It should be clear by now: universities have no basis to compel assignment of faculty intellectual property. The basis for faculty assignment of IP is voluntary agreement–either at employment because a faculty member is expressly hired to invent something, or later, because the university offers significant support in exchange for ownership and management privileges, or because a sponsor of research (not the university administration, slipping in its own self-interest) requires university ownership and the faculty investigators agree, or simply because faculty inventors choose the university, and the university agrees to manage the invention, seek licensees, share any royalties, and the like.
The situation is muddied because university attorneys have made assertions about IP that they cannot back up. They have claimed that federal laws were changed to vest IP with the university not the authors and inventors. That was thrown out. They have claimed that faculty assignment is a condition of employment, but that is not true for either invention or authored works. It is factually untrue, as faculty are not offered positions with such a demand–and would not accept positions if such a demand were in the offer letter. Even making assignment a condition of employment fails if there is no valid patent agreement, and a policy that permits the university to change its policy at will or decide later what it will claim is merely an agreement to agree forced on employees–against public policy and not enforceable as a contract: no meeting of minds, no consideration for the changes, just bombast in legal-sounding language.
The main reason why the university compulsory claim to own faculty inventions and other stuff persists is because it costs $100,000 or so to challenge it in court. The compulsory claim to own faculty inventions (and most everything else, including what cannot be owned, such as “unpatentable inventions” and “know how”) is abuse of power. Most people being so abused do not have the kind of money needed to fight back.
If a university tech licensing shop was any good, it would not need to force people to assign inventions, and it would not stand for deceiving people into doing so, or bullying them, or threatening them. If a university tech licensing shop was any good, it would decline to manage a lot of inventions, not because those inventions had no “commercial value” but because there were other agents better positioned to advance the development and use of the inventions. If a university tech licensing shop was any good–and we are talking both practice and moral compass–it would demand to be a voluntary shop, it would be embarrassed to be a compulsory shop, and it would advocate for university policy to be restored to what it should be, and was: a statement of support for inventions, authorization to provide resources, with a protocol for reciprocity or equity, and a delegation of responsibility for implementing the policy. The policy would be directed at administrators, on behalf of faculty, not directed at faculty on behalf of administrators.
On this account, a lot of university tech licensing shops are pretty shabby places. Nothing personal, folks. We are discussing your situation, not your personal intentions and qualifications. Just look at yourselves, who you serve, what you remain silent about. It must grate if you think about it, that faculty deal with you because they are under threat for their jobs, their reputations, their finances if they don’t. Doesn’t the thought go through your head that this isn’t what you signed up for, to be guards at a slave mine? Surely, at some point, the sense of shame must weigh. If an organization such as AUTM or COGR or APLU came out with a discussion of outrage about it, led a public debate about how to change, to get back on the right track, that would be a huge relief. The Stanford v Roche decision offered the best opportunity anyone will ever have to do so, but these organizations have gone all black, not a one of them willing to spark the discussion. Instead, they are leading the charge to take all faculty scholarship, just so their members can enjoy a monopoly free of any possible other way of handling the results of research. Money from a deal every decade at a handful of campuses and a few infringement awards can’t wash them clean.
The demand in policy that faculty assign inventions (and other stuff), or that by the action of the policy they already automatically have assigned everything, is nothing more than administrative abuse. If folks want to mount an argument in favor of abuse, fine: that abuse is necessary so the institution makes money (or merely tries to make money); or that abuse leads to the best way of developing commercial products from research discovery; or that abuse is actually the university protecting the public from the lazy, stupid, greedy faculty inventor; or that abuse is the consequence of faculty refusal to accept the power of petty, misguided administrative policies; or that abuse is the competitive edge, the force that has built such a wonderful “technology transfer system”–so wonderful that it cannot in thirty years bring itself to honestly and fully report its activity, expenses, and outcomes. If that, then let’s have at it. I’m up for the debate. Why is abuse of administrative office so important to the development of innovation from faculty research discovery? Is it the money? The power? The delusion that abuse is necessary for some public good? These may be excuses, but they don’t amount to a legitimate argument that universities should compel faculty to assign ownership of their scholarship, inventive or otherwise, to the university. These are excuses for abuse, not aspirations to do good in the world. If you don’t like my account of excuses, I dare you to find one that is any better.
