Here is a state law pertaining to employer claims to employee inventions:
Sec. 2. Employee rights to inventions ‑ conditions). (1) A provision in an employment agreement which provides that an employee shall assign or offer to assign any of the employee’s rights in an invention to the employer does not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and which was developed entirely on the employee’s own time, unless (a) the invention relates (i) to the business of the employer, or (ii) to the employer’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the employee for the employer. Any provision which purports to apply to such an invention is to that extent against the public policy of this State and is to that extent void and unenforceable. The employee shall bear the burden of proof in establishing that his invention qualifies under this subsection.
(2) An employer shall not require a provision made void and unenforceable by subsection (1) of this Section as a condition of employment or continuing employment. This Act shall not preempt existing common law applicable to any shop rights of employers with respect to employees who have not signed an employment agreement.
(3) If an employment agreement entered into after January 1, 1984, contains a provision requiring the employee to assign any of the employee’s rights in any invention to the employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the employer was used and which was developed entirely on the employee’s own time, unless (a) the invention relates (i) to the business of the employer, or (ii) to the employer’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the employee for the employer.
This is a typical set of requirements. First, a limitation on the claims an employer can make in patent rights of employees. Second, a limitation on making a claim outside the limitation as a condition of employment. Third, a requirement that if a claim is made a condition of employment, then the employee must get written notice of the limitation.
[There are arguments out there that these sorts of laws–in eight states or so–actually expand an employer’s right to claim inventions over federal common law. Federal common law, for instance, does not recognize use of an employer’s resources as a basis for a claim to ownership of inventions–all that might get in equity is a “shop right”–a right for the employer to practice the invention royalty-free.
The thing that’s the more interesting is that university officials end-run the law by asserting that a university patent licensing function means that all inventions any employee might make come within the business of the employer or its anticipated future development, which now seeks to make money from any invention an employee might make. Such a move simply defies the law and attempts to transform the business upon which an organization is founded become any dealings an organization may have with patents on inventions.]
Now let’s look at a university patent policy in the same state. We will take excerpts to cut to the chase, with my emphasis.
First a general statement of applicability:
Acceptance of the X University Intellectual Property Policies is a condition of employment or enrollment. The X University Intellectual Property Policies apply to all full-time and part-time faculty and non-faculty employees, students, and appointees or visitors who are funded by the University or who use University facilities or materials in the process of discovery or invention or in creating copyrightable materials.
Applicability
Any invention or discovery by an individual who (1) made the invention or discovery within the normal field of his or her employment responsibility and activity with the University, without regard to location or salary source (specifically including individuals employed at affiliated hospitals and institutions), or (2) makes use of X University resources, except library, shall be subject to the provisions of the X University Patent and Invention Policy. Such an individual is hereafter referred to as “inventor.”
University Ownership Rights
All inventions or discoveries to which this policy applies are owned by X University. The ownership rights to an invention or discovery are the exclusive property of the inventor if the University has contributed nothing substantial or essential (as, for example, funds, space, materials, or facilities) to the conception or development of the invention or discovery, and the invention or discovery is outside the scope of the inventor’s normal field of employment responsibility and activity within the University. Where the University has entered into an agreement for a project sponsored by a government agency or private firm, the terms of that agreement will govern the disposition of patents and licenses.
We may note a few things going on here. First, the policy clearly comes within the scope of the state law by making the patent policy a condition of employment. Second, statements in the policy do not parallel those of the state law. While we might recognize the same general gesture–the university claims inventions made with its resources or in the area of duties–there are differences, too, that one might think important. Third, there is no notice here of the limitations imposed by state law on employer claims. Perhaps that is elsewhere, among employment documents. One hopes so.
In a way, things are rather nominal. The law has a broad gesture. The policy has a similar broad gesture. They are generally in the same area. Everyone should get that the policy tracks the law. But does it? We will make a technical argument and a general observation. The technical argument merely shows that the policy statements here are badly drafted for their purpose, invalid in their apparent intent, and unparseable when examined in any detail. This is typical of university IP policies. Most of them are so unbearably dreadful from a technical point of view that one wonders why they even try. The general observation, however, is the more important. Why on earth do universities claim ownership of faculty work?
