Freedom to Innovate in Washington State: Undoing the Embarrassing and Deceptive Muddle of UW and WSU Invention Policies

Here in the state of Washington, we are working to free faculty at public universities from state control of scholarship.  That’s the purpose of SB 5247, now in committee in the Washington state senate.

Presently both the University of Washington and Washington State University claim ownership of faculty “inventions” asserting through policy statements that such ownership is a condition of employment and/or use of university resources, even though there are a multitude of good reasons for them not to do so.

University of Washington

The University of Washington patent policy claims (Executive Order 36) to cover “innovations” rather than, say, inventions that are or may be patentable.  An “innovation” is something new to an adopting party.  More generally, it is “an introduced change in the established order”.  In economic development terms, an innovation is often equated with “a new product offered for sale”.  Thus,  I have put “inventions” in quotes–since the policy aims to define invention to be “an invention, or a non-invention that we choose to call an invention anyway”–which if one thinks about it only a little bit is a really expansive claim.    Other policy documents support this expansive claim.  Administrative Policy Statement 59.4.5 on “Technology Transfer”:

Intellectual Property Right means all forms of intellectual property rights including, without limitation, patents, trademarks, copyrights, trade secrets, know-how, and similar technology rights.

That is, all faculty expertise would appear to be caught up in “know-how, and similar technology rights.”  Of course, one could also argue that UW policy drafters had no freakin’ clue what they meant by “similar technology rights”–similar to what, exactly, in a list of some statutory forms of intellectual property, some non-statutory forms, and some stuff (“know-how”) that is just what people know how to do?  Not only that, but in an approval form for outside professional work for compensation, UW’s technology transfer office inserted a particularly nasty attempt to require a present assignment for all faculty “IP” as a condition of merely requesting permission to do outside professional work for compensation.  The present assignment stands independent of the disposition of the request–the request could be denied and the present assignment continues on forever.  That form restates (and wrongly) APS 59.4.5 and defines “any intellectual property interest” as “any interest in an invention, patent, copyright, trademark, trade secret, know-how, or other intellectual property right.”  The form (opens in Word) then requires a signature following this statement:

The Statements above are truthful to the best of my knowledge. With this request for outside work, I acknowledge that I am bound by and I agree to comply with the University Patent, Invention, and Copyright Policy (Executive Order 36) (“Policy”), as it may be amended from time to time.  In accordance with this Policy, I will disclose all inventions and discoveries I create to the UW Center for Commercialization, including any that I create in connection with any outside work.  I agree to assign and I hereby assign to the University all my rights in any intellectual property to  which the University has a right of assignment  under the Policy, provided I created such intellectual property in the course of my University activities or responsibilities or with more than incidental use of University resources.

It is a nice clever touch to make the agreement include the right for UW to change the policy in the future–and faculty members who sign this form have, apparently, already agreed to those changes.   In some bits of the world, this would be an agree-to-agree provision and get thrown out.  But the UW contracting folks appear not really to care–and perhaps they don’t even know.   (One can also wonder about the purpose of the excessive “provided” clause that qualifies UW’s claim to a right of assignment–it is as if the policy is thought to claim everything, but here the form assignment has been generously reduced to a claim based on “my University activities” (but not “scope of employment” or “official duties”) and use of “resources” (again, without definition–whatever an administrator wants “resources” to mean, apparently)).

As for the Bayh-Dole Act and federal policy regarding faculty inventions made with government support, UW misstates the effect of the Act:

These new laws marked a dramatic liberalization of previous patent policy by allowing grantees/contractors to take title to inventions made in the course of their federally funded research. To enjoy the full benefits of this law, the University must:

Bayh-Dole does not allow universities to “take title” to inventions.  If a university gets title, then under the standard patent rights clause in a federal funding agreement, a university is allowed to *retain* that title.  There is nothing in Bayh-Dole that mandates that universities get title to inventions.  UW’s policy statement presents the conditions on any assignee of a federally supported invention as if these are *benefits* when in fact they are restrictions.  Of the three classes that may retain ownership of a federally supported invention–inventors, small businesses, and nonprofits (including universities), it is the nonprofits that are hit with the most restrictions, and it is the inventors who have the fewest.  At best, UW’s policy statement might read, “in order to comply with the requirements of the patent rights clauses in federal funding agreements, the University must: . . .”

