Present Assignment Shakedown

That’s a nice invention ya got there, Prof.  Pity if something were to happen to it.

Using a present assignment would not have saved Stanford’s position in Stanford v Roche.  There are too many other circumstances that work against Stanford.  There’s Stanford’s policy, which at the time made a point of the position that “if possible” university-based inventors owned their inventions.   That’s a good point.  No, it’s a great point.  It’s a shame Stanford hasn’t held to that policy and instead has caved in to the claims of folks who think they smell money from institutional controls on faculty work.  There is also Stanford’s approval of the nine-month visiting relationship at the company, along with its assignment obligation to the company.  Stanford was part of that bargain, no fingers crossed.  And it was a good bargain.  No, a great one.  Stanford faculty got early access to hot new technology, PCR, and used that access to win government grants, and develop, or at least validate, effectiveness measures for a pressing health-care need, the treatment of HIV.  And there is also Stanford’s own invention management practice, with allowing their company-visiting guy to join a federally funded research project without executing the (f)(2) written agreement, without working some arrangement with the company up front to clarify the situation or strike a prospective business deal, the mis-sequenced patent application (assignment, then election to retain, then file; not file, then elect to retain, then assignment).   Good people, but not the usual sequence of practice.

No present assignment could overcome those circumstances, and it comes as some relief that it cannot.   There is always a tiny risk in this business that an inventor will work against the expectations of others.  But that did not happen here.  The investigators made their bargain–multiple bargains, in fact. Stanford concurred.  Live with it.   Demanding a present assignment of everyone, up front at employment, is like requiring everyone on a commercial flight to wear a parachute because the captain and co-captain may have been drinking, a mechanic forgot to check a part, the weather forecast is wrong, a flock of geese might be chased by a small angry bird, and someone mislabeled all the fuel gauges.  It could happen, but the remedy is not the parachutes, but to address the various concerns to make the flight safe.

Folks advocating for present assignments as the university response to Stanford v Roche have got a nasty, expensive, damaging, misguided message–it’s wrong about the law, about innovation, about universities.  It proposes a seemingly simple fix that won’t fix anything, won’t operate as claimed, and which distracts from the arrogance and bumbling going on in the cockpit.   It seems, too, that some of the folks doing the advocating don’t care.  That is, they are exploiting the situation to get something they want, and are fine with spreading misinformation to get it.   These guys like fascism.  They want the state to own faculty work, because the state has shown itself to be ready to sell off patents to speculators.  Anything to make money, even loss of faculty and student independence.  That’s what they see Bayh-Dole as authorizing.  Administrators, faculty, students, companies working with universities, policy-makers–everyone should take notice and think things through.  If you don’t feel like thinking about it and want System 1 pattern recognition to jump to conclusions for you, then instead of:

Stanford lost!
Big risks!
Own everything!
Academic freedom?
For Prissies!


Save face!
Own everything!
Cheat better!
Let the rest rot!

The reality is that some vocal advocates of Bayh-Dole as a vesting statute pushed the Supreme Court appeal as the way to seal in their horribly wrong misreading of Bayh-Dole.  These folks have a lot to lose, and aren’t about to admit they were wrong.  They don’t accept the Supreme Court ruling, and have latched on to a question raised in a minority opinion with regard to whether there should be any difference in “promise to assign” and “hereby assign” a future invention.  That is a perfectly legitimate question to raise, and it has something to do with a bit of the reasoning of the decision, but not with the outcome or with Bayh-Dole.  The fact of the matter is, Stanford v Roche is not about a present assignment trumping an earlier promise to assign.  It is about a valid assignment trumping a later, invalid assignment, an earlier promise to assign having been waived for the invention in question.

It does not matter how Cetus/Roche came to have a valid assignment–they got it.  It was in the form of a present assignment.  So what?  It was only because Stanford argued that its employee’s promise to assign amounted to an assignment that the court had to look at that obligation.   If that was the case, why did Stanford attempt to get an assignment years later?  Why, for that matter, if Bayh-Dole is a vesting statute, did Stanford try to get an assignment at all?  These are the problems, as well, with the University of California constructing a similarly absurd claim about its invention policy, that all along it secretly intended a promise to assign policy that used disclosure + review + request for assignment to mean assignment upfront, without the need for disclosure or review or request.

