The first installment of this article is here:
In 1999, Edmund Cronon and John Jenkins included a chapter on the Wisconsin Alumni Research Foundation in their history of the University of Wisconsin. The discussion of WARF is interesting for its spin and what it leaves out. WARF represents not only a piece of the now widespread way of thinking about university patenting but also in many ways is the first primary representative of this thinking, the origin as it were, the place where the tick bit into the neck and introduced the systemic changes that have properties not unlike Lyme disease but adapted for university patent management.
Thus, working through Cronon and Jenkins’s account of WARF provides an opportunity to gain a sense of perspective on what now are taken as obvious truths. But at the time, WARF was a work-around to popular expectations of university work, and a work-around to the way that the Research Corporation proposed to do things. It’s only fitting, then, that WARF is started by an invention at the University of Wisconsin which was itself a work-around to federal regulations. The mindset that WARF brings to the development of university patent policy and practice is one of clever work-arounds to public policies. One might say, WARF institutionalized the idea of gaming the system of university research, which led to the IPA program, which led to Bayh-Dole. And in Bayh-Dole we find the same mindset, the same gaming, the same work-arounds, cast in a vocabulary of public interest but in practice being something entirely different.
According to Cronon and Jenkins, WARF was something revolutionary:
But WARF’s revolutionary nature was not that it provided a means for university inventors to have their inventions managed by an agent. Rather, WARF was revolutionary precisely because, as Cronon and Jenkins put it, WARF was “a captive venture.”
WARF came a decade after Frederick Cottrell had set up Research Corporation as a national resource for university inventors. WARF was not revolutionary in the sense of offering invention management services to university inventors. Rather, WARF was competitive. That in itself is fine, but it is also worth noting the differences between WARF and Research Corporation. First the similarities: both are foundations, both act as agents external to universities, both return money from licensing to universities for research support.
Now the differences. Research Corporation was chartered by an act of Congress. It stands outside federal income tax laws. Research corporation was led by a board of directors drawn from industry. In effect, industry leaders consider each university invention and decide whether Research Corporation should assist in patenting the invention and presenting the invention to industry for use. To move an invention to Research Corporation for management is, in a real way, already “transferring the technology” to industry. After recovery of its expenses, Research Corporation provided money to the Smithsonian Institution to support research across the country, not just at the university that hosted research leading to a patented invention. Later, Research Corporation worked out arrangements with universities to share royalties on inventions provided to Research Corporation for management, but under the influence of the WARF model.
By contrast, WARF’s board consisted of rather wealthy alumni of the University of Wisconsin. They set up the foundation to make money, not only from patent royalties but also from the investment of patent royalties in the stock market. Each year they declared a dividend and “gift” a sum to the University of Wisconsin. WARF shared royalties with inventors, but it shared a portion of its overall profits with the University of Wisconsin. And in this, WARF is provincial, a “captive venture.” Money from its operations goes back only to Wisconsin, and in return, Wisconsin requires its inventors to assign to WARF if they are going to pursue patenting at all. Put another way, regardless of the merits of any other invention management process or agent, the University of Wisconsin requires its inventors to deal with WARF: they cannot choose Research Corporation or any other agent, or license/assign inventions directly to companies.
In transferring an invention to WARF, one is not transferring the invention to industry for review, but to speculators on the activities of industry–wealthy alumni looking to make their university wealthy. Certainly there is a version of public spiritedness in such an effort, but it is a noticeably different sort of public spirit than the one evidenced by Research Corporation, which takes a national view and operates to benefit industry generally rather than any specific company, and similarly operates to support research wherever it may be proposed rather than simply funneling money back to research at the same institution that hosted the original work. WARF, by contrast, made its gifts available to support “natural sciences” and “education.”
But WARF was revolutionary in another way:
Thus, as a separate entity, WARF also was designed to end-run the expectation that publicly funded work ought to be made available to the public by publication, not by patent. It’s this expectation–that public funding should result in public benefit–that lies at the heart of the debate about what role patents should have in research work. This is the heart, too, of the idea of a public covenant that runs with patents of a certain kind–patents that cover inventions that might improve human health, for instance, if not patents on inventions made with public support.
Why Should Anyone Patent Publicly Supported Inventions?
But even here, at the heart of the matter, we also have a dilemma. Why, if research the public has funded should be made available to the public, should anyone hold a patent in any findings? Why not just publish findings and go from there? And that, basically, was the federal government position for the research it funded–which wasn’t all that much, beyond agriculture, prior to 1947. Why should one go to the work to obtain a patent, only to make licenses available to all, royalty free? And worse, why would anyone charge for such licenses? Wouldn’t that just add to the cost of using any such invention, and thus be a barrier to use?
