In a recent essay on the Stanford v Roche decision, Sean O’Connor gives a fascinating perspective on the push by the University of California to impose a present assignment obligation on faculty. I could not figure how they could rationalize the idea that doing so was not a policy change, when everything pointed to a clear change in policy, or at least a willful disregard for policy. The UC policy is clearly a review + request style policy, with the request backed up by policy demands, of course.
In a 1997 case, Doug Shaw, the creative force behind the UC Davis strawberry development program, sued the University of California to prevent it from unilaterally changing its patent policy, and thus forcing changes to the royalty arrangements that he had negotiated under the previous patent policy. In the course of arguing their side of the case, the UC administration argued that the “promise to assign” language meant the “complete transfer of [his] right to the University”.
The court didn’t buy this argument. And why should they? It is not an argument that makes any sense to a university IP practice built on review first, then request when an invention is within scope and the university makes a commitment to develop the invention or the university is required to obtain title by the terms of a contract.
But from this account, one can see the shape of the reasoning about present assignments. The UC attorneys argued in court that UC thought the meaning “agree to assign after review” meant “hereby assign everything the review is merely ceremonial”. Thus, they now are arguing that since they previously argued this is what they *intended*, and this is what faculty also must have *intended*, then to change the wording of the policy documents now merely makes them *conform to what was intended*.
Whoa. Shall we work through that again? Write words that have a reasonable interpretation: you agree to assign after review. Now later make a losing argument that is rejected by a court that the wording really means “you assign everything right now and the review is extra”. Now you assert that everyone really intended the latter, and the court merely was unpersuaded. The obvious thing to do, then, is change the wording to match the losing argument, since everyone really agreed to it except the court. No policy change needed. Clever.
There’s no evidence that anyone at UC or on the faculty ever understood the UC “promise to assign” as anything but that. It appears to me that UC made up the argument about “promise to assign” = “assignment” for the purposes of trying to overcome Doug Shaw’s arguments regarding changing the policy. It would not be the first time UC has done this. They argued in the Singer case that UC IP policy had the “force of law”. Even though they lost that case, it meant–for it to appear that the UC administration really believed the argument–that one couldn’t grant exceptions to policy, since that would be like, letting some people break the law. In one circumstance, I had the opportunity to license some biotech goodies to a company. I found that the company had done a nice deal with another UC campus a few years before, so I got ahold of that document, and asked the company if that deal would work again for them, changing just the campus name and the goodies to be conveyed. The company was fine with it–even a bit surprised that things could work out so well.
Except, when I ran the new contract through legal, I was told I couldn’t offer the same terms to the same company because they had already got one exception to policy and if I used the same exception, it would begin to appear that the policy was being changed without due process. I could appeal for a different exception, perhaps, but not that one. So much for repeat business! One can see, however, how such an approach to policy was necessary to substantiate a claim made in court to try to win a dispute.
If we look at how UC argued in Stanford v Roche amicus briefs, the same thing is happening. UC argued that its technology transfer world would fall apart if Bayh-Dole was not a vesting statute. Without “title certainty” vested in the University, research inventions would sit on the shelf and federal research dollars wasted, or something like that. It was a losing argument. The Supreme Court threw it aside. It was an argument that sounded good, but it was made up to try to win the case. It didn’t have any substance. Even in UC, the practice was to get assignments from inventors after review of the circumstances. I never heard once that “promise to assign” means “already have”. And while plenty of folks thought Bayh-Dole gave title of inventions to UC, that was interpreted to mean a right to title, which still had to be got by requesting assignment.
Thus, having made an argument to the Supreme Court that vesting was essential to UC practice, it doesn’t very well serve not to take some action to create a vesting policy if federal law won’t do it. Thus, present assignments as the remedy to “title certainty” and to show everyone how much the attorneys really meant it when they said vesting was essential. Thus, not only do we see a move to vesting, but combined with the losing argument made in the Shaw case, the vesting was always “intended” by the administration, even if the court got tripped up trying to read the actual words used.
Folks, words mean things. They are not ceremonial stand-ins for administrative caprice. Even adhesion contracts–imposed by one party on another–have to be stable. It’s not a contract to say: “You have to agree with me, whatever I later say I intended to agree to. Furthermore, I can fire you if you ever don’t agree with me, as that will show your insubordinate, uncooperative, unethical attitude toward university administrative rules, willingness to misuse publicly provided facilities, and intent to exploit your faculty position for your own gain and that of others ahead of institutional benefit.” It doesn’t strike me as a nice place to work, if that’s the subtext for the present assignment. The policy in that case is not even a contract. It’s merely an assertion made with sufficient threat that it will still be an effective threat in the future.
