Among those developing university patent policies, Archie Palmer was the Johnny Appleseed, publishing surveys and discussions of university patent policies for over three decades, from the 1930s to the 1960s. Palmer argued that it was important that universities have patent policies. Let’s look at his discussion of the matter. In 1948, Palmer writes that developing policy is “a healthy sign” that will lead to “agreement”:
It is not clear here whether Palmer means that internal debates regarding research and patent matters might be resolved with formal policies, or whether the “great variation of practice” among the various universities ought to be resolved by adoption of uniform policies across all universities. It would appear that Palmer’s emphasis was on the internal issues raised by not having a policy–letting faculty and administrators and company sponsors make up what they want to do as they go, rather than being guided by norming statements already in place to anticipate such situations as they arise.
In making a case for universities to develop formal research and patent policies, Palmer argues that research and patent policies provide “efficient operation and harmonious relations”:
These two drivers–efficiency and harmony–appear to be the keys to creating and formalizing norming statements to guide administrative actions.
In 1934, Palmer reports 2 of 21 universities he reviewed had a patent policy. By 1952, of 811 colleges and universities surveyed, 227 had a formal patent policy or “generally accepted practices.” In 1962, Palmer looked at 945 colleges and universities and found that 349 had a formal patent policy. That is, even after thirty years, most colleges and universities did not have a patent policy. Even then the application was anything but uniform. Here’s Palmer’s 1962 description:
Even in 1962, Palmer could not resist tacking on a moralizing statement with regard to the need for policy, even if policies varied wildly across the spectrum of the debate over whether patent monopolies had any place in university activities. Some universities are hands-off, some demand an interest in everything; and some refuse to establish a policy. A few years ago, I helped a small college work on a patent policy–it never had had one, and the ad hoc approach appeared to have worked fine for a century. However, when so many universities had patent policies, it appeared to be that a policy was necessary to have the trappings of a full university. Ad hoc decisions, apparently, weren’t as authoritative or reasonable as ones backed by a policy statement.
As we have seen with Wikipedia and the development of formal Christian doctrine, in the development of university patent policy, there appears to be a move from early ad hoc treatment, with a diversity of possible approaches, to the establishment of norming statements, which over time take on the character of narrative myths–that is, the norming statements become surrounded by rationalizations and institutional status so that to move outside a norming statement is to challenge the institution’s authority and be a generally antagonistic person. One might call such a person an “innovator,” in the long-standing, disparaging meaning of the term.
One might create a typology of administrative motivations for creating a patent policy. Three come readily to mind. First, there’s precedent. Once a norming statement has been created, there is a strong attraction to re-using that statement by others. I remember drafting a policy on the proper use of copyrights on campus. Later, I found that another university had lifted the policy verbatim. It was one of those pleasant ironies that university administrators had off and pirated a policy statement on respect for copyrights. Such is the power of precedent.
To be sure, precedents are useful. One can see how a situation developed and consider the reasoning that came into play to address the situation, and review the outcome of the decision. All this is helpful if one has the same situation. A challenge, however, is determining whether one does have the same situation, or whether the precedent has established a “principle” that ought to apply more broadly. When dealing with administrators, there’s yet another challenge: when administrators adopt a principle and assert that it is broad, they also are prone to then demand that situations be made to fit into the framework of the principle. This is a matter of control of naming and training. An “invention” is what an administrator defines it to be, in order to take advantage of a policy claim on “inventions.” No matter if the original policy statement intended patentable inventions for which the inventor determined that a patent was appropriate and chose to dedicate the patent to the university in exchange for the university sharing royalties from any licensing and conveying the invention to a patent management agent that would pay the costs and handle the complexities.
A second motivation is consistency. For university administrators, consistency equates with fairness and equal treatment. It all sounds good. But there’s a problem in deciding what elements to make consistent. In an ad hoc approach, consistency involves the repeated exercise of judgment based on a review of a situation. The elements to be reviewed might vary, then, but the consistency would come from the application of reason and common law to the circumstances. In a policy approach, one could implement such a procedure, but it is much more likely that administrators will distrust judgment and skip directly to the outcomes. In other words, administrators dislike a consistent process that may create varied outcomes. They would rather have defined outcomes, and skip having a process at all. Thus, royalty-sharing schedules, one of the banes of university patent policies.
