A theme of this blog recently has been the transformation of faculty work from that of independent scholars working collectively to form a university to that of indentured labor working for management that controls the university. This is particularly true of technology transfer and intellectual property. Inventing was a private matter. It wasn’t within scope of duties, it could happen in research or otherwise, it could “make use” of facilities like preparing curriculum or developing materials for a lab exercise, and the private claims on such inventions were none of the university’s business, any more than it would claim copyrights in scholarly articles, books, plays, sculpture, or architectural drawings.
Now, however, that has changed. Public universities have led the way. The State now insists on owning and controlling everything it legally can (and then some, as in overclaiming inventions to gain the benefit of a convenient misreading of Bayh-Dole).
The ways the university concept has slipped from something very cool to something dull and bureaucratic are subtle. One way in has been state labor law designed to protect employees from overclaiming of inventions by employers. Here’s a typical statue from CA, and here’s WA (and more here). This type of law aims to restrict what an employer can claim by way of ownership of inventions made by employees, along with protocols for informing the employees of their rights and ascertaining what inventions an employer can properly claim in an employment agreement.
Generally, these laws provide that an employer can only claim inventions made by the employee in certain circumstances. The drafting strategy is to exclude first, and then weaken the exclusion with exceptions. The excluded inventions are those made without use of the employer’s facilities and trade secrets and on one’s own time. The exceptions are for work done on one’s own time that relates to the employer’s business or anticipated research or development, or from work performed by the employee for the employer. While there are big holes in this drafting strategy, for a lot of companies, it is still pretty sensible. Most companies have a pretty well defined line of business. You work for Starbucks, and in the evenings you design a new transmission system for your go-kart. It’s not with company resources, not on company time, and not in the line of Starbuck’s business or development, not what you are paid to work on for the company. Easy enough. As a company gets larger, however, so that it has a lot of divisions, even if you are off in the coffee makers in the cockpit division of Boeing, it may be that there’s a transmissions for aircraft support vehicles division of the company working on new trannies, and even though it’s not work you do or know about, it’s still in the anticipated direction of company research, so the company could, it would appear, be able to sustain a claim to the invention within state law.
The problem gets acute when one turns to a research university. It has research all over the place. Worse, it has a technology transfer office that has as its business taking anything done in research and trying to make money off it. The line of business for the university might be teaching and research services, but the line of business for the tech transfer office is anything that could make money. Thus, when a university employee invents at home without use of university resources, it’s virtually impossible for the university’s claim to be limited by these labor law protections for employees.
There’s a question whether other legal principles in contracting and employment would also limit an employer’s claim to outside inventions, but for our purposes it’s important to see the effect of this sort of law on university administrators hungry form intellectual property. Instead of reading these laws as protecting employees from overclaiming, administrators read these laws as setting an outer legal bound to what they are entitled to claim. It is just a free gift from the universe that the laws are also drafted so that if they have an omnivorous technology transfer office, they can claim everything. That is, they read the law as a special mandate, because of their comprehensive interest in making money on everything, that the law provides this extra special set of exceptions to the limits that ordinary businesses face because they do not do research on everything, and they don’t try to make money on everything.
It’s not that the drafting of the labor laws on invention are faulty–even if they are–but rather that administrators read them the wrong way. Rather than leaving things alone, they change their patent policies to claim everything they can under the law (even if doing so violates other long-standing principles regarding state control of faculty work product, academic freedom, and whatnot).
These labor laws set up a basic paradigm. Some inventions are “service” inventions. They arise from work done for their employer, or what their employer would expect to want. Others are “free” inventions. They are not the employer’s, but if they are made with employer resources, then the employer has an implied license, a shop right, to use the invention. The idea is, inventions are personal property, not corporate property. Even use of an employer’s facilities does not create an outright claim of ownership to a personal right, any more than buying a lottery ticket while driving a company vehicle transfer ownership of the ticket to the company. US patent law provides that patents are personal property. Thus, we have this service and free dichotomy, within which an employer is given freedom to contract in employment agreements for service inventions, but does not have to, and is prevented from demanding free inventions, but an employee and employer can reach an independent agreement regarding these, outside the employment arrangements, on the usual principles of offer, acceptance, and consideration. Further, if the employee uses employer resources, then there’s a tacit implied license, regardless of whether the invention is service or free. The employer does not have to claim everything it can to obtain the benefit of employee inventions for its own business purposes. If an employee wishes to avoid the shop right, he or she would be prudent to seek a release from the employer prior to embarking on potentially inventive activity.
