s royalties, based on royalties on sales, is equal to the social good.

The third rationale focuses on the idea that if money is going to be made by an inventor, then someone should step in and determine the extent to which the inventor relied on the university to make or develop the invention. If the university provided resources beyond the ordinary, or if the university released the inventor to work on the invention rather than do regular work, or if the university hired for the work or commissioned it in exchange for extra compensation–then the university ought to get a share. In this approach, the inventor might still own the invention, but the university could be awarded a share of any money the inventor might make. In this rationale, the university doesn’t necessarily own, unless that’s the obvious “fair” or “equitable” thing to do. Given that nearly all universities turned the inventions they claimed over to external agents for management means that a university did not have to concern itself with how the money got made–certainly some of the same issues regarding public benefit equal to royalties paid would be present–but rather whether the public mission and support of the university was properly recognized when a university-affiliated inventor did go out and assert a patent right and try to make money from it.

These three rationales boiled down over time to

  • It’s a good thing for universities to own patents.
  • Universities should provide resources to help inventors.
  • The university and its inventors should share the money.
  • The public benefits when patented products get sold.

These are all innocuous assertions, but perhaps you start to see what has been left out of each:

  • It’s a good thing for a university to own patents when the university uses its patents to prevent abuses such as monopolies.
  • University should provide resources to help inventors as a subvention, not as an employer or speculator.
  • The university and its inventors should share the money when the inventors agree to do so in recognition of access to special allocations of resources. 
  • The public benefits when patented products get sold or the inventions are used.

The shorter version always seems to win out, and the qualifications get dropped. But it is often the qualifications that motivated what has become the primary point. The present approach, the default at nearly every American research university, is

  • University inventors necessarily rely on university support to invent. (no subvention)
  • The university owns patents to protect the public from abuses by inventors. (no review)
  • The public benefits when the university licenses its patents. (license, not use or sale)
  • The university generously shares with inventors a portion of what it makes. (a cost)

Notice that in this version, a university does not provide any assistance to faculty. There’s no subvention. The faculty are hired as servants to use the master’s goods to accomplish the master’s tasks. The purposes of the university are the purposes set out in administrative statements, not in the intentions and actions of faculty. The intentions and actions of the faculty are assumed to be personally motivated and therefore unethical if not approved for the university by administrators. Thus, owning one’s own inventions must run against the social values of the university. To prevent such behavior, the university uses policy and agreements to ensure that all inventions are owned outright by the university.

The primary tools to do this are (i) a definition of invention made broad to include non-inventions, ideas, know-how, information, materials, software, and anything else of value; (ii) a definition of employee made broad enough to include faculty, staff, students, employees, visitors, volunteers, collaborators, and anyone using university resources or money or affiliated with the university; (iii) a policy statement that requires a present assignment for all such future inventions from all so-defined employees, whether or not a specific agreement is ever signed.

  • The university instantly owns inventions made by anyone affiliated with the university.
  • The university uses any legal means to make money from these inventions.
  • Doing so is a public good.

This is the approach, so the argument goes, that Bayh-Dole authorized as federal policy, and only a quirky Supreme Court decision has required university administrators to add an additional, fussy administrative step. According to the university administrators (and their lawyer-krakkens), the Stanford v Roche decision was “due to a technical shortcoming in Bayh-Dole that everyone had already mentally corrected for, universities do not get title automatically to federally funded inventions by operation of law. Instead, universities have to put the magical language ‘hereby assign’ into their policies. Then they get title automatically.” The Supreme Court, so the lawyer-krakkens argued, “turned Bayh-Dole on its head.” The only way to correct this foolish and nit-picking decision was to add a present assignment to every policy and every document from employment agreement to invention disclosure to request for approval for outside consulting. (For yet another effort to make clear how Stanford v Roche played out, see here).

The upshot for university administrators was that there were gaps in their effort to lock up ownership of all inventions made by personnel affiliated with their universities.

To get to this position, and to represent their position of ownership of all as a good thing, the university administrators and their lawyer-krakkens had to get people to accept the following:

  • University ownership of inventions is necessary for “commercialization” of inventions.
  • “Commercialization” is necessary for the public to benefit from inventions.
  • A university should to own all inventions that it can.
  • Assignment to inventions, broadly defined, should be made up front, for all such future inventions, without review for circumstances.
  • “Commercialization” means “license for money.”

And yet there is remarkably little by way of discussion, debate, explanation for the claims made in this list. All we find is advocacy about how successful this approach is. Whatever debate that has taken place is not readily available to the public, aside from some academics who question the narrative and some university inventors who challenge it. Despite the apparent lack of deliberation, university patent policies–almost all of them, at U.S. research universities–exhibit these claims. To get there, someone must have made arguments and others must have failed to rebut those arguments. In particular, university legal counsel has approved of the changes. Of course, it could all be a big mix-up, accident and bungling followed by more accidents and bungling in an effort to be consistent. But these policies persist, and are viewed as progress, and as wildly successful.

We might add to the list:

  • It is fine for university patent policies to be poorly drafted garbled messes.
  • It is acceptable not to disclose the status of each invention claimed by the university.
  • It is acceptable for a university to flip (assign, including labeling an assignment “exclusive license”) inventions for money, even if the flip results in nonuse or trolling or unreasonable pricing or disrupts research or does not result in public benefit.
  • A working university approach to research enterprise requires a university bureaucrat to touch every invention.
  • It is a personal conflict of interest for university employees to own their inventions.
  • There is no institutional conflict of interest for a university to own patents.
  • Universities actually need patent royalty income to support research.

These things are not stated expressly in university policies, of course, but these are implications of the way things are stated. Beneath it all are some working assumptions that show up in conversations or at AUTM meetings when licensing “professionals” discuss their issues:

  • University inventors are variously helpless, greedy, inept, egotistical, and selfish.
  • University patent administrators represent taxpayers seeking a return on their “investment” in research.
  • University patent administrators are better licensing representatives than any other personnel around and aren’t variously helpless, greedy, inept, egotistical, and selfish.
  • Any other approach to university invention ownership is unworkable, undesirable, unfair, creates liability, and won’t produce public benefit or money for the university.

We have arrived at this “local maximum” for university patent policy. Things are locked up about as tight as they can be–which is a kind of garbled-tight–awaiting the lawsuits and public shaming that inevitably will happen. It just takes time for the awfulness of the situation to become apparent to anyone other than the inventors, entrepreneurs, and even university licensing professionals who are caught up in the approach and have no expectation there’s any way to even have the discussion about alternative approaches.

 

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