Nine Points to Consider (with regard to AUTM’s licensing survey), 8-9

We are considering nine points with regard to AUTM’s annual licensing survey. We have got through seven points–not validated and with estimates, duplicate reporting, conflating technology and invention, activity measures giving the illusion of a process at work, no reporting of federally funded outcomes, silent on Bayh-Dole specific objectives, misleading on the key questions. Now for two more points, both requiring a bit more discussion so you can see how clever AUTM has been in institutionalizing its practices as proxies for technology transfer and public benefit. Keep in mind that “technology transfer” originally meant the transfer of inventions from a university campus to Research Corporation or another external agent for management. That’s what a “technology transfer office” was designed to do. The idea that a research invention (or anything else) might be “transfered” to anyone else, or to industry, or to a venture speculator–that’s a later overlay–as is the idea that a university engages in patenting and licensing rather than identification, referral, and perhaps assignment.

That said, consider these two further points.

8. As a matter of public policy, AUTM’s focus on patents and licensing is misplaced. Well, yes it is a “licensing” survey–and one pretty much must have an ownership position in order to license–but that’s a big part of the problem. If one looks at AUTM’s survey, one would think that technology transfer means obtaining patents so that one may attempt to license for financial return. No doubt AUTM intends this thought, but licensing is only marginally related to technology transfer. The foundation of technology transfer is that others come to use what another knows how to use. That is, a technology is transfered when it is taught. If others independently learn how to practice the same technology, that’s not technology transfer–it’s independent discovery, or recognition, or development. Transfer matters, then, only in the case that someone cannot readily discover or create the same technology at need but must rather rely on being taught the technology. Otherwise, obviously, taking an ownership position is intended to prevent independent development–not to transfer the technology. You see? In any area in which any reasonable effort will produce the expected invention, ownership of a patent right defeats common development.

As for the emphasis on licensing, then, if there’s common development and one beats others to a patent and then excludes all others, or all others but for one favorite company, then one disrupts common development. One might say, one has defected on common development rather than contributed to it–even if one has previously benefited from that same common development–publishing, sharing of data, collaboration, conversations. In such a setting, exclusive licensing amounts to disruption of the common good.

Consider, too, the failure of the AUTM survey to distinguish exclusive license from assignment. An exclusive license grants an exclusive right in some portion of the rights to an invention covered by a patent–such as the exclusive right to sell an invention. An assignment, by contrast, conveys all substantial rights in an invention–the exclusive rights to make, to use, and to sell the invention. An assignment may be made by assigning title to an invention (i.e., ownership of the right to patent or not) or by granting an exclusive license to all substantial rights in an invention. Either assignment or license may be involved in the “transfer” of a “technology.” The difference matters for Bayh-Dole, which requires assignees of nonprofit subject inventions to comply with the nonprofit patent rights clause provisions (see 35 USC 202(c)(7)(A))–including dedicating all income with respect to a subject invention to specified public purposes. An assignment of a subject invention not only transfers the technology but also expands the number of organizations that are constrained to act in the public interest and not to pursue their own profit.

AUTM’s definition of licenses worth counting does not include those that involve a payment less than $1,000. Thus, royalty-free licenses are not be counted, even though a royalty-free license may be the most effective way to transfer a technology. AUTM even advises universities that they don’t have to count non-exclusive licenses of $1,000 or more if they think that doing so will “skew” the data. One wonders exactly what AUTM thinks the data are, or what skewing means. Clearly, however, the issue involved is not the number of paying licenses granted, but the number of companies that gain access to any given invention. If one is resolved to count these companies, then one has to have some means of determining access–download, license, request, registration. Otherwise–and this drives to the heart of the matter–the only thing that counts is that one or more others come to use what has been invented as a consequence of some action by the inventor or those affiliated with the inventor. Otherwise, it’s independent development of something so near the surface that most anyone could do it, and it’s not technology transfer at all, and licensing (other than fair, reasonable, non-discriminatory non-exclusive licensing) would serve only to disrupt common development.

If one wanted an insight into the effectiveness of a given patent administration program, one would look first to the number of inventions patented, and ask how many of these had been licensed at all. That would be a measure of the interest in a given invention relative to the cost to acquire the license. If an invention has no interest regardless of the cost to acquire, then one has to wonder after the decision to acquire a patent. If an invention has interest, but not at the cost a university creates for it–an upfront fee, or an audit-enabled royalty on sales or use–or the cost of the patenting or even the bother of negotiating a license–then it is the program’s apparatus itself that stands in the way of transfer. We might state a general rule, then, that to transfer technology in the public interest means that the cost of the transfer should not figure in establishing terms for an effective transfer. A university ought to be ready to subsidize the cost of any transfer, especially on a non-exclusive basis, if it is acting in the public interest and not its own interest. An effective program of transfer would look at whether each invention under management indeed has been “transfered” and for each, the method by which the transfer was brought about, and the speed with which transferees were identified and received the information, instruction, and materials necessary to practice the invention.