Stanford policy said inventors own “if possible.”  That means Stanford’s claim to inventions under such a policy is not discretionary.  “If possible” doesn’t mean “if outside the scope of whatever we want to claim.”  It means “we take ownership only when we are constrained to do so by law or contract.”   Thus, for Stanford to have a claim that makes the promise to assign go true, there has to be a legal claim that forces Stanford to request ownership.  Thus, the importance of Bayh-Dole in the fracas with Roche.  If Bayh-Dole is a vesting statute in any of the many variations that folks have claimed for it–all rejected by the Supreme Court–then Stanford is forced by law to take ownership, the promise to assign goes true, and then darn, it looks like Stanford has got cheated out of the value of its invention by a loose cannon of a post doc and a sneaky-clever company.  But Bayh-Dole doesn’t vest ownership, doesn’t require university ownership, doesn’t even apply to universities.  Bayh-Dole applies to federal agencies and establishes the protocols for how these agencies contract for inventions as deliverables under federal funding agreements.  It was a prudent company, and appears to be a sneaky clever university that didn’t pull off a quarter billion dollar shakedown.

Bang at it another way.  If Bayh-Dole is a federal contract that requires inventors to assign to the university, or grants universities a first right of refusal, then this contract trumps other contracts and Stanford can rely on this right to void a private agreement that its employee made and which Stanford approved and got the benefit of.   The Supreme Court wouldn’t have it.  Bayh-Dole controlled federal funding agreements do not require inventors to assign inventions to the university, and the first refusal is only with regard to agency requests for ownership of subject inventions that Stanford has come to own.

Finally, getting down to it, the problem for the promise to assign approach in the Stanford v Roche fact circumstances is not the form of assignment (promise vs present), or even the timing of the assignment (earlier does not always win), but rather the scope of the obligation to assign.   Even if Stanford had gone to a present assignment, the scope of what Stanford had a right to would still be the problem.  Under Stanford policy, Stanford did not have a right to own what Stanford was not compelled by law or contract to own.  Even if we retroactively revised Stanford’s policy to something worse, like “Stanford owns everything done by employees within the scope of their employment or with Stanford resources” (both hugely suspect claims, but let it go for the argument), these expanded claims are discretionary with Stanford.  The nine-months working at the company is approved by Stanford.  It is entirely outside the scope of even a bloated claim based on employment and resources.  Stanford allows the bargain on invention ownership.  It has to.  That’s the only way Stanford’s guy gets in the door to learn PCR and what the company is working on.  Now the guy comes back to Stanford, with this bargain that says, “I hereby assign any invention I make as a result of access to company stuff.”   Stanford knows the deal.  Stanford accepts that deal in favor of its own discretionary claim when it allows its guy to use Stanford resources and work on a Stanford grant-funded project.  Stanford has no standing to claim ownership from its guy having previously permitted its guy to obligate the same rights to the company–even if its guy also wants to find a way to break the deal.   The invention is out of scope of Stanford’s assignment requirement regardless of how that requirement is expressed because Stanford has waived that scope in favor of the deal with the company.  A present assignment changes some aspect of the process, but not the scope.

I expect folks wanting to get access to all faculty work so they can try to sell it off to the speculator market don’t care about all this.   They are looking for any rationale they can.  They are desperate.  They swore tech transfer would fall apart if faculty weren’t forced to use their monopoly offices.  They told that to the Supreme Court.  A bunch of university administrators hopped onto that cart.  It’s not true.  Hasn’t happened.  But to “save” technology transfer and the “success” of Bayh-Dole, they have to make it appear that they “took action.”  That’s what the present assignment bit is really about–saving face while putting in place the monopoly they thought they had already got by misstating Bayh-Dole.  To their delight, they found that there was little opposition, that university administrators actually warmed to the idea of becoming lords of scholarship–that it was “holistic” not “dictatorial”; yeah, “holistic” as in “protecting the public from faculty incompetence, and protecting the university from that incompetence, and yeah, kindly protecting faculty from their own bad judgment.”  What rot!

