In my last article, I cited claims from an article that insists that faculty are employees, employees have a duty of fidelity to their employers, fidelity sounds like fiduciary, so faculty have a fiduciary duty to their universities and therefore cannot do anything that would compete with their universities. Since universities are in the business of selling whatever it is that faculty make, doing anything other than assigning their work to their universities is a breach of their fiduciary duties. Done.
Really, this is the shape of the argument. Actually, it’s not much of an argument. It’s more a string of assertions. What is fascinating is that it reflects a mindset. In this mindset, there is no indication of any effort to worry these assertions. Assertions are presented as simple truths, as the way things are and entirely consistent with the way things ought to be. Masters control all things servile. Anyone employed is servile. Ergo, faculty are servile, and should be servile, and the world is good when they are servile. Woot.
The basic strategy is to classify faculty as employees, and then make assertions about employees, and then apply those assertions to faculty. In this way, one effaces the idea that faculty is anything other than a name for some employees at a university, but has nothing to do with a difference in obligations. All employees, in this view, are the same. So faculty cannot be any different, by definition. The rest follows as a happy ride at high speed with the windows down and logic blowing around off the seats and onto the shoulders of the road. Here’s one paragraph from another part of the same article series:
Similarly, unless otherwise agreed, an employee is subject to a duty not to compete with his employer concerning the subject matter of the employment. This duty exists even though the employee does not use his employer’s facilities or time to accomplish his competitive objectives. Modern universities are now in the business of selling and leasing the technologies developed by the professors and students they employ. Thus, a scientist hired by a university to conduct research in cold fusion cannot compete with the university by creating Cold Fusion, Inc. and working for it on his own time. Further, a university professor cannot be employed as a consultant by any private company that competes with the university for grants or income from the sale of technologies.
Now, this is nonsense on many fronts. Consider the bits I’ve put in bold. Consider the logic fluttering around the seats. Notice how the wording moves from “employee” to “professor” to “scientist.” But we don’t see “faculty member” or “appointee.” Even the choice of words contains the denial of rights the authors appear happy to promote.
Just to point out the gulf, take a look at how the Organic Act of 1867-68 describes University of California faculty, under the head “Further powers of the Regents”:
The Regents and their successors in office, when so incorporated, shall have power, and it shall be their duty, to enact laws for the government of the University, to elect a President of the University and the requisite number of professors, instructors, officers and employés, and to fix their salaries, also the term of office of each, and to determine the moral and educational qualification of applicants for admission to the various courses of instruction.
The Regents have the power to “elect” professors, instructors, officers and employés (there’s that French term, again). Professors and instructors here clearly are not employés. The list is not ended with “and other such employés” but rather employés are clearly not professors or instructors, and professors and instructors are not officers. The Regents have no statutory power to employ professors and instructors! The Regents are empowered by law to elect professors, instructors, officers, and employés. By law, University of California professors are elected by the Regents, not employed. The Regents have no statutory authority to employ professors. To do so would turn professors into mere employés.
Oh, I know, that is old law, and old laws according to common university administrative practice must be ignored. That’s another mindset, of course, that goes along with ignoring any law that gets in the way of one’s will. Perhaps university administrators are secret admirers of Callicles, who in a dialogue with Socrates (Gorgias) argues that laws are made by the weak to hold back the strong from fulfilling their natural talents of taking and enjoying:
The reason, as I conceive, is that the makers of laws are the majority who are weak; and they make laws and distribute praises and censures with a view to themselves and to their own interests; and they terrify the stronger sort of men, and those who are able to get the better of them, in order that they may not get the better of them; and they say, that dishonesty is shameful and unjust; meaning, by the word injustice, the desire of a man to have more than his neighbours; for knowing their own inferiority, I suspect that they are too glad of equality. And therefore the endeavour to have more than the many, is conventionally said to be shameful and unjust, and is called injustice, whereas nature herself intimates that it is just for the better to have more than the worse, the more powerful than the weaker; and in many ways she shows, among men as well as among animals, and indeed among whole cities and races, that justice consists in the superior ruling over and having more than the inferior.
