Let’s start with the Dubilier decision. In 1933, the U.S. Supreme Court determined that two federal employees, working within the area of expertise for which they were employed, using the employer’s time and resources, still owned the inventions they made in that work. The federal government did not obtain ownership of the inventions as a consequence of employing these two workers, not even if they used the government’s resources and time while working on their invention. The government did not even have a right to obtain ownership. This decision has had lasting consequences. In a way, the present university IP policies are a debased sort of response to Dubilier.
In 2011, in Stanford v Roche, the Supreme Court reaffirmed the core tenets of Dubilier:
Our precedents confirm the general rule that rights in an invention belong to the inventor. See, e.g., Gayler v. Wilder, 10 How. 477, 493 (1851) (“the discoverer of a new and useful improvement is vested by law with an inchoate right to its exclusive use, which he may perfect and make absolute by proceeding in the manner which the law requires”); Solomons v. United States, 137 U. S. 342, 346 (1890) (“whatever invention [an inventor] may thus conceive and perfect is his individual property”); United States v. Dubilier Condenser Corp., 289 U. S. 178, 188 (1933) (an inventor owns “the product of [his] original thought”). The treatises are to the same effect. See, e.g., 8 Chisum on Patents §22.01, p. 22–2 (2011) (“The presumptive owner of the property right in a patentable invention is the single human inventor”).
Under the Dubilier reasoning, it is not somehow “fair” for an employer to own inventions made by employees. Whether the ownership claim is based on employment, or on use of resources, or use of employer’s time, or even if what’s invented is something that the employer wants. Another way: It is not fair. It is not equitable.
The courts have then carved out two concepts that follow from this reasoning. The first is that of a “shop right.” If an employee uses the employer’s time and resources, then the employer is entitled to a right to the invention for its purposes. It’s like a implied or compulsory license but it also seems to be a limitation on the right of the patent holder to exclude the employer’s practice of the invention.
One might think of it this way–if an employee uses the employer’s time and resources in inventing or developing that invention, then what’s fair is that the inventor compensate the employer for that time and use of resources. It’s not fair at all that inventor forfeit title to the employer. University lawyers writing IP policy universally reject this idea–reject the Supreme Court rulings on the matter, reject the reasoning that goes with it, and one might surmise, consider their opinions somehow above the law, and since they have gotten away with it, they might think they are then “right.” Looting is okay if everyone does it. Must take law school to learn this highly technical mode of reasoning.
But the court decisions on shop rights seem to go one step further. By suggesting an implied license, these decisions appear to displace the idea that what the inventor might owe the employer is compensation for time and resources used with the idea that the inventor owes the employer the right to practice the invention. It’s like, I mean it’s like the shop right becomes the compensation to the employer for the use of the employer’s time and resources. The employer does not have a claim to reimbursement as it might if the employee was just messing around with equipment and had not invented. I suppose we might ask if a shop right is a fair exchange for making an invention using the employer’s time and resources. Maybe it’s not in some cases. Maybe the invention is useless to the employer and the employee used a lot of time and resources. But then maybe the invention is crucial to the employer and the time and resources used were mere dust specks.
The core idea that controls remains that it is not fair, not equitable, for an employer to demand ownership of inventions as a consequence of employment, or use of the employer’s resources, or use of the employer’s time. The remedy is a shop right, not ownership of the invention. There it is. It is not how things generally operate, but that’s what should be the case. Worried about how “innovation” is faltering? Maybe start there rather than with putting up signs to mark “creative zones.”
The second concept developed by the courts is that of “equitable” title. As we have seen, in the general case, employment has nothing to do with the disposition of title to an invention. But there is a class of specific cases in which the employer hires an employee to invent, or to conduct experiments that might result in inventions. In such cases, so the reasoning goes, it is equitable that the employer acquire title to any inventions that arise. The courts construct an agreement–they operate as if the employee, in accepting work in which inventing for the employer is a condition of the job has entered into a contract to assign any inventions that arise to the employer. Notice that equitable title has nothing to do with the use of resources or time–it has to do with the express purpose of the employment. Whether the employee uses a lot of employer resources or none at all doesn’t much matter. If you agree to be employed to try to invent a better washing machine controller, it does not matter that you do all your work in your garage with your own stuff.
In this context, then, one can agree by contract to grant rights in any invention made to another. So an employer and inventor can make such an agreement. Or a contractor can make such an agreement with a funder of work. Crucial to an understanding of what inventions are involved has to do with the scope of the agreed upon claim to inventions. For employees, that scope has to do with what one is expressly hired to invent (equitable title). For employers, that scope has to do with what employees have invented using the employer’s time and resources (shop right). Otherwise, the scope is controlled by contract–what have the parties agreed to? You know–offer, acceptance, consideration. What makes a contract.
Thus, when USC obtained a contract from the U.S. Navy to work on part of the development of an improved helmet for naval aviators, and they then on the side worked on a different aspect of such an improved helmet using their “own” time and resources, the court found that the Navy still had a right to practice the inventions they made–essentially a government shop right. See Mine Safety Appliances. The scope of the project was an improved helmet, USC agreed to grant the government rights in inventions made for an improved helmet. Doesn’t matter whether USC makes the inventions with its own resources (essentially gifting these to furthering the government’s project) or with Navy resources.
You can see that the idea of one’s “own time” has a different meaning if one is hired to invent. There, “own time” is “time spent doing something other than inventing within the scope of the employer’s expectations when making the hire.” Same deal for “own resources.” If you are hired to invent, then it is just wrong to think that a good way to screw over the employer and keep inventions for oneself is to work after hours in your garage to make the inventions, or even more cleverly, to make a coarse invention for the employer and then design around it or improve it in inventive ways in the secret comfort of your garage. Put it another way: if a claim to inventions is based on “employer’s time and resources” then the inventions cannot be ones that one was hired to invent, and further–arguable at least–the inventions cannot be ones for which the employer obtains a shop right as compensation.
These, then, are a very curious class of inventions. Certainly an inventor and employer can contract so that the inventor promises to assign inventions to the employer, but to make that contract binding, it would appear that the employer must offer reasonable consideration to the inventor for the promise to assign. Again, offer, acceptance, consideration.
In the case of university IP policies, we find often the following line of reasoning:
as a condition of employment, even if no agreement is signed . . .
employee agrees to assign (and hereby assigns) inventions yet to be invented . . .
whether or not patentable . . .
to the university.
There’s no consideration. Or, employment itself is the consideration, or perhaps it is continued employment, since no university employee (as far as I know) has ever been fired for failing to invent. So maybe once one invents, then there’s a choice–keep the invention but get fired, or assign the invention to Moloch, er, I mean, the university. But this is a policy-created dilemma, since under Dubilier and the twin concepts of shop rights and equitable title, things would shake out in ways that courts have made “fair.”
Unlike Dubilier, typical university policy asserts that it is “fair” that the university own everything, not just what would be equitable under “equitable title” reasoning. There is no consideration for this university assertion of rights. And it is made to appear “fair.” One might almost think that the university claim is in contempt of court–certainly contemptuous of court. If one were looking for reasons that universities have such a terrible record of moving inventions made in research to any other use, this contemptuousness is a good place to start.