From this, however, it is instructive to turn to Justice Breyer’s dissent in Stanford v Roche. Breyer argues that promises to assign and present assignments both establish only “equitable title” and that a further step is required to obtain legal title, in the form of a written assignment executed after the invention has been made. Except that in FilmTec, a federal court made a distinction in “slight linguistic differences” (as Justice Breyer puts it) and thus “hereby assign” comes to mean the transfer of both equitable and legal title when a patent application is filed. If one takes up Breyer’s argument, it works against UC’s position on the present assignment. Breyer doesn’t argue that promises to assign have the same effect in transferring legal title as present assignments, but just the opposite, that one still needs a later assignment in either case to hold legal title.
The problem in Justice Breyer’s dissent, however, has to do with how he construes the standing of university policy claims. Universities with review + request invention policies make a conditional claim on inventions, when they meet scope. In Stanford’s case, with what I think was one of the best patent policies in the country, the university claimed title only when necessary and title stayed with inventors “if possible”. That’s not your usual employer-take-all arrangement. And it’s an excellent model for how universities should do it. Oh, were it that Stanford still followed its own lead! When a university with this model allows consulting, then those inventions are committed elsewhere, and that’s fine. When a university says, don’t enter into any agreements that would conflict with your assignment obligations to the university, it means: don’t have conflicting obligations when the university must take assignment.
The Supreme Court made it clear that federal funding does not require the university to take assignment. Except Justice Breyer wants to construct an argument that it was expected that universities would take assignment, even though there’s nothing in the Act or the implementing regulations to this effect, and in fact are things that count against such an argument. Thus has been the influence of the patent administrators in getting the APLU, AAU, AUTM, COGR, and other organizations with lots of initials worked up to a frenzy over the matter.
Universities are not mere employers. Faculty are not mere employees. They are not hired to invent for their employer. They do not propose research so that their employer can control the results. The regulations covering university research do not demand that employers get ownership. But the regulations do require the university to be a trustee not acting in its own self-interest. Even if we took Justice Breyer’s point that universities were expected to take title to inventions that “otherwise might not realize their potentially beneficial public use”, this kind of title acquisition should happen *after* it becomes clear that the inventors have not identified or will not identify an appropriate invention agent to do this AND the invention does have a beneficial public use that the university desires to promote AND the invention will “just sit” if the institution does not take action. This *does not* translate into *taking every invention on the assumption that the inventors and their agents are incapable of promoting their inventions for public use* nor that this effort really is measured by *how much money comes to the institution* or *how good the institution’s tech transfer programs are made to appear*.
And for all that, in the Bayh-Dole Act, the universities are called out to collaborate, not commercialize (See 35 USC 200). The commercialization bit is called out for American industry and labor to do. The university role is not to commercialize. That right there puts a shape to what a university patent license ought to look like. It should promote use, not products that pay a royalty. Under this reading, it is hard to see how Stanford had standing to sue Roche at all: it violates the objectives of Bayh-Dole to do so, since it sought to disrupt a product available to the public, that was being commercialized with the help of American labor, at least. Stanford’s role under Bayh-Dole was to collaborate. Why is that so difficult?
Bayh-Dole was created in a context in which universities did not necessarily take an ownership interest in faculty work. Of those that did, they preferred directing faculty to external foundations for management of inventions. Thus, Bayh-Dole does not assume anything with regard to university ownership. There was nothing at the time to assume but diversity of practice! If there had been any concern on the matter, surely the law or the implementing regulations would have required universities to have employment agreement that required assignment of inventions made with federal funds. But there is nothing like this. Instead, there is the (f)(2) agreement, which is a federal commitment made by likely inventors to protect the government’s interests. Bayh-Dole leaves the private dealings of faculty with their administrations alone. And good for Bayh-Dole. What an astute gesture. Rather than the government dictating ownership to universities as a condition of funding proposals made by faculty, it stays entirely out of it and focuses instead on what the government needs by way of access to inventions for its own activities, and to protect the public (and inventors) in the case that an invention agent selected by an inventor fails to meet minimum obligations.
Universities like UC are determined to implement vesting of inventions. They have argued in court that they must do this or technology transfer will fail. They have to make it appear that they were serious about this argument. They have argued in court that they intended a promise to assign to be a present assignment, and that this was a private vesting of all future inventions. They now have to make it appear that they were serious about this argument, too. It’s a perfect storm of having to live with arguments that appear to have been made in the moment to try to win a court case–and both turned out to be losing arguments.
I have a suggestion for my UC friends. Instead of penalizing the university by persisting in arguments that the courts have dismissed, why not take the opportunity to drop the arguments, perhaps a bit chastised, but free of the problem of maintaining losing propositions after the purpose to do so has passed? You do not have to be the Black Knight. You can be good, happy, supportive knights. You have a valuable role to play. Don’t muddy it up by refusing the guidance from the courts.