Further, the university does not “elect title” but rather “elects to retain title”.  That is, the Bayh-Dole Act is not about how the university obtains title to inventions, but how a federal agency may respond when a university (or other invention management agent) does obtain title.  The use of “elect” in the UW policy is deceptive, as it makes it appear to the casual reader that UW has under federal law the right to take ownership of inventions from faculty inventors when there is federal money involved.  All UW has is the right to elect (that is, notify the funding agency) to retain title to inventions it obtains.  There is no requirement under Bayh-Dole that a university obtain anything!

While it is true that written invention agreements are required by the standard patent rights clause authorized by the Bayh-Dole Act, it is not true that these agreements are required by Bayh-Dole.  They are not.  They are required by the Department of Commerce regulations that implement Bayh-Dole and are not to be found anywhere in the text of the law itself (See 37 CFR 401.14(a)(f)(2)).   That is, the written agreements are a matter of federal contract compliance, not Bayh-Dole.

The difference is significant for another reason as well:  the agreements required under (f)(2) of the standard patent rights clause are to protect the government’s interest in inventions, not to secure ownership of those inventions for the university.   The UW policy statement invites the reader to conflate the written agreements under (f)(2) with the text that immediately follows:

Employee Invention Agreements

It is the responsibility of the OIPTT to disseminate the Patent, Invention, and Copyright Policy to University employees. This may include employee invention agreements, but failure of the University to secure a signed agreement in no way affects the responsibilities or obligations of either party under the Patent, Invention, and Copyright Policy of the University. Employees are expected to comply with the University requirements even if they have not signed a specific patent agreement.

This statement regarding employee invention agreements not only is positioned to create a conflation of the federal requirement with the university requirement, but even more so, the statement appears to relieve the university from requiring a written agreement on inventions at all!  It is bizarre, to say the least.  While UW enters into federal contracts for research on behalf of its faculty, and those contracts require a written agreement on inventions, UW writes a policy that says it doesn’t have to have such agreements.

The written agreement required by (f)(2) of the standard patent rights clause is a critical piece of the federal contract.  It does not require faculty inventors to assign title to inventions to their university host.  Rather, it makes the university substitute the written agreement made by faculty for anything in its own policies that might conflict.  Further, in doing so, it makes the faculty conditional parties to the federal funding agreement–if they invent, then they become, under the definitions of the standard patent rights clause, “contractors” just as the university is a “contractor”.   This becomes clear when one considers what happens if a faculty inventor chooses not to assign title of an invention made with federal support to any invention management agent.  In such a case the implementing regulations instruct an agency that it may allow the inventors to “retain title” to their invention, and the agency does so, then the agency will treat the inventors as if they were small business contractors, but require even less of them by way of compliance than under the standard small business requirements (see 37 CFR 401.9).

The UW policy statement is deceptive and muddled.   The written agreement that is required by federal contracts is not an agreement to assign invention title to UW, but one that gives faculty investigators standing to make responsible decisions that both protect the government’s interest and further the objectives of federal research invention policy.  UW turns this all into a claim to have the right under federal law to own faculty inventions.  It is not accurate.  It is not the truth.  It is bad for research, and it is bad for innovation.

One might observe that in the above quoted UW policy text, “OIPTT” is the name of a prior organization that managed UW inventions.  That organization was renamed years ago, and then renamed again four years ago in yet another reorganization, but UW has not gotten around to changing its policy statements to reflect current conditions, just as it has not done so with Bayh-Dole after the Stanford v Roche decision.  For policy statements that apparently are central to UW’s technology transfer efforts, and are represented as central to the state’s innovation economy and the source of jobs and wealth, it is consternating to see the inattention that UW pays to the text of its core documents on the matter.

Washington State University

Washington State University goes about its technology transfer operations with a different arrangement from the University of Washington.  WSU handles patent licensing through an affiliated research foundation, WSURF, which was among the earliest of such foundations in the country.  An internal office, the Office of Intellectual Property Administration, deals with policy, ownership, and advocacy for “technology transfer”.   Unfortunately, WSU doesn’t do any better in how it manages inventions.  Here’s the definition of “intellectual property” from the WSU policy statement:

a.) Intellectual property is the inherent value produced by human creativity and invention, protected by law from unauthorized exploitation by others, and includes patents, copyrights, trademarks, and other proprietary information.

The policy then asserts that it applies to “potentially patentable discoveries and proprietary information” developed using WSU resources (there’s a big list of these) or which “relate directly to the University’s business, research, or development.”