It turns out that in American democracy, at least, some laws are made to hold back government and thus preserve both the weak and the strong from the power of government, and other laws are made to make the weak and strong equal in matters of law and commerce, so that whatever differences we may have, those differences should not matter when we seek justice or do business. No merchant should cheat a child because the merchant has the power to do so. No judge should favor the powerful because the judge fears reprisal or seeks favor. But the idea of employment, of master-servant relationships, has to do with how individuals privately agree to a relationship. The law can put some bounds on what is implied in such relationships, but there’s no foundation in asserting that the law dictates those relationships, forces them into some shape despite the agreements and dealings between those hiring and those hired.
Perhaps university administrators like the idea that they should use the power of the university to prevent faculty members from enjoying the benefit of their work (even if that enjoyment comes from giving away–publishing freely–what they have thought, discovered, invented, found). Perhaps administrators think of the faculty as weak and incapable of doing anything meaningful with their work. Or perhaps they don’t think beyond the idea of taking everything they can on general principles (such as those might be) and letting other administrators sort it out later, based on whatever looks best. Sort of “save it for the class of administrators–we have got that far, that administrators should deal with this, not faculty.”
Returning to our snip of logical fluttering, consider:
Similarly, unless otherwise agreed, an employee is subject to a duty not to compete with his employer concerning the subject matter of the employment.
Faculty in fact do apparently “agree otherwise” in accepting appointments at universities. They have certainly not agreed to a master-servant relationship in general, nor do university administrators at the time of appointment appear to intend such a thing. I have never met a university faculty member who intended to be servile in accepting a faculty appointment. Perhaps university administrators think they are clever: “we tell faculty they are appointed, but what we really, secretly mean is that they become servants of the university, at our beck and call, it is just that we do not let on that we are their masters, or that we control the university as a fictional, corporate ‘person,’ which is their master on our behalf.” That would be pretty deeply clever, but to make this scheme stick, one has to asset that whatever anyone else has thought, the intention has been to employ faculty, to make them servants, and by doing so anyone can then reason from employment to whatever it is that the administrators demand, such as university ownership of faculty personal property–inventions.
But even if faculty are “employees,”–let’s say it goes this far–there is still the issue of the “subject matter of the employment.” What is it that the faculty member is employed to do? What does it mean when we say loosely that faculty members are “hired to do research”? Does that mean technically that a university assigns faculty to research projects? That has never happened in my time in academia. A university never assigns a faculty member to a research project. A person may be hired into a research project and given a research faculty appointment (typically funded only by the “soft” money of the grant–but the person seeks that position, and is not appointed and then assigned to the position by the university, as if the university could choose to not assign the person to that position, or assign that person at whim to a different position instead.
What then is the “subject matter of employment” for faculty? If this is left unstated, or unclear, do university administrators (or law professors writing goofussness to advance their careers) get to make up whatever they think that subject matter must be or should be? If the subject matter of employment is not clear, does it even exist? That is, if it is not clear, then it doesn’t exist as part of the agreement. It is not “there” in some abstract, mysterious way but for some reason not expressed in clear words. It just isn’t. It is not that “they agreed about something, but didn’t bother to state that something clearly.” Rather, it is “they did not agree about that, and furthermore they agreed that it did not matter that they did not agree.” Even if faculty are employed and have a duty not to compete with regard to the subject matter of employment, if there is no such subject matter of employment at the time of employment, then there can be no duty not to compete with regard to such subject matter (and that’s accepting the further goofussness that such a duty not to compete can be implied by the mere mention of the term “employment” and that a university is actually in business trying to sell off faculty properties and therefore cannot be competed with by faculty owning their own property).
This mindset that constructs a duty not to compete based on employment took a beating in Ransom v Customer Services PLC in 2012. Ransom was “a senior employee” in a company; held meetings to start his own before he separated from his current company. His current company sues him for breaching his duty not to compete by failing to disclose these meetings. Here is a good summary of the ruling from the law firm Mayer Brown (my emphasis, as usual):
In the Ransom case, the Court of Appeal drew a clear distinction between employees and directors. Fiduciary duties for a director arise because the individual is a director. Fiduciary obligations for employees (who are not also directors) would only arise if it was consistent with the contract and governed by the rules of that contract. There is an implied duty of fidelity, contained in contracts of employment, but again, this is dependent on the terms of the contract of employment itself. The employee may have promised to serve faithfully, but it is important to establish what the employee has promised to do, and to establish whether or not the employee has acted faithfully. This case means that, if the employer wants to argue that an employee (as opposed to a director) was under a duty to report his own breaches, this could only happen if the contract of employment supports the existence of such an obligation either by express term, or such an obligation is consistent with other terms in the contract, albeit not explicitly set out.
