If state university patent policy is actually state law . . .

Over the course of a number of years, Professor Galen Suppes was involved in litigation with the University of Missouri over rights to inventions. Among other things, the University claimed ownership of inventions that Suppes made at another institution before joining MU, which the other institution had released to him. When Suppes sought to appeal MU’s actions on this and other matters, the university interpreted its policy to preempt the appeal. The policy stated that a faculty member could appeal only if there was no litigation. The idea was a faculty member could not both appeal and sue. But MU pulled a fast one and sued Suppes. Then claimed that its suit against Suppes meant that Suppes lost his right to appeal. You can see where this goes for any appeal that MU might worry about losing. Just sue. No matter. The university has beaten back Suppes at every point.

Professor Dennis Crouch, at PatentlyO, has an interesting commentary on one aspect of the multiple cases, one in which Suppes sued the MU technology transfer office for claiming ownership of his inventions, preventing him from pursuing patents on these inventions, and then doing nothing with the inventions itself. You can see there’s a point to Suppes’s argument. It’s just that Suppes’s petitions were batted back and forth between federal court and state court. State court controls ownership of inventions. Federal court controls patent law and ownership of patents. The state, via MU, claims ownership of inventions and refuses to seek patents on them and refuses to release its ownership claim. State court sides, easily enough, with the state. Federal court declines to get involved.

But here’s Prof. Crouch’s comment:

One way to think about Suppes argument here is to consider the employment contract as a state law that applies to anyone who works for the state (at least this branch of the state). And, the state law says that the University (rather than the inventor) owns the inventions.

The University of California has made much the same arguments in court defending its research enterprise practices. University policy, its counsel declares, “has the force of law.” That’s interesting, given that no one has much say in how university policies are drafted and ratified. It’s like a state then grants its agencies the right to create law without legislative review and approval. A few states–Ohio and Florid among them–have state laws that appear to dictate that ownership of inventions made by university employees or using university resources (even if made by non-employees) vest with the university.

The Supreme Court in Stanford v Roche relied on the idea that inventions vested with inventors.

Although much in intellectual property law has changed in the 220 years since the first Patent Act, the basic idea that inventors have the right to patent their inventions has not. . .

Our precedents confirm the general rule that rights in an invention belong to the inventor. . .

In accordance with these principles, we have recognized
that unless there is an agreement to the contrary, an
employer does not have rights in an invention “which is
the original conception of the employee alone.”

The Court did not bother with California state law in Stanford v Roche, even though California has a law that is directed to the scope of an employer’s claim to inventions made by employees. No doubt that’s because the court was not asked to write a tome on invention ownership but rather to decide whether Bayh-Dole vested title to inventions with Stanford. The court found that Bayh-Dole did no vesting.

But if it’s the case that any university policy rises to the level of state law, then why should any university bother with invention ownership language in employment agreements or assert that assignment of inventions is a condition of employment? That would appear to be wasted energy if all university administrators had to do was get an executive order that the university owned all inventions made within the scope of its claim–by employees, by use of resources, related to an employee’s professional expertise, under the auspices of the university, collaborating with any university employee (these are claims actually out there in the wild).

But let’s look at the MU policy claim to ownership of inventions, such as Suppes. Here’s what Prof. Crouch cites–relying on what MU cited multiple times in court:

The University “shall have ownership and control of any Invention or Plant Variety developed in the course of the Employee’s service to the University.” University of Missouri Collected Rules and Regulations § 100.D.1.a.

There’s a bunch of commentary in the (now closed) thread at PatentlyO that is based on just this language. And it appears to be pretty tight. But that’s not the complete statement of the policy. Look:

D. Rights of University and of Employees

1. The University, as the employer and as the representative of the people of the state, shall have the ownership and control of any Invention or Plant Variety developed in the course of the Employee’s service to the University.

Each Employee of the University is required and shall upon request assign to The Curators of the University of Missouri all domestic and foreign rights to any Invention or Plant Variety made by the Employee within the general scope of her/his duties as Employee of the University, unless such requirement is waived in writing by the University. Remuneration to the Employee for such assignment is detailed in Section 100.020 E.2.c and E.2.d.

I have bolded two statements that represent variations on the claim of scope. That is–there’s no doubt that the university asserts ownership of certain inventions. The assertion isn’t the issue. The issue is the scope of the claim. First the university policy states the scope as “in the course of Employee’s service to the University.”

One wonders how Suppes’s inventions made before he became an MU employee could possibly be within the scope of MU’s policy claim here. How could a non-employee come with a claim directed at an employee’s service? The MU policy goes out of its way to define “Employee”–go look. Short of it is, “any person receiving compensation for services rendered” plus anyone receiving any other “compensation” (so, compensation but not for services rendered), plus anyone who is stark raving made enough to agree to be treated within the definition of “Employee” even though they aren’t an employee and haven’t received compensation.

