Let’s work the logic of university administrators thinking, ahem, about innovation. We have to do this sort of thing because it appears few university administrators bother with logic. Logic certainly is easily distracted by fallacies and is perhaps then overrated. But let’s give it a try. Let’s start by dividing inventions into worthless ones and not worthless ones. “Worth” is its own problem. There’s “worth” in the sense of “worthy of praise”–such as a discovery that wins acclaim, such as finding a new minor planet. There’s “worth” in the sense of apparent “social value”–a finding, say, that poor people are more charitable than rich people. There’s “worth” in the sense of offering a benefit–such as a new potential medical therapy. There’s “worth” in the sense of “having the potential to make money”–universities call this “commercial value.” And there’s “worth” in “advancing one’s interests”–whether personal or organizational reputation or business opportunities.
Given the different meanings we might give to “worth,” we ought to use a different word for each meaning. But then we would disable university administrators from using “worth” and similar words such as “value” and “benefit” expecting the public to expect one thing when the administrators may mean another–or not mean anything at all, using these words to keep the public complacent with regard to university invention practices.
In all of this, a key question is “worth” relative to the role of the institution making a claim to own inventions. In one version, is a given invention “worth” filing a patent application? In another, is it likely that a university will get its money back from the expense of filing a patent application on a given invention? Or, yet more sophisticatedly, is it likely that if a university seeks patents on a range of inventions of varying apparent worth, is it likely that one or more of these inventions will pay for themselves and all the others, the losers? This last question leads to another–is it likely that if a university seeks patents on as many inventions as it can, is it likely that eventually the university will make enough money from any one of them to cover the costs involved in seeking patents on many? There’s a yet broader argument that patenting is not the most general concern–any “asset” that has “commercial potential” or “commercial value” may and should be claimed, and that potential or value should be realized through any means to withhold access to the “asset” until someone pays and agrees to preserve the university’s control over access–that could be a license based on a patent, or on a copyright, or on trade secret, or ownership of a physical thing (such as a mouse or cell or antibody), or even just being prepared to raise a stink if things don’t go as offered (claim of misappropriation, say, or even an attack on one’s own faculty or students involved).
Even at this point, perhaps you can see problems emerging in the form of the questions. First, the questions are just ones having to do with recovery of the cost of getting involved in the disposition of inventions, using patents. There’s nothing yet of any purpose other than to make enough money to justify the patenting activity–nothing about public benefit, say, or social value–unless patenting is itself put out to be a public benefit, offering social value, worthy of praise. You know, hopeful signs of “innovation potential,” confirming the glories of the university and the appropriateness of public funds–billions of dollars each year–dedicated to such public-spirited research, for which patenting is a confirming, crowning achievement.
From a pragmatic point of view, such questions about expense recovery are ones about survival of an administrative function. I’m told repeatedly that regardless of a university administration’s public comments, the internal discussions are all about the money. That’s been my experience, too, over two decades of work, with a few notable exceptions. When I started in technology transfer back in 1989, the university I was at still operated on old-style principles–if you couldn’t find at least one company willing to take a license and pay at least enough to cover the patent work, then you couldn’t file a patent application. The pressure was to move fast from report of invention to contacting companies with a “non-confidential summary” that might spark a request for a full report along with a non-disclosure agreement, leading to a request for a license.
The need to recover patenting costs in turn put pressure on university licensing folks to seek an exclusive license, as then they need find only one company rather than go fishing for sufficient companies that combined would cover the patenting costs (which, if patenting went foreign, were still substantial). Somehow, it was not attractive to offer a non-exclusive, paid up license for the price of, say, the US patent application cost, and expect multiple companies willing to pay the $15,000 or whatever. Instead, the offers were always (i) pay the patenting costs (or a pro rata–almost impossible to do in practice unless all the companies took a license at the same time, as in a research consortium) plus (ii) a license issue fee plus (iii) milestone payments plus (iv) a running royalty on sales. Essentially, administrators took their exclusive patent license template and replaced “exclusive” with “non-exclusive.” Lazy, clueless, ineffective. This, even after having the example of Stanford’s approach to Cohen-Boyer in front of them: offer a non-exclusive license on terms so easy that companies don’t really have to think about it (a good working definition of “reasonable terms,” by the way).
If one goes about things this way, then the motivation to patent everything one can is to pay for the cost of the patenting operation–that is, to pay your salary and that of the others in the office, and to have money to pay for more patenting in the future. Survival. There’s nothing in this approach that argues that a university should be patenting without any expectation of cost recovery–that patenting and licensing royalty-free is a social good and public benefit. There is such an argument–that the patent system can be used to document new inventions through a national publication (the specification of the patent), and by using the patent system, universities improve the review of future patent applications, provide full information for practitioners (well beyond what an academic journal will permit), and set up research and consulting opportunities as people practice what has been published. In this argument, patenting is a matter of public interest and there is no need to recover the costs of patenting, just as there is no need to do so for, say, public libraries.
