2. The equities
University faculty develop an approach to patents—mostly, keep them out of the university, use Research Corporation or a local research foundation. Agents provide services, take on the costs and risks, and share upsides with inventors and institutions. Most universities do not take ownership, but rather ask that equities be considered. The federal government commits to reimburse universities for releasing faculty and resources to work on federal government, so there are no obvious equities involved in federally supported research.
As Cottrell’s idea of using the structure of the corporation in a non-profit configuration as an intermediary between university faculty and the commercial world, universities also work out the implications. Cottrell’s patents and Steenbock’s patented way of circumventing federal regulations on adding things to milk (such as vitamin D) were both lucrative licensing situations, and that got university administrators as well as faculty thinking about income. Faculty thought about building funds to support independent research. A few no doubt thought about becoming wealthy, too. But few patents made money. Much of the early discussion among faculty was about how to prevent patents from blocking the adoption of research findings by the creation of monopolies. Both Research Corporation and WARF licensed patents non-exclusively. Some universities, notably medical schools, created policies that banned patents on medical inventions. Harvard went so far as to offer financial assistance to faculty seeking to overturn medical patents.
There was little interest in universities owning patents or trying to engage industry directly. A university might hold patents to prevent a monopoly, but not to help bring one about. The primary concern, as echoed in Cottrell’s deliberations regarding the University of California, was whether the university deserved a share of patent income. This discussion led to the development of policy built around “equities.” A university might not have an ownership interest in any given invention, but if the inventor drew on university resources, then it seemed only fair that the university might share in any upside realized by inventors who went so far as to obtain patents and work with an external agent to find commercial licensees.
Thus, by the 1960s, spurred on by Archie Palmer, about half of research universities had patent policies. Of these, most were based on a review of the “equities” of the parties. A university might enjoy an equitable interest in an invention if it had allocated funding expressly in support of the invention. Depending on the arrangements, a university might expect repayment of its support, a license to any patents for university use (essentially a shop right), a share of licensing income, or in some cases, ownership of the invention. If a faculty member sought a patent, then a committee would review the circumstances of the invention and recommend a sharing of income from licensing activity. Again, the theme was selectivity. First, a faculty inventor decided an invention was appropriate for patenting. Second, an external agent agreed to take on the effort to introduce the invention to industry. Third, the university expressed an interest in reviewing only those inventions that got this far.
Some few universities–notably MIT–did implement patent policies that were directed at ownership, but typically these policies focused on “official duties”–situations in which someone was hired expressly to invent, and even then most of these policies directed ownership to an affiliated research foundation or to Research Corporation.
In the 1940s, Vannevar Bush developed an augmented skunk works for basic research. His approach combined university faculty, industry scientists and engineers, and gadgeteers—people who could make things, such as machinists and electricians—to develop ideas outside the status quos of industry, universities, and government. Bush leads the development of new technologies for the World War 2 effort, with significant results for saving lives as well as taking them. In 1946 he proposes a National Research Foundation to transfer the method to civilian use, starting with research that will take on the medical establishment. With time and politics, this becomes the National Science Foundation, following the model of Research Corporation for the distribution of research funding to support science nation-wide, but substituting tax dollars for royalty income.
The federal government committed to reimburse fully universities for releasing faculty and facilities for government supported research. At the University of California, policy required all extramural research to be self-supporting, requiring no additional university funds. Universities, for federal research, are not asked to commit any of their own resources (in some cases, federal grants asked universities to find matching funds from private sources, such as companies). As a result, there was (and still is) no basis for universities to claim to have an equitable interest in inventions made with government support. Whatever happens with these inventions was between the inventors and the federal agency funding the work. Federal support for university research soon overwhelms that of Research Corporation and industry and induces university administrations to set up dedicated sponsored projects units to deal with the complications of federal research contracting. Research Corporation responds by intensifying its marketing to find inventions on university campuses, and encourages universities to form “technology transfer” offices to work with inventors and pass inventions along to Research Corporation for management.
By the time a committee of University of California faculty in the early 1960s beg their university to implement a patent policy that would generate more money for their research, the idea of invention ownership was becoming connected with financial return to support research, institution by institution. Faculty, in addition to competing nationally for funding from companies, the federal government, or non-profits, wanted their own research funds–operated by the institution–to supply funding that did not require extramural contracts.