Dear Vice Provost for Research,
In my last letter I pointed out how the aggregate-patent-license model for university technology transfer has failed. It is a seductive model. It sounds so reasonable, so clear. And yet it has failed to deliver. You can throw more good money after bad and try to avoid responsibility for the decision, or you can make changes that will open up innovation opportunities for your university, for your faculty, and for companies and foundations that would benefit from the creative work undertaken by your faculty, students, and staff.
That last letter dwelt on the downside, that the aggregate-patent-license model is failed prophecy that persists through rationalization, blame-shifting, and that eternal human desire to choose the known and consistent over the unknown, the forgotten, the marginalized. Yet innovation is a creature of just these things–the unknown, the forgotten, the marginalized. In this letter, I will suggest some ways to change your institution, to escape from the failed model–even though everyone is doing it–and build a program that matches what your university can (and should) do to support the use of research findings–and put your most motivated, creative people in positions to have an impact on the directions that communities, companies, and governments take.
1. Renounce the idea that the university should own and have central control over the work of faculty, students, and staff.
This is the most difficult step. You must play the Gorbachev and break up what a band of patent administrators has worked to conquer. Create a “freedom to innovate” environment. Abandon the idea that central control of intellectual property leads to “economies of scale” in innovation. Central control almost always leads to inefficiencies, to bureaucracy, to barriers to entry. Say good-bye to all that. This step will take some courage, but this is where everything good starts. And, to help you with that courage, remember that fifty years ago, many universities did not assert central control over intellectual property–and that was in the golden era of university technology transfer, when commercialization rates were over 25%.
Start with the premise that the university does not own–and does not expect to own, and does not desire to own–anything created by faculty, students, or staff unless it has expressly contracted with them for such ownership. For patent rights, this is the default of federal law. Employers do not own their employees’ inventions as a result of employment. For copyright, only work for hire–work made under the control of the employer (there is a multi-part test for agency)–is outright owned by the employer (or commissioning party), and that’s because that party is the author of the work. Most scholarship is not prepared under the control and authority of the university–let it go, it is not yours. You never wanted it, and shouldn’t want it now. Trademarks–use of a mark in commerce–are, outside of your sports program and alumni-giving efforts, are a matter of quality control, the curation of materials to ensure common standards of access, use, and documentation.
Technical information and know-how are controlled by trade secret requirements (a matter of obtaining promises not to disclose or use) or by statute (as in the case of FERPA and HIPAA, for instance). But asserting trade secret claims on information (no disclosure, no unauthorized use) prepared by university faculty and students amounts to abrogating academic freedom and open science. The path to an innovation culture starts by making academic freedom more important than patent administrators’ desire to own everything to make their administrative lives (they think) easier.
Trade secret requirements also kick the university outside of the safe harbors in export control law, bringing down the prospect of non-compliance with licensing requirements for the release of that information to foreign nationals–students, visiting scholars, and even US citizens employed by foreign governments and foreign-owned companies. You really don’t want to go there. You want those safe harbors, by which you avoid discriminating against foreign visitors and setting up a complicated management system to track who has proper access to what laboratories and what projects and what information.
Choose freedom. Benefits still come to you.
2. Change your intellectual property policies to reflect an open, non-grasping approach.
It’s not easy to change any university policy. IP policy is no exception, especially if your legal counsel thinks he (or she) works for the technology transfer office, and not for you, too, or for the faculty. But the changes can be quite simple.
If you are at the University of California, here is the policy you have to deal with:
An agreement to assign inventions and patents to the University, except those resulting from permissible consulting activities without use of University facilities, shall be mandatory for all employees, for persons not employed by the University but who use University research facilities, and for those who receive gift, grant, or contract funds through the University. Such an agreement may be in the form of an acknowledgment of obligation to assign. Exemptions from such agreements to assign may be authorized in those circumstances when the mission of the University is better served by such action, provided that overriding obligations to other parties are met and such exemptions are not inconsistent with other University policies.
