Taking Apart APLU’s Talking Points on Bayh-Dole, 1

The APLU has published a set of talking points about a bunch of things (original spelling retained):


Let’s call them “cash cows” for lack of a better organizing principle. The primary point is that the APLU is committed to making the case for continued (if not expanded) government money provided to universities. The talking points serve the role of ensuring that political appearances will substitute for fiscal accountability–that is, so long as the activities being supported are made to appear good, that’s sufficient. Whether the supported activities are really doing anything beneficial for the broader community is rather immaterial. What counts is the persistent message that they are.

Talking points, of course, have that delightful overtone of helping people who cannot think for themselves at least repeat what someone aiming to control the discussion wants to have circulating. That way the appearance can be given that most everyone has the same experience–university programs across the country are delivering technology transfer successes in the form of startup companies that vitalize regional economies, create new products, and benefit the public. But the stark reality is that the university administrators are reciting the “talking points” rather than looking at their own activity. Just no one will admit it. The justification is that sticking to the talking points is for a “good cause”–all those public benefits that universities intend by their technology commercialization programs. If intent were truth, we would all be millionaires. The actual “good cause” however, as the APLU document makes clear, is getting more government money to pay administrators to operate technology commercialization programs, especially ones that involve “entrepreneurship” and startup companies.

For the talking points, startup companies are the new cows on the block. It’s just that there is woefully little to show that university startup companies are contributing at all to regional or national economies. Yes, Google was a university startup, but let’s get over the idea that Google wouldn’t have happened without the Bayh-Dole Act or a university compulsively taking an ownership position in inventions.

When the Utah state legislature audited the University of Utah’s economic development claims, they found that there was in fact almost no economic impact from the millions of dollars poured into university startup administration. One study found no justification for talking about “economic impact” and instead argued only for “economic contribution”–the effect on the economy of spending the allocated money. The state could have given the money away rather than put it into building new research facilities and obtained a comparable economic contribution. No impact from innovation, from startup companies, from new products made in the state, from benefits to customers who then altered their own buying activities. Nothing. The legislature instead found a “culture of untruth and lies”:  with regard to the obviously failed USTAR economic development program, state senator “Reid would go so far as to wonder if USTAR is simply a middleman and noting that it is simply unacceptable that USTAR was unwilling to spend the funds necessary to investigate that it is effective.”

Given that subject invention use reports are declared (probably in violation of FOIA) to be government secrets, no doubt APLU member universities are encouraged to believe that all invention use information should be held secret against both FOIA and state public disclosure law requests. Here’s the irony: the universities claim that their technology commercialization programs are a roaring success and therefore should receive public subsidies, but the university administrators are unwilling to provide the public with actual information to demonstrate that their programs are in fact effective. Absent such documentary information being made public, it is reasonable to surmise that administrators don’t have that information–and cannot produce it. The programs are not effective. They are a waste of public money. They are a nest for administrators using a rhetoric of good intentions and a future promise of economic impact. Just nothing ever happens at the scale of the claims made. No wonder the APLU needs talking points instead of actual information.

The Talking Points list a set of “key messages.” These messages are built around intent, not outcomes. First “Universities support” economic development by doing what universities do–but no mention of technology commercialization in this first list of activities–teaching, publishing, public service, and collaboration with industry. Here’s the bureaucratic version in the Talking Points:

Universities support local, regional and national economic development in a variety of ways, including by training the future highly-skilled workforce, conducting research and publishing the results, encouraging faculty consulting, and partnering with industry to develop new ideas into commercial products.

What isn’t stated is that university invention and conflict of interest policies are set up to suppress the effect of research publication, to discourage faculty consulting, and to make “partnering” with industry little more than selling speculative companies monopolies on university research findings. What good is publication if no one can practice the reported findings without first obtaining permission from a university bureaucrat? What is the use of asking for permission if the bureaucrats demand an exclusive license and a commitment to create commercial products for a steep payment rather than just release a finding for use–research use, internal use, or even use in preparing products? Another irony is that the training of a “highly-skilled” workforce is defeated exactly where those students invent or are taught to practice the inventions made in the university’s research programs. It is exactly this practice that the university’s technology commercialization program precludes. No student can practice the distinctive research findings of the university unless the student starts a company that receives an exclusive license to the findings or goes to work for the company that already has that exclusive license. Awful stuff, but not something the APLU wants its members to discuss publicly.

The Talking Points then makes an assertion:

One of the most important ways universities foster economic development is to help nurture and grow new start-up companies based upon university generated intellectual property.