But universities were a different thing. They didn’t have patent policies that claimed every invention possible. They didn’t have a line of business in which patents were an asset–they assembled faculty to teach courses, and to do research to better themselves and advance knowledge, and they didn’t have any lines of business under which even copyrights for publishing, much less an industrial right such as a patent, had any meaning. They did not manufacture, they did not sell, and they only used to the extent they did research, and that was covered by the shop right, if not the (now abandoned) “research exception”. Everything an employee did was a “free” invention. There were no university “service” inventions, or if there were, they arose out of specific work done in a campus boiler room to improve service, or out on the extension campus farm, to improve a milking machine.
Universities had an impressive run of “free” inventions making their way to the market–electrostatic precipitators, Vitamin D synthesis, warfarin, gene-splicing, TCP/IP–over 60 years of great work. It was this great work that laid the groundwork for Bayh-Dole. Bayh-Dole itself set up this kind of labor law dichotomy. Certain federal agencies, in their contracting with universities, made demands on inventions that turned them, in effect, into service inventions for the agency. The inventors were obligated to assign inventions to the government as a condition of the funding, essentially creating a federal employment agreement, proctored by the university as the legal entity receiving the funds on behalf of the investigators.
It is only in a snarky way that anyone could think that the investigators were working for the university when working on a federal grant. The grant paid their salaries and expenses, and it paid the university its indirect costs in managing the grant and providing facilities. Yes, those were “employees” and yes, they used their employer’s “facilities”, but the work was proposed without employer supervision, not in any particular line of employer business, and was for the benefit of the public (via public funding) and the government (via ownership of inventions). Universities for the most part did not care. They were not losing property to the government. They never had it, never wanted it. If someone wanted it, it was an inventor who wanted to run with the invention. For that, inventors turned for help to their research foundations, such as WARF, which then worked out a deal, if it could, with the agency, to take ownership of the invention and do whatever the deal with the agency permitted. Working out deals one by one with agencies was a challenging business. Agencies felt the need to qualify folk who wanted to own inventions made at the public expense, review plans for use, and provide protections for the government, the public, industry, and for industry bidding for government contracts.
Bayh-Dole came along and backed agencies off the premise that every federally supported invention was a service invention. The universities made the case that they were doing a great job with the inventions they obtained–way better than the federal agencies, the argument went. The point of Bayh-Dole was to make nearly all federally supported inventions “free” inventions. Owned by their inventors per patent law, with only a conditional obligation to assign or license to the government, pending local disposition of the invention. Bayh-Dole also provided exceptions to this freedom, with the idea of exceptional circumstances–where an agency could impose service invention conditions if there were a compelling reason. The Department of Commerce, in creating the standard patent rights clauses, as it was authorized by Bayh-Dole to do, added a second clause that made a standing exceptional circumstance for certain nuclear and military applications. You see the strategy, however. It’s just like the state labor law strategy (which largely came later than Bayh-Dole). Make more stuff free, less stuff service.
We find, however, that Bayh-Dole had a remarkable unanticipated effect. Even though university success was based on an amazing run of robust policy supporting free inventions, backed by independent research foundations working with faculty inventors, industry, investors, and universities, instead of continuing this approach, and amping it up with this new influx of federally supported free inventions, the universities did something dark and silly. They started behaving like the federal agencies, but with a different set of motives. They started claiming the free inventions as university service inventions. They started arguing that Bayh-Dole gave them the right to claim ownership. They misread the Act to say that the Act entitled them to have ownership, mandated that ownership even, so that it was a violation of federal law for an investigator not to assign ownership to the university. So much for free inventions.
It is a simple misreading. And a nicely self-serving misreading. Where the Act said, agencies cannot default to service invention claims, the universities read it as “we have the right and mandate to own” rather than “when inventors bring us their free inventions, we do not need the approval of the agency to work with the inventors”. Thus, Bayh-Dole, a law that set free a lot of future inventions, became the basis for enslaving them again, but this time with the idea that the university, as the employer, had not only the right but the obligation (to protect the public from those greedy, inept, gullible inventors!) to own federally supported inventions. Federal funding agreements became extensions of employment agreements, and whatever was done in those federal agreements was in the line of business of the university, with its omnivorous tech transfer office. The growth of such offices is a direct index in the spread of this misreading disease throughout the country, propagated and evangelized by organizations such as AUTM, which became its primary vector of infection, but with willing help from research organizations such as SRA and NCURA, and university attorney organizations such as NACUA. These organizations led the indoctrination of senior administrators into the misreading, what they stood to gain from it, and how to implement it to tie up not only federal inventions as service inventions, but all inventions made by faculty, staff, and students.
Next, we will see how they have used “ethics laws” to pack down their misreading and make it a sin against the state to disagree with them.