All you have to do is expand the scope of “exemptions from such agreements” to assign. You don’t have to change a word of the policy. Start with an exemption for all research funded by the federal government. The Bayh-Dole Act does not require the university to take ownership of any invention made with federal support. So just don’t. That covers perhaps three-quarters of all research on your campus. If you want to change the wording of the policy, then reduce the scope of the initial claim:
“An agreement to assign inventions which are or may be patentable and any resulting patents to the University shall be mandatory for all employees who participate in activities in which University ownership is required by law or contract, or where the University and the employee have entered into a voluntary agreement outside of the conditions of employment under which the University will have ownership.”
If you are at the University of Washington, you will need to deal with this sentence:
As a condition of employment, and even if a specific patent agreement is not signed, University employees agree to assign all inventions in which the University has an interest to the University, to an invention management agency designated by the University, or to the sponsor if required under agreements governing the research.
Since the university has never gotten around to stating what inventions the university has an interest in, don’t leave it up to administrators to take an interest in anything they happen to want. Write a policy directive that the university will not take an interest in any invention made with federal funds, nor in any invention made with the use of university resources, unless those resources have been expressly provided with the understanding that the university will have an interest in the resulting work product. If that doesn’t work, then add a sentence to follow the sentence quoted above: “The University takes no interest in inventions that are not patentable, or that arise from federally supported research, or that arise in any other externally supported project in which the sponsor has not required the University to take an interest, or that make less than significant use of University facilities, unless the University and the individuals involved have voluntarily entered into an agreement that provides for the University to take an interest.”
“Significant use of University facilities” might also benefit from a definition. Sometimes a dollar figure is given–$5,000 or $10,000 would be about right. Note, as well, that we are talking here about an ownership interest. A university might have a financial interest in inventions without claiming ownership. In fact, that was the usual approach before Bayh-Dole inspired mania swept away reasonable university approaches and replaced them with the snake-oil idea that taking everything upfront was better than waiting to see what was actually valuable *and* the result of direct university support, and then requesting an equitable share of the success, reflecting the university’s role. But I promised to be positive in this letter, so let’s leave it at that, for now.
If you are at Yale, then you need to deal with the following passage from your patent policy:
When the University determines that an invention by a University employee is unrelated to the activities for which the individual is employed and has not involved the use of University facilities, then the University will make no claim to such an invention. All inventions made or conceived under circumstances involving University facilities or personnel are the property of the University.
The policy claim here is too broad, claiming “University Auspices” as the criterion for university ownership. US patent law does not recognize a claim to inventions based on employment, let alone the ambiguous idea of “auspices,” as the Supreme Court made clear in the 2011 case of Stanford v Roche. Similarly, the use of resources does not itself give anyone a claim in inventions made with those resources, not even an employer. So it’s a crappy policy statement to start with–all the more reason to clean it up. But to do this, we need to recognize that “employment” is not the same as “appointment.” A faculty member is appointed–and the scope of activity under an appointment may be quite broad. But within that appointment, a faculty member may also be employed–for “official duties,” which would be ones assigned by the university as employer.
For intellectual property, employment has specific meaning–it’s not enough to pay someone for working. The work has to be with the intent to invent something, such as figuring out a way to get the air conditioning in the optics lab to cool the room uniformly and not leave a temperature differential between the floor and the ceiling. Faculty typically request a release from their duties in order to conduct sponsored research, so sponsored research should be outside any claim based on employment.
As with the other policies, Yale’s policy fails to state how the university “determines” what is “unrelated” to employment. One might expect that the policy is read by patent administrators to mean that whatever administrators say is related to employment is therefore related. Even the word “unrelated” is coarsely ambiguous. My dog’s warts might be “related” to my biotech research in some way. The last sentence of this paragraph compounds the ambiguity:
All inventions made or conceived under circumstances involving University facilities or personnel are the property of the University.