A Technical Argument
Note the things in the law that may create employer interest in inventions: use of the employer’s equipment, supplies, facilities, trade secret information, or developed on the employer’s time. For a university, we might set aside trade secret information. We can come back to it if needed. The things in the policy that create a similar broad claim: makes use of University resources, except library. To comply with state law, resources would appear to have mean equipment, supplies, facilities, or on the university’s “time.” Any claim beyond these would be invalid. Technically, everywhere the university over-claims inventions, its policy is invalid, contrary to law, might we say, illegal.
There’s more. The law differentiates inventions done on the employer’s time, relating to the employer’s business or actual or demonstrably anticipated research or development, or results from work done for the employer. The university policy has it this way: within the normal field of employment responsibility and activity with the University. This claim would appear to be: if you are hired to teach electrical engineering, then anything pertaining to electrical engineering is claimable. But if one is hired to teach, then one might think, the limits of claim would be inventions arising in instruction. If one is hired to do research in the area of electrical engineering, the claim would be, anything in the area. Yet, from point of view of the law, it would appear the effort is to focus the claims on a scope of duties that has some limitation. Otherwise, all an employer has to do is define the scope of work to be anything in the general area of one’s responsibility. An electrical engineer is hired to create new circuit, but rather one hires to practice electrical engineering. End run around badly drafted law? Or not legal? Let’s look at the differences and overlaps.
The law says, work done for the employer. One angle, the end run angle, is to say in policy: anything you do by way of invention is for the employer. Define all employment positions that way. Now the law doesn’t matter. Let’s say for the sake of argument that doing this is not going to hold up, technically. Let’s say, also, that in general, for a university to be the one trying to make this end run, something else is going on as well, a matter of public policy and expectations of universities.
In university terms, work “for the employer” could either be work done in the normal course of duties to teach and conduct research, or could be more specifically work commissioned by the university. We might expect work specifically commissioned to be “for the employer.” That would appear well within expectations. With regard to research, however, there are generally two categories within a university.
University Research
One is departmental research. Here, faculty pursue their research interests without an external sponsor. They may draw on supplies and facilities, and may involve students or staff, but their work generally is not separately accounted. That is, there is no budget expressly for the work being done. It comes out as generally supplies and within the salary already paid. Furthermore, their work is not specified by their employer, nor supervised by the employer, nor are the outputs for the their employer. It may be that the employer–the university–considers the importance of publications in considerations for tenure and promotion, but not as a condition of employment “for the employer.” It is “for the faculty” or “for the public” or “for the advancement of science.” Departmental research is not “for the employer,” even if done using equipment, supplies, or facilities of the employer.
We might ask, furthermore, under what conditions such equipment, supplies, or facilities are made available to faculty conducting departmental research. That, after all, would appear important to an interpretation of the law with regard to university work.
The other category of research is extramural or sponsored research. This research is proposed by the faculty member to one or more sponsors, who then fund the work according to a statement of work and budget. The funding provided is typically broken out into direct costs, which are those set out in a budget, and indirect costs (or “Facilities and Administration” in federal award terms). The indirect costs are intended to recover the university’s costs of administrating the award and providing resources not easily charged out as direct costs, such as electricity or janitorial services for labs. The university accepts the funding and manages the funds for compliance with the budget. The work, however, is not performed “for” the university. The university is an intermediary to facilitate the sponsor’s access to the faculty. The work is performed by the faculty member with the support of the sponsor, and depending on the terms of the award may or may not be “for” the sponsor. A university does not write a grant proposal. It may review proposals for appropriateness, and it may block proposals that do meet its requirements, but it does not specify the work or the work products or the deliverables. If the award is in the form of a grant, the sponsor is more the patron than the beneficiary. If the award is a contract, then the sponsor typically has specific expectations for deliverables.
We can ask, if the employee proposes the work, and a sponsor is paying for it, and the employer has no role in directing the work, can the work be said to be “for the employer”? Of course, one might argue either way. In terms of university research practices, however, my question is directed at why one would argue the work is done “for the employer” when it is would appear the work is done, largely, “for the public” or “for the sponsor.” What motivates an argument “for the employer” even if you could make that argument?
