Supreme Court Case Could Deprive Inventors & Businesses Ability to Commercialize Inventions

By Kaswan, Boundy & Barnett
December 15, 2010

An important case now before the Supreme Court may soon reconfigure ownership of all student and faculty inventions. The Supreme Court agreed to hear the appeal of Stanford University v. Roche Molecular Systems, Inc.; faculty and student inventors, the public, and American industry have an enormous stake in the Court’s decision. The appeal pits university patent administrators against university inventors. If the administrators win, university inventors will have no invention rights—not in the work they do at the university, and not in the work they do in the community. This is a crucial juncture for every researcher who has ever or might someday work in federally funded research. Likewise, it presents a tipping point for innovative industry and anyone with a vested interest in American research.

In Stanford v. Roche, Mark Holodniy, a Stanford post-doc developed an assay for HIV partially at Cetus, a (then) small Silicon Valley biotechnology company, and partially at Stanford. Over time Holodniy signed conflicting agreements assigning rights first to Cetus and later to Stanford. Holodniy timely informed Stanford about the conflicts, but Stanford failed to resolve them. Holodniy and his colleagues then used Cetus PCR technology to develop a PCR assay for HIV. Holodniy and his research colleagues disclosed their invention to Stanford, and Stanford filed patent applications. Because Holodniy’s research at Stanford was funded in part by federal grants, Stanford filed its Bayh-Dole paperwork with the NIH—six years after Holodniy’s assignment to Cetus.

Cetus was subsequently acquired by Roche which developed and marketed a PCR test for HIV. Stanford sued Roche for infringement, claiming approximately $250 million in royalties. Roche replied by noting that Roche was co-owner of the patents because of its assignment from Holodniy. Stanford argues that the contracts don’t matter, because the federal Bayh-Dole Act applies and supersedes all contracts and licenses—in Stanford’s view, Holodniy never owned any invention rights to assign to Cetus – Stanford automatically owned all of it.

The United States Court of Appeals for the Federal Circuit ruled that the Bayh-Dole Act only governs ownership as between the federal government and an institution receiving federal research funds (in this case, Stanford), but had no effect on ownership as between the university and the individual researcher. The court held that inventors in government-funded labs have the same rights as anyone else: initial ownership of inventions always lies with the inventor and the inventor is at liberty to contract his/her IP rights. Inventors and their employers remain free to share ownership and benefits between themselves in their contractual relationships, without governmental interference into those relationships.

Stanford is appealing to the Supreme Court. In support of Stanford, the Association of University Technology Managers (AUTM) and several large research universities claim that the federal Bayh-Dole Act automatically overrides otherwise valid contracts. AUTM argues that universities automatically receive 100% of all rights to all inventions arising in any part from federally funded research. AUTM argues that an inventor’s intellectual property transfers with no requirement for any written assignment, without notice or due process, without inventor compensation. According to AUTM, the Act alone vests 100% exclusive title and patent rights, total authority and sole discretion to make license decisions, solely in the university; even when the patent includes inventions formerly owned in the private sector.

Giving universities a “trumps all” right to ownership of inventions will kill the goose that lays the golden eggs—inventors, businesses, the public, and the American innovation ecosystem will all be harmed.

In enacting the Bayh-Dole Act in 1980, Congress created a uniform process by which universities could elect to retain title to inventions made with federal support. The objective was to encourage academics and industry to collaboratively use inventions for public benefit, unimpeded by federal bureaucrats. But now, university bureaucrats—technology administrators and university officers—are muscling their short term financial and administrative interests into the Act, distorting Congress’s original intentions as well as long-established IP laws.

The entire basis for Bayh-Dole is to give inventors, capital, entrepreneurs, and universities freedom to arrange their contractual relations to optimize and commercialize innovaton —a bureaucratic contract override was exactly the problem that Bayh-Dole sought to relieve. Intentionally or unintentionally, AUTM’s position debilitates faculty initiative, autonomy, and ability to research and invent.

AUTM’s legal position (which contradicts AUTM’s own long-standing position stated in their practice manual) uproots faculty opportunities to collaborate with industry or start their own companies, ensuring that faculty and students will never obtain or convey certainty of title to their inventive work. If AUTM succeeds, faculty will lose any bargaining power with their universities, and university patent administrators will have little or no accountability to investigators, inventors, the broader university community or the public.

