Patent Policies of Confidence, and Patent Policies of Fear

Posted on May 16, 2013 by Gerald Barnett

Vannevar Bush, writing in the introduction to Modern Arms and Free Men (1949):

This is not a history of what science did in the war; that has already been written.  It is an attempt to explore its meaning in the relations between man and man, as individuals and in the organizations they create.  Since the beginning of organizations there have been two controlling motivations that have held them together.  One is fear, utilized in the elaboration of systems of discipline and taboos.  The other is the confidence of one man in another, confidence in his integrity, confidence that he is governed by a moral code transcending expediency.  Most governing organizations have involved a mixture of these motivations; they always will as long as the nature of man remains unaltered, but one may be controlling and the other subsidiary, incidental, or extraneous.  There has been a general feeling that the second is the higher motivation, but that it is inherently weaker in dealing with the harsh and complex conditions of existence. (7)

Bush then goes on to discuss the confrontation between democracies and totalitarian regimes in the time following the end of the second world  war.  The challenge for democracies is to address the expediencies of existence “if the world is to be more than a mere police state.”  As Bush puts it, “The philosophy men live by determines the form in which their governments will be molded” (9).  This is true not only for nation states, but also for organizations. Continue reading →

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University startups, exits, and candor

Posted on May 11, 2013 by Gerald Barnett

The most recent Pitchbook has some interesting information on private equity exits.  If university administrators have been sold on the idea that there’s fast cash in startup company equity, there are also data to dampen administrative spirits.

The Pitchbook identifies three primary forms of exit: acquisition, buyout, and IPO. For investment success, this is the real meat of the matter.

*According to Pitchbook data, the holding period before exit via acquisition is now about 4 years, and 6 to 7 years for IPO or buyout. These periods are similar to estimates for the time it takes from license to the time royalties from sales might be seen.

*More than 90% of the exits for companies raising less than $25m is by acquisition. If folks are raising small amounts of investment, then if there’s going to be an exit, they will be acquired. What’s interesting, then, for university claims to economic development and innovation, is what happens to the company, and its products, when it is acquired. The company may be shut down or moved, or its products pulled in favor of those of the acquirer. In times of fever growth, I’ve seen big companies buy small ones just to expedite the acquisition of engineers–get them 20 or 30 at a time rather than having to hire them one by one. One is essentially buying the work product of someone else’s HR department as the primary asset of value. Continue reading →

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The long, slow 180 degree turn

Posted on May 10, 2013 by Gerald Barnett

I have spent the past few weeks working through 130 patent policies at US universities, circa 1962.  I have compiled a set of notes that runs to 100 pages, and another set of notes that are notes on the notes–2nd derivative stuff, you might say.  In a myth of progress, the past is the land of errors and lack of understanding and misdirections, to be replaced in the course of time by enlightenment, leadership, efficiency, and my god things that really work in modern, recognizable ways, as we have today, at the peak of all things progressive.   In other myths, the myth of progress is rather silly, if not dull, because it is little more than a big self-pat on the back to whomever happens to be riding the gravy pig at the moment, thinking that whatever happens to look powerful must be the best of all things.

Just because there is a progress myth in play does not mean, of course, there is not also progress.  It’s just healthy to separate myth and reality, recognizing that the representation of either is going to end up as a narrative, and have narrative artifacts that go along with it.  The great mystery of the way things are is that there is no primitive narrative.  There is not one true statement to which all artifacts, facts, accounts of events, and reasoning will lead, once everything is sorted out.

This idea is equivalent to what a senior federal mediator told us once, that it simply was not the case that if one side in a dispute just understood everything proper-like, then they would agree with the other side’s position.  Continue reading →

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400 reasons to consider alternatives to the now standard model

Posted on May 9, 2013 by Gerald Barnett

The National Science Foundation has kept track of university expenditures on research in a detailed way since 1972.  The figures for 2011 include expenditures of $65b across all fields, from all sources of funding, with 912 universities reporting.  Nearly $35b of that was for work in the life sciences, $9.3b in engineering, and $4.6b in physical sciences.  By contrast, the humanities and arts, the source of the design, imagination, and creativity that fuels society, though not via laboratory research, but rather through performance, got a bit over $0.3b.  I guess that reflects the idea that somehow discovery is the work of the white coats and not, say, composers working with new audio formats or writers imagining possible futures, say along the lines of Neal Stephenson’s call for a new kind of science fiction.

