I would like to see a solid white paper written by the leaders of the organizations that are arguing for a university compulsory system of invention management. Not some paid attorneys to do the water carrying, not some academics put up to it by proxy, but a statement from those that have substantial practice experience, that have led technology transfer offices, that work through why such an approach is the thing to have.
Since I haven’t seen anything like this, I thought I’d help by providing an outline for such a paper, and what it might cover to give it some substance and really fire home its points. It’s just a start, and I am sure there is much more that can be added to make it a really fine argument supporting compulsory ownership of university research inventions. As far as I can see, there is no such document now, and it would be a really opportune time for the folks who care about compulsory systems to trot one out.
Compulsory Ownership of Inventions for University Research:
Creating a Truly Great Approach to Deploying Inventions to Advance Research, Science, and Impact in Commerce and Community
By a Committee of Important People in University IP Management
(and not written by their attorneys or economists looking to influence policy)
Part I:
Compulsory Ownership: The Best Way to Do It
In this section, we review various approaches to invention ownership, and show that in a university research environment, compulsory ownership with the university backed by federal and state laws is the superior way to implement a national innovation policy tied to research outputs.
We show how such a method of accumulation and selective release of invention rights has worked in other settings, and why university research should be modeled on these other settings, or, in the alternative why even if there is no indication that such an approach has ever worked in other settings, why this is the best way for universities to go about it.
The History of Progress: From Choice to Method to Duty to Compulsion
Turning to the history of the development of university involvement in invention management, we start with Cottrell and Research Corporation, discuss how WARF extended the model and other universities followed with research foundations of their own. We discuss how this model was created by research faculty in collaboration with administrators, often in collaboration with industry as well. We trace its influence through the work of Vannevar Bush, the formation of the National Science Foundation, and the introduction of government funding to the advancement of science through widespread funding of university faculty. We show how defects in the thinking of various leaders of technology innovation led them to overlook the advantages of compulsory ownership in favor of simplifying assumptions about the importance of personal rights in the development of technology. Such an approach cannot possibly serve in today’s present complex environment. We argue that compulsory approaches offer the best alternative for dealing with this complexity.
In a sidebox, we note how compulsory control of creative work is well matched to American culture, has figured in great events in our history, and will continue to serve us into the future. We make a special effort to show how compulsory control is matched to American universities, works in concert with academic freedom, and meets better than any other approach the public expectation for university research outcomes.
Bayh-Dole: The Ideal Vesting Statute
We show how with the passage of the Bayh-Dole Act a superior model has been developed in which research faculty no longer need have a personal ownership interest in their inventions. While Bayh-Dole appeared only to normalize agency requirements for the administration of inventions as a research deliverable in federal funding agreements, it really shifted vesting of invention to universities. This fundamental change in the import of Bayh-Dole is only now after 30 years becoming clear. We argue conclusively that the expeditious, compulsory transfer of title to inventions from inventors to university administration represents an important step forward in the management of inventions in the public interest.
We argue that Bayh-Dole as passed is nearly perfect, but for some refining language that makes absolutely clear that title of inventions is with universities and not with anyone else. We note in passing that the only thing better than compulsory title would be a requirement that American companies take royalty-bearing licenses from universities when offered, as a matter of federal law. This we identify as the 6% solution, but recognize that it will take some time to position the public to permit passage of this extension of Bayh-Dole and so complete the university vision for end to end treatment of research invention, from conception to delivery.
Fundamental Statement of Practice
We state clearly as practitioners of research invention management that compulsory title offers the best approach to serving faculty, research, science, industry, entrepreneurs, community, and governments. If federal and state laws did not provide for compulsory outputs, we would seek to establish these in university IP policies and employment agreements anyway. We would seek to use of standing present assignments of future inventions to the fullest extent allowed by law, restricting consulting by university personnel in any way that would interfere with a university’s full enjoyment of title to any research inventions originating at the university. We would do these things because we believe them in our hearts, we can show them in practice, and we will present statistics carefully constructed to avoid model fallacies and pre-determined outcomes that show that a compulsory regime for invention ownership is superior to one based on choice, negotiation, and mutual commitments and promises.
Considering Alternatives
For this work, we turn not to the work of federal agencies in their own programs, which we have demonized for thirty years, but rather to an evaluation of past invention activity at universities and their research foundations, and show that the compulsory approach is far superior in its impact, with broader use of university research by industry, better collaborations, and lower administrative costs than previously were achieved in the period 1950-1980.
We also show how compulsory title to the university offers substantial advantages over inventor-owned approaches, management by choice through foundations, ownership by mission-directed foundations, specialist agents with a deep understanding of a particular industry, as well as ownership by professional societies and independent institutions. We also show how revisiting in even some instances government ownership of inventions arising in federally funded research could not be a viable option for a national research innovation policy, even in areas such as standards and other infrastructure development.
