Dealing with compulsory assignment policies, Part 1 (California)

Restoring voluntary assignment for university inventors is the first step in reconditioning university invention management–and putting that management on a road of development consistent with university mores and roles. Voluntary assignment can be accomplished a number of ways. I will outline a few here.

  1. correct interpretation of policy–often policies are drafted with a narrow scope on claims but that scope has been expanded by administrative interpretation
  2. change policy–often the change does not have to involve dramatic redrafting
  3. change acceptance practice in the IP office
  4. implement (f)(2) properly for subject inventions
  5. change state law (for public universities)

Getting to a correct reading of policy requires administrators willing to read carefully rather than assert that the words stand for their secret, unexpressed intentions. As the Shaw court chided the University of California lawyers arguing for administrators (university lawyers apparently never take the side of faculty in disputes with university administration), “The true intent of a contracting party is irrelevant if it remains unexpressed.”

Changing policy, too, takes time and lets in all the ticks who have their own agenda for changes to policy. If present patent policy has been drafted by inepts, will they also be the ones charged with making the changes? Whatever the outcome, it is likely five years out if you start now, and you may not get a fully voluntary approach to assignment. There are alternatives–there’s still a voluntary aspect to nearly all university patent policies, already there, built-in–on the administrative side.

Change Acceptance Practice

While most university patent policies now demand the assignment (often upfront, before anything is made) of all inventions (and non-inventions) to the university, those same policies do not require administrators to accept assignment or to file for patent protection on everything assigned, or seek to “commercialize” or at least license or make money on everything, even if owned and patented by the university. And even if administrators do accept, file patent applications, and try to license inventions, most patent policies also permit inventors to ask for a return of their inventions–such as when university administrators have given up trying to find a licensee and have let an invention sit (“on the shelf” as it were).

Thus, there are often two mechanisms in policy by which patent administrators can implement a voluntary program of assignment, even within a policy that makes assignment mandatory:

  • decline to assert ownership, and
  • assign back to the inventors if assignment is required by policy.

Let’s look at a few examples to show how a voluntary practice can be implemented, even within existing policy statements, and even when those policy statements have their problems, if not their garbled messes. First University of California. Then back to University of Iowa, south to the University of Kansas, and last, to the University of Florida.

University of California

University of California patent policy consists of a patent policy statement combined with a “Patent Acknowledgment” agreement required at the start of employment or appointment. Here’s the core bit from the policy regarding assignment:

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.

Notice that there is no scope made for what should be assigned–just an exclusion. One implication is that all other inventions not made in “permissible consulting activities without use of University facilities” might be claimable by the university. But this would run against public policy and the California Labor Code, so there must be a less expansive scope. While the burden of the policy is to require an agreement to assign, the scope is the job of the patent agreement:

Such an agreement may be in the form of an acknowledgment of obligation to assign.

Thus, the patent policy requires a patent agreement, but then backs away and provides that the agreement may be simply an “acknowledgment” of an obligation. But such an acknowledgement leaves open exactly how the obligation to assign itself comes about. University of California lawyers have argued in court that university policy has the “force of law.” The obligation comes about because the university puts it in writing. But then why does patent policy require an agreement? An acknowledgment of an obligation without the obligation itself first being established somehow means there’s no obligation.

The Patent Acknowledgment is in fact a patent agreement, but it is cast to appear to be a matter of administrative procedure, so that it appears that one is “acknowledging” the university’s control of inventions. The university changed the name of the form from “Agreement” to “Acknowledgement” after losing the Shaw case, where the university claimed that the patent agreement was an administrative instrument, not an actual contract with the employee. The court disagreed. So the university doubled down and rather than reforming practice, simply obscured it beneath another layer of legal bluster.

Actually the university now uses the Patent Acknowledgement as a “present assignment,” an assignment document for all future inventions:

I acknowledge my obligation to assign, and do hereby assign, inventions and patents that I conceive or develop within the course and scope of my University employment while employed by University or during the course of my utilization of any University research facilities or through any connection with my use of gift, grant, or contract research funds received through the University.