The scope of claim then is immediately restated as “within the general scope of her/his duties as Employee of the University.” So we have “course of Employee’s service to the University” and then “general scope of duties as Employee.” Sort that out. How can a person “receive compensation” that’s not for services rendered and still be compensated and provide services to the university but not one for the other? Worse, how does one have “duties” if one hasn’t accepted the university as the “master” with the right to assign and control those duties? We might think of faculty freedom of research and publication–both of which MU policy swears are fundamental to the university.

The MU patent policy, however, provides help. We are into some of the oldest text in the MU patent policy, going back decades while crazy stuff like the definition of “Employee” was erected around it. The policy itself defines what it means by “general scope of duties for the University” (I know, yet a third restatement–but this is supposed to be treated as law, per Prof. Crouch’s conjecture):

An Invention or Plant Variety shall be considered as having been made within the general scope of the Employee’s duties for the University if either of the following conditions are met:

So the definition of scope involves two possible conditions–not everything. The general statements of scope cannot be taken out of context. Let’s see, then, the context:

(1) Whenever the Employee’s duties include research or investigation, and the Invention or Plant Variety arose in the course of such research or investigation and is relevant to the general field of an inquiry to which the Employee was assigned; or

Go slow. This is supposed to be university law. Only research employees–“duties include research.” The invention arises in the course of that research. Okay. In the course of research duties, not any old research, not any inventing outside of research–no epiphanies. No messing around with stuff in at home. Next: the invention that arose in the research duties was “relevant to the general field of an inquiry.” Okay–even inventions made in the course of research duties but that aren’t relevant to the field of the an inquiry are excluded. And now the zinger: the inquiry–the subject of the general scope of duties to the university–is one “to which the Employee was assigned.” That is,

(1) The university must assign an employee to an inquiry.

(2) That inquiry involves research or investigation.

(3) An invention gets made in the course of that research or investigation in that inquiry.

(4) The invention is relevant to the general field of the inquiry.

If all four go true, then condition (1) of the MU patent policy is met. Given that MU faculty are not assigned to inquiries except by their own express agreement to accept the control of the university over their choice of research, condition (1) never is in effect as a general claim for faculty inventors.

You can see how misleading it would be to cite to a court this:

The University, as the employer and as the representative of the people of the state, shall have the ownership and control of any Invention or Plant Variety developed in the course of the Employee’s service to the University.

When the policy defines service to the University to be, effectively, “assigned to an inquiry.” While for ordinary staff employees, things work out fine–staff employees will always be assigned to work, the policy requirement with regard to faculty–with the conjecture this is law–would read entirely differently, “The University shall have ownership of any invention developed in the course of inquiries involving research to which faculty members expressly agree to be assigned, having given up for the purpose of the inquiry their right to freedom of research to which they are otherwise entitled under University policy.”

There’s a second element to the definition of “service to the university”:

(2) Whenever the Invention or Plant Variety was in a substantial degree made or developed through the use of University facilities or financing, or on University time, or through the aid of University information not available to the public.

So, even if a faculty member has not been assigned to a inquiry involving research, a faculty inventor might use “in a substantial degree” certain university resources, and that, too, would be considered “within the general scope of duties for the university.” It’s not any inventions using any university resources. Rather, the inventions claimed are ones that use “in a substantial degree”–that is, a substantial portion of the inventive work in relation to all of the inventive work, rather than “use of substantial resources” (such as use of an expensive instrument) or “substantial use of resources” (use of lab space for an extended period of time). If one spends $10,000 of university funds on inventive work, and a total of $10,500, the university funds meet the “in a substantial degree” standard. If one spends $10,000 of university funds and $200,000 total, then the “in a substantial degree” might be less clear. Again, if this is law, then it’s not just administrative handwaving to mean whatever administrators might say it means, even if we defer to the administrators as the first interpreters of their “law.”

Further, the claim for making or developing an invention (that is, working on an invention after it has been made) “in a substantial degree” is limited to use of facilities, financing (money, loan), time, or non-public university-owned information. Left out–equipment, software, telephones, supplies, personnel, public information, information held by faculty without an obligation not to disclose. You see the point. Part (2) of the policy definition of again sites a narrow set of conditions that constitute “general scope of duties for the university.”

For university administrators to establish a claim to any given faculty invention, then, they cannot merely cite the policy statement in general. Nor can they make up anything they want regarding “general scope of duties for the university.” It’s not just general scope of duties–but duties “for the university.” And for that scope, the policy gives two narrow requirements–

(1) in an assigned inquiry and relevant to the field of that inquiry

(2) made or developed in substantial degree with university facilities, financing, time, or aided by university non-public information.

Thus, if MU’s policy really is a form of state law, then ought we not read it as law–and not in some deceptive, incomplete manner. If a law goes out of its way to define its usage, would not we expect that definition to control our interpretation of the law, especially where the law is intended to take ownership of what would otherwise be personal, not university, property.

Oh, MU’s patent policy follows with this, for the sake of completeness:

b. An Employee of the University shall be entitled to all rights resulting from any Invention or Plant Variety which was made by her/him outside the general scope of her/his University duties, as defined in Section 100.020 D.1.a; for example, the University shall have no rights to Inventions or Plant Varieties developed in the course of summer or consulting employment by an employer other than the University of Missouri, and not resulting from research or information obtained from University services.

