University Patent Policy for Effective Technology Transfer, 7: Transfer pathways

We are working through what a university patent policy should look like to support effective technology transfer practices. The Eat and Fart model–claim ownership of everything and mostly fart away opportunities to transfer so long as one exclusive deal every two decades is lucrative–is among the least effective approaches one might take to technology transfer. The Eat and Fart model is a bureaucratic risk-averse parasitic survival model. All that matters is that one show the potential for making big money some day from some patent somewhere in an ever-growing “portfolio.” That’s the antithesis of technology transfer. It’s what a bureaucratic parasite would do. And they have. There’s your primary effect of Bayh-Dole–attracting bureaucratic parasites to university administration where they can destroy long-standing (and productive) policies of research freedom–freedom from institutional meddling and central control.

We have talked, then, about transfer relationships. Technology suited to institutional management of IP transfers effectively through institutionally sanctioned relationships. A good objective for university patent policy, then, is to identify inventions that are suited to institutional management and authorize university personnel and resources to acquire and manage such inventions.

Now consider again those two scenarios. Let’s expand them a bit. We will start with the offer of a non-exclusive patent license. I know–you never, never do that. Then we will consider the offer of an exclusive patent license.

Scenario 1:

University offers a non-exclusive patent license for $5,000 with no post-license assistance other than delivery of documents at the time of the license.

Scenario 2:

University offers a two-day research review workshop for $5,000 led by the team that made the invention. Up to three people may attend on each registration. Companies attending receive a royalty-free, non-exclusive license to the invention and for the next year, access to the research team for up to 10 hours of assistance on an as-available basis and notice of updates, plus a free license to any of those updates.

Here are some ways that these scenarios differ as a matter of effective technology transfer practice.

Making the transaction a matter of legal review

In the first scenario, the company must determine whether a license (a promise not to sue) is worth $5,000. That review includes legal counsel, which must assess whether the patent (if there is one yet) is valid, and even if it is, whether the invention is necessary for whatever the company is doing or might do in the future. Technical people don’t negotiate patent licenses. Legal people do. Leading with a patent right means that one is all but insisting that legal people get involved early in any prospective “transfer.”

I once worked with a big engineering firm whose research administration people were upfront about things–if a research contract with IP terms had to go to legal, they assumed the deal was dead. Like that.

That legal review is carries another serious concern. Even doing the review puts the company in an awkward situation–if they look at the university’s patent position, and they are doing something that infringes claims, then they will have to take the license (or change what they are doing, or risk an infringement suit) and if the patent has already issued, then they may also be liable for past infringement–which isn’t necessarily covered in the university’s offer and may be a problem to raise (and perhaps also to report, if the company is publicly traded).

If the invention involves something the company might do in the future, the question is whether the company needs to pay for the license, and if so, when. If the patent is likely invalid, or if it is easy to design around, or if it involves something that the company won’t get to for, say, twenty years, then screw it. No license needed, thanks for asking–and all the bother.

The focus in scenario 1 is the patent license. The question is whether the company needs the license. The university’s remedies include suing for infringement or offering exclusive rights to some other company–and that might lock the company out and that other, exclusive licensee might show up thinking about litigation.

Any approval to spend even $5,000 goes through legal and going through legal affects all sorts of things.

Making the transaction a matter of learning or not learning

Now look at the second scenario–a research review workshop. Review workshop approvals generally don’t go through a company’s legal department. There is no legal review regarding whether the university’s patent position is valid or even whether the invention is immediately useful. And all that doesn’t matter because the university has already proposed upfront that the company gets a free non-exclusive license to the invention by attending the workshop (and, if someone really thought that the license and workshop might constitute a competition-suppressing “tie,” the university could offer a free license anyway, without the workshop.

Now $5,000 isn’t out of range for spending on a two-day research workshop. Maybe a bit much. The company will have to decide if it’s worth sending anyone. But then, there’s the prospect that the company’s tech people will meet a bunch of other tech people from the university and other companies, and that it might be valuable to size up on neutral turf as it were how everyone else is getting on and what they think of the inventive work. Further, the $5,000 does not just represent the workshop–it includes an easy way to contact the research team and expect not to be blown off. In other words, the workshop heads the start of a potential on-going technology transfer relationship. And best of all, the workshop offer does not trigger a review by legal counsel. The IP issues are already resolved–no cost, a promise not to sue over it all, and the university can’t go full ass-hole and threaten to license the invention exclusively to competition or to a patent troll (or a troll to be, like a likely-to-fail research startup).