Archie Palmer bemoans the ad hoc nature of royalty sharing agreements. In his 1952 compendium of patent policies, and again a decade later, he observes with regard to royalty sharing arrangements that “all too frequently these determinations are made on an ad hoc basis after the invention has been disclosed.” Many early university patent policies were based on a determination of the “equities” involved. How had the university supported the work leading to the invention? the development and testing of the invention itself? Had the university contracted with the inventors to create the invention? Did the university hold a contract with an external sponsor that set the conditions for ownership and control? Were there any understandings on how the invention might be deployed? Were there concerns for the impact that a patent might have on public welfare, or a patent misused to disrupt adoption or further research? One might imagine a policy that made formal such questions. But administrators appear to have preferred a policy that eliminates the need to ask the questions in the first place. Just assert a claim on all inventions or assert a disinterest in all inventions–these are the administrative strange attractors for policy. Anything involving judgment, while at the heart of governance, is antagonistic to management.
Royalty sharing schedules in university policy create a huge problem pertaining to incentives. Regardless of the circumstances, regardless of any or no university contribution, regardless of the amount of effort or the personal contribution or the relationship of the invention to an area of research, or the value of the invention, or the role of the inventor (or non-inventors) in moving the invention toward practical application, beneficial public use, research applications, commercial product, or idiot-bait for wealthy speculators–regardless of all such things, every inventor of every invention gets exactly the same share of royalties, if there ever are any.
In a voluntary assignment environment, a royalty-sharing schedule is an essential part of the offer made by a university to manage the invention. Making that offer a part of policy makes public the financial part of any deal, screens for political power plays within the university (so a dean gets no better deal than a post-doc), and for public universities bates the idea that the university is somehow negotiating private business with its employees. Not only these things, but also a schedule in policy removes negotiation of these matters from any exchange. These are all important rationalizations for administrators.
For an inventor in a voluntary approach to ownership, if the royalty-sharing schedule fails to accommodate the circumstances–the university put in no special resources or funding, didn’t commission the work, didn’t contract with someone for the work to be done, didn’t hire the faculty member to invent, or not in this area, or that the work to develop and commercialize or idiot-bait will require a huge amount of additional inventor time and effort outside of work commitments, then the inventor may well not take the universities standard offer to manage the invention. The inventor will then seek out other opportunities for invention management that are responsive to the situation and better meet his or her requirements.
In a voluntary approach to ownership, a university royalty-sharing schedule is a standing offer. It seeks then to manage only those inventions for which the offer makes sense to the inventors. Where the inventors don’t plan to do any further work, or where the university has provided a great deal of support, a university’s offer to share, say 1/3 of royalties plus pay all the patenting costs looks generous. Where inventors don’t see the offer as generous, or even fair, then they may take their work elsewhere, especially if the royalty-sharing policy does not allow for negotiation or exceptions, even to recognize “equities.”
You might see, then, how moving this same body of policy to a compulsory ownership approach changes the situation dramatically. Everything is “the same” except that now the royalty schedule is not part of a standing offer, and isn’t part of any consideration for an exchange of ownership, and is not subject to a review by the inventors for whether it’s generous or even fair. While the patent policy might even retain marketing language about how the schedule is designed to be generous, or to encourage participation in the program (from the voluntary days in which encouragement was a matter of marketing), now the idea of “generous” comes to mean “you must by policy accept that this is a generous sharing schedule, even if you privately disagree”; “encouragement” of course becomes a euphemism for “fair warning to avoid discipline.” If a royalty sharing schedule in a compulsory ownership policy scheme fails to provide a fair share to some inventors, then the schedule itself is inherently unfair to those inventors–and especially to those who have done extra work, who anticipate having to do even more work, who have developed the invention primarily in an area outside their assigned duties, or who have created something with amazing value and for which they are well positioned to manage.
In a compulsory ownership scheme, a standard royalty-sharing schedule created for a voluntary approach is likely to be seen as unfair for the majority of the most interesting inventions and the most motivated inventors. The compulsory scheme’s schedule will be generous and fair for the nominal and the mediocre inventions, which will form the vast majority of inventions reported if the definition of “invention” runs to most anything that might be claimed or owned and not restricted to patentable inventions for which the inventor has determined that a patent is appropriate. It is no wonder that the “problem inventors” on most university campuses are the ones that see as unfair or even stupid any royalty-sharing policy created for the convenience of administrators in dealing with a flow of average invention mediocrity.
