University monopoly-monopoly IP practices create betting parlors

Posted on March 8, 2016 by Gerald Barnett

Examination of a university intellectual property policy apparatus, such as that of the University of Michigan, is instructive. Rarely does one get the chance to do a close reading of such documents outside of a dispute, and if there’s a dispute, then vested interests are paid to highlight some parts of policy and suppress others. History rarely comes into it. Nor does a knowledge of intellectual property practice, nor does the social realities of how innovation comes about and what university bureaucrats can do to facilitate innovation. All these matters are too far afield to be considered, even if they are vital to the question of why a university should seek at all to have everything of some value done by its faculty pass through the hands of bureaucrats as a pre-condition to public benefit.

A comprehensive, compulsory intellectual property policy typically exists to create a betting parlor for second- and third-rate speculators. In old-fashioned terms, the policy intends to forestall a market by preventing the work of faculty from reaching market. (If the university intended to sell into the same market that faculty work was already reaching, then they would be regrating the market as well. It’s good to have the old terms available, so when old offenses arise anew, one can put a name to them.)

The essential action of a comprehensive, compulsory asset policy is to secure monopoly ownership of faculty output, both intangible and tangible, so that university officials can sell off (i.e., exclusively license) assets to a coterie of investors looking for a speculative situation in which they can use the reputation of the university as cover for reselling their interest at a higher price to less clever investors or to create the appearance of potential disruption in a market that a major player in that market acquires the asset for the purpose of removing the appearance of a competitive threat. A bureaucrat’s thumb in every possible innovation pie. Continue reading →

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The University of Michigan Mess of an Old Patent Policy, Part IV

Posted on March 7, 2016 by Gerald Barnett

In a series of three articles (here, here, and here), I showed how the University of Michigan intellectual property policy apparatus managed–or didn’t manage–patents and copyrights. One problem is Regents Bylaw 3.10. The Bylaw sets out conditions under which it is appropriate for the university to take ownership of patents and copyrights. In doing so, it brings forward the language of the 1944 patent policy, but then conflates two separate conditions, adds copyright and enigmatic “property rights” in software, and follows with a string of conditions, exceptions, and worries. The basic premise of ownership described by Bylaw 3.10 is this: “When the university specially supports an activity that either needs or produces patents or copyrights or software, the university should own those patents and copyrights and software and enjoy whatever financial benefit might come from such ownership.”

The burden of 3.10 is to give scope to what it means to support an activity. 3.10 focuses on money “administered” by the university. That is, money in university accounts. The worry of the Bylaw is that money from donors or from the state or from research sponsors or from program income might be treated differently. So source of funds is disclaimed. A second worry is that the money could go to support an indirect expense rather than a direct expense. A laboratory could be outfitted with new equipment, for instance. So Bylaw 3.10 calls out indirect support to make clear support is not limited to direct funds.

The distinction between direct and indirect research funding is well established in sponsored research administration. Use of the language here underscores the idea that the purpose of the policy is to deal with those situations in which the university itself acts as the research sponsor. This has been a concern in university patent policies from the earliest efforts at policy drafting. If an external sponsor of research can negotiate for rights in patents and copyrights arising in a university research project, why should not the university itself be also able to do that, negotiating with itself, so to speak–or at least making demands of its research personnel before releasing funds or other resources to support their work? Continue reading →

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The University of Michigan’s Mess of a Copyright Policy, Part III

Posted on March 6, 2016 by Gerald Barnett

Part I of this series looked at the University of Michigan 1944 patent policy and its transmogrified afterlife as Regents Bylaw 3.10, and the strange Supplemental Appointment Information invention present assignment document that claims to derive from Bylaw 3.10.

Part II moved to the Technology Transfer Policy, current from 2009, and worked through key paragraphs on purpose and ownership, showing that the morass of language reduces to the core of the 1944 patent policy, with all the bombast text–nigh unto unreadable–doing little more than adding ambiguity and asserting new powers for the Office of the Vice President for Research, expanding the scope of university claims on intellectual property (and non-intellectual property), and further asserting that the Office of the Vice President for Research does not have to follow its own policy. Nor does any other unit of the university that “in good faith” contracts with anyone for any other terms. Thus, HR can “in good faith” require a present assignment of invention rights from incoming faculty and staff, and ignore the Technology Transfer Policy.