The ruling makes clear that one cannot simply invoke a fiduciary duty because someone is an employee, or worse because one has called a person an employee. If the contract does not stipulate no competition, then for “employees” at least there’s no basis to claim an “employee” has been unfaithful by “competing.” Even if faculty, in holding personal property, compete with university administrators who also want that personal property, there’s nothing that violates any contract made between the university and the faculty member at the time of “employment.” That’s even if there’s something in a patent policy requiring that faculty members assign all inventions made within the scope or course of their employment. The problem is not the university’s demand to own personal property so much as the problem that there is no scope of employment for faculty unless it evidences a meeting of minds and is supported by consideration.
I’m not arguing here that faculty scope of university employment is narrow. I’m arguing that it simply does not exist. It is not that it is hinted at, or not expressed so clearly, or is anything that university administrators later say it is–I’m arguing there is no such thing as “subject matter of employment” until it is clearly constructed by mutual agreement of an adminstrator and a faculty member. Folks can put words in a patent policy about scope of employment, and those words will apply where there is a scope of employment, but those words do not construct a scope of employment where none otherwise exists. This is not a “savings clause” that steps in and supplies the text of agreement for people who never came to such an agreement. It is just words specifying an empty set. Conditional language drafted with sufficient lack of care to omit the conditionals.
This duty exists even though the employee does not use his employer’s facilities or time to accomplish his competitive objectives.
The US Supreme Court refutes this claim. Employment does not give the employer a right under common law to ownership of inventions unless the employment expressly includes an agreement to assign. Ownership of an invention without the freedom to exploit that ownership is meaningless. There is no constructed duty in common law that an employer has a right to an employee’s inventions as a property of employment alone. One has to look not only to the scope of employment (words) but to the nature of the employment, of the employment. Even if the employee uses the employer’s facilities or time to invent (how does that get parsed is another matter–conception takes place in the mind, perhaps a Eureka! moment–how does such a thing use the employer’s facilities or time?), common law provides for only a shop right, and if no facilities or time is used, then no right at all. So this assertion is pure fiction.
Modern universities are now in the business of selling and leasing the technologies developed by the professors and students they employ.
The court in Madey v Duke found that Duke was in the business of conducting research in order to teach students and faculty. It did not consider whether such “business” was competitive or not, and set aside any consideration of “commercial” business or a “profit motive.”
For example, major research universities, such as Duke, often sanction and fund research projects with arguably no commercial application whatsoever. However, these projects unmistakably further the institution’s legitimate business objectives, including educating and enlightening students and faculty participating in these projects. These projects also serve, for example, to increase the status of the institution and lure lucrative research grants, students and faculty.
In short, regardless of whether a particular institution or entity is engaged in an endeavor for commercial gain, so long as the act is in furtherance of the alleged infringer’s legitimate business and is not solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry, the act does not qualify for the very narrow and strictly limited experimental use defense. Moreover, the profit or non-profit status of the user is not determinative.
But our text makes a somewhat different claim, that universities are in business selling patents and the like obtained from the faculty (and students) that they employ. Much is left out to allow this statement to be made. First, universities, when audited by the IRS, make the argument that they are not in the business of selling patents, that doing so is part of their public mission and is not a matter of custom or business, but rather of education and the benefits of the pursuit of knowledge. If they were in business, and they could not locate the authorization for that business in their charter, then they could be exposed to unrelated business income tax on their royalty earnings. But as university technology transfer offices set up with “branding” and make their faculty appear to be customers (as, for instance, the University of Washington’s federal trademark registration for the new name of its licensing office’s services implies), then perhaps it becomes true that some universities are indeed operating businesses and ought to be exposed to UBIT:
business consulting and business development consulting and advisory services pertaining to intellectual property, new technology innovation and research, technology transfer, licensing, acquisition and incubation of intellectual property; assistance in business management and product commercialization; business services, namely, assisting inventors in finding investors and negotiation of contracts with entities which support research and manufacture or distribute products resulting from such research; new business venture development and formation.