In the monopoly of baseball, Curt Flood fought the system and established the basis for “free agency.” Baseball had a “reserve clause” in its contracts that required a player to stay with a team for his entire career, unless, of course, he was traded. Universities have established just this sort of monopoly. AUTM, APLU, and similar organizations–paid for overwhelmingly by university administrations–meet to decide what policies and practices will be instituted. These organizations, essentially, collude to prevent competition with their monopoly position, dealing in faculty scholarship for money. Patent policies, being changed from a support gesture for inventors to a demand of employment that takes everything an administrator decides to take (other than certain “traditional academic works”–a definition fraught with disingenuity), have become the new reserve clause of university work. One only talks about “free agency” in the context of monopolies. Otherwise, we talk independence, freedom, opportunity. It is little wonder that an organization like AUTM despises “free agency” and argues that the system AUTM represents–one of comprehensive claims, compulsory assignment, and compulsive misrepresentation of activity–will be destroyed if faculty become, once again, “free.” Truly, let’s hope this system *is* destroyed, and soon.
AUTM is inventor loathing, to be sure, but also faculty loathing. AUTM and its administrative ilk deeply wish that faculty would stop being faculty, that they would become servants to bosses, that they would become dutiful hens in the administrative farm, laying invention eggs for market and being content with daily feed and perhaps in liberalized settings, time out of cage, provided none attempts to flee the coop. In such a monopoly, an institutionally selfish “royalty-sharing” policy is presented as generous, even when the policy gives the majority of income to the institution, and worse, often stipulates that the university has no obligation to generate royalties or pay its inventors anything. Taking without giving. In eminent domain settings, that’s simply illegal–the state cannot take private property for public purposes without due process and just compensation. Paying nothing because it is impossible for a licensing office to make money off everything taken is not just compensation. It’s arrogance bred by monopoly. Worse, these royalty-sharing policies do not take into account the equities of each situation–did the institution contribute significantly or nothing at all? Does the claimed scholarship require substantial further effort by the inventors or could any half-rich, second-rate investment fund find a way to turn a profit on a patent play without much further ado? Yet these policies are pawned off as “fair” because everyone gets treated the same despite what the circumstances are. That’s not fair–it’s arbitrary, institutionally lazy, inequitable.
The royalty sharing schedules are ruins from a past regime. In that regime, universities did not take an interest in faculty inventions. They did, however, offer faculty support for their inventive work, and proposed the use of qualified agents. The deal was, if an inventor wished to use university-designated services, then the university would share any royalties that arose with the inventor. It makes a world of difference that the use of university services is voluntary. If voluntary, it makes sense if a university indicates that it might not be successful in securing licenses that pay. If an inventor does not like that stipulation, then the inventor can choose a different agent. It makes sense to have a single schedule for sharing. If an inventor does not think that schedule reflects the equities of the situation, the inventor can choose a different agent. Publishing a schedule and holding to it is critical for a university, especially in dealing with its own personnel. A published schedule means there are no secret deals–everyone knows, if the university is involved, what everyone else is getting by way of sharing. Politics and hissy fits don’t (or shouldn’t) change things. All this makes good sense. It’s good consideration paid by the university if the inventor agrees, without any coercion, that it is good consideration. That’s the nice thing about mutual agreement.
If, however, once a royalty schedule is in place, the university reverses itself and makes the deal compulsory, then there is no agreement on consideration for those inventors who would not accept the transaction were it voluntary. The compulsive policy drafters go further: they make the assignment obligation a condition of employment or use of facilities, as if the university by hiring a faculty member, or allow that faculty member, once hired, to use university facilities, is paying not merely for the faculty member’s teaching services but also for everything that the faculty member produces, that can be owned (or not owned), that might be sold or licensed for a profit. The royalty schedule is removed from the consideration and is treated as a generous administrative benefit to faculty inventors, entirely a product of administrative choice (and policy) and not part of any bargain by which a university comes to own faculty work.
