Universities prior to Bayh-Dole generally pushed invention management to external agents. These agents took on the expense, the complexity, the competitive issues, and the liability. These agents allowed universities to avoid direct conflicts of interest between managing the research environment and communicating with the public on the one hand, and on the other having a financial interest in the activities of companies and having the ability to manipulate activities such as startups in order to create the appearance of success in research programs. Once a university has a direct financial interest in exclusively licensed technology, how can the university be trusted to regulate the research environment? Or to ask for full data on the activities of agents and companies taking exclusive control of faculty-created research assets? Once a university is able to create startup companies by fiat, how can anyone know whether the university administrators aren’t “cooking the books” to snooker the public with the idea that their research programs are highly productive when the facts on the ground are otherwise?
Instead of spending more money on university administrations to do something they clearly don’t do very well, and which undermines their public position, why not ask university administrators to get out of the technology speculation business, simplify their operations, and focus on instruction and research?
Bayh-Dole was passed on the strength of productivity metrics drawn from external agent practice. After Bayh-Dole was enacted, however, university administrators rushed to build in-house operations. Faculty did not clamor for loss of ownership–though some certainly clamored for the university to pay for their patents, license these patents, and make them rich. But this was a small minority. Other faculty apparently clamored for university control in the belief that faculty inventors would subvert the academic workplace and administrative control was better than nothing. Other faculty, at least this is my impression, have been happy with the idea of a bureaucracy getting in the way of hasty inventors seeking to make a buck (if that is what they might do), especially in clinical research.
Were university administrators told patenting and licensing was an easy way to make windfall millions? Were they told that the big hit licenses at WARF, Stanford, and Columbia would just keep coming, and would come in greater piles if only patenting and licensing was turned into an administrative process that required everyone to participate? Did they think they would make even more money if they demanded to own every possible thing that faculty, staff, and students might invent that was even half-way connected with their activity at the university? Just what was the thinking that led university administrators to dismantle the largely private agent-based invention management system that was in place, the one that Bayh-Dole apparently anticipated would be used once federally supported inventions were readily available to add to the mix?
The Brookings Report proposes more federal funds for university administrators to entrench the system they imposed, having undone the private agent approach on which they based the value of Bayh-Dole. The new system, in turn, has been based on a misreading of the Bayh-Dole Act, or perhaps it is closer to the truth that it was a misrepresentation, at best negligent and more likely deliberate.
Bayh-Dole, faculty were told, applied directly to their work.
(Bayh-Dole does not; it authorizes a standard patent rights clause for use in federal funding agreements with universities, and even this clause does not reach to faculty inventors–the clause requires universities to reach to their own inventors, to make clear that those inventors have no obligation inconsistent with their ability to protect the government’s rights; and even this requirement the university administrators have failed, or refused, to implement!).
Bayh-Dole, faculty were told, required the university to take title.
(Or vested title with the university, or gave the university first right of refusal, or precluded anything but assignment to the university–a host of claims giving a clear indication the university administrators were making it all up and could not read the substantive documents that framed and implemented the Bayh-Dole Act; nothing of the sort–Bayh-Dole authorizes federal agencies to use a patent rights clause in federal funding agreements with universities that assures universities (and other qualified assignees that they can keep the rights they obtain against any claims for those rights by the federal agency, provided they comply with a minimum set of requirements).
Bayh-Dole, faculty were told, required the university to change its patent policy.
(Again, not so. Bayh-Dole authorized a standard patent rights clause that is self-implementing; a university need not change any part of its patent policy, and need not have a patent policy at all. The few requirements of the standard patent rights clause are simple to implement, are not costly in the slightest, and do not require a university administration to take any action beyond delegating to faculty (and other prospective inventors) the obligation to protect the government’s interest in inventions made with federal support, educating faculty on the importance of disclosure of inventions, designating someone to receive disclosures, forwarding disclosures to the funding agency, providing a final report of inventions at the end of a grant and annually, and informing the government whether the university, if it has obtained title to an invention, wishes to retain that title. A sponsored projects office can easily do all of these things. The delegation and education when individuals are hired under a federal grant; the reporting of inventions along with all the other reporting done under grants; and notification of the university’s non-interest in owning such inventions. Absolutely no change in patent policy is required.)