The Employer’s Business
There are other elements to the statute, however. We don’t have to hang our hat on “for the employer.” We also have the “business of the employer” and “the employer’s … research or development.” What is the business of the university? A typical answer might be: to teach, research, and serve. But this is a function of a university of as a whole. Are these activities that the faculty do “for” the university? Or is it that the faculty collectively in doing these things create the university? If this latter, then a university is composed of its faculty, and while in doing so it receives the benefit of the fiction of being a “person” under the law as an organization with independent legal standing, it is merely a fiction of convenience to say that the organization employs faculty to do things “for” the organization. The organization exists to serve the faculty and their service to the public, not to direct them in their tasks. Not in the classroom, not in research, not in their choices about how to serve the public. Yes, there is salary set and benefits paid and courses assigned, and compliance with grant conditions required, but these are in the way of managing logistics.
There really is no good argument that faculty work “for” the university in conducting research. The university does not teach, research, and serve, and for this reason hire faculty which it directs to do these things. No, faculty do these things, and the university manages their affairs for coordination, scale, paperwork, and convenience. It is not the employer’s “research or development.” It is each faculty member’s. Yet for all this, we find in a later section: “The University owns all inventions and discoveries made by X researchers arising from gifts or sponsored projects.” We might wonder at the use of “researcher” and we might ask what is meant by “gifts” in relationship to scholarships and fellowships, under which someone might conduct research, say, as part of coursework or a dissertation. We do not find here any such qualifications or explanation here, however. Just a bald claim. It is simple and direct, at least. It just does not appear to be valid relative to state law, or consistent with public expectations.
Okay. One can still argue that the “business of the university” is pretty much everything, so that covers things nicely. If an employee in engineering invents something in engineering, that’s we can argue that it’s the business of the university–to invent things. And it doesn’t matter, really, where the invention shows up–an engineer can invent in the field of architecture, or diplomacy, or quilt-making–well, it’s all there, as the business of the employer.
Further, by having a technology transfer office, one can argue that the university is in the business of monetizing all the inventions it claims. The university policy makes it clear the basis for action is “development of commercial use.” If an employer under the state law merely states: we aim to monetize every invention made by our employees, and therefore we can extend our claim that any invention made by our employees falls within the definition of our “business”–does that expose the defects in the law, or does it get thrown out as an invalid definition of “business”?
Problems Parsing Scope
If we turn to the university’s policy statement, we can see that this argument could be deployed a couple of ways. First, that any engineering invention made by a member of the engineering faculty would be within “the normal field of his or her employment responsibility and activity with the University.” That would be the coarse general argument. But that would be the meaning of “the normal field.” What does adding “employment responsibility with the University” do to this? For one, it restricts “the normal field” to the “employment responsibility and activity.” We might worry over whether “with the University” modifies “activity” only or both “responsibility and activity.” We might wonder whether “employment” modifies only “responsibility” or also should read “employment activity.” Or, does “normal” modify both “field” and “activity”? We might ask what the difference is between an employment responsibility and an activity. Or a normal field and what, an abynormal field? If an activity is not within an employment responsibility, then surely the claim is outside the law, because such activity could not be for the employer or the employer’s business.
Given this flurry of questions, we might then be led to think, well, this is not very good drafting, but we might feel the general intent is clear–the university intends to make a claim on stuff a faculty member does, however this comes about. If an electrical engineer makes an invention in quilt-making, and that’s not his “normal” field, then apparently no claim, at least with regard to that bit of policy. But if he works on this invention over time, publishes some stuff, what then? We might, however, go another way and say, this drafting leads one to believe there is no clear intent at all. There is simply no way to understand what is meant by the claim. The language is so disordered as to modifiers that no one could possibly interpret it with any clarity.
For all this, one could argue that I’m deliberately creating confusion, that anyone can see what is meant, one can smith words only so much. Nonsense. But it is the opposite–my point is that most anyone *cannot* see what is meant by the words when state law is brought into the picture. What one has is the expectation that someone in authority will assert a claim, recite these words, and demand compliance, without regard to what the words say, how the sentences are composed–without regard to what is meant by the words. What is meant by the words is whatever the employer says they mean, with regard to any future situation. That’s what one might infer is *meant*. And even with this, a contract is interpreted against the drafting party, so to the extent this policy forms a part of the employment contract, it is not up to the employer to decide what the policy means as it suits, at some later date.