The situation that administrators have fixated on, with some degree of self-serving hysteria, is this:

(1) Promise to assign (whatever the scope)
(2) Invention made
(3) Invention assigned by inventor to company
(4) Company is wildly successful with invention
(5) University is cheated out of royalties (and maybe inventor is too)

For this, the claim is, if (1) becomes a present assignment, then when the invention is made, it is owned outright by the university, and the company is cheated out of the invention, turn about being fair play to these folks’ way of thinking.

(1′) Present assignment (whatever the scope)
(2′) Invention made
(3′) Invention is assigned to university (automagically)
(4′) Invention assignment to company is void
(5′) University can sue company for infringement and clean up (and share with inventor!)

In this twisted way, university officials make a baldfaced claim for “protecting” university inventors when what they are doing is proposing a way for inventors to break deals made early in a collaboration in order to have leverage on the deal later, by surprising everyone with a patent right that clobbers the collaborator.  What’s the value of your car?  What’s the value of your car with this gun pointed at you?  Yes, one can regret a deal later, but really, the point of a deal is to formalize the limits of regret and envy.   University folks so caught up in visions of money really do need to take a breath.   They are suffering from envy, not practicing prudence.  It’s a foul age that can no longer differentiate the two.

Look at the scenario again, this time filled out:

(1) Any kind of assignment obligation to university
(2) University permits consulting w/company
(3) Company bargains for inventions w/university consultant
(4) Consultant inventions tied to company work
(5)  Employee returns to university

Now the university has a situation.  The employee has obligations to assign to the company and may continue to think about the company work while at the same time doing work at the university that would otherwise be within the scope of the university’s claim.  If the university allows the employee to do this work, there are three options:

(6u)  The university attempts to use its present assignment instrument to void the company bargain.


(6c)  The university acknowledges that the scope of its claim does not extend to the bargain with the company, a bargain that the university has previously approved.


(6e)  The university bars the employee from working on projects in which others might invent, pending their informed consent to the obligation or working out an acceptable business deal with the company on behalf of the university and any other inventors, and of course, clearing any possible obligations on IP to a research sponsor.

The holistic present assignment folks are in the (6u) camp.  They see the present assignment as a clever way to allow inventors to regret a promise after the fact, when it is clear that they could hold the company up for a lot of money by triggering a university claim to a future invention by touching a university resource or spending a dollar of grant money or just doing their job “in the scope of employment.”   This is equivalent to the university permitting the consulting, knowing the assignment bargain with the company, and the moment the employee comes back, making them sign a deal with the university that aims to disrupt the bargain with the company.    That doesn’t seem quite “holistic”–a word more like “dishonest” comes to mind.   The point of contracts is to create enforceable promises.  To load a situation with a back door that one can exploit to break the deal isn’t good faith.  If one wants to argue that if the invention turns out to be a great value, then the consideration will be revisited, that’s perfectly front door.  That’s stuff baked into, say, the UK patent law, so it is not unknown.

The “present assignment” scheme to “protect” university inventors really is a scheme to set up company collaborators for a shakedown:

(1x)  Get present assignment in place
(2x)  Allow consulting–even encourage it, with assignments to company
(3x)  Put consulting employee into university situations that trigger the present assignment
(4x)  Sue the company for infringement if they don’t pay up

That, essentially, is what the present assignment folks are advocating.  That is not what Stanford was arguing, however, since Stanford’s claim was that somehow federal law forced the double-cross.  It wasn’t therefore something planned from the start.  Given this clever approach to the double-cross to get leverage on potential licensees to force payment, the scenario itself becomes unrealistic.  Only really stupid, inattentive companies will fall for this, and even those will have remedies.   Steps 2x and 3x won’t operate as claimed.

First, if the university makes clear to the company that any deal the company can have with a university employee can be voided by that employee simply working with university resources or within a broad scope of “employment” with the information and technology obtained from the company, then few companies will allow the collaboration in the first place.  The whole point of an assignment obligation in these situations is to ensure that work that’s bargained for comes to the company.  The very thing that a company worries about is that someone will dip in, learn what’s going on, and then rush back to the mothership to beat the company to its work, and come up all full of blocking patent rights to make everyone miserable.  It’s an old trick, and it’s consternating to think that university administrators are taken with it, and actually want to modify policy requirements across the entire university community to build it into practice.  Such a move will not “protect” university inventors.  It will destroy collaboration between faculty and anyone else–whether in industry, government, or faculty at other universities.   That, too, appears to be acceptable to the “holistic” crowd, who are concerned with how they strip faculty of ownership, not how innovation comes about, or how research is advanced, or how folks benefit from expertise hosted by universities.  Greed culture for all, as a matter of policy.