With these three claims, university administrators took the opportunity to dismantle the system of mostly private agents that had laid the groundwork for Bayh-Dole, bureaucratized and processified and policified inventive work, made the claim for university ownership of scholarly discoveries comprehensive, compulsory, and arbitrary, and proceeded to make the case that universities must divert millions of dollars to cover the “investment” cost of operating these costly offices. For a few universities, where there was a big hit license, the cost was absorbed by the licensing income. For public universities, state governments were induced to pay (“it’s necessary to comply with federal law“). There have been a few “big hit” licenses based on federally supported inventions since Bayh-Dole, of course (though the Cohen-Boyer, Axel, and Hall inventions are not among them; nor is Gatorade). But there is nothing to indicate processification and compulsorization of institutional control of faculty discovery has had any meaningful positive outcome for universities, for the research community, for collaboration with industry, or for innovation in society.
My argument is not that universities should not support their inventors, or their software developers, or their authors, or their data gatherers, or their imaginative thinkers–they absolutely should. But not in the way they have; not with the arguments they have adopted; not with their exploitation of others who depended on them for a careful read and explanation of the new law. University patent policies were changed for horribly flawed reasons, and the result has been little of anything good, and a whole lot of expense, bitterness, uncertainty, disruption, lost opportunity, bullshit rhetoric, and non-compliance.
Again, this not a criticism of the good people who staff university licensing offices and do their best to manage the workload (it is an impossible workload), comply with policy, and still meet the expectations of as many folks as possible. Good for you, my friends. I wish you well. I have been there, too, and continue to support your efforts. But I also wish you much, much better: you would have better working conditions, better inventor relations, better industry relations, and more public support if you fought back, stood up for an open environment, and relied on the strength of your capabilities and connections to draw in faculty (and staff, and students, and visitors) who wanted to work with you, rather than leaving in place a policy based on false premises and which defies the historical record.
If you did one thing this new year, open a dialog with your faculty on revisiting patent policy. Show the alternatives–using an equity model rather than an ownership model; shifting the university involvement to voluntary. Emphasize the university’s important role in promoting non-exclusive, non-discriminatory licensing. Renounce reliance on patent infringement litigation except in the public interest (such as when a standard is being misrepresented), not merely when it suits the university’s financial interest. Industry folks will respect you for that move, and some may well decide to return to collaborative efforts. Freedom does not mean loosing unbridled self-interest. Freedom means cultivating an environment in which faculty (and others) may form collaborations and honor the commitments they make in those collaborations. The university administration is there to provide guidance without institutional conflict of interest, and to assist in keeping folks true to their promises.
But instead of revisiting how university administrators have come to dominate faculty scholarship, the Brookings Report has decided that what is needed is even more public money provided to the administrations to somehow make startup licensing work since licensing to existing companies and to privately backed companies has been, generally, an abject failure. At least the Brookings Report acknowledges that universities have not made the money they set out to make, at least most of them. I doubt the Brookings Report financials, however, since they don’t appear to have much clue at all with regard to how to go about determining the break-even point for a university patent licensing operation. Perhaps if the Brookings folks published their data and method of analysis, we could have a substantive debate.
Even so, the Brookings report is spot on when it argues that most universities cannot emulate the practices of the “big, really big” research universities. The smaller schools simply lack the level of activity and budget to cover all areas competently to processifate and compulsorsize invention ownership. What the Brookings Report ought to have concluded, first, is that the smaller schools should immediately rethink their approach and get out of the compulsory ownership patent licensing business. They could still make a lot of money, but would not have to expend a lot of money pretending to be just like Stanford or MIT. They would do things any number of different ways. Just not the way of the bigs.
As for the bigs, the Brookings Report might have asked whether, even for these universities, the comprehensive, compulsory system is suited to startups. Surely, somewhere, someone must have had the thought that startups are not amenable to process. Surely, someone saw that the University of Utah experiment was a failure–lots of paper shell companies, a handful of investments, few jobs, few products, and, really, nothing to shout about, except with a kind of deceptive rhetoric aimed at inducing the state to drop millions on more research facilities, because, well, just look at all those new companies.
One would think–or at least I would–that the Brookings folks might have better advocated for the idea that whatever federally funding might be directed to startups would better go to folks outside university administration who work with startups for a living. Those folks are generally selective, domain-aware if not technically capable, often embedded in markets, and are comfortable negotiating arrangements with everyone who might become involved. Those are the folks I’d like to see get federal money, if anyone is going to. Not more money to university administrators, not to support a rotten claim on creative work, not to grind out another five or ten years of oppressing opportunity while trying to help. There are better ways, ways that even university administrators should want, ways that return administrators to their strength, as advocates and mediators, not what they will awake one day and find they have become.
I’m disappointed in the Brookings folks. They can do better. It’s time to advocate for the doers rather than the owners. The Brookings report writers–and university technology transfer practitioners, as well–owe it to America’s university research community to do so.