For every scenario, other scenarios

AUTM imagines faculty researchers messing around with patent obligations and creating a situation where no one has undivided ownership of a research invention.  To AUTM, this is horrifying.  How can one make money  exclusively licensing to monopolists to make a pile of money if you don’t have the entire title?  Their answer: totalitarianism.   The university as beneficent dictator will take care of all.

We note that in Stanford v. Roche, there is a product on the market–the public is benefiting.  It’s a success story but for the university’s need for money in the deal.   For that, any outcome with divided title apparently is a disaster.  If research were only about public benefit, there would be no dispute.  AUTM chimes in, universities getting compulsory title with the power of Bayh-Dole will solve *that*.

But it’s not so obvious.  Consider:

A faculty investigator A obtains a federal grant and subcontracts part of the work to a colleague B at another university.  The two work together and invent.   A then assigns to A’s university and B to B’s.  But B is working in a federally funded consortium within the same scope under which every industry member gets a royalty free license non-exclusive license.   Not only is there no common title, but also rights are obligated to industry no matter what A’s university wants to do.

Consider another scenario.   Investigator A collaborates with graduate student B who is also an employee of a company that is paying B’s tuition.   B is not employed by the university.  B has employment obligations to B’s employer that include assignment of patent rights.  A and B co-invent.   The university may claim title to A’s share, but not B’s, which is obligated to B’s employer.   Perfectly well formed.

Or consider a situation in which a sponsored research office allows sponsor  1 to have a first option to an exclusive license to any inventions.   Investigator A works on the grant for the sponsor.  Investigator B works on a grant with sponsor 2 with exactly these same terms.  Then A and B discuss some ideas in the hall and co-invent.  Well now, those standard terms come back to haunt–since sponsor 1 and sponsor 2 are promised the same first option to an exclusive license.

There are any number of scenarios in which, even in a compulsory title environment, universities using entirely typical procedures do not end up with an undivided interest in title.   We have not even considered where co-inventors disagree, or where two labs disagree on related inventions.  Bayh-Dole cannot save them.  Compulsory title cannot save them.  It is not an option to prevent faculty investigators from talking with one another, or subcontracting research, or collaborating with students.

The reality:  the university with a compulsory assignment policy creates more liability for itself and more difficulty in contracting with others than a university that does not.

Most companies working with universities want freedom to operate, not a monopoly position.  That is, just being assured the university or its licensees won’t assert patent rights against them is sufficient.

This is opposed to a university TLO that has a desire to license to monopolists.  They cannot let go of the idea that patent rights induce investment to create product.   Not that this does not happen, but the TLO insists that it has tohappen, even in cases where it is clear it does not need to happen at all, as we have seen with disease assay patents licensed exclusively by universities to companies that then shakedown laboratory medicine programs at universities across the country.

To get at how universities should use the patent system to promote practical application, we have to get past the idea that the only use a patent has is to induce a monopolist to invest in the development of a product and share a piece of its monopoly sales action with the university.

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