The proper mechanism for the transfer of inventions is through mutually agreed contracts with fair consideration. When faculty or graduate students accept corporate funding, elect to consult with industry, or work with entrepreneurs to start a company, they must have sufficient rights in their own inventions and future work to be able to deliver on the contractual obligations that those relationships carry. In AUTM’s world, standard commitments can simply be invalidated by Bayh-Dole assertions. If AUTM prevails, prudent corporations will exclude faculty and students from industry laboratories, severely hamstringing faculty and student participation in industry research. Faculty and graduate students will be discouraged from discussing their research amongst themselves, out of fear of creating conflicting obligations to their respective universities, and making it impossible to contract with others with regard to current and future inventive work. This will breed a guarded and non-collaborative research environment, which will throttle life-saving and ground-breaking research, and undermine graduate student education. The flow of ideas through commercial contracts on invention will freeze up—because every licensee will seek rock-solid assurances that no federally-funded research “infected” even the smallest corner of the technology—no licensee will tolerate the risk that investment in developing an invention may be expropriated by a surprise ex post Bayh-Dole revocation by a university.

As AUTM’s brief notes, Bayh Dole is “possibly the most inspired piece of legislation to be enacted in America over the past half-century,” one that “helped to reverse America’s precipitous slide into industrial irrelevance.” But if AUTM’s claims prevail, Bayh-Dole will become the most despised statute in innovative environments. Ironically, AUTM’s position would cook their own goose by making it impossible to grant sufficiently good title to inventions, such that firms won’t lay a hand on university-based inventions.

Senator Birch Bayh has recently stated in connection with the Bayh-Dole Act, “When government takes inventions away from the creators, it extinguishes the fuel of interest the patent system was intended to create.” The fire of innovation comes from entrepreneurial inventors, not bureaucrats. Any national innovation policy that systematically relies on bureaucrats–federal, state or AUTM—is doomed. The inspiration of the Bayh-Dole Act is to more fully involve university inventors in the national economy. AUTM seeks to snuff this inspiration out.

While AUTM’s argument attempts to assist Stanford and their faculty inventors, the unintended consequences are dire for academic collaboration, American industry, our economy and jobs. Will the Court leave you a leg to stand on when AUTM bureaucrats come to snatch title to your breakthrough innovation?

For documents in the case see:

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Kaswan, Boundy & Barnett

Kaswan, Boundy & Barnett

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Discuss this

There are currently 33 Comments comments.

  1. Mark Nowotarski December 15, 2010 3:46 pm

    Renne, Dave,

    Insightful as always.

    If nothing else, this emphasizes how important it is for inventors to have proper, non-conflicting assignments.

  2. Gene Quinn December 15, 2010 7:49 pm

    Renee, Dave & Gerald-

    You have convinced me. I haven’t known what to make really of the case other than it seemed that Stanford’s contracts were poorly drafted, or at least didn’t take into account this situation, which is bizarre really.

    I agree that it would be a mistake to upset the Federal Circuit ruling here. It seems to be on solid ground. But why would the Supremes take the case if not to change at least something?

    You say: “The entire basis for Bayh-Dole is to give inventors, capital, entrepreneurs, and universities freedom to arrange their contractual relations to optimize and commercialize innovaton —a bureaucratic contract override was exactly the problem that Bayh-Dole sought to relieve.”

    That is exactly correct. I think the Federal Circuit was likewise correct to notice that there should be no special rules for inventorship; inventorship resides with the inventor unless there is a contract in place that deals with the rights. That type of one-size-fits-all approach seems like it is one that the Supremes should like. In the eBay injunction case they didn’t want special rules for IP, so why create special rules within the patent/innovation space?

    -Gene

  3. Paul F. Morgan December 16, 2010 8:29 am

    I agree with the two above comments {contrary to the lead hyperbole} that this kind of legal mess need not occur if universities had normal employment contracts with their employees clairifying the universities rights to adequate compensation for licensed inventions made by employees recieving full university salaries and using costly university facilities and equipment, and often also using cheap graduate student labor, plus clarifying conflicting “double dipping” outside work for additional compensation by employees. Especially for taxpayer supported universities.

  4. EG December 16, 2010 8:37 am

    David,

    Normally I agree with you but not this time. I’m familar with the facts of the Stanford case, as well as the Bayh-Dole provisions in play. My views on the Federal Circuit ruling incorrectly on the Bayh-Dole issue in the Stanford case were posted on this web site last year when this case came out, and nothing has changed my mind in that regard. I also agree with the views expressed by the DOJ in support of Stanford’s petition (one the rare times I’ve agreed with DOJ’s position on such petitions).