This change leaves the royalty sharing schedule in ruins. The support approach, the university’s role as an agent, and transactions with inventors involving ownership are disrupted by the intrusion of an arbitrary institutional claim to ownership. This intrusion came because the Bayh-Dole Act was represented as a federal demand that universities own faculty inventions made with federal support. The claim was routinely expanded from patentable inventions to all inventions (the “unpatentable ones”) “just in case” they turned out to be patentable. The claim was routinely expanded to “intellectual property,” leaving the impression that copyrights, trademarks, and even information and data were involved in Bayh-Dole. The claim that Bayh-Dole was a vesting statute permitted an all-out assault on university patent policies, demanding that these policies be altered to “conform” with federal law, to ensure “compliance” with Bayh-Dole. In fact, the assault was not based in Bayh-Dole, but in a wish-list by Bayh-Dole supporters who did not get all they wanted from the Act, but went ahead and acted as if they had. They exploited the lack of intellectual property expertise among university attorneys and faculty alike; they played on the greed of administrators for more money; they presented a near-random activity tied to goodwill and luck as if it could be reduced to a process any bureaucracy could manage; and they shaped reporting of outcomes to emphasize the few positive outliers while hiding the remainder in aggregate figures and not reporting actual expenses at all.
Once the policy changes were in place, the compulsory patent advocates did not need Bayh-Dole–they could rely on the difficulty in changing policy to keep the compulsory policy in place, treat the royalty sharing schedule as a generous gesture where inventors ought to expect a lot less and should feel gratification for the university’s largesse, and operate a monopoly that hammers down the last few nails in the coffin of academic freedom. These folks are doing the hammering now, introducing present assignments on top of expanded definitions of “invention” and “intellectual property” and expansive claims of ownership, all packed into a policy package that fails at every point to live up to the expectations of valid contracts, public policy, academic freedom, innovation support, or developing financial support for universities.
There is a rich history of good work provided to faculty by universities developing support for inventions and related results of faculty research. The effort to transfer technology is challenging and honorable. The use of patents has its place, from developing standards and controlling quality to cross-licensing to gain access to pooled technology, to supporting private investment to create new products. How patents get used in the specific cases of publicly supported research, at universities built on public missions, and among faculty especially those concerned with public health and environmental safety is not a matter of trying to “maximize financial value” by threatening litigation or selling off to monopolist speculators or even to be “business-like” (intending to mean something like “amoral” or “hard-hearted” or “blind to public considerations”).
The special challenge to universities–to their faculty as well as their administrators–is to figure out how to use intellectual property, along with other assets, to serve the public in all its various manifestations. There is no mandate to make sure that all faculty scholarship is first shopped to speculators. Monopoly control of inventions by or on behalf of future speculators is not the surest, best, only way that faculty scholarship will ever be used. The present approach universities are using has given up this challenge. Institutional ownership and love of money are linked to create a monopoly on the control of faculty scholarship.
Wouldn’t it be something if the Department of Justice took a look at university technology licensing operations, and at the AUTM meeting workshops, and found that universities had engaged in anti-competitive collusion to create a monopoly that prevented university faculty from choosing the manner in which their discoveries were made available to the public? That the royalty-sharing schedules amounted to price-fixing. That the compulsory, expansive, arbitrary assignment clauses violated public sense and functioned as an illegal restraint of trade. That AUTM was a forum for collusion. What would be the result? Free agency. The ability to contract with whomever one wanted for innovation services. Academic freedom, and the freedom to participate in the economy of ideas, to innovate without a bureaucrat’s thumb touching everything one aims to do, without Sheriff John Brown aiming to kill every independent seed before it grows.
University research is stagnating, published outcomes are unreliable, and the university monopoly engine is in part to blame. If things don’t change, the basis for funding of university research is undermined, as the recent cover story in The Economist makes clear. More than anything else, university technology licensing personnel should be speaking out for a strong innovation environment, not merely pitch the idea that more public research money is needed to further stress university infrastructure so some few administrators can claim bragging rights to “rankings” of universities. The foundation of a strong innovation environment is the freedom to innovate. This freedom is important everywhere, but especially so at universities, which have no good reason to be monopolists and certainly have done a lousy job of implementing monopoly practices. There is time to run the rascals out and restore faculty freedoms. After that, there will be work to do to rebuild conventions and private infrastructure. There will be need for vigilance, and for support, and for a return of confidence, even gratitude, and delight–things that never show up in any university patent policy statement, and I have read hundreds.
It’s time to end the monopoly before the last nails are driven home. Where’s Curt Flood when you need him? Where is the Department of Justice, to restore faculty freedom and challenge institutional collusion?