All that aside, there is an oddity about the figures.  The federal government provides $40.7b of the total spent, and business only $3.1b.  Institution funds are listed as the source for $12.4b in funding–four times industry support.  The odd question is:  where are the universities getting the $12.4b to spend on research?  That’s not the indirect costs in the federal and industry awards–so where is this money coming from?  Donations?

Thirty universities account for $26b of the $65b in expenditures–40% of all university research.  97 universities have $200m or more in research expenditures.  Continue reading →

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What the university doing research was built for

Posted on May 6, 2013 by Gerald Barnett

[update 9/2/2016. I’ve rebuilt the middle section of this article to do a better job with the numbers. I built a little model in Excel and have included snapshots from it in the text. Once the model is in better shape–I want to show more realistic scaling of costs as the volume of inventions, patents, and licenses goes up as well as account for expiration of patents and licenses–I will post it in a file that folks can download and mess with.–Gerald]

Let’s imagine the most minimal university patent licensing office.  Let’s say, just one licensing person, with no assistance.  A reasonable, utterly low-ball salary for this person might be $70k, with benefits at 25% or so, making the total cost around $85k.  Throw in office expenses such as travel, communications, software, and the like, and call it $100k a year. This is about as cheap as one can make it.

Now there’s the problem of the patenting budget. One doesn’t have to have such a budget, of course. When I started in tech transfer, back in 1990 or so, folks were still using th’ auld way, which meant that one shopped inventions to industry under a cloak of confidentiality before making a decision whether to file a patent application. Industry, then, essentially chose what inventions ought to be patented. Once there was at least one industry partner willing to take a patent license, then an application would be filed, and proceeds from the license would pay the patenting costs.  When a licensing office got a big hit license, however, the practice changed, and some patent applications would be filed “speculatively”–meaning, without any licensee in hand ready to pay the cost of the patent application. This also meant something much more fundamental–that the patent was being obtained without anyone in the industry choosing it. Right there is a substantial change in practice. It is the difference between holding a pen and a pen knife. One is a minor opportunity, the other a minor threat.

In the administrative swarming that has taken place around university technology licensing, offices moved to adopt this speculative approach, even when they didn’t have a huge licensing stream, on the argument that this is what the leading offices were doing–and look at the huge revenues they were receiving as a result. Of course, it was all backwards, because the huge revenues came first, and practice changed to take advantage of the extra money. Those coming along later, starting their own licensing offices to get in on the gold rush, then emulated the changed practice, as if the changed practice was the reason for the big money. If these new entrants wanted to follow the actual model in place, they would wait to start their office after they got a big hit deal. Instead, by starting before that deal, they dig a deeper hole of unrecovered expenses, pushing back the break-even point by years and years. Continue reading →

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University patent policies then and now

Posted on April 28, 2013 by Gerald Barnett

Some patent policies in effect in 1962, with the date of most recent revision.

From the preamble to the New Mexico State University research and patent policy, 1960:

Discoveries and inventions which appear as a natural product of original work should be made available in the public interest under conditions that will promote their effective development and beneficial utilization, but the potential gain from royalties or other compensation should never be allowed to influence programs of scientific research nor should such expectations be allowed to regulate support of academic investigation.

Harvard, 1934:

No patents primarily concerned with therapeutics or public health may be taken out by any member of the University, except with the consent of the President and Fellows; nor will such patents be taken out by the University itself except for dedication to the public.  The President and Fellows will provide legal advice to any member of the University who desires steps to be taken to prevent the patenting by others of such discoveries or inventions.

Johns Hopkins University, 1948:

The ownership and administration of patents by the University is believed undesirable.