That is, if an invention is not within the scope of D.1(a)(1) or (a)(2), then the “Employee” has “all rights” in the invention. It’s clear that MU patent policy does not permit administrators from using just part of the definition at 100.020 D.1.a. One has to include the two defining conditions. Those two conditions are not merely “illustrative.” They are, according to the policy, a direction to administrators about how to interpret the scope of the university’s claim. If the conditions were merely illustrative, then administrators could make up whatever they wanted “general scope of duties for the university” to mean–they could claim anything. Why have all the convoluted apparatus if the policy reduced to “The University may claim any invention it desires, so long as it asserts that the invention comes within the administration’s then-current interpretation of “general scope of duties.”

The Shaw court dealt with the University of California’s claim that its patent policy had the force of law. No, the court found, the university had entered into a contract with Shaw, and as such, Shaw had an equal right to the benefit of the contract. In the Shaw case, the university had tried to change its royalty policy. The court ruled that while the university could change its policy, it could not do so with regard to Shaw because it had made a contract with Shaw.

We find no merit in the University’s suggestion that, as a public employee who is employed pursuant to statute, not contract, Shaw has no vested contractual right in his terms of employment, such terms being subject to change by the University.

Here’s the MU patent policy:

With respect to Employees, these patent and plant variety regulations form a part of the employment contract. These regulations constitute a condition of employment of all Employees of the University, and shall be effective as to all Inventions and Plant Varieties made during any period of employment from and after the date of their adoption.

Employment does not give rise to an employer’s claim to any given invention made by an employee. But here it’s clear that MU asserts that the policy is part of a contract with each employee. The policy might change, but the employee has an equal right to the benefits of the contract to which the policy attaches itself. In that case, the policy in place when the contract with the employee is first made is the policy that controls. If a university changes its policy, and does not get the agreement of employees to accept the change, and does not terminate those that don’t indicate agreement, then the change does not enter those employees’ contracts. The Yale v Fenn court found the opposite, but Yale just had a patent policy and did not make that policy part of an employment contract. And anyway Yale made material, deceptively false statements about Bayh-Dole that appeared to sway the court. But isn’t that like almost any university these days–snooker the court for the “public good”?

The Suppes cases differ from Shaw in their basic claims. Shaw argued that the university had no right to change its policies with regard to him without his consent. The court agreed. Suppes argued that the university had no right to his inventions, or if it had a right to them, it also had an obligation to file patent applications and pursue commercialization, as its marketing material to faculty claimed. The university in reply cited a partial statement of the policy scope of claim and the court looked no further to see how the university “law” read in its entirety. Justice might be blind–but in this case it was merely blinded by clever lawyering.

If the university’s policies on this matter are law, why is it that everyone only thinks that the law applies to inventors and not also to administrators? It’s a weird sort of law, in which the judicial branch and the executive branch of university law are merged and the legislative branch is reconstructed as the dictates of the owners of the organization–whatever the regents decree, whatever administrators pick and pull from those decrees.

If the MU policy is law, then it ought to be  interpreted in full context–not just a selective, misleading bit of the policy, not just as part of the legal bluffery to snooker a court to a favorable decision. And if folks are going to provide a commentary on the case, it would be good to look at the MU policy in full–as some of the comments in the thread suggest. The patent policy in that case would be subordinate to the university’s policy on freedom of research and publication. A patent application is a publication. Faculty are free to choose their research. Freely chosen research is not assigned research. So long as an invention is not made or developed in a substantial degree with a specified subset of university resources, the university by policy–by administrative law–has no claim on it.

The irony is that MU’s patent policy statement of claim is headed with

“Rights of University and of Employees”

It’s just that as MU administrators interpret the policy, employees apparently have no rights. They don’t have the right of ownership of inventions that the policy does not claim; they don’t have the right to have clear guidance on the meaning of “in a substantial degree”; they don’t have the right to expect the university to file patent applications on inventions that administrators do claim; and they don’t have the right to have the university use reasonable efforts (even if not best efforts) to see that the inventions administrators claim provide a benefit to the public–through licensing, through commercialization, and the like. In the Suppes cases, the courts found ways to avoid making a decision, allowing MU’s claims to stand, or sided with MU without taking into account MU’s policies. It was enough that MU administrators insisted that they had a right of ownership, and that Suppes had been bad to resist those claims, object to their management decisions, and ask that the policy be read according to the full statement of its requirements, and not picked and pulled as if it was an old junker offered for convenient parts.

For university research enterprise, then, we reach a very different line of discussion than that pursued by Prof. Crouch. There’s much in his commentary worth considering, but it goes off on the law. Here, we go off on the practice. The University of Missouri has fought to preserve a dismal IP practice. Certainly Suppes was a prick in their operations and they spent millions in legal fees to beat him back, prevent a review of the IP program, and get him dismissed. As for the IP program itself, then. Who in their right mind would want to deal with them? Who would want to work creatively in such an organization? Who would want to do business with it? Sucks to be MU.

[Personal disclosure. I was retained to be an expert witness in a Suppes case, was deposed, but was not called to testify.]

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