Options for Drafting
What are the options for policy drafting of this sort? One might be: cite the law exactly. That would be good. Whatever the problems with drafting in the law, at least you have it done for you. Second, if you are going to cite the law, then the burden of the policy is to make clear the application of the law to the particular circumstances of the university, and for that, to instruction, commissioned work, departmental research, extramural research, public service, personal consulting, and stuff done independently of all these things. We don’t get that here. We don’t get any reference to the law, even though the law requires it. We get no indication of how the policy with its own wording and the law interact.
There are two general approaches one may take to drafting this sort of policy. One is to claim everything, and release selectively. The other is to claim selectively, and expand claims through mutual agreement. The first is a power move, and conservative. The work of a catch-and-release policy is to claim everything and let administration release what it doesn’t want. It is also a strategy of drafting one might use when one doesn’t know what one is doing, doesn’t trust administration to know what it is doing, or does not know enough about practice or the future to anticipate all cases, or knows enough about the future to know there is no point in trying to anticipate just the cases that matter. Taking everything seems “safer.” And yet it violates the law.
One chooses a selective approach when one knows what one is doing, when the administrative responsibilities are clear, when one has confidence in how individuals will get on in particular situations, and when enough of the future can be anticipated to make decisions. Selective drafting is focused, confident, expert. In a way, it is also a power move–but power directed at a clear purpose rather than preserving an administrative position for later disposition.
An example of selective drafting would be to write something like this: “The Patent policy shall apply only to those patentable inventions made by an inventor subject to an agreement in writing, other than his or her employment agreement with the University, that requires the University to have an interest.” Such a selective statement would set out that a written agreement is required. That would still leave a broad area of possible interest, but it would require that the employee and the university had made a deal on the matter and recorded it. This could be a sponsored research agreement, an agreement under which the university commissions work leading to an invention, or some other arrangement other than an employment agreement.
Nothing, however, is clear from the university’s policy statement. It’s in the form of a claim of catch and release, drafted without any apparent interest in making clear its intent, beyond subjecting stuff to the policy, and the policy then operating to claim ownership. “All inventions or discoveries to which this policy applies are owned by X University.” That would be “patentable inventors or discoveries” resulting from “research or educational activities performed by members of the academic community.” Even here, we have little idea what this means, though it is possible to posit the intent. In one place, reference is made to patentable inventions and discoveries, but where we see “applicability” the “patentable” is dropped, and the text reads “invention or discovery.” Clearly, there are many discoveries in research that are not patentable because they represent laws of nature or general mathematical principles.
Further, one might expect the policy to state an obligation by individuals within the scope of policy to assign their rights to the university. Instead, we get the simple statement that the university owns. Of course, it cannot. There has to be an assignment step for patent and promise not to disclose for trade secret. But there’s no trade secret as a requirement of the university, no control on faculty publication or use. Just the opposite, “any inventor…is encouraged to report it promptly.” Not required–which is rather odd, if one knows anything about 37 CFR 401.14(f)(2) agreements required under Bayh-Dole.
Is the Law Just an Excuse for Work-Arounds?
But we might also observer that any employer in the state might also make such claims–just create a policy that says, it is the business of the company to work in any area in which our employees invent and we choose to work. Done, eh? However, we might come back around and say, no, that’s not what is going on here. What makes something the business of the employer as employer is what the employer sells, what the employer directs, what the employer makes. That would be a much narrower set of claims than anything the employee invents, no matter if the employer, like Gollum, wantses it, it does.
Similarly, with regard to the employer’s research and development. If the faculty member is proposing the work to a sponsor and the employer’s role is to allow it with conditions (such as payment of the funds and no secrecy restrictions), then sponsored work is generally not for the employer, and is not the employer’s research and development, no matter that the university likes to build buildings for a medical center or chemistry department. The research and development of an employer would be specified by the employer, laid out in planning documents and reports as decisions of the employer.