University of Chicago, 1954: Continue reading →

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The University Inventor’s Prayer

Posted on April 24, 2013 by Gerald Barnett

Psalm 23 includes the lines:

Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

Through some strange time warp, the “valley of death” has become a stock motif in explanations of university technology transfer practice. University patent administrators use the valley of death (leaving out the “shadow” bit, as perhaps too complicated for their audiences) motif to justify acquiring patents and dealing in exclusive licenses. In this schema, university patent administrators set themselves up as the benevolent deities shepherding university inventors through this evil valley, relieving their fears, and bringing them to accept and even to love both the protection and discipline they provide. Tech transfer officer as the Lord Shepherd. It is little wonder why the image is so popular. University inventors, however, sing a different song on the same theme. I’ll get to that.

There are plenty of depictions of this terrible place, the valley of death. Do a Google image search. Or use DuckDuckGo.  It’s just that I’m not sure that this evil place exists, or if it does, that it is relevant to a discussion of technology transfer, or that even then that it has the properties attributed to it. Mostly the valley of death is an artifact of badly chosen methods of managing inventions and associated intellectual property. While the valley of death is set out as a material problem in the operation of the Linear Model of research innovation, it appears mostly to be a consequence of how universities seek to make the horribly limited and suspect Linear Model “work.”

When a university takes ownership of an invention, and applies for a patent, it creates a triple barrier to access.  Continue reading →

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Administrative patent policy swarming

Posted on April 23, 2013 by Gerald Barnett

I have been intrigued by a story David Byrne tells in How Music Works.   Byrne needed three dancers as part of an ensemble, so they held an audition that had fifty dancers.  The choreographer had the dancers do an exercise with these rules:

1.  Improvise moving to the music and come up with an eight-count phrase.
2.  When you find a phrase you like, loop it.
3.  When you see someone else with a stronger phrase, copy it.
4.  When everyone is doing the same phrase the exercise is over.

Byrne then describes what happened:

It was like watching evolution on fast-forward, or an emergent lifeform coming into being.  At first the room was chaos, writhing bodies everywhere.  Then one could see that folks had chosen their phrases, and almost immediately one could see a pocket of dancers who had all adopted the same phrase.  The copying had begun already, albeit just in one area.  This pocket of copying began to expand, to go viral, while yet another one now emerged on the other side of the room.  One clump grew faster than the other, and within four minutes the whole room was filled with dancers moving in perfect unison.  Unbelievable!  It took only four minutes for this evolutionary process to kick in, and for the “strongest” (unfortunate word, maybe) to dominate. (67-68)

Now consider what Archie Palmer was doing–gathering university patent policies, publishing them, and encouraging universities to adopt such policies.  Continue reading →

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The non-patenting of the first digital computer

Posted on April 22, 2013 by Gerald Barnett

In Turing’s Cathedral, George Dyson provides an account of the creation of the first digital computer at the Institute for Advanced Study at Princeton.   John von Neumann, leading the effort, in 1946 came up with a patent policy for the effort:

Employees agreed to assign their rights to the Institute, while the Institute agreed that ‘it will promptly and at no expense to the Employee have prepared, filed, and prosecuted an application for United States Letters Patent (and for patent in countries foreign to the United States, if it so decides) on each invention which the Institute determines is or may be useful to it.  Furthermore, “the Institute agrees to pay to the Employee all of the royalties, if any, received . . . on each invention . . . over and above the total cost to the Institute of procuring the patent or application therefore. (138)

That sounds like a decent patent policy, if an institution is going to insist on being involved.  One might note that under Bayh-Dole’s standard patent rights clause, such an arrangement is still perfectly fine.

Then, in 1947, George Dyson reports that the patent agreement was modified at the time of a follow-up contract with the federal government to fund the project, so that “most patent rights” would go to the Government.  Continue reading →

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1962 University of Arizona patent policy allowed inventors to choose their agent

Posted on April 16, 2013 by Gerald Barnett

In Neal Stephenson’s Anathem, in an earth-history parallel but someways upside downed from our own, there is an order of “avouts” or knowledge-monks called Lorites. A Lorite is “A member of a Order founded by Saunt Lora, who believed that all of the ideas that the human mind was capable of coming up with had already been come up with. Lorites are, therefore, historians of thought who assist other avout in their work by making them aware of others who have thought similar things in the past, and thereby preventing them from re-inventing the wheel.”

Here is a bit of lore from the patent policy of the University of Arizona, circa 1962.  Continue reading →

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