Now, what the heck is “proprietary information” and why is it included in what should be a simple list of patent, copyright, and trademark?  And given there is never any discussion of trademarks–by far the most valuable form of intellectual property–except in lists like this, why are trademarks even included? What makes information “proprietary”?  And who is the proprietor for the purpose of this policy statement?  One would think that “proprietary information” as used here would be information that WSU owns.  But the whole problem here is how such information does come to be owned by WSU, when it starts out in a faculty member’s head.  The policy asserts ownership of something in a definition of what it is later going to claim ownership of.  Oh, but it is much worse than that.

WSU defines “employee” to include “any person volunteering services for the benefit of the University.”  That is, employees are employees are non-employees.  That ought to cover it.  Yet there appears to be no way that a non-employee enters into any kind of contract with the state of Washington by “volunteering services for the benefit of the University.”  Yet here we have the state claiming that even volunteering services is sufficient to create a claim to ownership of intellectual property.  If that’s the fate of the poor volunteer, what awaits WSU faculty in such a policy?

Well, for openers, the policy is adamant:  “All employees accept the terms of these policies as conditions of employment or gratis association.”  The state asserts the policy as a condition of “gratis association.”  Well now.  Seems that WSU is programmed to receive.

Now here is the WSU statement of claim to ownership:

The University will be assigned ownership in patents and other tangible research property developed by its employees as a result of their University research or employment.

This policy demand is not consistent with the definitions and statement of scope already discussed.  Instead, it launches out into new territory.  It claims ownership of patents (but not inventions) and adds “other tangible research property” (as if patents are tangible) and instead of the mysterious “other proprietary information” (which would appear not to be tangible, being information).  Further, the claim is tied not to use of resources or proprietary information, or anything relating to WSU business, but instead has to do with a “result of University research or employment”.  What makes “research” into “University research”?  One might think, it will be “University research” when it is assigned or contracted for by the University.  But later we find that if the research is “sponsored” then the “University normally retains ownership of property developed under sponsorship agreements….”   The upshot here is the implication that if it’s property (that is, owned), then WSU “normally” claims ownership.  Note the use of “retained”–that old dog of a word from Bayh-Dole, which there means “once you have got it, you can keep it, subject to good behavior” but in the faux Bayh-Dole world of university patent administrators means “presumptively taken from private individuals and made automatically owned by the state, for which any later assignment documents are pure formality to document for others what has already taken place by fiat.”  That is, here the state of Washington simply claims that if something can be owned, then the state owns it.  Such a claim necessarily includes a large swath of faculty scholarship–not just inventions and discoveries, but also all that “information” and “tangible research property.”  The section on “Patent Ownership” makes this all painfully clear:

The University shall own the rights to all patentable property and other tangible research and scholarship developed as a result of University employment, or when the equipment, supplies, facilities, employee time or proprietary information of the University are used.

Yes, there are some qualifications on all this, but to sort through them makes my eyes tear up.  It’s a confused jumble of a policy from which one may infer a substantial desire for the state to claim everything it possibly can.  The state does this by making a policy, which appears to have the force of a state regulation, that simply takes property from people.  There appears to be no contract formed–certainly not one that volunteers helping WSU would know about.   It amounts to eminent domain taking of faculty scholarship by the state.  It is like a deep ocean trawling operation, that brings up everything for a few keeper fish–the rest can die, or rot, or struggle to survive, no matter.

WSU makes it clear that once it has ownership, it controls even faculty publication:

In close consultation with the employee inventor and for the benefit of employee inventor, University, and possible Licensee, there shall be no publicity or disclosure concerning the invention until patent applications have been filed. OIPA shall act in a timely fashion in such cases so as to not unreasonably delay employee publications. All publicity, public reports, interviews, news releases, speeches, public disclosures, or public demonstrations of the invention subsequent to the filing of the application shall have prior clearance in writing from the University or its assignee.

An interesting consequence of this policy assertion is that WSU is subject to export control laws whenever an invention is made that is subject to this policy.  That means that WSU must comply with export control licensing procedures for every person who is not a US citizen or a permanent citizen–and many foreign students and “volunteers” may well be in this category.  Any disclosure of an invention to these individuals is a “deemed export” and WSU, by its own policy, may not have the benefit of the fundamental research exception in export control law:

(5) University based research is not considered “fundamental research” if the university or its researchers accept (at the request, for example, of an industrial sponsor) other restrictions on publication of scientific and technical information resulting from the project or activity. Scientific and technical information resulting from the research will nonetheless qualify as fundamental research once all such restrictions have expired or have been removed. (See Supplement No. 1 to this part, Question D(7) and D(9).)