(The university made this move after the Supreme Court decision in Stanford v Roche, which made clear that Bayh-Dole did not vest ownership of inventions made with federal support with the university that hosted the research. Bad lawyers and clever Bayh-Dole advocates used the decision to claim that the case actually depended on a collision between a promise to assign and an assignment of future inventions. To “comply with Bayh-Dole” universities had to be assured of title to inventions. But the Stanford v Roche decision did not depend on anything of the sort. Stanford’s own policy at the time declared that Stanford allowed personal ownership of inventions “whenever possible.” Thus, there was no collision between a promise to assign and a present assignment unless Bayh-Dole somehow required Stanford to require the assignment. The problem for Stanford was one of scope, not magical assignment language using “hereby” rather than “will.”

Adding a “hereby” would not have changed the outcome of the case. But the outcome of the case was used as an excuse to make the appearance of assignment even more dramatic. I expect that the drafters of present assignments–adding “hereby assign” to policy statements, to patent agreements, to invention disclosure forms, to request for approval to consult forms–thought they were “tightening” the university’s claim to inventions. But what they were actually doing was weakening the university’s claims in all sorts of ways. The thing that keeps the new language in place is the legal cost of challenging it–typically $100K to $250K–but in some instances, much, much more.)

In the case of the University of California Patent Acknowledgment, we do get a statement of scope–“course and scope of my University employment while employed” or “during the course of my utilization of University research facilities” or “any connection” to the use of certain university-controlled funds. There are many problems here that evidence careless drafting:

inventions and patents … conceive or develop

But patents aren’t conceived or developed. And an invention is patentable when it is conceived and reduced to practice (among other things). An invention is “developed” through testing and experimentation. If “develop” is used as a synonym for “made” then “conceive” is superfluous. If “develop” really means “reduce to practice” then the coordinating conjunction should be “and,” not “or.” If the university intends to claim anything “conceived”–that means any new idea–far broader than inventions which are or may be patentable. If the university means to claim anything “first actually reduced to practice” even if the conception (and constructive reduction to practice in the form of a patent application) has taken place outside the university (or even prior to university employment), then the university ought to make that clear so everyone can stay clear. A company employee might make an invention, the company might file a patent application, and someone at the university might first reduce the invention to practice–build a prototype, say. Reading “develop” to mean “first reduction to practice” results in a university claim on a property that it cannot possibly own. “Develop,” it would appear, must mean “develop” as in “enhance, improve, test, validate” and not have anything to do with reduction to practice.

scope and course of … employment

Employment isn’t “appointment.” Employment means something more specific than “anything you do while receiving payment from the university.” In an employment relationship, the master directs the work of the servant, or has the right to do so. The scope is the extant to which the master has this right. The course is the activity that the servant does to do the work within the master’s right to direct. For faculty members, the employer’s scope of right is narrow–the university has no right to assign faculty to research, or to direct their research work. So the scope and course of employment is narrow, except where a faculty member might agree to broaden that scope in exchange for something of value (such as release time, or access to special resources otherwise not available, or under the terms of a sponsored research agreement). But university lawyers want “employment” to mean “anything you do except what we expressly release.” Such an approach is not one of employment or even patent agreement but rather is a non-compete requirement cast as a scoping statement on assignment. In California, at least, as a matter of state law, such non-compete agreements are generally unenforceable.

university facilities…

In University of California policy, “facilities” means “buildings.” It is odd, here, to claim inventions made in buildings but not inventions made using other resources of the university–equipment, supplies, fields, and the like. Perhaps it’s oversight. Perhaps it’s cluelessness. Perhaps university administrators secretly intend “research facilities” to mean “facilities and anything generally in the category of things that facilities is also in.” For copyright matters, university officials must “designate” “facilities” for which the university might make claims to ownership of copyright works. But for inventions, no such designation is necessary. If a library is a “research facility,” then the university policy here would appear to claim any invention anyone (not even an employee) might make while in a library. How odd indeed. A much more reasonable interpretation is that a claim based on use of research facilities must include a prior notice of the claim and agreement by the inventor-to-be that assignment of inventions is a condition of access to the facility. Same for claims based on the use of funds, since such claims, like those pertaining to access to facilities, are not connected to university employment or any other form of agreement.

Present assignments, like any other form of assignment, depend on a clear definition of what is to be assigned. In company situations, the definition of what is to be assigned in the future is usually set forth by reference to the business (and foreseeable business) of the company, one’s scope of work, and use of company information and resources. Universities don’t have anything parallel. Their “business” is “higher education” but in terms of “research” it is anything that faculty choose to study. Research, then, is not the “business” of the university–“research logistics” is–getting grants, managing budgets, providing financial reports, ensuring compliance. Furthermore, a faculty member doesn’t have a scope of work that is to be performed for the university as master when it comes to inventive activity. And a university does not have a trade secret claim on most “information” that a faculty member might use or create in the course of his or her activities. If anything, the faculty member may have a trade secret claim relative to university access to such information.