    First, you paint with too broad a brush in your article. You make it sound like university inventors will get nothing for their inventions which are subject to Bayh-Dole. But in fact, the university is obligated to share with university inventors any royalties obtained for such “subject inventions.” That’s because of Bayh-Dole.

    Second, as correctly argued by the DOJ, Bayh-Dole provides a statutory scheme for dealing with invention rights which involve federally funded research. That scheme ensures that title to those “subject inventions” will normally reside with the contractor for such research versus the federal government (generally the reverse of what was before Bayh-Dole) who must act in specific instances if the federal government wishes to “void” such title. In this instance, as the DOJ argued (and the district court ruled), the university researcher simply had no title that it could transfer to a third party. Also, while the focus of the Stanford case is on non-profits, Bayh-Dole also protects small businesses from likewise being usurped of title to “subject inventions” under Bayh-Dole.

    Third, the Federal Circuit allowed a “boilerplate” assignment clause in what was, in essence, a confidentiality agreement to trump this scheme in Bayh-Dole. What is ironic, if Stanford had phrased its assignment provision with its university researcher more artfully, we wouldn’t even be arguing now about the scheme in Bayh-Dole applies or not as even the Federal Circuit would have ruled in Stanford’s favor. In fact, as one who previously worked in the corporate world (and understands who has and who does not have authority to bind an organization contractually), I question whether this researcher even had the authority to sign this agreement without the appropriate level authority at Stanford giving its OK beforehand.

    Fourth, the ruling by the Federal Circuit is inconsistent with 35 USC § 202(d). 35 USC § 202(d) says that if the university elects not to retain title, the university may request that the appropriate federal agency allow the inventor to retain rights in the “subject invention.” If 35 USC § 202(d) is to make sense, initial title to the “subject invention” must reside with the university under Bayh-Dole. The DOJ brief makes this point as well.

    Fifth, the ruling by the Federal Circuit appears to frustrate what is intended by 35 USC § 202(c)(7). 35 USC §202(c)(7) expressly prohibits a nonprofit organization, like Stanford, from assigning rights in federally sponsored research to third parties (like Cetus or Roche) without approval of the respective federal agency. That a university researcher (like Holodniy) can so easily defeat the prohibition of 35 USC § 202(c)(7) by signing a confidentiality agreement that incidentally assign rights to “subject inventions” to third parties seems bizarre to me.

    Sixth, the Federal Circuit’s ruling cannot be so easily reconciled with their prior holding in Central Admixture. (Central Admixture by the way protected a “reversion back of rights” to the university inventor even though university inventor didn’t comply with their Bayh-Dole obligations to the funding agency.) In essence, this ruling in the Stanford case allows a “third party” (e.g., Roche) to challenge and “void” title to a “subject invention.” That is exactly what the Federal Circuit said in Central Admixture cannot be done. Instead, as was held Central Admixture, only the appropriate federal agency may “void” such title in appropriate circumstances under Bayh-Dole.

    I realize I’m in the minority in the IP world in expressing these views. But with SCOTUS granting Stanford’s petition and with the DOJ supporitng Stanford, I predict that the Federal Circuit’s ruling in this case will be overturned. Also, SCOTUS is likely to give the Federal Circuit’s view even less deference in that interpretation of Bayh-Dole is not a traditional “patent law” question, even though the Bayh-Dole provisions are in Title 35.

  5. EG December 16, 2010 8:52 am

    Let me also say that I agree with Paul Morgan’s views that universities need to use contract (not simply policy statements) to make clear the unversity researcher’s obligations regarding inventions, including those subject to Bayh-Dole obligations. In a slightly different vein the contract issue, the “food fight” in Madey v. Duke University could have been avoided if Madey had been obligated to provide a non-exclusive license under his patents to Duke for the equipment used in the FEL lab, given that Duke paid for this lab.

  6. l doigan December 16, 2010 9:18 am

    Nice hyperbole!

  7. Paul F. Morgan December 16, 2010 9:31 am

    Thanks EG, you should publish both of your above great comments in AUTM (the Association of University Technology Managers) Newsletter or Journal, for those that really need it. [Even though most of those people (supposedly in charge of these problems) (and even if adequately legally represented, which is not always the case), seem to be politically overpowered by professorial clout as compared to university administrators and boards. The increasing dependence of universities for funding from scientific or medical research is probably exacerbating this practical problem.]