It’s just that university administrators, on the whole, have nothing good to say about this argument. Illustration: they claim that Bayh-Dole provides the opportunity for universities to acquire ownership of inventions arising in federally supported work because then universities will be motivated by the profit-making potential of patent positions. It is not that universities are more willing to spend money on patenting “in the public interest” than are federal agencies. No, the argument was that federal agencies were patenting and licensing royalty-free, non-exclusively or so indifferent that they didn’t even bother to draft formal licenses, and that as a result, the inventions were wasted. Universities, so the argument goes, would be more motivated by the prospect of making money from licensing and therefore would license more, and thus (logical miracle here) there would be more public benefit from federally supported research than if the federal government controlled patenting and licensing.
University control of research inventions, then, has to do with making money, and doing so by concentrating the “worth” in a license contract. In this context, “worth” means “is it likely that we can make money through licensing based on a patent position?” Or, more bluntly, “Can we make more money if we have a patent position than if we don’t?” Publicly, of course, there is never anything like this. Instead, the question is, “Will the public benefit be greater if we obtain a patent than otherwise?” If an invention has “worth,” then the answer always affirms university patenting. The account of public benefit is tied to a university’s expectation of profit from holding patent rights.
There is a marvelous Catch-22 in university administrator reasoning about “worth.” If an invention has “worth,” then the university has an obligation to acquire it, patent it, and realize some “return” for its (and the public’s) “investment” in the research. If an invention does not have “worth,” then there is no reason to allow an inventor to get back ownership. If an inventor requests ownership, then the invention must have “worth”–and so back to the top. If an inventor insists that an invention does not have worth, then there is no point in bothering even with the paperwork that would cede ownership to the inventor. If an inventor persists in demanding ownership and is otherwise uncooperative, then a typical university practice is to offer to license the invention to the inventor–again, to get a financial share of any “action” (and to burden any such action so that it is harder to bring off, creating a narrative that the university licensing operation is more effective than that of individual inventors seeking to exploit their inventions).
Thus, administrators create a logic in which university ownership is the only reasonable pathway. Once that is established, then any inventor seeking to resist university claims is (i) unreasonable–the typical inventor fool overvaluing an invention; (ii) violating policy made for the good of inventors and everyone; (iii) ready to lead the university into liability positions the university cannot manage; (iv) creating conditions in which special treatment is unfair to others who did not demand special treatment; and (v) has the potential to sell out research done in the public interest for personal gain–a clear personal conflict of interest that would be otherwise managed (so the rationalization goes) if the university does the selling out and shares a portion with the inventor. With such an array of reasoning, the debate is settled.
So much for inventions that have no “worth” or whose “worth” is merely praiseworthy or socially uplifting. The concern for university administrators is those inventions for which there is “commercial potential” or which can be “monetized” or “commercialized.” The patent position is just one of the possibilities. But since federal policy is based on patentable inventions, let’s stay with that restriction. Behind the federal policy (not that it is what is now intended or expected) are these matters:
Should the patent system be used to announce the invention?
Should everyone have free access to the invention, or are there market conditions (such as the concentration of economic power, organizations abusing patent positions to create monopolies or otherwise to exclude access and competitive development) that would indicate the need for a patent position to counter imbalances in a given market?
If an invention is patented, should in addition access be restricted or encumbered to correct for market imbalances or to address equal opportunity (such as to spread opportunity around geographically (such as to areas with a “labor surplus”–yes, that was the term used) or to minority-owned companies, small businesses, and the like?
Does an invention need to be patented because exclusive control of the invention is the only means by which the invention will ever be used or developed for use (or the shortest means, or the most productive or beneficial means)?
These are policy-maker questions. In the abstract, they are useless. The common properties that patentable inventions have–new, useful, non-obvious–don’t have anything to do with how any given invention, in its circumstances, might be taught, used, developed, adopted, standardized, productized, monetized, and the like. But a policy that those close to an invention should use their best judgment does not sound like much of a policy. And a policy that adds a bunch of standard questions that must be answered before anyone uses their best judgment (for which see 35 USC 209) just encumbers judgment with fussy paperwork (or assumes that those involved won’t have good judgment–all the worse–and that gathering fussy paperwork approved by policy-makers is superior to individual judgment).
In a sense, by demanding a policy statement to dictate ownership of inventions, one already has gathered mental baggage about how to respond to useful findings of faculty-led research. The properties of a “policy”–having a “purpose” based on “principles” announcing “procedures” and authorizing institutional control–are opposed to things such as pursuing unique opportunities, following personal preferences, treating different inventions differently based on whatever the distinguishing difference might be (in inventor, invention, research, application, industry, public expectation, public benefit). Having no policy on inventions is a stronger position for a university than to have any single policy attempting to cover all inventions–even for a mission statement or to announce principles. Certainly no policy is better than a poorly conceived, badly drafted, ineptly practiced policy. Here’s looking at you, University of Missouri.
A second best policy is one that forbids the university from taking any ownership or financial or controlling interest in inventions. If university administrators feel strongly about the need to support any given invention, then they might donate their personally to the cause, so long as they don’t acquire, personally, any ownership or financial or controlling interest in the invention (or anything else–a business built around the invention, say, or the next direction for research proposals or potential sponsors or future inventions).