Ideally Matched to University Culture
We show why the legacy university approach to intellectual property as evidenced by copyright in publications, control over the creation of grant applications is not a good guide to the management of inventions. We further differentiate research inventions from other research events, including discoveries, realizations, data, artifacts, specifications, software, multi-media and digital presentations, and reports. We show how research inventions, unlike any of these other research assets, properly belong to the university outright. We demonstrate that a properly functioning national innovation system requires each research invention to pass through administrative choke points.
Expanding the Definition of Invention
We show how university ownership in inventions has numerous benefits, prevents numerous liabilities, and has no adverse impact on the conduct of research, the advancement of science, collaborations with industry, or the development of regional and national economies, and quite the opposite is the best means by which these areas may benefit from university assets. We show how by expanding the definition beyond that of patent law to any work that may be characterized as an invention, even if not patentable, universities are able to convert other intangible assets, such as biomaterials and software, to the same compulsory scheme, to the advantage of all.
The Commitment to Commercialization
We review the literature on commercialization, setting aside legacy discussions of differing uses by industry of the outputs of university research. We note in passing the debates in industry of whether industry took problems to science when they proved intractable or offered some subsidiary opportunities to research, but did not expect that there would be any particular purpose in waiting for scientific research to produce, particularly, products. We work through the rise of the concept of basic research and examine the many definitions that argue that basic research does not lead to inventions, does not have commercial interests as a primary or even an indirect purpose, and aims to advance science. We show the defects in these arguments and offer instead a superior view of the role of commercialization in being a direct product the action of university administrators to place inventions with investors and industry. We focus then on commercialization and show that it has two primary components, licensing to established, major companies, and starting new companies.
We show how small and mid-sized existing companies properly should not figure in any national innovation policy based on university research inventions, as such companies do not routinely attend university job fairs, have limited funds to support research or make big donations or purchase naming rights to buildings, and lack both the capability and status of industry leading companies and venture-backed ones. We show in a sidebar how our approach extends even to companies that we created two or more years ago and apart from some residual research funding, no longer represent a significant licensing opportunity. We argue, rather, that commercialization only takes place in a meaningful way with major strategic licenses worth millions in royalties, or with venture-backed start ups able to achieve an exit resulting in substantial profits from equity holdings.
The Primacy of the Linear Model
We further show how the linear model of development of commercial products starting with basic research, moving to applied research, and from thence to products is the most important model by which university research outputs should be judged. We argue that policy traditions that look at the diffusion of inventions through other means lack merit, and that the current interest in open innovation, crowd sourcing, and democratization of technology development are misplaced. We show how the fundamental relationship sought by the university, of an exclusive license to a committed future monopolist as a means to attract invention represents the most important outcome a national research policy on innovation could imagine. We show how an increased volume of such relationships represents the peak of a healthy innovation society. The proper measure of university research impact, therefore, is the success of monopolist investments.
We note, but only in passing, that any non-exclusive licensing under the linear model is properly regarded as just a tax. We argue that expecting non-exclusive licensing is antithetical to a high performing national innovation program. We note that cross-licensing, standards formation, sharing of technology, and creation of commons and exchanges represent a deliberate effort to circumvent monopoly licensing. We argue further that monopoly assurance is essential to attracting investment to make new products. We argue still further that it is necessary to suppress non-exclusive licensing as a race to the bottom that destroys the inherent value of monopoly-based work, of which the patent is a prime tool.
The Historical Importance of the Linear Model
We show how, repeatedly, the linear model has created commercial products of great value, and how across all reported inventions at universities this model has served inventors and the public remarkably well. We compare the impact of productive licenses (resulting in greater than $1m in cumulative licensing revenues—or about what a university could make by holding an annual workshop attended by 20 industry representatives paying $5K each for 20 years) with the impact of inventions managed in other ways, such as by the federal government, by industry, and by foundations, and show that a compulsory model results in greater impacts. We review as well the adverse effects of the various models and show that the compulsory approach has fewer such effects than other approaches.
How Other Accounts Are Anomalous
We pay particular attention to the development of open source models in software, and related open and standards based architectures in information science and communications and show that outcomes such as the internet and the world wide web are anomalies and should not be considered in the overall assessment of the importance of compulsory ownership, the linear model, and the importance of commercial sale as the proper endpoint to the inventive findings of university research. We argue that such results are exceptions that prove the rule.
The Necessity to Suppress Other Approaches
We argue that other approaches, while attractive on paper, offer such complications in practice that they cannot possibly succeed. The suppression of attempts to introduce choice by inventors, investigators, sponsors, or industry into university management are useless complications that take energy away from the primary operation of the model and undo the valuable grains in training faculty, administrators, and companies to do business with the university on these matters through the agency of a one-stop shop, the Office of Technology Licensing. We show that the suppression of other approaches is a necessary consequence of the adoption of the linear model of commercialization.