The university, were it a company, would be making a claim of the form: our business is to make money from anything you do, therefore anything you do is within the scope and course of your employment. That’s the problem with having a faculty appointment rather than a statement of work under an employment agreement. The patent administrators and their legal advisors then construe the lack of a statement of work to mean that anything that done is claimable. As one senior university administrator told me, rather in confidence, “we own everything the faculty does, but we don’t tell them that because we don’t want to get them upset about it.” He was wrong, of course, but appeared truly to believe what he said. He was, after all, an “expert” on matters of university employment. The attitude that the university owns everything, and ought to own everything, is rampant throughout university administration. It takes a special administrator to make the case otherwise–and yet universities would be better off, stronger, play a distinctive role in a broader innovation economy if administrators did limit university ownership claims in inventions (and most everything else). Put it in terms administrators might understand: they would have more money if they limited their invention ownership claims. 

Finally, and here’s the additional problem for the University of California, the patent policy does not specify what subject matter the university actually will claim. The matter is put to a review. Here’s the Patent Acknowledgment statement:

In the event any such invention shall be deemed by University to be patentable or protectable by an analogous property right, and University desires, pursuant to determination by University as to its rights and equities therein, to seek patent or analogous protection thereon, I shall execute any documents and do all things necessary, at University’s expense, to assign to University all rights, title, and interest therein and to assist University in securing patent or analogous protection thereon.

Thus, (1) the invention must be patentable (or may be patentable) and (2) the university must make a determination that it has “rights and equities” to the invention, and (3) the university must decide to apply for a patent. When these three conditions are met, then the inventor agrees to “execute any documents” “to assign to University” the invention.

Well now. First the inventor-to-be makes a present assignment (“hereby assign”) all inventions made in the scope and course of employment or with university facilities or with university funds, but a paragraph later the inventor is told that three conditions must go true before the university may require assignment. University patent policy makes a similar statement–both inconsistent with and incompatible with the present assignment language:

Those individuals who have so agreed to assign inventions and patents shall promptly report and fully disclose the conception and/or reduction to practice of potentially patentable inventions to the Office of Technology Transfer or authorized licensing office. They shall execute such declarations, assignments, or other documents as may be necessary in the course of invention evaluation, patent prosecution, or protection of patent or analogous property rights, to assure that title in such inventions shall be held by the University or by such other parties designated by the University as may be appropriate under the circumstances.

The policy clearly anticipates an agreement to assign inventions. Inventors report their inventions to the university. Note that now we have “conception and/or reduction to practice” instead of “conceive or develop.” Note, too, that “and/or” has replaced “or.” This is a materially different scope of claim than that placed in the present assignment inserted in the Patent Acknowledgment text. Following disclosure, inventors will “execute” “assignments” and perhaps not to the university but to “other parties.” It’s not possible to have a policy anticipate disclosure of inventions followed a request for assignment and to have an implementation of that policy require the assignment upfront before anything has been done and also predicate assignment a request for assignment on a review of the university’s interest and a decision to apply for a patent. If the present assignment operates, then no review is necessary and the patent policy and the rest of the Patent Acknowledgment are superfluous.

But if the present assignment lacks a clear statement of scope–about what is agreed to be the “scope and course” of employment, for instance–then what has actually been assigned? And if the insertion of a present assignment into the Patent Acknowledgment exceeds the authority of the university as delegated in the patent policy: the university has the power to require an agreement to assign or an acknowledgment of an obligation to assign, and the power to require assignment once a determination has been made as to the university’s interest in a reported invention, and the university has decided to pursue a patent application. The university has no authority to turn a patent acknowledgment into an upfront assignment that bypasses reporting, determination, and decision to file a patent application. But the university has, anyway. It’s a situation awaiting $250,000 to break it, or awaiting administrators with competence and integrity. Perhaps someone will start a Kickstarter campaign to raise the money for the lawsuit.