  8. MBT December 16, 2010 9:49 am

    I have not read the ruling yet, so I am basing this comment on the above commentary and what I know about Bayh-Dole and university research. my I suspect the ruling will be a narrow one – and will address the conflicting assignments. That Bayh-Dole would overrule private contracts is absurd. Bayh-Dole is an agreement with the university, not with the inventors (or usually the Principle Investigator). The government can reserve rights, so if the post-doc or the PI did not inform the agency, then clearly those rules were violated. It has been held that even in light of general employment agreements that assign all rights to an employer, specific assignments to inventions have to be signed, otherwise, titles are clouded, which would be an issue for any future commercialization or financing of any ventures. I think SCOTUS took the case to put to rest all these cases where universities are overreaching on successful inventions when they didn’t mind the store when the invention was being developed. Tech transfer offices are universally underfunded and overworked. The universities usually take no interest unless they think they are losing a source of income. I am hoping that the ruling will at least inform universities that they will need to be very clear in their ownership interests in any invention made at the institution and provide the inventors the support and education they need to understand their rights and the ability to commercialize their inventions. Without an incentive to commercialize, reasearch will grind to a halt.

  9. David Boundy December 16, 2010 9:55 am

    EG –

    I don’t see where you disagree with our view. Your comments about several (not necessarily all) of the the various contractual ownership issues swirling around in this case are well enough taken that, without digging deeply, at this point, I don’t disagree with you on them.

    But the Court didn’t grant cert on the problems created by the messy contracts in this case. The Court only took cert on a non-contractual statutory override. If the contracts mean what the Federal Circuit says they mean, then the birds had already flown–the university never owned anything to “retain” vis a vis the federal government, and there was no applicable policy to effectuate under § 202(c)(7). Your points, no matter how good, and the cert petition are passing in the night.

    David

  10. Unintended Consequences December 16, 2010 10:00 am

    New University Policy – No faculty, staff, employee, student or other university personnel shall enter into any contract or agreement without the prior express written consent of general counsel.

  11. Paul F. Morgan December 16, 2010 10:14 am

    Dear David, do you really think the Supreme Court is going to agree with you that: “the university never owned anything to ‘retain’ vis a vis the federal government” under the Bayh-Dole Statute [which is NOT just a private contract] even IF the invention was conceived or reduced to practice utilizing, at least in part, taxpayer-funded equipment or facilities? [The Supremes may be unpredictable, but I like the odds. Would you care to place a small wager in support of your prediction in Nevada, where it would be clearly legal?]

  12. Mark Nowotarski December 16, 2010 10:44 am

    I wonder if someone could clarify a few points for me. As I understand it, the inventor personally assigned rights to any inventions that he made that relied on confidential information he received from Cetus.

    Is that correct?

    Was it ever established that the claimed inventions were, in fact, based on confidential Cetus information? If so, did Stanford have the right to disclose the confidential information in its patent applications? If not, doesn’t that nullify Cetus’s assignment rights?

  13. EG December 16, 2010 11:14 am

    Paul,

    Thanks for your kind comments. In the interest of full disclosure (in case it wasn’t self-evident), I’ve been an active member of AUTM since 2003, including recently the AUTM Public Policy Committee. I’ve also written an article on Madey v. Duke University (including the licensing point noted which my patent attorney Mark astutely suggested), as well as co-written an article on compliance with Bayh-Dole obligations (mainly around the Campbell Plastics case which is at the center of that article), both published in AUTM Journal.

    David: We’re going to have to “agree to disagree” about your statement that “the university never owned anything to “retain” vis a vis the federal government, and there was no applicable policy to effectuate under § 202(c)(7).” That would be true only in the absence of Bayh-Dole. In fact. I just saw the amicus brief filed on behalf of numerous universities/university organizations (including AUTM), and it points out that “disposition of rights in federally funded research by operation of law” has been in existence for at least 60 years, even prior to Bayh-Dole. Accordingly, having title to subject inventions be determined by operation of law under Bayh-Dole is nothng new and is consistent with the statutory scheme of Bayh-Dole. And I wouldn’t take that bet with Paul because I (again) predict you’ll lose it.

  14. David Boundy December 16, 2010 11:55 am

    Paul –

    Nope, no bet. I can only opine on what should happen, not on what will happen.

    If Festo (the most-technologically-equivalent changes are the least legally-equivalent), KSR (Graham still requires exclusion of hindsight, unless you call it common sense), eBay (statutory right to exclude means compulsory license), and Bilski (mumble mumble) have taught us anything, it’s that any mixture of the Supreme Court and patents leads to randomness at the level of quantum fluctuations.