The Technology Transfer Policy asserts that the fundamental claim of ownership, set forth in the first sentence of the policy’s discussion of ownership and derived from Bylaw 3.10, is expressly stated to be subordinate to anything else in the rest of the policy, and to any other policy of the university, including the copyright policy. The Technology Transfer Policy subordinates Bylaw 3.10 to the whims of administrators. Cheeky.

In this Part III, we will take up the University of Michigan Copyright Policy. Continue reading →

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The University of Michigan’s Mess of a Technology Transfer Policy, Part II

Posted on March 5, 2016 by Gerald Barnett

In Part I of this series, we looked at the University of Michigan patent policy from 1944, which was still in effect in 1962, its unsettled relationship to the Board of Regents Bylaw 3.10, and a present assignment form last revised in 2014, which makes a mess of Bylaw 3.10 even while citing it as the authority for its requirements. We noted that while a senior university official was happy to inform the Regents in 1985 that the university owned all faculty work, a court in California dealing with the University of California patent policy made it clear that a “true intention” that’s not expressed is “irrelevant” in the interpretation of a contract that incorporates the patent policy.

In this Part II, we will add the complications of the University of Michigan Technology Transfer Policy, which also claims its authority from Bylaw 3.10. There are multiple themes to explore. One is the layers of text, one piled on another, trying to do a single job. Greater bureaucracy creates inertia to change and buries change in ambiguity. This serves bureaucracies that control interpretation, but it does not provide the clarity and stability that written instruments claim will result from their existence. A second theme continues to be an exploration of how a policy document that binds an institution to patterns of dealing can become a contract that forces individuals to give up personal property to the state of Michigan as a condition of providing services desired by the state of Michigan. Continue reading →

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Five Motivators of University Patent Policy Madness

Posted on March 3, 2016 by Gerald Barnett

University patent policies are not what they seem, and are shaped by the exploitation of ideas that have nothing to do with inventiveness, creativity, entrepreneurship, public use, commercial development, investment, economic vitality, public welfare, or even university mission. All these things are nice, feel nice, but are not the motivations for the changes in university patent law that have led to the bureaucratic, managerial, compulsory, expensive, complicated, embittering, bullshitting, non-compliant, and largely ineffective version of “technology transfer” that most university officials have adopted. Technology transfer professionals meet at AUTM conferences (mostly at university expense) to reassure themselves that everyone else is talking the same nonsense, and so are refreshed for another year of more of the same.

Let’s look at five forces that shape university patent policies. [And, special bonus, five more!]

1. Compliance. Faculty are told that to comply with federal law, with Bayh-Dole, universities must modify their patent policies to ensure that inventors assign patents to the university. This is nonsense. Bayh-Dole is implemented through patent clauses in federal funding agreements. The requirements to comply with those patent clauses do not assume either a patent policy or any obligation by inventors to assign inventions to the university that hosts their research. The compliance talk is merely there to compel changes in the patent policy that patent administrators want. Continue reading →

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The rise of “employee” as a means to pervert university IP policy

Posted on March 3, 2016 by Gerald Barnett

We live in a society dominated by the public stock corporation and the manner in which it engages work. It has only been since the late 19th century that the public stock corporation has come to have this role, though corporations have been around much longer. The big boost came with the transcontinental railroad corporations, luring European investors and setting up scams to route money from the railroad companies to the construction and development companies that did the work to build the railroads and their infrastructure. Conveniently, these construction and development companies were owned by the same folks who sold the shares in the railroad companies, and these folks saw to it that the construction and development companies were paid well for their services. So sad that the railroad companies then failed and European investors lost their shirts.

With the corporation came an innovation in the idea of the relationship between the corporation (which was given the status of a fictional person–a big deal under the 14th Amendment to the US Constitution) and its workers. This was the concept of the “employee.” We had the noun “employment” and the verb “employ,” but “employee” is new and distinctive to the corporation. Look at this ngram from the Google nGram Viewer:

ngram employee

While “servant” has had a long run (and decline), and “worker” emerged with the industrial revolution–something Marx worried over–“employee” has arisen much later, and is a creature mostly of the last 100 years. Continue reading →

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The University of Michigan’s Mess of a Present Assignment, Part I

Posted on March 2, 2016 by Gerald Barnett

In reviewing university IP policies, I came upon the following Form HR36100 at the University of Michigan titled “Supplemental Appointment Information.” After a section in which the appointee provides name and social security number, we have this:

umich-hr36100

It is apparent that university has implemented the “present assignment” intervention that has circulated in the tech transfer community by folks who don’t understand the Bayh-Dole Act and refuse to accept the Supreme Court decision in Stanford v Roche. Thus, we have “hereby assign” language upfront, before any invention has ever been made. The clever idea is that when any invention is made, it automatically becomes owned by the university by operation of this assignment document. The problem is not how the assignment is made, however, my clever children; rather, the problem is how the assignment is scoped–the definitions that operate, the inventions that come within that scope, and a reasonable interpretation of the assignment that has been made.