We argue that over specialization has no particular risk and many immediate benefits, that everyone using the same model points to its general acceptance and does not create too many cooks spoiling the broth, and we argue that in no way should a regional innovation environment benefit from universities practicing different models that collectively work together, such as one university supplying patents, another research capability, and a third exceptionally well prepared students, with all universities sharing in the benefits provided by each. We show how such a model is merely idealistic, and that a much better one, proven repeatedly in practice, is that each university should work to create its own deals, in competition with other universities, and with the private sector, but using an approach in which all university technology personnel work to help the personnel at other schools better implement this singularly important model.
Championing the OTL
We show how the Office of Technology Licensing provides the full spectrum of invention management and licensing needs for a university of even a moderate size. We argue conclusively that while a university may receive $100m or more in extramural research for work in any conceivable area of inquiry, a handful of licensing officers with primary expertise in biotechnology and law are more than adequate to provide services to all. In comparison with any other possible agents, not only are OTL staff superior, they are also more efficient in their work, better able to explain the nuances of a compulsory policy to inventors, and better judges of the potential of research inventions, certainly better judges than the inventors themselves or industry representatives, especially when assisted by review committees composed of associates from the venture capital community, local business executives, and faculty who have worked with the office in the past. We show that this combination of skills and oversight is superior to any other way of going about the assessment, management, and diffusion of research inventions.
Part II
Overcoming Problems
We acknowledge that the compulsory approach does have challenges. We mark out that the overall goal of commercialization of university inventions through monopoly licenses is itself tremendously challenging. It is this very depth of challenge that requires compulsory transfer of title, as the difficulties are beyond the comprehension of university research personnel. The problems in the model are so difficult, in fact, that only OTL staff should have standing to address these problems, and only then with the approval of their direct supervisors and national organizations that evaluate their presentations. No one outside the technology transfer profession should speak to university research innovation. We argue even holding public discussions without pre-determined outcomes merely prevents progress toward the goal of a fully working approach.
Constitutional if Understood Properly
We deal first with the objection that a compulsory model based on federal and state laws is not supported by the Constitution. We note that the Constitution has been re-interpreted for other purposes in its history and that the taking of private property for public use without due process or just compensation is only a problem if one thinks of title to invention as private property, which it cannot be if it is said to vest in the university before it ever comes into the possession of any individual inventor. While it may be imagined that an inventor conceives an invention before ever reporting it, it is the case, under a compulsory regime such as the one we document, that the inventor has that conception on behalf of his (or her) employer, acting as the agent of the employer, who by law is therefore conceiving the invention and therefore is the inventor. The title to invention is indeed personal, but personal to the employer. Thus, no property is taken from the inventor, and any compensation paid to inventors is purely in the form of largesse under university policy and not as consideration for a mutually agreed arrangement (no such arrangement exists nor should) and not as just compensation for a taking (as nothing was taken).
Faculty Training is Not Indoctrination or Suppression of Ideas
We turn then to more substantive problems. The first of these is faculty training and participation in the compulsory system. While the system works to hold title to inventions wherever these may arise, it has the defect of not knowing what title is held by a university until faculty report the inventions to the proper personnel at the university. This failure to report is at once caused by the complexity of the reporting requirements, distraction by faculty to other matters they deem more important, such as research, teaching, and public service, and to a recurrent refusal to participate in the technology transfer process. We attribute this refusal to arrogance, greed, and recalcitrance. We identify various means to overcome this refusal, including repeating narratives of faculty who have lost millions through inattention, alleging ethics law violations and conflict of interest, proposing to ruin reputations and career advancement with claims of research misconduct and misuse of facilities and funding. We show that the threat of jail time acts as a significant inducement to support a compulsory system. For that, we acknowledge that we are not yet assured that we are obtaining a comprehensive list of inventions to which we already hold title, and we note that we may never get notice of each and every invention, but that in time we can assure the public that we will have nearly all inventions under management, and with some certainty all inventions that have any residual commercial potential.
The Funding Gap is Not Generally an Artifact of Mismanagement
We turn next to the funding gap, which represents the single most challenging matter in a compulsory invention system. We note the importance of taking title to every invention regardless of value or state of development. We show how the immediate task is to construct a scenario for each invention such that it becomes commercially valuable, first as a positive inducement to invest by a committed monopolist, and in the alternative, later, as a means to extract settlements from companies that infringe the patent rights—one of the few instances in which a non-exclusive license is tolerable. The funding gap represents the financial distance between the invention in the form we claim it and a situation in which we are able to realize a monopoly license with the prospects for significant licensing income.
