University patent policies as covert non-compete covenants

Posted on December 18, 2012 by Gerald Barnett

I have been looking at laws regarding non-compete covenants.  A non-compete agreement aims to prevent a worker from accepting other work that would compete with his or her employer or business partner.  In employment situations, this might include non-solicitation of the business’s customers, or operating a competing business within a given range of miles from the business.  In publishing, a publisher may ask for a non-compete from an author, so that the publisher is the only one publishing the author’s work on a given topic.  Non-compete agreements may exclude competitive activity for a year or may go for much longer.

Many states have laws that permit these sorts of non-compete agreements, provided that they are “reasonable” to protect a “legitimate business interest” or the “goodwill” of the business and balancing that interest with the effect on the public of the restraint of activity. A common strategy of employers seeking non-compete clauses, therefore, is to demand a very extensive non-compete, but then qualify the claim with a statement that the demand is no broader than is required by law.  The idea is to get the “full benefit” of the law by asking for whatever the maximum interpretation of “reasonableness” might be.  A happy side attribute of such a strategy, from the employer’s perspective, is that absent a law case, the employer can claim pretty much anything is reasonable up to whatever limit an employee is willing to tolerate, short of filing suit.  That is, “reasonableness” is not so much a matter of public policy as it is how far an employer can go before some employee chooses to fight over it.  Some states won’t tolerate this sort of thing, while others will.  California, for one, declines to re-write invalid arrangements to make them valid.  Folks have to do their own heavy lifting in California.  (Here is a nice summary by Christopher S. Drewry of the variations among the states.)  We will come back to this strategy in a moment, so keep it in mind.

In this regard, California is something of an outlier, along with Texas and North Dakota.  Since the 1860s California has simply banned non-compete agreements.  The current statement of the law is California Business and Professions Code Section 16600:

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void. Continue reading →

Posted in Agreements, Freedom, IP, Policy | 1 Comment

Falling revenues for the model that never was, but is

Posted on December 10, 2012 by Gerald Barnett

An article by Jens Krogstad in USA Today, reposted at Innovation Daily, has the headline “Universities struggle with falling invention royalties”.   Well, no kidding.   The big biotech window of investment was 1980-1995.   Aging patents in university portfolios are expiring everywhere, without much to replace them.

Look at the University of California portfolio on page 20 of the FY2011 annual report (page 22 of the pdf).  Here are the “top 25” inventions in terms of licensing revenue, out of a portfolio of  some 5,000 US patents.   The dates in parentheses are the dates of disclosure, not patent issue or first license.  Of the top 10 inventions, 8 were disclosed in 1992 or earlier.  Thus, one can expect the associated patents are set to expire.   That represents over 25% of UC’s total licensing revenue.   And the top money-earner is a one-off payment, so that’s not continuing either.   Inventions for which patent applications were filed in the second half of 1996 or 1997 will be expiring in the next five years.  UC could see its patent licensing income drop from $182m to under $80m, unless it comes up with “big hit” replacements.  Continue reading →

Posted in Freedom, History, Policy, Technology Transfer | Comments Off on Falling revenues for the model that never was, but is

Three Innovation Propositions of the Moloch-State

Posted on December 7, 2012 by Gerald Barnett

As American public universities ramp up their claims to own faculty inventions, software, works of authorship, and even know-how, all in the name of profit-seeking from “commercialization”–by which they mean something along the lines of “making money when speculative monopolists make money”–the framework of the implied innovation policy starts to become clear.  It consists of three interrelated propositions:

  • The state should own and control all faculty scholarship that is useful or valuable.
  • Faculty are servants of the university as represented by administrators who assign, direct, and approve their work.
  • A bureaucrat must be involved in the development of every opportunity for innovation.

If you think that these propositions are pretty good things, then you will be right at home with compulsory present assignments tied to public university patent policies.   Otherwise, think about it, and then do something about it. Continue reading →

Posted in Bayh-Dole, Freedom, IP, Policy, Present Assignment | 1 Comment

A bureaucrat’s thumb in every hopeful innovation pie

Posted on November 28, 2012 by Gerald Barnett

Advocates of the “faux” Bayh-Dole make the claim that the inspired part of the Act is that it gives ownership of faculty inventive work supported by federal funds to university bureaucrats for their fun and profit. I know, I’ve skipped over all the rationales for public benefit and orderly management and the apparent inability of all faculty inventors to be patent and contract experts and the just all around fine idea that managers are better at management than inventors are at innovation. Recently, I came upon this discussion at IP Whiteboard of the Stanford v Roche case and its application to Australia, posted by Martin Ivanovski.  It’s a pretty good discussion, as far as these sorts of web discussions go.  Still, there are things to add:

The case highlights that:

  • US government-funded contractors have to ensure that they take assignment of rights to inventions from all employee inventors as this is not inherent in the operation of the Act;