Note, while the EAR provides exceptions for “pre-publication review” for a sponsor–but there is no such exception for the university itself shutting down disclosure or publication for its own review.  It would be interesting to see how this plays out.

While we are this far into the WSU policy we should point out how badly Bayh-Dole is treated:

Under the federal patent and trademark legislation of 1980 (35 U.S.C. § 200 et seq.) [i.e., Bayh-Dole], the University has the right of first refusal to title in inventions made in the performance of federal grants and contracts. The University will assert title to and attempt to license inventions made with federal government funds so that the Congressional purpose of fostering the development of industry in the United States will be furthered.

Universities have no right of first refusal to title, relative to their faculty inventors.  The “right” under the standard patent rights clause of a federal funding agreement is actually a *condition*–that IF the university obtains ownership of an invention made with federal support, THEN the university may “retain” that ownership subject to a set of requirements.  The phrase “will assert title” is pure bombast.  There is no way to put it nicely.  The university–here, the state of Washington–turns “retain” into “assert” and turns it from a dealing with a federal agency into a dealing with its own faculty inventors (among others).   As for “fostering the development of industry”–that’s not in the statement of objectives set out and 35 USC 200.

The opening purpose of Bayh-Dole is “to use the patent system to promote the utilization of inventions”–and it is this emphasis on practical application that permeates Bayh-Dole.  The only reference to industry is “to promote the commercialization and public availability of inventions made in the United States by United States industry and labor”.  That is, the emphasis is on “commercialization and public availability” of inventions *made* by US industry.  The “commercialization” is not an activity of the universities, but of industry.  There is nothing about “fostering the development of industry”.  Perhaps that is a consequence of inventions getting used, but it’s not a part of the law.   One would think that the state of Washington would get it right, when it comes to federal law, but apparently, sadly, no.

SB 5247

In both the UW and WSU patent policies, one finds not only incoherence and inconsistency, but also mis-statement of federal law, misapplication of law, and a faulty but determined effort to claim ownership of faculty scholarship and expertise.  Anyway one wants to look at it, the policies are an overreaching mess.   These are not private universities, but rather instruments of the state of Washington.  What an embarrassment for the state, that its leading public universities have been used as a launching point for an attack on faculty scholarship.

SB 5247 addresses the way in which UW and WSU have made their IP policies into state claims for ownership of things that should not become the state’s by fiat.  Here is the text of the bill, with underline and cross-through showing changes from the existing law, which itself was enacted in 2010 as a cleverness of the UW’s technology licensing office.  There are two areas of important changes.  The first pertains to the statement of intent by the legislature:

Sec. 1. RCW 28B.10.630 and 2010 1st sp.s. c 14 s 1 are each amended to read as follows:
(1) It is the intent of the legislature that state universities ((engage in)) promote the practical application and commercialization of research and other economic development and workforce development activities that benefit the ((intermediate and long-term)) economic vitality of Washington. State universities are expected to develop and strengthen university-industry relationships through the conduct of research, the support of company formation and job generation, and collaborative training. The state universities, using a collaborative process that may include both in-house resources and independent contractors with necessary technical expertise or innovative processes,
must perform one or more of the following functions: [follows a list of functions].

The purpose of the changes in the first part are to make it clear that the state’s universities are not to “engage in commercialization”–that is, they are not to create products for sale, but rather to “promote” such an activity by others, who are not the state’s universities.  The addition of “practical application” makes clear, as well, that the universities are not simply to fixate on products for sale, but also on the utilization of inventions, consistent with federal policy as provided in the opening statement of objectives for Bayh-Dole, where the fundamental theme is that inventions made with government support get used, no matter, really, how that comes about.

In any event the construction “engage in commercialization of research” makes no sense.  The universities don’t “commercialize research” but rather should be working with the *results* of that research, such as inventions, or ideas, or new relationships.  There is absolutely no need for the state to demand ownership of research results–faculty scholarship, for the most part, to promote the use of research results.   All of the text that follows in section 1, including the list of functions (collaborative research and technology transfer opportunities; publicize their commercialization processes [meaning, presumably, how they promote commercialization]; pair researchers, entrepreneurs, and investors [“pair” a triad–what do you make of that?]; host events; train students by involvement in research and “industry interactions”) is consistent with an advocacy role for the state’s universities, not with “engaging” in “commercialization of research”.

