The AUTM CEOs Speech, Fitt 1

As part of NIST’s recent symposium on “unleashing American innovation,” the CEO of the Association of University Technology Managers (AUTM) read a talk. Let’s work through his talk and see what we can learn. I have made a transcript so you can follow along.

All right. Thank you. As Marcia has mentioned, I’m the CEO of AUTM and we are the nonprofit leader in supporting the development and commercialization of university and nonprofit research that is changing the world.

It’s weird to hear someone claim that a professional lobbying organization is “the leader” in “supporting” anything. What does it mean to “lead” in “supporting” “commercialization” of “research”? It’s rather like a cheerleader taking credit for the football team by talking about being better at cheers than others. The strange word among all these strange words (and thus the quote marks) is “supporting.” One might think that “supporting” suggests that university inventors might turn to AUTM for assistance when they–the investigators–see a reason to develop or commercialize their “research” (or, perhaps, patentable inventions). That’s the idea of “support”: “It looks like we need some cheerleaders here, folks–let’s contact AUTM, the leader in that sort of thing.”

“Support” implies that AUTM is not the primary actor–that some non-AUTM actor makes the decision to develop and commercialize and some non-AUTM actor does the actual work. Since AUTM’s members are mostly university licensing officers, the AUTM CEO’s use of “supporting” further suggests that AUTM’s members are also involved in support, and aren’t the ones making the decisions and doing the work. In part, this suggestion is entirely spot on–AUTM’s members don’t, for the most part, have the standing to decide what “research” should be developed and commercialized. But in another part, this suggestion is almost entirely wrong, because many AUTM members will assert that they have the responsibility and authority under their universities’ patent policies to make such decisions on behalf of the university and therefore they do not merely “support” development and commercialization–they do the development and commercialization on behalf of their universities.

Perhaps the AUTM CEO means that AUTM the organization “supports” the AUTM members in their attempts to do it. AUTM cheerleads the cheerleaders who claim that they should decide what the football team will do next. After all, if one decides the play on the field, it is so much easier to plan out the proper cheers.

The CEO in fact has it backwards–universities pay the dues for their licensing professionals to join AUTM and attend AUTM’s conferences and those licensing professionals make most of the presentations. AUTM is the leader in extracting money from universities–the universities support AUTM, not the other way around. If AUTM went out and raised its own money, and used that money to assist universities, then perhaps we could talk about AUTM’s support.

And even if one allowed AUTM its claim that it supported “development and commercialization of university and nonprofit research,” we would still have to point out that virtually none of that “research” is in fact “commercialized.” Most of it stales behind patent paywalls, not available for direct access by industry, not even for research purposes. For AUTM, “commercialization” means creating patent positions and offering these for exclusive licensing. Supporting “commercialization” means encouraging universities to find ways to create more patent positions. What is “commercialization” where nothing comes out the other end? Constipalization?

As for the tag “that is changing the world”–what does that tag modify? Research? Or the development and commercialization (of research)? Or is it the act of  supporting? Perhaps it doesn’t matter–the AUTM CEO wants everyone to understand that AUTM supports stuff that changes the world. The implication, of course, is that those changes are a good thing. But the CEO could be correct in his claim and the changes in the world could be nasty ones.

Our community is comprised of over thirty-two hundred members who work in more than 800 universities, hospitals, businesses, and governmental organizations around the globe.

Universities, mostly, pay for their employees to be members of AUTM. AUTM, then, is financed primarily by universities. We might say that only 3,200 people are needed to institutionalize publicly funded research so that it is not made available to the public or to industry without first being offered for speculation on the future value of patents on inventive findings.

AUTM was formed back in 1974, a time when many federal funded inventions were languishing in labs without a clear path to commercialization.

The Society of University Patent Administrators was formed in 1974. It changed its name to AUTM in the early 1990s. In the 1970s, the NIH and NSF operated the Institutional Patent Agreement program, under which nonprofits could take ownership of inventions that they decided to patent. Thus, the AUTM CEO here is simply wrong for the predominant funders of university research–the IPA program offered a “clear path” to commercialization. Even so, many inventions were “languishing in labs”–and still are. It’s just that under federal regulations, those inventions were available to all via the public domain or non-exclusive, royalty-free licenses. That is, if the inventions were “languishing” it was neither because they lacked a “clear path to commercialization” or because they were stuck in labs. The AUTM CEO recites fake history.

The Bayh-Dole Act, which you have heard about, changed everything in 1980 and AUTM was instrumental in supporting that ground-breaking, bi-partisan legislation.

Bayh-Dole changed almost nothing relevant to university research. It followed by three years the end of the IPA program, on which it was loosely modeled–both the IPA program and Bayh-Dole were drafted principally by Norman Latker, NIH’s patent counsel. The IPA program was shut down as ineffective and the few licenses that were granted were almost entirely exclusive licenses, and those exclusive licenses appeared to be sweetheart deals that gave too much away. What might one then expect of Bayh-Dole, following in the IPA’s footsteps? The DoD already had a policy of allowing contractors to own inventions made with DoD funding. Thus, Bayh-Dole changed very little, overall. Universities could now retain ownership of inventions made with NASA and DOE funding without having to request a determination of rights.

Bayh-Dole changed virtually nothing for universities. Bayh-Dole was not ground breaking. It was, however, bi-partisan.  That part the AUTM CEO gets right. And universities did change their technology transfer practices following Bayh-Dole, but it was not to comply with Bayh-Dole–it was something else entirely, but ascribed to a misrepresentation of Bayh-Dole.