There is yet a third motivation, efficiency. As the volume of work expands, and the issues to be considered become tangled in reviews, negotiations, precedents, and worries about consistency, administrators’ minds turn from public benefit to the huge pile of work that their policies are creating for themselves. Policy then appears as a means to make the work efficient. Administrators less fond of thinking clearly and quickly prefer a policy environment in which they don’t have to think much about anything other than following the prescribed procedure. This not thinking much is a great thing where one is making a million widgets or laying a million bricks, but it’s a lousy thing when one anticipates working with things that have never before existed in the world and someone is considering what it means to make any such thing persist.
Folks who think there is a system to follow in bringing new things into the world, into use, into commercial product have little to show they are right. There may well be a system to attract wealthy idiots to a speculative monopoly betting parlor. There may well be a system for gathering in all inventions and preventing any private initiative with regard to them. There may even be a system for filing patent applications on everything that’s disclosed. But there’s no system available for getting new things introduced into an established order. To think that construction or sales methodologies will work, by policy, for innovation is just administrative nutsoism. May as well use coconuts for headphones.
For the administrators who supervise the administrators who are supposed to be doing the work, policy has an added meaning. Once judgment is out of the way, then Taylorist principles of scientific management come into play: one can hire less capable lesser administrators to manage patent situations, because judgment and negotiation are not so important. Administrators then no longer administrate situations or govern competing individual desires; they administrate policy. That is, they do what the policy tells them to do. They don’t do what reason suggests is worth trying. Policy does not record and remember practices that “worked”; it dictates uniform practices regardless of whether they “work.” As Henry Ford once quipped something along the lines of “Why is it when I ask for a pair of hands, they always come with a head attached.”
Early on, university patent policy statements are norming statements about ambiguous situations. These statements create guidance for dealing with future situations, but still require the use of judgment to determine that a new situation is sufficiently like a previous one that following the same path–following the policy recommendation–makes sense. As the norming statements build up, and are generalized to appear to deal with a wider range of situations, and are abstracted to principles rather than presented as guidelines, and then finally turned into law and adhesion contract, not to be meddled with by mere administrators, much less mere inventors, policy becomes narrative myth, becomes a form of prophecy about the future, and about the policy’s own role in that future. University patent policy becomes responsible for economic vitality, for the impact of basic research, for the harmonious relationships of inventors with university and university with industry. If none of these things appear to happen as a result of policy, then it is the fault of business people (failing to cooperate, being uneducated, greedy) and inventors (same traits) or administrators (being dull and bureaucratic, poorly connected to wealth and power, fixated on public benefit rather than making money, and the like).
It’s not that policy itself is a problem. Policy serves institutional memory and provides guidance. But when policy becomes myth, then things change, and people serve the policy rather than policy serves people. For university patent policies, it makes a huge difference to move from ad hoc reasoning about a low volume of situations in which faculty inventors determine that a patent is appropriate to following an unchallengeable written statement with the power of law, contract, myth–even sacred text.
Now here’s the thing about policies. The usual approach to policy formation is to use policy to get rid of problems. That’s what Palmer argues–that a formal policy is the answer for disharmony and complexity and differences of opinion about proper practices involving patents at universities. But policy also *creates* problems. In the case of royalty-sharing schedules, the move from voluntary to compulsory ownership practice all but assures that for the very best inventions and the very best inventors, the policy will be unattractive, unresponsive, unfair, and likely stifling, demotivating, and destructive. For the vast majority of uninteresting inventions made by indifferent inventors, the policy will be fine, even attractive. A policy designed to meet the majority of cases will be adequate for that majority. It’s just that inventions populate what Nassim Taleb calls “extremistan,” a region dominated by a power law, where a few things dominate (wealth, say), not “mediocristan,” where an average is a good descriptor of the whole (people’s heights).
A policy for inventions should be based on a power law, not on a mediocre majority. But that’s not how things have developed, and it’s not how most administrators think. As a result, most university patent policies have become uniform mythic norming statements. They make assertions about their own worthiness, they demand that practice conform to their claims, they reject as unfit, criminal, and disgruntled any evidence that would undermine their authority, they provide cover for administrators who don’t what to deal with negotiation or reasoning, and they attract administrators who would gladly serve them for an appropriate wage without thinking much at all. And these policies are by their nature unfair and damaging to the most important inventions and the most motivated inventors at universities.
