Support or Purchase?
In American Universities and Federal Research (1959), Charles V. Kidd underscores Bush’s concern that the federal government make a distinction between support and purchase, between subvention and procurement. Kidd cites a memorandum from General Eisenhower to the Army’s various organizational units: “we must separate the responsibility for research and development from the functions of procurement, purchase, storage and distribution” (158, quoted in Price, Government and Science). Kidd notes that as of 1959, the Department of Defense had yet to figure out how to implement this separation–or just didn’t see the separation as important.
As we will see, Bayh-Dole does not solve this issue–it makes the rejection of Bush’s insight a matter of law by conflating all contracting, whether subvention or procurement, under a single “uniform” policy. It is just this sort of singular policy that must meet every federal agency need that Bush sought to avoid and others sought to at least accommodate. But procurement contracts gave certain interests–commercial and patent brokers–advantages in the discussion that federal gifts to support basic research did not.
Bush did get an independent agency, which became the National Science Foundation (the switch from Research to Science is significant, too), but Bush lost on the idea that the agency should have a distinctive relationship for funding, one that stood apart from that of mission-directed agencies. After the war ended, multiple federal agencies rushed to establish extramural basic research programs. Universities argued that federal research funding should not be focused in any single agency, but spread about among agencies. Charles Kidd cites a finding by American Council on Education’s Committee on Institutional Research Policy (1954):
The Committee recommends that the Government not concentrate its general-purpose research funds in any single Government agency, since such concentration might result in creating a powerful bureaucracy, which could exercise too much control of education and which might lose the great advantages in research management of diversity in method and objective. (12)
The universities advocated for “diversity” in federal contracting. They didn’t want to focus on a single source in the government for basic research funding. They wanted that research distributed over various agencies, with various objectives, so as to avoid a concentration of federal power. In doing so, they created the conditions that would result in each agency working out its own policies with regard to invention–the very thing they would rail about some twenty-five years later in hearings having to do with a uniform IPA and then a couple years later, in support of Bayh-Dole. Bayh-Dole was the final nail to hammer home to bury Bush’s recommendation that the government distinguish between federal research support and procurement.
It’s not that the federal government did not make an attempt to distinguish subvention and procurement. 1958, Congress passed Public Law 85-934, “An Act to authorize the expenditure of funds through grants for support of scientific research, and for other purposes.” The Act is important–it consolidated the authorities that government agencies held to grant funds to support research (1842, the federal government grants $30,000 to Morse for that telegraph thingy; 1887 Hatch Act authorizes the Department of Agriculture to make grants for research; 1944, NIH given authority to make grants for research projects; 1950–the formation of the NSF, Vannevar Bush’s vision for federal support for basic research) (See Leroy Kahn, “The Lawyer and the Scientific Community–Procuring Basic Research,” Law and Contemporary Problems, vol. 29, no. 2 (Spring 1964)). Section 1 authorized federal agencies to support basic research. Section 2 provided flexibility. Section 3 required reporting. Section 2 contains the germ of what will be:
All those words to say “universities may be allowed to own equipment purchased with federal funds.” But let’s look at the wording more closely: “where it [furthers the agency’s objectives], to vest in such institutions or organizations, [with or without conditions] title to equipment purchased with [government funds].
Here we encounter the concept of vesting of title–but in equipment purchased by a university, not yet patentable inventions. It is worth noting that the vesting of title depends on a prior purchase of equipment. The potential for a federal government lien on the equipment follows from the use of federal government money. The purpose of Public Law 85-934 was to make it clear that an agency had discretion to allow a university to retain ownership of the equipment it purchased using federal funds.
The pattern here should be immediately recognizable. If the federal government contracts for research and may release its claim to title to equipment purchased with federal funds, so also it may release its claim to title to inventions acquired with federal funds. Forget for a moment that title to equipment does not foreclose all others from using their own equipment or similar equipment. And forget for a moment that equipment is purchased and therefore title to the equipment moves with the sale.
Title in equipment “vests”–that is, the right to claim title under the funding agreement may shift from the federal government to the contractor. The title is not “settled” until the right to claim title is settles. And that’s a matter of the federal contract.
But inventions are a different matter. The invention rights vest in the inventor. The question becomes whether a university has any obligation to acquire title to any invention. For Bush, the answer was absolutely not. For the IPA system, the answer was required only if the university decides to file a patent application. For Bayh-Dole, amazingly, the answer is again absolutely not. However, for most of Bayh-Dole’s existence, the answer given was a confused noise of automatic vesting, first right to acquire, implied duty to commercialize–as if universities simply owned all such inventions outright until they decided otherwise. And then, since 2011, the answer has been absolutely yes–to comply with Bayh-Dole, universities must assert ownership over all inventions made with federal support (and for the sake of compliance and consistency, with all other inventions as well).