If one wanted to consider the effectiveness of the transfer program overall, one would look to the use that transferees made of the invention. If no one uses the transfered invention, then the activity of transfer was a flurry, but not of much consequence. A transferee might use a transferred invention to ascertain that it does not work so well, say, and that might be of some value–saving a company money that it would have spent doing its own research to come to the same conclusion–but overall, the impact of the transfer is nil. Similarly, if the only use of a transfered invention is to speculate on the future value of holding a license to the transfered invention, then one is running a pyramid scheme and preferring to license first to people willing to speculate based on an artificial scarcity rather than seeking out those who would have a desire to use the invention. On the other hand, if a transfer program placed an invention in the hands of many companies, most of which were using a given invention, then we might consider that transfer program valuable–even if it made no money from licensing. Typically, if a program provides a service of value to an industry or to the public, there are many opportunities for that program to receive support it needs–through donations, through subscription-based services (a newsletter, workshops), sponsored research (consortia), consulting and other services, publishing, sales (the technology is free, but you might want to buy our kit).

Thus, counting $1,000 or more licenses pretty much entirely misses the point of technology transfer or the actual use of transfered inventions. It’s not a subtle point once one is clear of AUTM’s fantasy land approach to the metrics of technology transfer.

9. AUTM’s survey effaces the public purposes for which research at university is undertaken. If one looked only at AUTM’s survey metrics, one would think that university research is undertaken to subsidize commercial interests, and only (primarily, especially, most importantly) through profit-seeking activities might the public come to benefit from university research–and by implication, from federal support for faculty-proposed university-based research. This idea in any of its variations is mealy mouthed. University faculty rarely propose research for extramural funding because they hope to invent something to be commercialized through a company license. Any number of other reasons control–the desire to discover, to advance the frontiers of science, the need to find funding for one’s graduate students, to advance one’s career, envy of others gaining fame, a hope to help others, participation in a collective effort to improve or challenge or change professional practices or our conditions of living, to get rich.

Federal and foundation funding argues that some faculty motivations are worthy and others are not. The role of the university, so this thinking goes, is to allow funding for those personal motivations that serve the public interest and to screen out those motivations that do not, such as those that are characterized as conflicts of interest or commitment. Thus, according to this thinking, faculty doing research only to get rich is not so good, but doing research to expand the frontiers of science is most excellent. University licensing programs based on compulsory ownership policies reverse this thinking. Faculty should desire to get rich, and expanding the frontiers of science points to the limited conception of how society must benefit through the investment of private money to make commercial products. These programs also pervert the idea of conflict of interest–universities claim that making something freely available is a conflict of interest because the university might make money by putting that free something behind a licensing paywall, and the free release denies the university what it by policy right ought to have. Yes, this argument has been found in the wild, in actual practice. Thus, conflict of interest comes to be characterized not as a conflict between a private interest that harms a public purpose but rather as any interest that defeats a university’s effort to profit from taking ownership positions in faculty-led work.

The patent system is blind to the range of personal research motivations–the inventor, by federal law, decides how to exploit exclusive rights in an invention. The federal government’s policies on inventions made in federally supported work addressed the range of motivations in two ways. First, for some research work–especially military work done by company contractors–the federal government allowed inventors to do whatever they wanted, so long as the federal government received a royalty-free license to practice any patented invention made in the federally funded work. Second, for other research work–especially work done in areas such as health or atomic energy or water desalination or by nonprofits lacking any commercial position or capability–the federal government reserved the right to decide what was in the public interest.

Federal policy since President Kennedy’s patent policy of 1963 has recognized three alternatives: 1) for some areas of research, such as public health or where a federal agency aims to create a technology ready for public use, the federal government should own patentable inventions for the purpose of making them freely available to U.S. citizens and U.S. companies; 2) otherwise, for any given proposed contract for research, a federal agency may decide to permit contractors to own and exploit inventions; 3) and on a case-by-case basis, in any research where the federal government by statute or regulation is to take ownership of patentable inventions, a federal agency may release its claim on any specific invention that has been reported when doing so best serves the public interest.

In each of these circumstances, the federal government acted as filter not only on inventor motivations but also on the motivations and practices of organizations–companies and universities, especially–that may claim ownership of research inventions. The federal government’s role in considering first the public interest and not using the patent system to make money (directly or through a non-governmental agent) or to play favorites among citizens (a form of injustice, to be sure) acted as a filter on the uses that the patent system might have when federal support for the research was justified because the research results were of public interest.