The second section of SB 5247 addresses the state’s embarrassment in the UW and WSU patent policies and their overreaching if muddled demand to own faculty scholarship, presumably so the state can “commercialize research” rather than “promote the use of research results, including the making of new products.”  Here, section 2 makes a condition of provision of resources for research that the state’s universities do not make an overreaching demand for ownership:

(a) May provide university-administered facilities and other
resources to students, staff, and faculty for their use, including but not limited to use in extramurally funded research, such as through grants, contracts, or donations, consistent with the public mission of the university, if the university does not impose a requirement to assign intellectual property or other intangible assets that may thereby be created, or assert a financial interest in such assets, except as may be required by an extramural sponsor of research;

(b) May require assignment of, or have a financial interest in
intellectual property or other intangible assets developed by students, staff, or faculty only through agreements entered into on a voluntary basis;

(c) May not, in employment agreements with student or faculty employees, require assignment of or assert a financial interest in their inventions. . . .

SB 5247 restores faculty, students, and staff to independent status with regard to their scholarship, including their inventions, however the state’s universities may attempt to define scholarship and inventions.   However the state’s universities, and especially UW and WSU, which to complicate and muddle up their procedures and pomp, they cannot demand ownership of faculty work unless there has been a voluntary agreement on the matter–either because faculty have agreed with a sponsor to such a condition, or have agreed with the university in a side agreement specific to certain work.

This arrangement also fixes a loophole in Washington state’s employee inventor protection law, RCW 49.44.140-150.  That law limits what an employer can demand of an employee by way of inventions, and also indicates how inventions may be disclosed, namely either to the employer or to the state’s department of employment security.  How odd that the state has a law like that, but has ignored it when it comes to its own status as an employer, and especially the employer of faculty at a university.  It is inherent in the position of faculty that they are independent, and certainly independent of state controls, no matter that the state’s interest in those controls is to sell off IP to investors for a quick buck.

The problem with the scope of RCW 49.44.140 is that the state’s universities have used the “maximum allowable scope” of an employer’s interest in an employee’s inventions as a condition of employment to become the state’s own interest in faculty scholarship, regardless of the actual conditions under which faculty are hired and provided with resources.  Faculty are not “employees” of the state for the purposes of their scholarship, and that scholarship includes their inventive work, their know-how, their information.  Faculty are not “employees” of the state for the purposes of the intellectual property that arises in their scholarship, no matter the theory of ownership, even if that theory is a muddled as “everything that can be owned or treated as if it can be owned even when it cannot be owned” (such as know-how of faculty).   The state–acting through public university administrators and the written regulations they produce as “policy”–has no business claiming faculty scholarship.  RCW 49.44.140 should reflect such a limitation; SB 5247 makes this limitation a reality in the context of higher education.

SB 5247 makes state policy on university-policy research consistent with federal policy on university-hosted research.   The federal policy is that government agencies, even though they provide support  for faculty research, will defer to faculty investigators and inventors who choose to assign title to a pre-approved invention management agent (even if that agent is the university they work at, even if that university has no invention management capability).  That policy has been distorted by university patent administrators, and those at UW and WSU are leaders in being adamantly, unrepentantly, muddled about federal policy in particular and research-inspired innovation in general.  They have construed the Bayh-Dole Act to give state government personnel arbitrary control over the ownership of faculty inventions when made with federal support.  Nothing could be further from the truth, but it is impossible even to have a thoughtful discussion with UW and WSU administrators on the point.  The US Supreme Court, however, was crystal clear, and the fact that UW and WSU have not moved to change their policy statements to be consistent with the Supreme Court’s decision is perhaps less negligent than arrogant, if not contemptuous–not only of the Supreme Court, but also of university faculty.

SB 5247 restores the balance that Bayh-Dole anticipated and university administrators have sought to destroy by exploiting a self-serving misreading of federal policy to make state-sanctioned regulations to take ownership of what is, and should be, personal property–such as title to inventions, even when made with government support in the form of state-supplied resources and salary for teaching and other civic-minded faculty duties.   By setting a limit on state claims to faculty scholarship, SB 5247 opens up a door for innovation that has been closed for decades.  While many faculty may still prefer to deal with their internal university patent offices, others will find that the freedom to publish, to collaborate, and to innovate is inspiring.  Without the overhead of state claims and the needless expense of dealing with owning everything (an expense of over $100m over five years in the case of UW) faculty investigators and inventors can make their own decisions with regard to how inventions may be employed in the public interest.   Doing so creates freedom to innovate, and that’s what Washington state needs.