True, nothing in Bayh-Dole forces inventions from their inventors to their employers. But it is not at all a highlight of the case that universities (in particular) must “ensure that they take assignment” from all inventors.  Perhaps one might put it thus:  if a university is intent on granting an exclusive license, then it better have valid assignments from all the co-inventors. But then, one does not need a law case to know this!  But the point made here is rather different, that somehow universities must have this fixation on monopoly licensing, and this fixation is sufficient to strip inventors of their personal property–their inventions–and hand control of their scholarship to university bureaucrats. What’s the thought behind such doings? What’s the basis for this as good advice? Who does one serve? Continue reading →

Posted in Agreements, Bayh-Dole, Policy, Present Assignment, Stanford v Roche | Comments Off on A bureaucrat’s thumb in every hopeful innovation pie

Another Wild Assertion of Best Practice

Posted on November 27, 2012 by Gerald Barnett

Here is a passage from the “IP Handbook of Best Practices,” from an article about the development of University of California “technology transfer”, co-authored by a former director of the UC tech transfer office (emphasis added):

In 1943, the first UC patent policy was adopted, which provided mechanisms for supporting the licensing of patented inventions.1However, assignment of inventions to the university was determined on a case-by-case basis and UC policy was silent on royalty sharing between the university and inventors. In 1963, the university adopted a new patent policy that foreshadowed some of the requirements the Bayh-Dole Act (1980) later made mandatory, including making the assignment of rights to the university mandatory and specifying a royalty-sharing formula (50/50 sharing of any licensing revenue between the inventor[s] and the university, after deduction of a 15% administrative fee).

Here is the key clause from the 1943 policy from Archie Palmer’s compilation:

UC1943
 Continue reading →

Posted in Bayh-Dole, History, Policy | Comments Off on Another Wild Assertion of Best Practice

Thanks

Posted on November 22, 2012 by Gerald Barnett

As we in the US celebrate another Thanksgiving holiday, it is also time to thank all the tech transfer folks for their hard work in the service of innovation for a better society.  We may not always agree on methods (freedom works better than compulsion, say), but we have goals in common, and it is worth keeping that in mind.

Thanks to all those who voted to reject SJR 8223, a statewide referendum here in the State of Washington that would have allowed the University of Washington and Washington State University to divert public operating accounts from education and research to speculating in company stocks.   Over at PublicMission [presently archived in transition to a new web host], we worked to explain how this is a very bad idea, poorly conceived and implemented.  The voters of the state agreed.  Message to the state’s leaders:  no, this was not the “far left” failing to compromise–it was the center.  Ponder that.

Thanks to all the faculty, staff, students, and business folks that have made Open 3d Printing a top program in all things related to off-road 3d printing, solid modeling, and creative work.   If nothing else, it shows how open programs with dedicated leaders attract talent and opportunities, and leave all sorts of new things blossoming in their path.   Folks on the hunt for venture opportunities might take notice of how this works.  Ownership is not the starting point.  Mutual respect is.  Tough lesson in some quarters.

Thanks to the universities and companies that are working to explore new approaches–especially alternatives to the speculative monopoly model that has roosted in American universities and driven out the diversity of pathways for scholarship to innovation that once prevailed.   The vanguard isn’t the consensus assertion of institutional control.  The smart institutions are the ones that choose to hold back their expansion of power rather than take everything and release only what’s worthless.

Thanks to the organizations working for innovation freedom–especially Public Knowledge, Electronic Frontier Foundation, Ewing Marion Kauffman Foundation, American Association of University Professors, the Berkman Center at Harvard, the Pragmatic Innovation Group, and Sen. Maralyn Chase and other members of the Washington State legislature.   You all rock.

And thanks to you, readers of Research Enterprise, for taking an interest in all things researchy and innovational.    There is good stuff to do out and around, and it takes more than just the spark of idea to make inroads into the world of status quo habits and expectations.  Building the social networks, the breakthrough (or break-in) networks, is more than invention, more than speculative investment–it is personal commitment to see folks succeed with their vision, whether it is a solo startup or an open distro or a complex research consortium.

Posted in Freedom, Uncategorized | Comments Off on Thanks

Right More Often Than Wrong

Posted on November 13, 2012 by Gerald Barnett

John Gruber writes Daring Fireball, one of the best blogs on technology management, innovation, and business, generally from an Apple baseline.   I like how he selects from the news of the day, pulls a quote, and provides a quick commentary.  Often he needs only a title or a single sentence.  Oh, to be able to do that!

In a recent post, Gruber pulls apart the idea that Steve Jobs would have done it perfectly (bold added):

Apple was far from perfect under Steve Jobs. But in hindsight, critics and skeptics of the company now see fit to deem his reign flawless or nearly so. Here’s a guy on Yahoo Finance telling Henry Blodget that “Steve Jobs wasn’t wrong about anything ever.”