We show that the funding gap is not merely an artifact of a gross mismatch of a particular licensing model to the circumstances that present but rather a real attribute of nearly all research inventions, which are properly called early stage inventions, by which we mean, that they require additional funding to develop to the point that a committed monopolist would recognize the opportunity to take a license and invest the resources to create a commercial product. The funding gap therefore represents the difference between our inventions and our aspirations for our inventions. We show the need to provide for gap funds from state and university sources where experienced investors decline to participate.
Many Failures of Industry the Cause of Most Problems
Denies Our Importance. We argue that aspirations are socially real, and as such are as real as anyone else’s views on commercial potential. We argue that industry claims that inventions lack commercial potential are meant intentionally to damage that value and represent, in point of fact, a species of industrial envy that seeks to reduce the threat that universities have better technology than that of industry. Thus, the funding gap also points to the failure of industry to acknowledge the importance of the outputs of university research.
Lacks Innovation Capacity. This leads us to a discussion of innovation capacity. We argue that it is no good obtaining title to many inventions, and securing gap funding, if in the end industry refuses to deal with us on monopoly licenses. We characterize this as a lack of innovation capacity. We attribute the problem not simply to industrial envy and the not-invented-here syndrome, but also to a deeper lack of imaginative reach by which industry can see how wonderful university inventions are. We dismiss in passing that university OTLs may be ill suited to relationship building, that the emphasis on commercialization may be misplaced, that the linear model may be misleading in many circumstances, or that the timing under which OTLs must operate is poorly matched to the development of research collaborations.
Criticizes to Cover Own Weaknesses. We spend some significant time dispelling the notion that the OTL-based approach is fundamentally provincial, depends on the accumulation of a vast unworked portfolio, cannot readily partner with other organizations, or that its methods introduce huge uncertainties and delays into rapidly developing areas of new technology. Instead, we argue by way of response that the problem lies instead in the competence of other organizations, especially companies and foundations, who fail to appreciate the value brought by the OTL to such deal-making, and the resistance of these organizations points to something more akin to a moral defect that might be inherent in capitalist corporations. We note in passing that corporate terms such as “pre-competitive” and “freedom to practice” and “strategic relationship” are merely placeholders for a refusal to pay and commit to monopoly development, backed by moral and imaginative dissonance with the aspirational rhetoric that universities have developed to describe the commercial potential of research inventions.
Part III
Protecting the Public From Researcher Failings
We turn at the end to a consideration of various other matters, that may be dismissed without effort. We note that a compulsory scheme protects the public from the greed, indifference, gullibility, and lack of capability among university investigators. We note how they may be the best in the world and still total cockups when it comes to anything pertaining to inventions. We show how cockup is a term of art, how it is nearly universally appropriate, and how it is properly only used in conversations within the OTL, or between the OTL and various publics in explaining the superiority of a compulsory system of invention ownership.
Bayh-Dole Seeks a Only a Few Successes
We note as well how Bayh-Dole’s mandate to use the patent system to promote each subject invention really means that the university TLO needs only to make a lot of money from a very few inventions, and this fully satisfies the true expectations of the Act. The Act only asks universities to make an attempt, and that might mean nothing more than complying with the somewhat ceremonious notices to the government, filing of patent applications, and sending unsolicited aspirational documents identifying the commercial potential of claimed inventions to a handful of companies selected from an industry directory, or in a significant improvement, foregoing any direct contact and simply posting the aspirational descriptions in an on-line repository.
Measuring Success: Think What We Ask, Not What You Should
We argue that the success of this compulsory system should be measured by statistics of effort, taken in the aggregate, with no reporting of individual inventions unless these figure in what are described as success stories. While it may be that such stories represent the only ones we have for a given reporting period, we show how it is in the public interest that we lead everyone involved, including ourselves, to believe these stories represent just a smattering of the many instances by which the compulsory model has worked to everyone’s satisfaction.
We argue that rather than participating in shared dialogue on how to develop research collaborations and manage inventions, the proper form of discourse is where we explain to the general public, and any other interested audience, how a compulsory system properly works and request that in the future they evidence an understanding of this approach in any public communications on the matter. We regret the need to suppress minority views and to assert that otherwise knowledgeable people, should they stray into discussions that might question the compulsory model, will be labeled ignorant, mistaken, bitter, or immoral, as the rhetorical necessity of the moment requires. We repeat the key point: at the heart of a working compulsory model must be a means to compel others to accept it, if not willingly in their own experience, then at least publicly, at some fear for their reputations, jobs, careers, and sense of self-worth.
Inspired Legislation
We close with a discussion of Bayh-Dole as inspired legislation. We go well beyond a comment in The Economist to show how Bayh-Dole established the foundation of compulsory innovation systems, and how this approach is now spreading throughout the world. The compulsory approach to inventions thus serves as a leading ambassador of American democracy and love of liberty in action, making a marriage of research ingenuity and orderly administration in the public interest.