Grants and Contracts
The effect of Public Law 85-934 was to authorize all federal agencies to fund extramural research by means of contracts in the form of “grants.” Public Law 85-934 was repealed in 1978 by Public Law 95-224, “Federal Grant and Cooperative Agreement Act,” which went further in distinguishing support and procurement. The new Act identifies a need to
distinguish Federal assistance relationships from Federal procurement relationships and thereby to standardize usage and clarify the meaning of the legal instruments which reflect such relationships
The FGCAA aimed to “establish Government-wide criteria for selection of appropriate legal instruments to achieve uniformity in the use by executive agencies of such instruments.” That is, a uniform policy with regard to grants, contracts, and cooperative agreements. The FGCAA distinguishes state government, local government, and “other recipients”–not state or local government, and including “any charitable or educational institution.” The FGCAA excludes from grant or cooperative agreement any “direct Federal cash assistance to individuals.” Thus, it is clear that a grant is not simply federal cash for faculty fun. There is, as Leroy Kahn put it, “a quid pro quo.” The question is just what is quidded for the proing.
I’ll mostly paraphrase to cut most of the wordiness. The Act requires contracts to be used:
1 Whenever the principal purpose is acquisition for the direct benefit or use of the Federal Government
2 Whenever the agency wants
Grants are to be used when
1 The principle purpose is to transfer anything of value to a university to accomplish a public purpose “of support or stimulation authorized by Federal statute”
2 No “substantial involvement” of the federal agency is “anticipated” during the performance of the “contemplated activity.”
Cooperative Agreements are like grants, except that there is anticipated to be substantial involvement of the federal agency in the contemplated activity.
This distinction between grants and contracts, however, did not get at another of Vannever Bush’s concerns. Bush worried that the government would fail to seek out scientific talent to do research and instead find proxies for merit–or, as he has it in Modern Arms and Free Men, the risk that the government will bumble into grandiose schemes and mediocre work. And that’s just what happened.
Charles Kidd points out that federal agencies looking to fund basic research at universities could follow any of three paths–they could provide block grants to universities and allow university officials–deans and department chairs, typically–decide what research gets support. Or they could provide funds directly to individuals in the form of fellowships or awards. Such awards would be based on the merit of the individual. Or the federal agencies could support a specific proposal for research, what came to be known as a “project.”
“Project” appears to derive from the legislation (Public Law 78-410) that created the Public Health Service in 1944. There, the Surgeon General is authorized to (emphasis added):
Make grants in aid to universities, hospitals, laboratories, and other public or private institutions, and to individuals for such research projects as are recommended by the National Advisory Health Council, or, with respect to cancer, recommended by the National Advisory Cancer Council
That is, the authorization is for projects, not for research generally, and projects comes to mean a pre-planned statement of work. That is, an applicant must already know what the course of study will be from start to end–planned and committed. Such an activity is alien to Bush’s idea of frontier research. By contrast, project-based research is tame, even dull. All the worse if proposals are competed for “merit” reviewed by a scientific consensus. As Alfred Korzybski (Science and Sanity) quipped, the reason we have scientific revolutions is that a consensus of scientists forget about doing science and stick to their academic habits. If scientists kept at being scientists, then we would see regular progress. If scientists get funding only for announcing fully formed projects, then it stands to reason that exploratory work that chases down whatever appears is not going to happen nearly so often.
By 1955, the NSF had also chosen to support research projects. Thus, we have “sponsored projects offices” at universities, built around the idea of a proposed plan of research, a project, rather than around the identification of scientific talent, the creation of an environment of creativity, or support for a university generally (as, for instance, states generally provide).
Kidd argues that the research project was adopted to move attention away from the subjective assessment of personal talent and to give the public the impression that federal funding was for a purpose, not merely a “personal subvention” that acted as a “personal subsidy which the scientist uses not only to pursue the work he selects but also work of no necessary relevance to the needs or desires of the community” (107). By focusing on the “objective” merits of a research proposal rather than on the talent or creativity of the proposers, government agencies could avoid offending scientists competing for funding:
Relations between the granting agency and the applicant for funds, and between scientific advisers to the agency and their colleagues who apply for funds, dictate that the nature of the proposed research veil any judgment on the capacity of the man. Anyone who has many ideas need not be offended by a judgment that one of his ideas is not worthy of support. He can always be consoled by the belief that more ideas will be forthcoming, that the advisory group did not understand the significance of his proposal, and so on. But an investigator who knows he has been denied support because of a general judgment as to his competence has been dealt with brutally. (106-7)
Once one moves to a competitive proposal format, and buries selection criteria in the properties of the proposal, then one has already moved a long way toward procurement, toward the purchase of research services–now represented by a statement of work created by an applicant rather than a statement of work created by a federal agency and bid on by applicants. The difference between grant and contract turns out to be the source of the statement of work rather than a difference in the purpose for which federal funds are allocated. This change in the conceptualization of funding categories makes it easy to think of all federal funding as procurement with differing degrees of deliverables. For grants–assistance–fewer requirements. For contracts–procurement for government use–more requirements. Into this mix, then, tumbles patent policy–not the one that Bush advocated, but one that sorts out what a government agency must require.