What you want is to be (1) right more often than wrong; (2) willing to recognize when you are wrong; and (3) able and willing to correct whatever is wrong. If you expect perfection, to be right all the time, you’re going to fail on all three of those — you will be wrong sometimes, that’s just human nature; you’ll be less willing or unwilling to recognize when you’re wrong because you’ve talked yourself into expecting perfection; and you won’t fix what’s wrong because you’ll have convinced yourself you weren’t wrong in the first place. The only way to come close to being right all the time is to be willing to change your mind and recognize mistakes — it’s never going to happen that you’re right all the time in the first place.

Makes you wonder if such a thing has happened at university technology licensing offices.

Posted in Social Science, Technology Transfer | Comments Off on Right More Often Than Wrong

Considering "Pay the employee as if it had exploited the patent"

Posted on November 3, 2012 by Gerald Barnett

I have been looking at the impact of the “export” of the faux Bayh-Dole Act from the US to other countries. By “faux” I mean the interpretation of Bayh-Dole that claims that the Act vested, mandated, and/or assured university ownership of federally supported inventions. That interpretation was set aside as erroneous by the US Supreme Court in Stanford v Roche over a year ago, but it still persists unchanged in many university documents and in scads of articles describing federal research policy. It does not matter whether someone is a proponent of Bayh-Dole or a critic–nearly all publications prior to the June 2011 decision have it wrong.

As I have worked through the problem, and in preparation for a talk in France next week, it seems to come down to whether people have a deep commitment to the idea that institutions should have the right to own the creative work of those associated with them, or whether the issue ought to be resolved by a reasoned discussion.  If the matter is a reasoned discussion, then laying out reasons and facts ought to count for something. If the matter is just one of comparing urges and alliances, then there’s little hope for reason. One changes “sides” only by a conversion experience or as an act of betrayal or coercion, not through persuasion. It then becomes something rather farcical to attempt to reason with folks who have made a commitment to institutional ownership. What they present as “reasons” are more in the form of “rationalizations”–they aim to explain the position and quell dissent, but do not reason from history, from logic, from judgment. For the “science of science policy” folks, one would think making this sort of distinction would be fundamental.  Continue reading →

Posted in Technology Transfer | Comments Off on Considering "Pay the employee as if it had exploited the patent"

The Box of Technology Transfer

Posted on October 25, 2012 by Gerald Barnett

In The Marketplace of Ideas:  Reform and Resistance in the American University, Louis Menand works his way through the angst that is the lot of the English professor mired in a world of humanities departments who have lost their way but had a good time theorizing about why this is a good thing.  While Menand constructs a plausible history for how this has come about, and why it really is a good thing to wring one’s hands about one’s discipline (“Skepticism about the forms of knowledge is itself a form of knowledge”, 92), as his text moves toward its conclusion, he pauses to wonder if such a path might not be less satisfying than it once appeared, even with happy theories to explain why “eclecticism seems to be the fate of the academic humanities”):

But is it possible that we envy a little those contributors to the culture who have to do battle with the forces of the market and with heteronomy–with the reality checks of life outside the university?”  I think we might be.  I think we want to contribute to the culture and the society that is being created and lived all around us, and we are a little sick of the institutional armature we once may have desired to secure us.

As Menand works through this idea, he longs for a “real fight” with “the forces that make and remake the world most human beings live in.”  Setting aside the image of literature professors prowling the streets looking to mix it up with ordinary humans, one can ask just what it is that the academic humanities might offer were they to become re-engaged in something other than internal squabbles.  Menand attempts to shape it out more clearly, or at least more melodramatically:

We want to bring the dissonance and struggles of competing interests, the risks of innovation and experimentation, into our box, and we are scandalized that the box refuses to accommodate them. (125) Continue reading →

Posted in Freedom, Innovation, Literature, Technology Transfer | Comments Off on The Box of Technology Transfer

Luck. Goodwill. Diligence.

Posted on October 12, 2012 by Gerald Barnett

I have a hypothesis, not made idly:

University innovation comes about primarily as a combination of luck, goodwill, and diligence, typically in that order of importance.

Most of the major university licensing transactions appear to have followed this pathway. Something is discovered, invented, realized–often it is serendipity–and that is the luck part. How did that discovery come about? What discussion led to it, what mistake in the lab, what pursuit of something entirely odd, or off topic, or couldn’t be done?

It’s as if “research” is not about the “statement of work”–that officious document that justifies an institutional form of curiosity–but rather that “research” provides a social approval for futzing around with stuff to see what will happen. The best research is perhaps the work with the best futzing, not the best proposed statement of work. Continue reading →

Posted in Freedom, Innovation, Policy | Comments Off on Luck. Goodwill. Diligence.