  15. Gene Quinn December 16, 2010 11:56 am

    I doigan-

    I appreciate you reading IPWatchdog.com, but a comment like “Nice hyperbole!” is not the type of comment that I encourage here. While we can guess what you mean, in order to comment on IPWatchdog.com I require substantive engagement. I’m not saying you don’t have the right to characterize things how you see them, but such a terse comment doesn’t facilitate the exposition of the issues.

    -Gene

  16. Gene Quinn December 16, 2010 12:08 pm

    EG-

    You say: “What is ironic, if Stanford had phrased its assignment provision with its university researcher more artfully, we wouldn’t even be arguing now about the scheme in Bayh-Dole applies or not as even the Federal Circuit would have ruled in Stanford’s favor.”

    I couldn’t agree more with that statement. That has been my view of the case from the outset, which is why it is truly surprising to me that the Supremes would take this case. Even if they want to rule that the CAFC is wrong, that their interpretation is incorrect, a case where there is a defective contract clause isn’t the right case. The hubris involved on the part of the Supremes is exceptionally high if you ask me. They take patent issues that are non-patent issues or only peripherally patent issues or fundamental issues that are supposedly easy, then they don’t even realize how hard they are as they screw up the law. This is the wrong case. Stanford should bear the burden of their poor contract. This case is really a moot point if you ask me because with the rule selected we know what needs to go into the contract in order for the university to prevail. So why make a ruling on Bayh-Dole when it is unnecessary? This issue will either never come up again having been fixed, or it will come up and the second university will be even less entitled to win than Stanford because they should have known better.

    -Gene

  17. EG December 16, 2010 12:59 pm

    “If Festo (the most-technologically-equivalent changes are the least legally-equivalent), KSR (Graham still requires exclusion of hindsight, unless you call it common sense), eBay (statutory right to exclude means compulsory license), and Bilski (mumble mumble) have taught us anything, it’s that any mixture of the Supreme Court and patents leads to randomness at the level of quantum fluctuations.”

    David,

    We can certainly agree on this point. We all hoped that SCOTUS’ review of Federal Circuit’s cases would end with Bilski, but we’ve got 3 more they’re going to review this term, and another one (Enzo Biochem v. Applera on indefiniteness under 35 USC 112) where SCOTUS has asked for the DOJ’s views on taking cert. With this onslaught, it won’t be long before the Federal Circuit is ‘hor de combat.”

  18. renee kaswan December 16, 2010 2:15 pm

    I am delighted that these comments are all about whether or not Stanford’s contracts were correctly interpreted by CAFC; that is the question we believe SCOTUS should address. What AUTM is trying to do is segue that simple question into an overarching ruling that no contract, even if its valid, even if its timely and properly disclosed, can ever limit the total assignment of a Subject Invention to a university who attempts to take sole ownership of it. The whole basis of the AUTM argument is that contracts don’t matter because they are overruled by Federal law, and, AUTM is interpreting the Federal B-D law as a vesting statute that takes, by eminent domain, all invention rights away from inventors and assigns them to the university. We believe invention for hire is best defined by consensual contracts at universities, similar to corporations, not by an obscure interpretation of a federal mandate that would supersede all employee contracts whenever federal funding infects a research program.
    Everyone I know and converse with would prefer that Stanford win this suit, but not with the AUTM argument. There are other ways for Stanford to prevail, without turning contract and property law inside out. CAFC ruled that Holodniy’s assignment of a Subject Invention to Cetus was valid. It is still a Subject Invention, and subject to all of the restrictions of the federal grant that funded it, including, sharing royalties, a minimum of 15%, with inventors. Gerald has done a yeoman’s job of explaining this, with the critical legal references at: http://rtei.org/blog/2010/12/07/ruby-slippers-what-ruby-slippers/

  19. Paul F. Morgan December 16, 2010 6:14 pm

    Gene, it would indeed be nice if this all went away by proper written employment and outside job agreements, but it will not. Because, for the reasons I noted, those handing these mattters for universities do not seem to even dare to try to force their employees [professors] to sign such agreements.

  20. Gene Quinn December 16, 2010 6:50 pm

    Paul-

    I suppose you are right, which is a sad enough commentary in and of itself about the way universities operate. I just can’t believe a parties refusal to engage in appropriate business practices should become a question about Bayh-Dole or a question to bog down the federal court system.