Or, yes, it is entirely possible to construct a university patent policy this way, since the University of California has done so. It’s just that it is a policy of garbled mess. It is not at all clear how this mess can create an enforceable agreement (other than as someone recognizes that the university insists on something, such as getting its way when it wants). Call it sophisticated incompetence. The more complicated the policy, the more complicated the garbled mess, the more expensive it becomes to try to unwind the mess to show that it fails in its purpose, is more limited by far than university administrators claim, and runs against public purpose and other university policy if allowed an expansive reading.

The garbled mess, however, represents an opportunity for university administrators to implement a voluntary assignment program. Here’s what the patent policy has to say:

In the absence of overriding obligations to outside sponsors of research, the University may release patent rights to the inventor in those circumstances when:

(1) the University elects not to file a patent application and the inventor is prepared to do so, or

(2) the equity of the situation clearly indicates such release should be given, provided in either case that no further research or development to develop that invention will be conducted involving University support or facilities, and provided further that a shop right is granted to the University.

The wording here is “release” not “assign back.” Clearly, the patent policy has no recognition that a present assignment has been inserted into an agreement to assign cast as an acknowledgment of an obligation to assign. A release of rights amounts to a decision not to require the inventor to assign. The conditions for release include a specific one and a general one. Either the university decides not to file a patent application and the inventors agree to do so, or “equity of the situation” indicates release and the inventors agree not to use “University support or facilities” (note that “support” is not part of the scope stated in the Patent Acknowledgment but shows up here as a stipulation regarding further activity involving the invention. Leave aside the clunky “development to develop” the invention).

The first of these conditions is strange. The university decides not to file. The inventors want the university to release its policy claim to ownership of the invention. That claim to ownership is on the face of it broader than that of the right to seek a patent. Why shouldn’t the university simply release its claim? Why should it require that the inventors seek a patent as form of ownership of the invention? Is this a requirement that the invention be published? Is so, why not just write that?

The second of these conditions is the key one for a voluntary program of assignments. University patent administrators are authorized to release the university’s invention claim “when the equity of the situation clearly indicates release.” There is no guidance as to what constitutes such “equity of the situation.” If scope and course of employment is read narrowly, as is reasonable, then unless an inventor has been hired to invent, or has agreed expressly to assign an invention as a condition for use of special facilities or funds, then it is equitable to release the university’s policy claims to the invention. Put another way, it is equitable to release the university’s policy claims to an invention in every circumstance that the university’s patent policy has been drafted to state ambiguous, indefinite, conflicting, garbled claims. It is inequitable to assert there has been a promise to assign (or worse, that an actual assignment has been transacted) where there’s no way to show that the invention comes within a garbled scope. It’s not what the university most expansively may want (even though that is the table cleverly prepared by university attorneys), but rather what an inventor might take to be a reasonable obligation, based on the wording, on his or her appointment letter (in the case of faculty), and on other university policies (such as the policy on academic freedom).

To implement a voluntary program of assignment in a University of California-like regime, then, all one has to do is decide that the equity of each situation clearly indicates release unless there is a clear promise to assign–something that an inventor would recognize as intended and for good consideration. The complications of such a move include that inventors must take further “development” of the invention out of the university, a sort of shoot-the-university-in-the-foot requirement, but there it is. No doubt there is room within the university’s conflict of interest policies to manage what happens when privately owned assets are brought into the university for further work–assets come in from companies for testing or use (compounds or protocols used in clinical trials, beta-release software, biomaterials, instrument prototypes).

For conflict of interest, it is not a question of ownership or use but what happens as a result of such use. And for all that, if there is a question of personal conflict of interest involving university use of something privately owned, then there is an even greater institutional conflict of interest involving university use of something university owned. While personal conflicts of interest may be managed by the university, an institutional conflict of interest is much more difficult for the university to self-manage–perhaps impossible. That’s why universities (those with integrity) refuse to conduct clinical trials on compounds that they have an ownership interest in, and perhaps why they should not permit anyone to conduct research aimed at “commercialization” for any invention that the university owns. One might argue–and make it stick–that university patent policies that claim inventions comprehensively and compulsorily create unmanageable institutional conflicts of interest. If everything published by a university must be considered spun to the financial self-interest of the university, that research following on a report of invention is fundamentally–by policy–aimed at improving the university’s patent positions relative to industry, then the university has undermined its own public purpose. That people don’t care should be dismaying to university leaders. Their institutions, then, have already died in the public imagination.



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