Remember, this is a university office and the “inventors” here are faculty, staff, and students of the university, not external customers, and these services are expressly described as “business services” not “administrative services.” If the inventors referred to are not university personnel, then clearly the university is opening up shop and competing with private industry. So perhaps the University of Washington, in its own legal documents, has asserted that it is in business.
Despite all this, it is not at all clear that simply because a university sets up a business in competition with private activity that it therefore has an implied right to prevent others, even its own faculty, from competing with that business. Consider, for instance, university presses. A university press may be in business (often, as a non-profit, but still in business). But that does not give the university the right to shut down all faculty publishing or to claim ownership of all faculty copyrights, or to assert that technically all such faculty work is work made for hire because (and here we get the assertions again) faculty are employees and everything they do is within the scope of their employment (not because there is anything to indicate that such a broad scope has been mutually agreed to, but because somehow such a scope is inferrable from the mere fact of employment and the secret desire of administrators to take everything they can).
Thus, a scientist hired by a university to conduct research in cold fusion cannot compete with the university by creating Cold Fusion, Inc. and working for it on his own time.
In logic, there’s a rule that any conclusion based on a false premise is true. False implies anything. Here, we might say iffy premises create the opportunity to make any conclusion sound true. Notice that the text has moved from “professor” to “scientist.” A university scientist may be staff–an employee, not a professor. But even here, there’s nothing short of an agreement not to compete that prevents a scientist employee from competing in licensing what the scientist produces on his own, outside what he has agreed to do faithfully for his employer.
Research on cold fusion (let’s stay with the example) is broad–the scientist may be employed by the university to mess with, say, hydrogen and palladium, while he could start a company focused on methods to produce and measure sonoluminescence. There is no competition here. The scientist is not diminishing or distracting his work at the university with what he does on his own, any more than if she were writing a science fiction novel involving sonoluminescence. The only competition arises because university administrators might claim they should own whatever the company produces, too. Such a claim is based merely on the premise that the university should own whatever anyone produces who works at the university, regardless of whether what the produce is what they have committed to produce for the university or not. The competition they create is that no one should even think to create anything or discover anything or invent anything unless that anything is dedicated to the money-making success of the university’s licensing office. That’s a sweet thought for the fascist. But for most of us, there’s nothing good for public policy in it. Logically and legally, it’s crap. But that does not end our authors’ reasoning:
Further, a university professor cannot be employed as a consultant by any private company that competes with the university for grants or income from the sale of technologies.
More illogic. First, university faculty consult (are “employed as consultants”) all the time by companies that sell technologies in areas that universities have technology licensing programs. Second, these companies can seek federal grants and contracts–and so long as the faculty member is not serving as a “principal investigator” (where some universities may have policies)–universities still allow it. Finally, faculty work all the time on grants awarded to other universities–as collaborators, consultants, and the like, and universities routinely waive any claim on IP that might be developed in such work. The wording “a university professor cannot be employed as a consultant…” is simply not true. They are all the time. They are not committing any offense in doing so.
Perhaps what is meant is that universities have a sound legal basis to sue professors who do such things. Even that is sketchy. Perhaps, then, what is actually communicated by this conclusion is more along the lines of “We encourage university administrators to sue faculty who consult with industry to prevent them from doing anything helpful for industry, as such help would necessarily prevent administrators from gaining ownership of the results of that help.” The idea is, faculty are not free to choose what they do for the university, and are not free to publish openly what they do for the university, because they might choose to do something more valuable on their own, or for others, and leave the university licensing office with rotten stuff, while industry or the general public gets the good stuff.
This is not even good public policy for for-profit employers. If an employer wants absolute faithfulness, so that anything an individual might decide to do will be included automatically in that individual’s scope of duties for the employer-as-master, and that there is no such thing therefore for the employee in the way of a personal life or personal property created by that life, then the employer wants more than time and faithful duties. The employer wants to own that life. It’s an outrageous claim, no matter how it is set in mealy-mouthed formal language of a university patent policy.