“Made or conceived” raises strange questions. “Made” in patent practice means “conceived and reduced to practice.” “Made” under Bayh-Dole means “conceived or actually reduced to practice,” but only for inventions that have been “made.” But “made or conceived” botches things up. What is an invention that has only been “conceived”? Is it just some idea in someone’s head? How does the university propose to reach in and own that? “Involving” is not the same as “related.””Personnel” is not the same as “employees”–why change terms in the middle of a policy statement? The use of “are” is also consternating. Federal common law provides that the owner of an invention is the inventor, not anyone else. A university might require assignment of inventions to the university, but an invention is not the property of the university until that assignment has been signed. It’s pompous of a policy to make it out that it owns inventions outright, rather than using “shall be” or “shall be the property of the University upon execution of an assignment responsive to the University’s request”–but then we are just stating what happens when an invention is assigned! The policy is a confused mass of words going one way and then another, as if written by a committee of wordsmithers who don’t actually know what they are writing–even if they know they are trying to claim everything they can.
To undo this mess, start by directing the Office of Cooperative Research (are we a bit Orwellian at Yale these days?) to limit their finding of “related” only to those circumstances in which an individual has been expressly (in the employment agreement, in some other agreement that states a specific work product) employed to create the disclosed invention. Exclude any federally funded work: that work is not done as a matter of employment at Yale–the work is proposed by the faculty investigator, and the university is compensated not only for the investigator’s time but also for the indirect costs of allowing the investigator to investigate. Exclude any gift funds unless there is a specific statement of donative intent requiring the university to own anything made with the use of the donated funds.
Again, limit administratively the scope of the claim. Not only is doing so good for innovation, it’s also the right thing to do. If the policy statement is a contract, then it’s badly formed–ambiguous, overreaching, contrary to US patent law, and against public policy. If the policy statement does not form a contract, then it’s non-binding on everyone–including faculty and students–but for those university administrators delegated to act under it.
If restricting the scope in this way is not enough, then change that last sentence to
“The University may make a claim of ownership only on those inventions that are or may be patentable and which have been made with significant, unreimbursed use of University facilities or have been made by individuals who have voluntarily agreed, outside any employment relationship with the University, to assign inventions to the University.”
That should do it. The policy is a mess anyway. I’m trying to match the flavor and competence of the original. There may be better wording–though with a policy this bad, who will notice?
As you can see from these examples, your first effort is to restrict the scope of ambiguous policy claims by administrative action. Most faculty will not object if you give them more rights in their work (though expect the English department to be up in arms, thinking that the sciences, engineering, and medicine faculty are riding high on the hog, double-dipping, and generally not making enough money for the humanities side of the university–and that somehow by creating a huge, sucking drain on administrative resources by claiming all inventions made in the suspect departments, the humanities will get more financial support–I can talk the English department faculty down from their horses if it comes to that–but so can you, I’m sure). Your second effort is to introduce wording that makes clear the intent of the policy statement and restricts claims to those things that one already has supporting documentation for. That is, the purpose of policy is to require that documentation in advance if the university expects to make a claim–in a voluntary agreement, in an employment agreement, in an extramural research contract to which the principal investigator has agreed, in a donor’s wishes acknowledgement agreement. If the university can’t be bothered to secure agreement upfront, it really should not be bothered at all.
3. Shift your attention to developing external innovation relationships that support invention management.
Develop relationships with qualified invention management organizations–law firms, invention management firms, research foundations (such as Research Corporation), and even federal laboratories. If university inventors want help choosing an agent, your university should have some recommended agents. On the back side of these relationships, you can develop a financial relationship, so that if an invention does happen to be “commercialized,” you get a share for the referral.
Research Corporation worked this way for decades, and the approach has much to recommend it for the university. First, the inventors choose whether to pursue a patent. This means many inventions simply enter the public domain–and that’s a great thing to build an open research commons of basic science and technology. The most likely way a research development will get used is that those interested in it can use it immediately, without a bunch of administrative dithering and without a demand for a commitment to make a product of it, and especially without an invasive demand for a payment in the form of a royalty–which involves disclosing sales figures, expenses, and calculating a payment under threat of having a license revoked.