Making the present assignment “work” the exploit to void the company assignment also won’t work.   There is the scope waiver problem.  But also consider what is required by 35 USC 261 for competing assignments.   A later assignment is valid over a prior one if (1) the prior one is not recorded in the PTO within three months or before the later assignment; (2) the later assignment is made without notice of the prior assignment; and (3) the later assignment is made in exchange for “a valuable consideration.”

In the present assignment scheme that the holistic advocates propose, there is no way for a university to record its present assignment in the PTO until it has an invention in hand to attach to the present assignment document.   It has a window of three months from the time of the assignment to do that.  How will it know an invention has been made, if it is made at the company?  Second, if both the inventor and company believe the invention to be out of scope of the university present assignment, then there will be no notice of that assignment.  The assignment does not operate.  There is no “meeting of the minds” regarding the scope of the obligation to assign.   For university faculty, this is a reality:  they, not university administrators, decide whether what they do in research is within scope of their employment–that is, what of their work administrators control.   That scope is not “whatever administrators say it is.”   If that were the case, then there would be no academic freedom.  We would have in addition for public universities state control of science.  Worse yet that the state appears to want that control to sell off scholarship to speculators, claiming this is a public service, because otherwise folks would just get new knowledge for free, and speculators couldn’t make a buck trolling everyone and sharing the loot with administrators who will share with inventors.   Really, university IP management is descending into a protection racket run by desperate administrators.

There is, of course, another worry, and that is that companies will use this same trick on universities.  There is the implication that this is what Cetus/Roche did to Stanford.  But that implication is inappropriate.   Nothing of the sort happened.  Cetus/Roche did not cheat Stanford.   Stanford cheated itself, if one wants to view it that way.  Stanford had a great inventor-loving policy.  Now that policy is gone, replaced by a well-drafted bit of present assignment nastiness.  Stanford had a great collaboration, and benefited from it.  Now that is gone, along with Roche’s 6oo-person lab in Palo Alto.  Stanford had ample opportunity to decide what was important before, during, and after the consulting and address the bargain that was made to gain access to company technology.  But for whatever reasons, it didn’t do that and hung onto the idea that Bayh-Dole would void the deal if Stanford ever wanted to regret it.  But they got even Bayh-Dole wrong.   If administrators are so hot and out of breath to “protect” university inventors, how will yet another poorly conceived piece of paper–and “holistic” obligations imposed on all employees so that faculty scholarship is, in essence, owned by the institution–remedy the problems that start and end with the administrators?  Yes, everyone can wear institutionally imposed parachutes, but that does not mean the flight is any safer.  Indeed, who cares if the flight crew is soused, if everyone can bail out if they have to?

There is always some exposure involved in patent work.  People do stuff, make arrangements, and then forget, or regret.   Universities can patch bad, complicated, poorly conceived policies with more bad, complicated, poorly conceived patches, or they can rethink how they go about things and make management a whole lot simpler.   A present assignment at employment is just one more rotten patch to a rotten architecture.  Stanford had it right to begin with:  the university claims ownership of inventions when it has to, for law or contract.    Now stand down the university demand in contracts that it must own inventions made by its personnel.  That demand does not apply to federal funding agreements.  There, what is required is not institutional ownership, but rather the (f)(2) written agreement.  That comes after each funding agreement is accepted by the university, and is easily incorporated into the paperwork that brings people onto a grant budget.  The (f)(2) may well have saved the inventors’ interest in royalties, and even may have put Roche in a disposition to work a business relationship with Stanford.   If there is any lesson at all in Stanford v Roche, it is to use the (f)(2) written agreement.

Why should a university impose that demand on its own personnel in other contracts?  There is no reason.  Let the personnel decide the conditions under which they work, and let sponsors determine if those conditions are acceptable.  If the personnel want to own, and the sponsor wants to own, then having the university act as an escrow agent for ownership is one way to work it.  But acting as a trustee because both personnel and sponsors choose that is a  long way away from playing the petty dictator and demanding that ownership as a general pre-condition of all creative activity.





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