Here’s an example of a points of engagement analysis. This is something that I worked up some time ago. Consider a university as a set of nested administrative units:
Central — Senior Administrators
Colleges — Deans
Departments — Chairs
Labs– Principal Investigators, Directors
Individuals — Faculty, Staff, Students
Each of these various levels can have points of engagement–and the further down in the organization, the more there are. Now let’s look at how a university policy directs the flow of IP assets in this nested set of units. If ownership is asserted by the university, then individuals are asked to report and assign IP up in the organization. Typically, these assignments are made to the university and put under the control of a central administrative level office such as an Office of Technology Licensing, with support from an Office of General Counsel for legal and contracting matters. It is the mandate of this office to seek license contracts on behalf of the inventors (as individuals benefiting with a share of royalties) and the university broadly (with central administration retaining a significant share of proceeds to pay the budget of the TLO and for discretionary spending).
The flow of ownership and control then appears to move up the organization:
We call this shift of ownership a venue jump. A premise of IP management is that venue jumps signal changes in IP valuation, since IP value, like other intangible assets, is a function of the capability and operating interests of the entity controlling it. Books like Negotiating Rationally (a really super book) explore how a sense of ownership shapes perceptions of value–simply thinking as an owner may result in a significant increase in expectations of value.
A simple question is, does an IP right acquire value by moving from individuals to the TLO? From the individuals’ perspective, the answer may be no–it has less value to the individuals because they no longer own or control it. On the other hand, it may have more value if the TLO spends $15K on patent work, and the individuals hope this increases the value of the IP right. From the TLO perspective, value may work similarly–by perfecting ownership rights in the IP, the TLO perceives the IP as having more value than in the hands of individuals.
But how might a company that has an interest in IP see the situation? Would they rather deal with individuals or with the TLO? Given that value captured is a function of consideration paid less transaction costs and acquired liability, individuals and the TLO present with rather different value opportunities. Individuals might be able to do a simple license arrangement as part of a consulting deal and be happy with a few thousands of dollars and some stock options, while the TLO may have a strong regulatory set of requirements for contracting and require diligence, significant up front fees, a sales model and running royalties on those sales.
So a follow on question is, will any given company perceive IP as having greater value with the individuals or the TLO? Or with some other unit of the university, such as the lab or college? This second question sounds similar to the first, but actually it’s very different. The first question asks what the value appears to be to the various units within the university–how much might be obtained in exchange for the right in their possession? The second has to do with how desirable a right may be in the hands of individuals or in the TLO or some other point of engagement.
Let’s build out the other side of the transaction to complete this picture. A company can be thought of as layers as well. There’s plenty of variation, but generally the layers look like this:
Corporate — Executive Officers
Divisions — Vice Presidents
Groups — Managing Directors
Teams — Team leaders
Individuals — Employees, contractors
If the company is a start up or small business concern, then these layers may collapse to Corporate and Teams, or Corporate and Individuals. We can ask, how does IP come into a company organization? Or, what is the most effective insertion point for new IP so that it is used as a tool? adopted for use in products? desired for an exclusive competitive position? These questions again have a range of answers. Generally, however, to propose an exclusive position, one moves up the company layers toward Divisions and Corporate, while providing technology as a tool may involve acquisitions that a Team Leader is able to negotiate, depending on the terms of the transaction.
Developing things this way leads to rather different possible points of engagement within organizations and pathways between them. A typical one is as above, with IP moving from individuals to the TLO to a Company Division, and from there down to a work group. Another might be from individuals, assigned directly to a Company on behalf of a work group (or another way, a work group collaborates with university individuals to create a joint ownership position in resulting IP). In this second scenario, IP moves to the Company without engaging the TLO, the Lab, or any other units.
One area we have spent time exploring is peer to peer exchanges between labs and company teams and groups. In this approach, IP moves from individuals to a Lab–so there is group ownership of assets–and from there assets are acquired by Groups and Teams. Open source distributions can look this way. While technically the copyright may be with the university, the attributes of ownership are with the Lab. The software is on the lab’s web site, or is placed by the lab on a web site like Sourceforge. A company acquires via an arrangement set up on behalf of the lab, such as a consortium or affiliates program, where joining the program triggers access to the available IP (that is, the licensing is embedded in a broader relationship that carries the value, and the broader relationship is available to purchase).
In this arrangement, IP moves from individual to lab, and from lab to work group, and from work group can move up and out in an organization, if one handles the IP conditions in the exchange transaction well.
In this approach, companies obtain easy access at a lower level with opportunities to move the IP up rather than down in their organization. This creates altogether different dynamics for adoption, as it meets a number of the Rogers tests for innovation, including triability, whereas a TLO administered arrangement to senior company executives will depend much more on scientific findings, inspection of prototypes, and the like.
These notes show how different points of engagement in both the university and in companies can change the dynamics of venue shifts for IP. Since it is these venue shifts that carry significant value change, and transform opportunities for value capture, IP policy and practice should focus on which of these points of engagement and pathways are resourced to promote highly productive research-community interfaces. While the conventional move from individuals to TLO to company has a lot to recommend, it’s also clear that doing so cuts out involvement by labs, by chairs, and deans–who also may have tremendous connections into industry–and typically forces acquisition decisions to be made at senior levels in companies and then pushed down to work groups, rather than forming as arguments for adoption at the work group level and migrating up.
If one is looking to assess the resources available to a university in promoting innovation, one key place to look will be the diversity of points of engagement to transact deals that move technology to new venues where it will be evaluated, used, and invested. Having only one policy pipe–from individuals to TLO to company–looks both overly restrictive and tremendously difficult!