It is not at all clear that this statement is true. Perhaps it is true in the sense that APLU administrators have decided that “nurturing” startups is important. Thus, the “key message” here is that administrators say startups are important. This is an old legal ruse of the form “I would like to say that …. [anything may follow–“I did not have sexual relations with that woman” or whatever]. The statement is technically true, whatever the reality. If “one of the most important ways” that universities “foster” economic development is by startups based on their own IP, then why aren’t startups in the opening list of activities that “support” economic development? Perhaps that’s an editing oversight, or perhaps it is implied in “partnering with industry.” Though “partnering with industry” implies providing “support” to all the companies in an industry, not picking one pit bull company to terrorize all the rest with the right to sue for infringement.

Look at the qualifying words in the above statement:

One of the most… foster… is to help… nurture and grow… It’s all watered down. This is all about intent and program operations, not about outcomes. If a university “helps nurture” a startup company, what is it doing exactly? Who else is helping to nurture? What does it mean, to “nurture” a company? Does this mean “play favorites”? Does it mean to do “sweetheart deals” with these companies? Does it mean provide public money as a subsidy to for-profit companies? Is this equivalent to “use public money to invest in the stock of for-profit companies? Does having a financial interest in such a company compromise a university’s oversight of the intellectual property it has licensed exclusively to the company? After all, if the company’s stock does well, does it matter if the company ever develops the intellectual property into a product? But isn’t it the development of the intellectual property that should matter? Isn’t practical application the stated purpose of Bayh-Dole? Not: exploitation of an exclusive patent position to attract speculative investment to run up the share value of a company, so the university can exit with its profit before people realize that no product can be made?

Let’s remove the weasel words, rewrite, and ask whether the result is true:

The most important way universities support economic development is to license patents exclusively to start-up companies.

If licensing exclusively to startups is the most important way, then we should be able to see some economic numbers that clearly demonstrate it. If such licensing is just “one of the most important ways,” then we need numbers for each of the important ways, showing that licensing exclusively to startups is in the same range for economic impact as the other important ways. Of course, “importance” is itself a term of judgment, not scale. An activity can be “important” and not register–because administrators think it is important, yes, or because it is necessary for other activities that have much greater effect. Again, someone has work to do. Here then is the rewrite with the missing information made evident:

University exclusive licensing to startups has resulted in the following economic development over the past ten years: ___________________ .

That would be a meaningful talking point. But APLU doesn’t have that talking point, and would not want it if it had the information.

Here’s the stark reality. Licensing to university startups is almost always exclusive. I’ve set up programs where the licensing is non-exclusive and works even better for startups–they don’t have to pay much of anything and don’t have to fuss with “negotiations” and commitments to commercialize or submit to audits or sue for infringement. But most university administrators are committed to exclusive licensing that amounts to assignment of the underlying invention while retaining title to the patent. What makes this reality stark is that any such exclusive license cum assignment removes the invention from any other use by industry or the general public, and even removes the invention from use by other nonprofit organizations (unless the exclusive license is atypically narrow). The university’s “nurturing” of startups means removing key research findings from public use. Any account of the economic impact of exclusive licensing to startups has to include, then, the impact of preventing everyone else from using those same research findings.

We get next that “universities…are committed… to continuing to enhance… efforts… to promote… innovation, entrepreneurship, and commercialization of research results….” Again, almost nothing gets said here. Administrators “are committed.” Well that they were. But administrative intent has nothing to do with outcomes, with economic development–growth of an economy, greater activity, more wealth available, broadening distribution of that new wealth, re-investment of wealth in new activities, more people engaged–jobs, new businesses, new products and services. And look what the administrators are committed to–“continuing to enhance efforts to promote.” Good Lord, they are committed to trying to improve how they promote. That’s a program goal, not an economic outcome. “We are committed to spend more money on our programs to license patents exclusively to our own startups and not to any existing companies in the area.”

Note as well the use of a triad to bury the subject under discussion: “promote innovation, entrepreneurship, and the commercialization of research results.” The subject was startups–but now we get a list buzzwords. The programmatic goal could mean holding a “business plan competition” or putting up banners that have the word “Innovate” in bold, friendly letters. But what we the public require is an account of the outcomes in terms of economic development. How does that friendly banner result in economic growth, other than in the payment to a banner production company for twenty banners with “Innovate” in the university’s colors? That is, how does the program contribute via research results rather than via spending public money, of which APLU wants more?


This entry was posted in Bayh-Dole, Policy, Startups. Bookmark the permalink.