It is in response to such questions that we end up with two distinct forms of answer. In the first, university patents are taken out because other patents–hostile to open university scholarship–are possible, and also are monopolies, and patents can be used to break monopolies as readily as creating them. For discoveries made in research, then, a patent might be used to create a commons rather than merely leave an invention to the public domain. A commons permits access to inventions on common terms–thus, a monopolist must contribute to a commons, or refrain from threatening practice within the commons, to enjoy access to the technology placed in the commons. This is the same thinking that underlies the “copyleft” idea in software licensing–use copyright to limit certain uses of copyright. A similar thought goes into commons based on patents: “you may use if you don’t threaten to stop others who are also using.”
The second distinct form of answer follows a different line of reasoning. Patents can be used to attract risk capital, and that capital may then compete with monopolies (whether private ones or merely ones that arise out of habit, or standards, or even commons that become too powerful and so appear as patent pools). The product of risk capital, then, is a new product, an invention made useful as an engine of both public benefit and wealth creation. The patent monopoly, in this line of reasoning, is essential to the task of raising capital to compete with the status quo, with market monopolies, with the dullness of technological stability advancing at a snail’s pace of complacent ignorance. The patent represents a new hope, that of “creative destruction” (to use Shumpeter’s term, perhaps badly)–undo current investments with something new, something defended by a patent, and so able not only to create new opportunities and benefits, but also create new wealth for inventors, for those taking risks–as distinct from those managing and profiting from the status quo.
Each of these lines of reasoning has its merits, and each has its limitations and corruptions. The first line can end up in rejecting the patent system–that inventors should have no interest in their work, simply because public funds are provided to support their work. It’s one thing to reject the patent system entirely (and then we are back to the problems of trade secrets); it’s another to reject the patent system because public money or resources offered as a subvention–an aid to what the researcher proposed to do–were used in research that led to an invention. If public money in research permits a researcher to have a livelihood with income (and thus spend salary on personal goods) and also permits a researcher to gain prestige through discovery and invention (and thus gain awards and the opportunity for consulting contracts and offers to work in industry and other such benefits) and the like, shouldn’t such ancillary benefits of inventions also be forbidden? What do we have left, then, but for some sort of self-effaced research robot, serving the “public” but having no personal interest in the results of the work? Mindless, cruel.
The second line can end up rejecting public interest. Power corrupts, and the power of a patent then also may corrupt. Corrupt, here, is used loosely, of course. One might say that any pursuit of power is merely a form of self interest, and according to a very loose reading of Adam Smith, an “invisible hand” guides cumulative self interest to society’s greatest good. Even Ayn Rand doesn’t go so far as to admire all forms of self-interest as ultimately beneficial. She takes pains to describe the special forms of self-interest that are virtues–having a purpose, seeking one’s own achievements without the need for approval, not compromising with parasitic claimants–and the others that are vices.
But worse, this second line can end up making it appear that it has the public interest more deeply in mind than might any mere inventor. That institutions can care about the public interest in greater, more productive ways than can individual inventors. That somehow, those individuals authorized to act on behalf of institutions can care better about and for inventions than can inventors themselves. In this second line of reasoning, bureaucrats decide who is best suited to enjoy the monopoly power of patents on inventions made with public support. And thus we end up with an argument that universities should own inventions made with public support, that they should pass patents on these inventions on to monopolists to extract maximum value from them, and that by sharing in that value in the form of payments, royalties, research funding, equity in startups, and settlements for infringement actions, the university gives back to the public a portion of what the public has paid to support the research. Except the university, of course, gives nothing back to the public–it keeps the money for its own activities.
There Must Be Middlemen, Send in the Middlemen
In this line of reasoning, however, we see the outline of the arguments behind Bayh-Dole, which are not about American innovation keeping up with the Japanese and the Germans, but rather about how middlemen designated by university administrators should have free access to patents taken out on publicly funded research, so long as inventors receive a share of the action. Although inventors should have no personal right to their inventions–that would be inefficient if not corrupt–middlemen should have such a right, but on behalf of a worthy institution. That’s the argument–or perhaps it is just the illusion of an argument. It starts as a business proposition for inventors–“choose us and we will help you advance your dreams.” It ends as a compulsory assignment scheme combined with a fixation on profiting from monopolies in whatever way profit is to be had–speculating on the future value of patents, trolling industry for infringement, breaking up existing monopolies, increasing the power of existing monopolies, creating new monopolies to “roll up” existing practice, and even creating new products that might benefit the public. There’s a thread of public interest in this line of reasoning, but the fabric itself is simply an interest in exploiting patents for profit, no matter the underlying invention, the effect on the market, or the nature of public benefit.
The next part: