Best practices in university invention management, 6

We reach the ipHandbook article’s “conclusions.” Suddenly, we return to the land of reason:

The principles underlying this policy have evolved from the line of court cases that, in the absence of a written agreement, hold that an invention belongs to an employee-inventor unless the employee was hired to invent or assigned to solve a particular problem (Standard Parts Co. v. Peck). 

That works. Things are easy. Don’t have a written agreement unless you absolutely need to have one (such as to comply with a research contract or is required to commit unusual facilities or funding).

Where no written contract and no implied contract to assign is found, the inventor owns the invention, subject to the employer’s shop right to use the invention if it was made with the employer’s resources or facilities.

The university gets a shop right. That’s its equitable compensation for providing resources. Things are still clear as day. Ownership is not in doubt. The only question is whether the inventor can sue the university for infringement. At public universities, the answer is already “no.” Sovereign immunity.

Our author then cites an “expert in IP law” who argues apparently that university faculty are not hired to invent and should be treated differently than other employees. Our author disagrees:

This conclusion is unsupported by the case law, which does not distinguish between university and commercial employees; in fact, the cases of Speck vK. D. I. Precision Products Inc. found specifically that university professors and researchers are, by definition, hired to invent.

It’s that “by definition” that grates. Let’s play the game. There is no documentary evidence for most university faculty that they are hired to invent, that their promotion or job security depends on their inventive productivity, and even that if they fail to report inventions and therefore blow patent rights, they are ever disciplined. “Hired to invent” is an assertion made by university attorneys charged with harassing faculty inventors. That’s about it. The documentary record–in university policies, in university appointment letters, in the actual practice of university control (or lack thereof) of research activities–strongly argues that most faculty are not hired to invent.

Faculty are not ordinary university “employees” when it comes to their creative activities, whether in organized research or otherwise. That’s a fact established in pretty much all university formal policies. University licensing folks may hate that, and may hire attorneys who disavow the differences, and it may even come to be seen as “best practice” to work to undermine rather than respect those differences–but let’s get honest. Not only are faculty different than some generic employee when it comes to their inventions, but universities are different than other forms of organization when it comes to their “business.” Clever attorneys can obscure the differences, and judges can be snookered. But that’s not the end of it–other than as university licensing offices aim to snuff faculty inventors’ claims to ownership (using “best practices,” of course).

Beyond the legal posing, we have the simple question of outcomes. Have university bureaucrats done a better job at making inventions made by university faculty broadly available for use and enterprise? Answer: little evidence that this is so. Answer: there is strong evidence that this is not so. Most inventions claimed by university bureaucrats sit behind patent paywalls, never licensed, and when rarely licensed, almost always licensed exclusively, and then often those inventions are never developed into commercial products. Maybe 1 in 1,000, to follow the University of California’s estimate of success. 1 in 1,000 inventions becoming lucrative is apparently sufficient to keep bureaucrats afloat in the business of owning all inventions. All other inventions–especially with university patenting–end up being unavailable for use for two decades. That’s the evidence. Explain how withholding inventions–even from industry research use–while hoping for an exclusive licensee willing to speculate on the creation of a mass market product serves the public interest. Explain how doing so even serves a university’s interest. Nah. It really is bullshit–the outcomes are horrible. But university patent administration is the body of a giant beached whale that fails to die. It has more potential to rot than ever to swim.

Ultimately, without a written agreement, the facts of each case determine ownership; a particular professor may or may not be found to have been hired to invent or to resolve a particular problem.

This, too, is nonsense, even in the context of the advice the article offers. University patent policy struggles to control, absent a written agreement. Some states have laws that assert university ownership–but even there, the question is the scope of the claim relative to what constitutes employment. And if there is a written agreement, then Shaw would appear to control–the patent policy cannot be unilaterally changed or interpreted against the reasonable understanding of the faculty inventor. And beyond that, most university “written agreements” are so badly drafted that they work against university claims to ownership–but for abuse of authority and nearly unlimited legal budgets to bully inventors to assign.

Our author concludes that it’s uncertain whether for any given invention the university will have a claim to equitable title. That is, it may not be at all equitable that a university claim to own any given invention. But, apparently, a university licensing office can fix that by forcing new employees to agree even to inequitable claims made by the university! Just don’t say it in so many words. “You agree that we own whatever we in the future decide this agreement gives us the right to own–even if you would find it outrageous if we told you now what that includes.”

As with any class of employees, probably no blanket statement can be made as to when university professors and researchers are considered to have been hired to invent.

Faculty aren’t employees for their research unless they agree to be. But here, at the end, we reach an important point. Let me restate it. “No policy–“blanket statement”– can establish that faculty are hired to invent.” Yes. Reason: faculty are assured by university policy of the freedom of research and publication. It’s not just that folks have not found the right words for a blanket statement–it is that the foundation of the university is built on freedom, not subservience. Built on confidence, not fear. Built on the offer of support, not threats to terminate appointments and destroy opportunities.

For managing intellectual property, invention, and ownership issues, the best approach is always to require employees and visitors in a position to invent to sign IAAs as often as employees sign W-2 forms.

The best approach cannot possibly be as recommended here, given what has been presented in the article. It’s clear that IAAs don’t work–they can be missed; they lock down policy creating different inventors under different versions of policy; they often are ambiguous with regard to scope–especially what constitutes employment for faculty assured of freedom of research and publication; they are to be interpreted against the drafting party or become uneforceable agreements to agree; and there’s no blanket statement that will fix any of this.

How about instead we keep it simple. University administrations have no unqualified interest in owning inventions, nor to exploit those inventions for patent licensing income. Furthermore, over the course of over 75 years of attempting to deal in patent monopolies, university administrations have mostly failed, doing a lucrative deal once every decade or two at the highest performing licensing operations. For most such deals, the university did not create the opportunity but rather stepped in to take a share of the income. That’s the reality. Inventive stuff gets out of universities despite university ownership claims, not because of them.

If we keep stuff simple, university policy assures all those at the university that the university will make no claim on their inventions unless the inventors have promised to assign those inventions. The university will make not ask for any such promise unless (i) it is required by a sponsor of extramural research and those involved have agreed to work under that condition; or (ii) is required to provide special support expressly for the development of an invention that otherwise cannot be provided and those involved have been made aware of the arrangement and expressly agreed to it; or (iii) an individual is hired to invent and that expectation is expressly stated in the advertised job description and the offer letter. Policy would also provide that faculty are not hired to invent unless they expressly choose to be so hired; nor are students, even those with stipends such as graduate students.

That is, best practice is to use IAAs sparingly, only to confirm what potential inventors have agreed to, based on an understanding of the circumstances. For extramural sponsors, any issue with regard to the disposition of any given invention is between the inventor and the sponsor. The university need not have any stake in such matters–just as it does not have (were it to comply) in the case of federal research funding under Bayh-Dole’s standard patent rights clause. Instead of attempting IAAs for thousands of “employees”–and non-employees–have twenty or fifty that matter, and pay attention to them.

By not making an ownership claim to all inventions, a university quells the noise of useless inventive work and may focus on those inventions that inventors actually want assistance in managing. The fundamental, the best, the most effective invention management at universities comes about when the inventors request the university’s assistance. It is at that point that one finds the sweet spot for university involvement–

inventions that are not so well positioned that the inventors can put them into play themselves, using legal counsel and business advisors that know the industry and support the objective, whether that’s a startup, a big-ticket exclusive deal, an industry standard, or open publication;

[sweet spot]

and inventions that are not so strange, hopeless, or unsuited to university administration that the university lacks the expertise or resources or mandate to get involved.

For inventions in the middle are selected by inventors and their advisors because they are suited to university involvement. Inventors choose the university and the university has the freedom to decline.

Within this framework, a university does not even have to take ownership of an invention in order to provide support. A university might offer to provide funding for patenting in exchange for a share of any income the inventor might make–along with other parameters to the deal. For that matter, it may be in the public interest to assist an inventor to obtain a patent so that the patent can be contributed to an open standard–with the inventor and university gaining recognition for their action, and that recognition becomes the intangible asset that carries the value of the invention management, not some exclusive patent license that precludes use in a standard.

This framework–a patent policy that limits institutional claims on invention ownership, establishes a standard for when a situation calls for a written agreement that provides for university ownership, and authorizes the university to act in support of private invention ownership without itself taking an ownership position–offers a clear, effective, simple approach to invention management.

A university acquires inventions because the inventors desire that outcome, sponsors desire that outcome. A university supports inventions because doing so leads those inventions to be placed in the public interest, such as becoming available as a standard, or assuring industry of non-discriminatory access that will not be disrupted by speculators acquiring ownership.