Second, inventors choose their agent. If the inventors have any savvy–and most do, despite what AUTM might suggest–they will pick an agent they can work with. If an inventor chooses to work with the university, that’s one of the best signs that the university technology transfer office might be able to help. It’s the problems with the inventors who are forced to use the university’s services that create 90% of the pain, disruption, and waste of energy in a licensing operation.
Third, using external agents allows a university to direct inventions to agents that have a specialty for the technology or for the target industry or both. An agent that has done successful business with target companies is a great channel to do repeat business with more good stuff. Agents one might most want to work with may be located near the companies and the industry centers where an invention might have the most impact. Spreading work among agents means that a university technology transfer office does not have to deal with every possible invention–instead, the technology transfer office can focus on those inventions where it already has the connections and the expertise. Let the rest go, build relationships in advance, watch for impact, repeat.
In this way, the university becomes an advocate for use and innovation rather than self-interested, institutionally conflicted, money-grubbing, defensive, and administratively overwhelmed.
4. Now deal with the consequences of being open. Manage the conflicts of interest, use of resources, and creative relationships among participants in project.
Thirty years of trying to control all faculty (and student, and staff) inventions has destroyed the prior culture of support for inventions that existed outside of university administrative offices. It will take time to rebuild this culture, and this time it will be different. Before, the culture of support for inventions had to work against the general belief that patents were antagonistic to university purposes.
Frederick Cottrell did an amazing job of creating in Research Corporation a map by which patents could be connected to academic work, inventors could benefit, and universities could stay aloof from all that. But that was before federal funding for research after World War 2 overwhelmed both industry and foundation support for faculty work. Now we have a different situation, in which patents are seen as a badge of honor for research faculty, evidencing technological breakthroughs and a commitment to relevance in the form of commercial uses of research findings. The government wants such commitments, and looks for not only patents but also licenses and products.
So the effort now is not to explain that patenting can be okay–it is to make sure that people aren’t off spending their own money chasing dreams of fortune by filing patent applications that will never issue or creating personal ownership positions in research findings that block others from working with the same materials, even at the same university. There is more to it, though, because there are good reasons (at times) to block others from using–the free riders, the opportunists, the vultures also inhabit a university and wait for others to do the heavy lifting. Such exploitation also happens with teaching materials–an instructor can spend years developing a course, only to have someone else lift all the materials and publish something as if it were original, burying an acknowledgement in the end notes. One research faculty member once informed me that if he visited a lab and saw a new discovery that wasn’t published immediately, then he had no problem taking the idea and publishing it himself. Apparently many things are necessary in a publish or perish mindset–or, with soft money, get grants or perish.
To manage these conflicts, it helps to have a faculty conflict of interest and innovation management committee. It could be an extension of the faculty senate or other governing body. There could be multiple committees, one for each school or even for larger departments. Let each school or program in the university decide, within some general guidance, what the conditions of a commercial or monopoly interest in research work is going to be. It will take time to work this out–but if you create the conditions for it, you will see a development of innovation culture as people test their new freedom and consider its effect on others at the university. Innovation culture is rarely top-down, rarely administrative, rarely imposed. Innovation culture is opportunistic, contrarian, marginalized, covert, changing, and subversive. This is how research becomes innovative rather than serving up what the status quo providing the funds expects. Try it. It takes intelligence, wisdom, and a sense of how to mentor and guide. You are up to that. That’s why you are a vice provost for research. This can be your finest hour–and your institution’s, too.
When I have a bit more time, I’ll write again and explain the role for your university licensing office in a “freedom to innovate” policy environment. There’s still an important role for those folks, and it’s a better role than they probably can imagine. The working conditions are better, the rewards are better, the relationships they form are better, and the money they make for the university is inherently better money. All around, things will be better, much better. Think of the policy and practice change as your gift to your technology transfer office.
I know, I should have just sent a post card, but you know how I get in the evenings, with Chopin on vinyl and all these ideas knocking around in my head. Take care, and get ready to try new things!
Cheers,
Gerald