No doubt Archie Palmer did not consider that policy statements could become antagonistic to innovation. It was enough at the time to move from ad hoc to written, to start a process of norming. But once seeded, norming can readily become conservative, and conservation taken as truth becomes dogmatic, mythic, eternal. From there, it is darned hard to make anything new happen within the sphere claimed by the policy and its coterie of supporters–call them priests, perhaps, or senior administrators these days. To add freedom would be to create anarchy, give rise to ad hoc ideas without precedent or defying precedent, would create an environment in which present policy experts would be inadequate, would lose standing, would be out of work. It would be, in essence, new steps for ballroom dancing competitions that the judges couldn’t teach and therefore must outlaw.
Current university patent policies are inherently unfair to inventors and damaging to innovation. It’s not even a matter of whether a given policy takes a voluntary approach (as most once did) or a compulsory approach (as most now do, after the Bayh-Dole shenanigans)–it’s a matter of how the policy deals with the stream of opportunities that present. If a policy claims all of them, then it best not attempt to treat them all the same. If a policy claims only those ready to take its offered bargain, then it can select for those opportunities that indeed will benefit from that bargain.
Efficiency is a nice virtue for dealing with a pile of uniform work. Efficiency is a lousy way to deal with work that’s new, that requires reasoning or creativity, that must be adapted to unique situations. Efficiency is great when one can hire less trained folks to follow directions and create a million things all alike. Efficiency is a crap when one is looking for one or two opportunities a decade to make a difference in the world, and everything else is about building good will to make those opportunities, whenever they might arise, easier to recognize and support. Efficiency is good for lowering costs in procedures repeated over and over. Efficiency is stupid when to make efficiency efforts successful, the most important stuff has to be treated as if it is just like the mediocre stuff around it.
It may be that ad hoc is a stronger driver for innovation. Bayh-Dole did not so much supplant ad hoc as it moved it from federal agencies to universities. Certainly, Bayh-Dole ended the idea that a federal agency could consider inventions on a case by case basis and be flexible. That much went out the door. But Bayh-Dole left the relationships between universities and inventors, and the claims universities might make on inventions, and the uses that universities or inventors might make of the patent system nearly entirely up to the universities and inventors. The standard patent rights clauses were drafted to leave inventor and university relationships (and small company and employee relationships, too) undisturbed. If a university desired to manage a given invention, it could ask, or it could contract, or it could bully–so long as the university complied with the standard patent rights clause and delegated to its inventor-employees the responsibility for conveying rights to the government ahead of any other arrangement. (That’s the (f)(2) clause at 37 CFR 401.14(a) and the inventor’s standard patent rights clause at 37 CFR 401.9, for those of you who want to look it up).
At some point, the forces for order and administrative control and efficiency and enforced agreement have to be balanced by forces that give room for responsiveness, for personal judgment and initiative, for ad hoc work, for freedom. Sometimes such balancing involves a bill of rights–restrictions on government to preserve or create freedom, diversity, experiment, and opportunity. Such limits don’t appeal to many administrators–limits on authority would appear to work against the use of policy formation as a tool to create administrative authority, and to solve problems.
So here’s the secret thing about university patent policies. Policy also creates problems. In fact, that’s the test of a good patent policy, that it creates *good problems.* For instance, how to share millions in patent royalties is a good problem. It doesn’t have to involve a lawsuit. It can rely on good will. Some academic inventors end up giving much of their royalty earnings (and realized equity, and the like) away to the universities that supported them or that support the work they wish to see accomplished. A royalty sharing policy that aims to prevent any reliance on judgment or good will or mutual agreement or recognition of circumstances is one that will suppress opportunities for making all those millions.
Look then at a patent policy for the problems it creates. Are these the problems you desire to have, or are they more whack-a-mole defects that crop up because the policy itself is so defective relative to innovation opportunities that it creates problems for the worst stuff (which the university shouldn’t want to touch) and the best stuff (which the university out of respect should only touch if asked), and ends up being a policy that allows the mediocre majority of stuff to be managed by administrators who aren’t asked to think about it, often supervised by administrators who don’t want to think much about it, just want lots of money and no problems at all.