We can generalize this second scenario. A research review is just one instance. Instead, one could have a weekly update service for developing code or data sets. Or a subscription to a monthly research newsletter. Or a lab web blog that highlights not only the weeks’ work but the weeks’ thoughts and ideas–rather like Minna Sundberg’s work on the side with Stand Still, Stay Silent. Or what Mark Ganter did with Open 3DP. The key point is that the research review-style approach is technical peer-to-peer. If there’s a newsletter, it is by the lab for other labs. If there’s a web site on 3d printing, it’s by folks doing 3d printing for others who are doing 3d printing. This is not the same at all as the PR “stories” that university alumni and development departments do about inventions or labs. The transfer relationship that’s expected is over and up (in the case of a company) or over and over (in the case of individuals). If technical people in a company like what they have got, then they pitch expanding the relationship up their internal line of command. If a practicing professional likes what he or she has got, then they tell other professionals.

The idea is that peer to peer is an effective channel for a lab to work in. The practice lesson for institutional technology transfer is to provide resources that helps labs work in the peer-to-peer channel. The lab–that informal coalition of practitioners, collaborators, facilities, equipment, NIPIA, and IP–is the anchor of effective technology transfer policy. The lab is slightly more than any single individual, and not so arbitrary as an academic department. Add purpose and call it a “project.” When a project has the capability to engage other lab-like peers, then you have a great opportunity for effective technology transfer.

Transfer pathways: convoluted or peer-to-peer

By contrast, if one leads first with a patent right, the technology has moved formally and legally away from the lab to the control of a university office. The “peer” relationship that’s on offer is peer-to-peer with a company’s legal or business officers, not with those doing the technical work. The relationship path desired then is up (away from the university lab) and over (to company executives) and down (to company labs). The relationship pathway is convoluted–the lab has to disclose the invention to the satisfaction of university administrators and their legal advisors to the exclusion of NIPIA and even other IP, which is relegated to at best “background rights.” But if a talented post-doc is a lab’s leading asset, and that post-doc is suppressed in favor of a prospective patent right, then the transfer relationship is off to an ineffective start.

Then the convoluted pathway has to find its way to company executives, who recognize that only one company realistically will obtain a license–if anyone ever does. Any negotiation at this point has to take into account a whole range of issues that have little to do with the actual technology or even the capabilities of the lab that has produced the invention (and other stuff)–competitive situations, budgets, form of product, whether a license is needed (design around, alternative sources). A company might want to string out negotiations to keep other companies out of the loop, or to wait for a first office action to see the status of claims, or to set up a transaction for the next budget cycle. Or negotiations might get strung out anyway because of internal politics (build or buy, competing priorities, and the like). In federal patent licensing, Bayh-Dole requires every company to submit a plan for development or marketing of any invention that a federal agency offers for license. Simply the overhead of creating an acceptable plan that addresses everything a federal agency expects can cause months of delay in moving technology. Plans are nice. Bureaucrats love them. But they are not much when it comes to effective technology transfer of new things. See? The intended recipient must right a plan about how to develop or market some new thing that it does not have and does not know. How is anyone in that condition supposed to know, really, what to do? Demanding a plan prior to transfer, as a condition of transfer, is ineffective technology transfer.

Once there’s a deal, then company management has to oversee the transfer and implement the development activities that the company has committed to. The transfer pathway then is from lab to licensing office (“disclosure,” “assignment”) with both inventors and licensing office working with patent counsel (two sets of relationship there–more complexity). Then there’s the licensing office setting up with a company’s executives (advertising, negotiation). And the company has to deal then with implementation (delivery (from lab, from licensing office), management, direction, logistics) of the new technology. In short, lots of transfer relationships. Lots of places for things to go wrong, lose interest, run out of resources.


Let’s review. The patent license offer is isolated–each company has to assess the offer on its own. The license offer goes to legal not to technical. So the company management is forced to determine whether the license is necessary or is worth it. Everything about the situation shouts to the company, “Don’t do it!” Once, when we obtained files for past efforts by another licensing office to “market” our campus’s inventions, we found letters written by companies in response to offers to license that the licensing office had sent out. “Please don’t send us such letters,” pleaded the companies. These were companies important to the university’s industry research programs. Then we would find more such invention marketing letters, ignoring the companies’ request, sent out months later. Talk about patent marketing pissing off potential research sponsors.

By contrast, the invitation to attend a research review workshop–and invited event–goes to technical, not to legal. The company does not have to decide if it is infringing or needs the license–the issue is whether the company’s tech people will learn anything useful, even if what they learn confirms that they don’t need the invention or that they can design around it if it is worth the bother to design around. Since they get a license anyway, the real issue is whether the research team has anything to offer (including other variations on the invention) that may be worth the offer of ten hours of easy access. In a big company, a $5,000 expenditure may come out from discretionary funds or professional development funds. No big deal. Maybe no authorization needed to make the spend.

Now, which of these two scenarios might be more effective at university technology transfer?




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