There is plenty not to like in how this assignment document is framed. Continue reading →

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Four Approaches to University Patent Policies

Posted on March 1, 2016 by Gerald Barnett

Policy

For the last couple of weeks I have been considering the nature of university patent policies. I have looked at a number of university patent policies and written a number of drafts. Things get complicated quickly, but there appears to be a simple set of points that ought to be clear, yet in practice aren’t clear at all. Here is what ought to be the case, put simply:

A university policy establishes principles upon which a university acts. A policy is a set of statements that delegate authority, authorize the use of resources, establish bodies and standing, and set out procedures to be followed in making and appealing decisions. These statements serve to bind the university to formalized purposes and courses of action that those dealing with the university may rely upon.

So far, so good. University policies cover all sorts of areas–faculty appointments, purchasing, risk management, conduct of research, health benefits, conflict of interest, donations, academic programs, student conduct, employment, and patents. There is little in university policy documents to indicate that one policy is special and another policy to be happily ignored. Policy statements are set up to have comparable authority within the organization. Other administrative statements, with lesser standing, are segregated out to procedure manuals, to guides and information pieces. A statement of procedure describes how some action should be done, but it is the policy that requires that the procedure be done. In the absence of policy–or some executive order–the statement of procedure is a memory device, a matter of organizational convenience, helpful in its way, but not the only way to do things. Continue reading →

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Do what you have promised to do: Further consequences of (f)(2)

Posted on February 18, 2016 by Gerald Barnett

[Updated with a discussion of NIST’s May 2018 rule change]

The (f)(2) requirement in the standard patent rights clause authorized by the Bayh-Dole Act is a requirement for the host university to delegate, to flow down, to subcontract a portion of the patent rights clause to technical employees involved in a federal funding agreement.

This delegation is essential to connect the patent rights clause with each inventor. The delegation makes each inventor a party to the funding agreement for a narrow but important set of tasks that only an inventor can perform, initially. That is, once the (f)(2) agreement is in place, “contractor” in the standard patent rights clause means “host university and each of its technical employees working on a federally funded project.” It’s wrong to read “contractor” to mean only the university. “Contractor” is necessarily–by operation of the standard patent rights clause and the definition of “funding agreement,”–a plural with a singular form.  Continue reading →

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The First Principle of Bayh-Dole

Posted on February 17, 2016 by Gerald Barnett

Here is the First Principle of Bayh-Dole:

A federal agency may not require the assignment to the federal government of an invention made with federal support at a nonprofit or small business if an inventor or the inventor’s assignee reports the invention, elects to retain title to the invention, and files a patent application. 

There are various qualifications to this principle.

A federal agency may require the assignment of an invention made with federal support if there are exceptional circumstances (and other similar conditions).

A federal agency may require the assignment of an invention made with federal support if an assignee fails timely to report the invention to the agency, fails to elect to retain title to the invention, fails to file a patent application or otherwise fails to prosecute the patent application or maintain the patent.

A federal agency may require an assignee to grant licenses to an invention made with federal support if the assignee fails timely to achieve practical application of the invention so that the benefits of the invention are available to the public at a reasonable cost.

The invention must be a subject invention to be governed by the patent rights clause–that is, it must be owned by a contractor, arise in the performance of work in a federal funding agreement, and be within the scope of the planned and committed activities of that agreement or the work involving the invention must diminish or distract from those activities.

More importantly, there is no other secret standing presumption under which a federal agency can require assignment of inventions to the federal government. Bayh-Dole takes precedence over all other laws (but for Stevenson-Wydler). The only way specified by Bayh-Dole for a federal agency to have the authority to require assignment of an invention made in work supported at least in part by the federal government is for the inventor or inventor’s assignee to fail to report and elect to retain ownership of an invention, or fail to file a patent application and maintain the patent.

Let’s look at the situation graphically: Continue reading →

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