Now, more fake history:

So, what did the Bayh-Dole Act actually accomplish? For the first time, the Bayh-Dole Act allowed public sector research institutions, like universities or research hospitals, to retain the rights to federally funded inventions to commercialize them on their own. And that seems like a really small change but it had a profound effect on innovation in this country.

We have seen that the IPA program, which ran from 1953 to 1978, permitted “public sector research institutions” to secure rights to inventions made in projects receiving federal support and keep those rights. Pretty much any university receiving significant NIH or NSF funding participated. Bayh-Dole was not “the first time.” Bayh-Dole was loosely based on the IPA program. Fake.

Further, the AUTM CEO is cleverly wrong with the use of “the”:

to retain the rights to federally funded inventions

Bayh-Dole permits a contractor to “retain” title to an invention made in a research or development project receiving federal funds–but only after a contractor has already obtained that title. Bayh-Dole does not “allow” a contractor to retain “the” rights to federally funded inventions. Bayh-Dole allows a contractor to retain the rights that the contractor has already otherwise obtained. That is a much more restricted scope. The AUTM CEO misrepresents Bayh-Dole at its material core.

Piling on the fake history:

Prior to Bayh-Dole, any federal funded inventions were owned by the government . . .

Utter nonsense. Inventions were owned by inventors, as always, except in special cases defined by statute–for atomic/nuclear energy and weapons, for space technologies, and the like, where there simply wasn’t a “market” for private licensing of patents and there was no purpose in disrupting contractor bidding for federal work with patent monopolies held in private hands. If the federal government was to own other than as required by statute, it had to contract for inventions as deliverables.

Prior to Bayh-Dole, the federal government routinely allowed contractors to own inventions made in projects supported with federal funds. Following the Kennedy (and later, Nixon) patent policies, federal agencies could allow contractors to own inventions made with federal support when the contractor had technical capability and an established non-governmental market position. Thus, contractors for the Department of Defense routinely had the opportunity to own inventions, if they wanted to. For incapable contractors without any market position–universities, say–there was still a chance for the contractor to own, provided it could make a case in the public interest. Except, however, the NIH (joined later by the NSF) revived the Institutional Patent Agreement program for nonprofits under which the public interest was arbitrarily defined as any federally supported invention that an IPA program nonprofit wanted to file a patent application on, the nonprofit was required to take assignment of the invention and seek to license it.

So the AUTM CEO here spouts what technically can be called bullshit–statements made without regard for the truth. Past federal government research policy did not change federal patent law. Inventors owned. And past federal government research policy did not arbitrarily claim ownership of inventions. Federal agencies had discretion–and used that discretion. Fake history.

. . . and the government was responsible for the commercialization of that invention, generally independent of the inventing institution and the inventors themselves.

The “inventing institution” is bad-ass nonsense. Federal research contracting takes place in the form of extramural research–conducted “outside the walls” of the university, led by faculty investigators that have to request a university release from their “official duties” to do the federally funded work. The “inventing institution” is rhetorical conversion of faculty inventor property into institutional property, with a clever use of an adjective. Federal grants, moreover, are subventions–they are grants-in-aid to the faculty investigators. The money is provided to their institution, which provides logistics support and facilities on behalf of those projects, and for which the institution is compensated (the “indirect” costs, or F&A). The institution–paid for its role–is to provide support. The federal money is not a gift to the university, which then decides to fund some project as if it commissioned that project. The federal money is federal money kept in a university account to be used by the faculty investigator, freed from university duties.

To imply that somehow the federal money became the university’s money, that the university was paid the full amount of the grant and not just the indirect costs is simply an administrative lie. 

As for the government’s purpose in funding university research–it was not, generally, the “commercialization” of inventions. The point of funding university research–this is Science the Endless Frontier–was to expand the frontiers of science, to train a new generation of research workers, to create the conditions under which findings in one area might find their application in other areas. Commercialization is way downstream, as an effect of policy, not a purpose. AUTM’s view of universities is to interpose themselves and disrupt the effect of policy, to prevent research findings from being immediately available for use by anyone capable of using them. AUTM has almost successfully made university research irrelevant to industry-based research. Where industry is ahead of universities, the university inventions are obsolete on arrival. Where industry is behind universities, it often has time to take a different direction and avoid university patents, or wait out the university patents (20 years is not all that long in big ticket technology development timelines).

The sweet spot for AUTM-class patenting is to patent just in front of an industry roadmap, where companies cannot readily change direction. That is, AUTM’s patent model, without saying so much, is to be the clever patent troll–but offering an exclusive license to a favored company before setting up to sue everyone. That’s the essence of the AUTM-advocated operating model. Perhaps that’s why the AUTM CEO has to repeatedly take “public service” onto the end of purpose statements, as if an afterthought that sounds good.

In this way, we might see that there’s no compelling reason for an “inventor’s institution” to be involved in any way in company development of a research invention, whether for the company’s own use or to create a commercial product or to hold the patent rights as a lure to be acquired by another company. If we want monopoly patenting, then inventors could work with *anyone*. The best patent agent might be national, might be based where companies that would be interested are already based, might be a standard organization that incorporates the invention into a standard. For most university-hosted research, the university that hosts the research is almost always the worst possible manager of patents.

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