We might from this come to the conclusion that much of what a university might claim is not within the breakouts of the state law. The overlap between a faculty member’s duties and research for the employer would be research commissioned by the employer, with oversight responsibilities, for a deliverable to the employer. Everything else may fall back on what constitutes “the employee’s own time” and “equipment, supplies, and facilities.”
A General Observation
The purpose of a university IP policy is to make clear the obligations of university personnel with regard to the law, contracts, and employment. Not just inventive personnel, but also those providing resources to inventors. The thrust of this particular university’s patent policy is to claim everything, releasing what is not filed upon in 180 days, or abandoned after filing. This, against the claims of state law, which would draw much narrower claims for the university as an employer, its business, and its provision of resources. The only gesture to release is allowing the use of the library.
What lies behind a general claim for everything? What motivates it? And why, even if there is such motivation, does the policy not run parallel to state law? We can construct plausible answers to the first question. The policy claims everything because university administrators want everything. Surely it’s not a mistake in the drafting. And it’s not likely that the faculty arose as one and demanded that the university administration take everything inventive they do.
As to motivation, that is more difficult. From the point of view of innovation, it is not clear at all that institutional ownership indicates a better chance of public use. Certainly for the federal government it appears that making ownership claims did not further innovation goals. That at least was an argument put forward by the universities to get Bayh-Dole. If that’s true, then why is *state* government control of inventions any different from *federal* government control? One might argue that private control of inventions is on the whole better than government control in getting things into commerce. And one might argue private university control is a branch of such private control. But why public universities? That’s just more government ownership. One might think, even, for national innovation goals that public university ownership is *worse* in general for innovation than federal ownership.
If one were making a change to Bayh-Dole, to improve and clarify the law, a good idea would be to *forbid* public universities from electing to take title directly unless requested by the inventors. Otherwise, the public university has to designate one or more private organizations to act on behalf of the government with regard to holding title to subject inventions. [As we learned in Stanford v Roche six months after this article was posted, universities have no right under Bayh-Dole to “elect to take tile” to federally funded inventions. Bayh-Dole applies only after a university has obtained title to such an invention. Universities have no right or special privilege under Bayh-Dole to take title. And, a careful reading of Bayh-Dole shows that universities are even restricted in how they can claim title to federally funded inventions outside the operation of the law.]
Rationales for University Claims to Everything
There are various arguments one might make for university ownership of inventions. One is to make money by licensing patent rights. Here is what our present university says about it: “The University and its members have a common interest in protecting and capitalizing on intellectual property, using such legal vehicles as patents and copyrights that makes possible the ownership and control of some creative works and that provide an incentive both to create such works and to make them public.”
Like other parts of this IP policy, it is difficult to parse what is going on here. It would appear that the policy claims that faculty need the incentive of ownership to create and make public their work. Is this possible? Is it possible that the policy really *intends* to make this claim the basis for its existence? Apparently, this is the case, that the university and its faculty share the desire to make money from IP, and for this reason the university takes ownership.
It’s not a compelling premise, but even if it were, how does one get from it to an outright claim to everything? It’s actually rather stunning to see a university argue that without ownership positions taken by the university its “members” would lack incentives to create or publish. Actually, it sounds like horsewallop. It is something to say before making an assertion. It doesn’t matter that it doesn’t add up. It doesn’t matter that it’s not an objective of Bayh-Dole, to the extent that federal funding is involved. Yes, there is the Constitutional rationale that to promote progress authors and inventors should have rights in their writings and discoveries. From there it is a leap to say that universities should own everything discovered. Not that the leap is impossible. I would just like someone to attempt to make it with a decent argument.
One challenge in dealing with university intellectual property policies is dealing with how badly they are, in general, drafted. In the case of this particular policy, not only does it ignore state law and Bayh-Dole, but it also at crucial points is so sloppy that one cannot parse what is actually expected. One is left with a claim to everything until the employer waives its interest, on the premise that everyone wants money from licensing. Even if that’s contrary to law. But the most challenging thing about these policies is coming to understand why it is that a university administration claims ownership of everything, or wants simply to make money from licensing. Or that it will make the most money, at any rate, by owning everything at the outset and going from there.
Coming to understand US university research policy, and the claims to innovation that attach to that policy, requires us to come to grips with the claims to ownership made in university policy statements.