The fake version of Bayh-Dole that circulates argues that the great virtue of the law was that it removed the federal filter on public purposes for specific areas of research (health, especially), on contracts, and on inventions. Bayh-Dole did this not only for research contractors but also for federal agencies themselves. Federal agencies now can seek profits from the licensing of inventions–a classic case of government abuse of patent franchises that the U.S. constitution sought to curtail and federal agencies can now play favorites among companies, rewarding this company and disenfranchising all its competitors. Doing this, so the argument goes, is in the public interest. The federal government may fund research with the justification that it seeks to expand scientific frontiers or address public health or provide tools for researchers or help industry, but Bayh-Dole (at least the fake, non-compliant version) argues that these justifications are to be set aside if a contractor comes to own any patentable invention made in the work supported by federal funds. Those justifications are just bluster to persuade the public to allow such huge flows of money–the only purpose that matters is what the contractor decides is in the contractor’s best interest. The contractor’s private purpose becomes the public purpose. Whatever government filter there is ends up being just for show and does not operate.

AUTM’s licensing survey eliminates any consideration of the public purpose served by university claims to ownership of inventions made in faculty-led research. AUTM plays on the “what you see is all there is” cognitive pattern recognition system. If you didn’t know anything about university technology transfer except what AUTM presented to you, you would reason from shadows and illusions. Perhaps you would be sophisticated about the shadows and illusions, but they would be all you had to work with. AUTM’s licensing survey, then, is built to serve an ideology of institutional control of inventions for the purpose of conveying the inventions by patent license to favorite companies, and taking enough share of the value of the license transactions to perpetuate the ideology–the AUTM-sanctioned best practice survives not based on outcomes of transfer such as beneficial public use but based instead on the outcomes of licensing for payment, regardless of whether most inventions are ever licensed, or whether those that are licensed are ever used or developed into commercial products, or whether the very few–1 in 1,000–that are developed into meaningful commercial products are made available to the public on reasonable terms (as distinct from terms supported by patent monopolies). There is absolutely no AUTM accounting for the inventions unlicensed, undeveloped, unused, held behind patent paywalls hoping for a paying exclusive licensee that never shows up, caught up in bitter battles between faculty and licensing administrators over ownership, control, and approach to dissemination. AUTM doesn’t ask survey respondants to report how many patented inventions have gone nowhere. A university licensing operation can appear to be financially successful with one lucrative patent license every two decades, and can use AUTM’s clever survey to make it appear that many patents and many licenses are involved in that financial success, when most of the program is grossly ineffective if not outright damaging.


The AUTM licensing survey is a form of political rhetoric, a bluster, a bluff. As politics, only fools would take it to be true. The survey is set up to serve the monopoly meme while making it appear that there is widespread licensing of most of the portfolio of inventions that each university claims to own. The idea is that the monopoly meme is in the public’s best interest but the public (including faculty, and inventors, and legislators) is too stupid to agree and so must be misled for its own good. To do this, AUTM conflates patentable inventions and “technology”; must hide assignment in exclusive licensing and ignore non-exclusive, royalty-free licensing; must confuse federally funded inventions with all other inventions; and must ignore the results of licensing, replacing any tracking of those results with nice-sounding aspirations about benefits and presentations in which an abstract case (each invention is licensed for public benefit through the development of commercial products) is made to appear to be factual when that abstract case rarely operates.

AUTM does not report, for each patented invention, whether and when that invention has been so transfered that the transferee uses the invention and a public benefit results. It would be easy to do so. List each invention. Next to each, list the number of companies that have obtained access to the invention. List the date of first commercial sale or use, if there is one. Next to each date of first commercial sale or use, identify the name of each product incorporating the invention or made through the use of the invention.

One does not have to reveal the companies or the terms of the licenses or the money received. One does not have to track the jobs created or destroyed. Just the basic facts that follow invention to public benefit via a university patent licensing program. If one wants to make a case for Bayh-Dole, that’s easy because each invention that’s patented will carry a federal funding legend and AUTM can just as readily mark each such invention in its list. Then we could all see at a glance the things that matter–what percentage of inventions a university has patented have been licensed? of those that have been licensed, what percentage report a date of first commercial sale or use? for those, what are the names of the products (since they should carry a patent marking, it’s not proprietary information)?

AUTM’s survey would have us believe that the motivation to conduct research in the public interest or to fund research in the public interest is subordinate to the exploitation of a patent position for any private interest.

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