In this approach, university startups don’t have to take a license from the university–inventors work out their own deals. The university might release inventors who are also university faculty or employees to be involved in the startup in exchange for some share of income received by the inventors or other employees, or for some other public commitment. Imagine that–bypass the invention reporting, the uncertainty of ownership claims by the university, the demands and disputes. Just handle the stuff that inventors ask you to handle, as part of research requirements by sponsors, or in exchange for special assistance, or because, well, it’s just the right thing to do. Imagine that–instead of all the totalitarian wrangling, why not focus on owning those inventions that it’s equitable–for all concerned–that the university own.

That policy is, comparatively, simple to establish and administrate. That policy selects for inventions suited to university expertise and role. That policy weeds out everything that the university would get in the way of, would bungle, would have no idea what to do with. That policy allows a university licensing office to focus on the select things that inventors want the office to manage. That policy allows inventors to chase whatever opportunities they wish for anything that falls outside of a university’s choice of its proper role.

A university licensing office might then say–“we handle inventions only where the goal is to license non-exclusively under fair, reasonable, non-discriminatory terms. If you want to do an exclusive patent deal, find your own broker or start your own company.” Then deal with the issues involved with university personnel seeking income from patent deals relative to their university research activities. The conflict of interest then is personal, rather than institutional, and the university can provide support for inventions by serving to manage personal conflicts of interest and to prevent personal conflicts of interest that cannot be managed. You know, the stuff of federally required conflict of interest policies for federally supported research.

Universities used to have patent policies that worked this way. Stanford even had such a policy well past the onset of its Roche disorder. Bayh-Dole was premised on the effectiveness of such policies, and was drafted and implemented to respect the role of the inventor–even if Senator Bayh later claimed that inventors were to be last in line to have rights in their inventions and so were to be first in line to be screwed over. The Supreme Court disagreed with Senator Bayh and with all the little scores of devilish university attorneys who ran up the wall backing Senator Bayh.

The university patent policies that formed the basis for the claim that universities were better at managing inventions for industry use than were federal agencies were the policies based on the freedom of inventors to own their inventions and decide on a course of management. In 1960, the University of California insisted that faculty had no obligation to assign inventions–doing so was voluntary, to help the university raise money for research. Stanford held out on a similar policy into the 1990s, though by then administrators clearly regretted it.

Neil Stephenson postulates that technology tends to overshoot its optimum in search of profits. We end up with five-bladed razors not because five blades are technically better–there are arguments they may be worse–but because five blades extend commercial monopolies and keep profits up. The same postulate appears to hold for university patent policies. We are long past the optimum policy. Best practice now recommends totalitarian control of inventions, regardless of outcomes, with information about management suppressed. Ownership becomes a matter of dispute and threats, inventors are depicted as oddities, unreasonable, and uncooperative. Faculty are reduced to servile employees working for the benefit of administrators, the “owners” of the university plantation. It’s all ugly, it’s complicated, and most of all, it is grossly unproductive.

An alternative is to scale back to the policy optimum. Inventors own and can pursue their interests. If special circumstances show up, use an agreement to record the commitments inventors and the university make. Manage personal conflicts of interest where patenting activity appears to adversely influence research conducted at the university. Adopt non-exclusive licensing as a university default for the inventions it accepts for management. Request a financial interest otherwise (as many Canadian universities do) in exchange for assistance and skip the invention ownership battle.

Invention management does take a degree of expertise. No question. But there’s no help in university administrators making invention management way more complicated than it ought to be. Rather than helping university administrators establish hopelessly uncertain “best practices” based on crappy policy practices that undermine the university, we need legal advisors willing to help university officials rediscover the policy optima that at one time fueled a great optimism about university-hosted research.

“Progress” in university patent policy then means rolling back policy–to about 1960. Federal contracting regulations allow such a thing. Industry would welcome it. Universities would have every bit as much licensing business to handle, but without the bogus statistics on patents and licenses, startups and income. And without the incessant disputes, the awful trail of paperwork, the inventions lost in the noise of binders full of inventions, and the reality that most of the patent activity undertaken by universities is wasted effort–expensive, bureaucratic, blocking invention use, non-compliant with federal regulations, the carcass of a beached whale, just before it dies.

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One Response to Best practices in university invention management, 6

  1. You make a bunch of interesting and valid points.
    But my question refers to digital innovation, such as apps and data related tools.

    We’ve seen with the Cambridge Analytica / Facebook scandal that governance of intellectual property opens a whole new chapter in this debate.

    Sponsorship and patents simply add to the potential confusion.

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