Consider the implications of an assignment of an invention in the context of big projects and greater inventions. If one assigns an invention, having already granted a license to that invention, then the license follows the assignment–unless, of course, the owner of the invention terminates the license (if it has that right). That is, the new owner has the same obligations under the license as did the prior owner. If the prior owner granted a sponsor a license that extends to a big project–say, commercialization–then assigning an invention to a patent management firm does not change the scope of that license. We are still dealing with the big project, but now it has expanded to include a new assignee of the invention. Same deal if the assignee is a “commercialization partner.” The big project defined by the university and used to justify obtaining ownership of the invention, obtaining patent(s), and assigning the invention is still on, regardless of how the university subsequently deals with ownership of the invention.
If it were otherwise–if a university could define a big project (commercialization) and claim that small research projects are justified by being part of the big project, but then cut off sponsors of the small research projects from access to greater inventions simply by assigning rights in some aspect of those inventions to a private monopoly interest, then we would have a classic bait-and-switch scam. “You will get a non-exclusive license, but it will help you only if we don’t assign the invention to someone else, which we are determined to do if you don’t commit to fund the entire big project and make commercial product, so if you refuse, you you won’t get anything you can actually use, you poor loser sucker sponsor. We will see to it that the development necessary to create commercial products (and any associated patent rights) prevent you from having full access to the results of our big project, even though you have supported that big project.” No wonder industry sponsored research agreements at universities are so fraught with company bitterness!
Now let’s deal with exclusive license and assignment in the context of big projects. University administrators routinely assign inventions using a written instrument labeled “exclusive license.” Their fingers-crossed make-believe claim is that they have not assigned any particular patent right, and therefore they cannot possibly have assigned the underlying invention. It’s just that they are wrong. Whether the paper title to a given patent has not been altered does not have anything to do with whether the underlying invention has been assigned. The typical university “exclusive license” works roughly, according to this premise: “we will assign to you this invention on the condition that you grant back a license for government and limited nonprofit use and agree that the university will be listed in the register at the USPTO as owner of patents for which it has applied or which have been issued to the university.” Put another way, a requirement of the “exclusive license” is that the assignee of the invention not record its interest in a patent with the USPTO as provided by 35 USC 261:
An interest that constitutes an assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.
That’s an interest in a patent or patent application. But if an “exclusive license” functions to assign the invention–then we must follow the invention, not merely a particular patent that covers some particular slice of the invention, some particular “claimed” part of the invention.
In federal copyright law, and exclusive license is defined as a transfer of ownership. Essentially, an exclusive copyright license assigns the copyright that is defined by the exclusive license. In federal patent law, courts have held that an invention is assigned when all “substantial rights” of the invention are exclusively licensed. The rights to make, use, and sell are generally regarded as these substantial rights. Reserving rights for government or nonprofit use doesn’t change the outcome. A university could license exclusively just one or two of these substantial rights–the right to sell, say, and license the other rights non-exclusively, if at all. In such a case, the university’s exclusive “commercialization partner” would have an exclusive license but not an assignment of the invention. The commercialization partner would have an “exclusive commercial position” but not a monopoly right in the entire invention.
But most universities don’t license just the right to sell exclusively. Instead, they license exclusively all substantial rights–make, use, and sell–plus they acknowledge the right of the licensee to enforce the patent on the invention–something only the owner of an invention has standing to do. Such an exclusive license is an assignment of the invention.
This failure is perhaps the single greatest flaw in university patent management. Transferring all substantial rights in an invention means that university administrators deal in monopolies rather than in distributing opportunity to a potentially broad community of users and developers. The trade in monopoly runs against university values (publication, public service) and against public expectations of a university (that it is aloof from commercial competition, does not play favorites, does not compromise its commitment to best judgment with financial entanglements). The trade in monopoly also suppresses access to new research findings for the research community and prevents expert early technology adopters from gaining access to those research findings.
If university patent brokers licensed their make and use rights non-exclusively, then anyone could make the invention; anyone could use the invention. The concern with regard to commercialization would simply be whether a market was large enough to support more than one company selling product based on the invention, and whether the development cost to produce such product was such that a monopoly position on selling product (if only for a limited time) was necessary to justify that development investment.
These observations form the basis for the make-use commons, which should be the first and primary objective of a university’s patent management program. Any invention that a university claims ownership of should, by default, be placed in a make-use commons, licensed on a fair, reasonable, and non-discriminatory basis–and probably royalty-free.
What is the effect of such an assignment of invention on a university’s big project? Ah, that’s the issue. It’s easy to think of an assignment as “moving the invention” to a “commercialization partner” and that’s what is meant by “technology transfer.” But that way of representing the action obscures what is going on. If a university grants a license to me, the bakery owner, in any inventions that arise that I have supported, and I support an initial small project that the university insists is necessarily part of a larger big project–so that the small project necessarily supports the big project–then I have supported the big project, and have an equitable (if not contractual) right to any invention that I have supported.
Now, take a breath. If the university as part of that big project assigns its invention to a commercialization partner to complete the university’s big project, the license I have includes rights to whatever the commercialization partner might develop in the big project. My license is to the greater invention; my license follows the assignment of any part of that greater invention. That is, by accepting an assignment of the invention I have supported, a “commercialization partner” joins the university’s big project, even as it appears that the university is offloading (“transferring”) the invention for commercial development. The university has declared from the outset of the earliest small project that commercial development is an essential part of a big university project. The commercialization partner joins that big project. It does not matter whether the commercialization partner joints the project by sponsoring research at the university with the expectation of a license or assignment, or takes assignment and self-funds development, perhaps even securing additional patent rights in the greater invention in the process.
Commercialization does not have to happen this way. But university administrators have chosen to do it this way. They demand that it be done this way. They write policy and procedure documents that enable if not require this approach. Their template agreements expect this approach. One does not have to kill all the fish in the lake as early as possible–“from the moment they become fish!” But if that’s what one does, there it is. Wishing it were different doesn’t do much. “I killed all the fish in the lake, but let’s sign a contract that stipulates we pretend that I didn’t kill all the fish and they are mostly still alive.” At this point, we reach a kind of administrative insanity.
We have dealt with the idea of projects, and bigger projects supported by smaller projects. Among these bigger projects, universities have included by policy a project to commercialize inventions. That bigger project exists until it is excluded by an exception to policy. This is one of the disasters that university patent brokers have brought on their institutions–good for the brokers, bad for just about everyone else. If it weren’t for the shrill voices touting the disaster as virtuous, claiming it is endorsed by federal law, and presenting utterly goofball metrics as proxies for its “success,” most anyone could see what a disaster they have made.