    -Gene

  21. renee kaswan December 16, 2010 10:29 pm

    “That Bayh-Dole would overrule private contracts is absurd. “ MBT

    – I agree with you MBT, but AUTM does not. Contracts be damned, as soon as there is ANY Federal funding for an iota of someone else’s invention, they claim B-D instantly and automatically vests the entire rights and title in the University. This from the WARF Amicus to grant cert:

    “The Federal Circuit fundamentally misunderstood the Bayh Dole Act…. Title to federally funded inventions originally vests in the contracting research institution, not the inventor or third-party collaborators…..The Bayh-Dole Act, adopted in 1980, changed the landscape by clearly vesting ownership of inventions made in whole or in part with federal funds in the contracting institutions….Inventions subject to the Act include “any invention of the contractor conceived or first actually reduced to practice in the performance of work under a [federal] funding agreement,” such as a grant….
    Section 202(a) nowhere states or suggests that individual inventors own initial title…..Other provisions of the Bayh-Dole Act confirm that research institutions own original title to the fruits of their federally funded research and that individual inventors have only contingent, secondary rights if the institution waives its ownership rights….The governing regulations confirm that “the ownership provisions remain applicable in any invention ‘conceived or first actually reduced to practice in performance’ of the project,” regardless of whether other sources provided supplemental research funding.

  22. UC Berkeley Grad Student December 16, 2010 11:21 pm

    Paul, Gene,

    The real problem is that universities do not have the resources to properly and carefully negotiate an accurately customized IP agreement with each researcher they hire. Each case is different and lawyers’ time is expensive.

    It’s not like a corporation, where a single IP agreement can serve for everybody with the job title “software engineer”. Universities that err on the side of grabbing as much as they can wind up attracting the laziest faculty — those who don’t plan on inventing much, so they don’t bother to shop around. It’s an information asymmetry: young faculty know far more about their future plans than the university that is hiring them.

    What we really need is a separate IP agreement for each project a researcher works on, so the proposed IP terms become part of the decision about whether or not to work on that particular project. Unfortunately for legal reasons (which I’m sure you all understand better than I do) the only time you can get an employee to sign this sort of thing is at the time they’re hired.

  23. Gene Quinn December 17, 2010 10:52 am

    UC Berkeley Grad-

    I agree with you for sure. Most universities don’t run like businesses, but they are increasingly trying to monetize the research so business realities seem to be catching up with them.

    I think you are right when you say that many universities try and grab as much as possible and over-reach. When I was at Syracuse University they wanted me to sign over all of my copyrights, even those on works I created prior to employment. I just refused to sign the agreement. I never openly refused, I just never signed it and ignored inquiries regarding where the agreement was.

    Finally, I think you are right about the young faculty. Those are the ones who seem to have a more pro-business mentality. They seem to be sick and tired of trying to get grants and are willing to research exciting things that might actually have market potential so that they can fund their ongoing research. Quite smart. If they hit one out of the park then they have options on top of that.

  24. Anon December 17, 2010 1:24 pm

    There are some good arguments here that align under a “Freedom of Alienation” theory.

    After all, Intellectual Property is stll “property.”

  25. Mark Nowotarski December 17, 2010 2:35 pm

    Universities that err on the side of grabbing as much as they can ….

    I’m not clear on why assigning rights to what you invent in exchange for a salary is characterized as “grabbing”. If you are hired to invent, shouldn’t you provide what you are hired to do to your employer irrespective of whether or not that employer is a university?

  26. MBT December 17, 2010 2:54 pm

    Mark, university-affilitated scientists, faculty, student and staff, are not “hired to invent,” they are hired to teach, publish, do scholarly prusuits, etc. (or are in the process of learning these things if they are a student). Inventorship is a by-product of these pursuits. The universities certainly have a right to expect some return on their investment and in fact, some universities have a lot of income through inventions that are marketed. However, there has been a recognition that unlike in industry, where compensation is generally greater, that professors and students in particular get a much greater share and stake in their inventions than what would happen in industry. Much of that has to do with control. The universities have little control over the research activities of professors and scientists, other than to ensure compliance with safety issues and to make sure they are in the classrooms to teach at their assigned times. Academic freedom is the benchmark of academia and the professors can be a prickly bunch when their toes are stepped on. Consequently, IP rights tend to be viewed differently in universities and also by the courts. Copyright ownership of scholarly writings are almost never owned by the universities, but by the authors, for example.

    The problem here is that the scientists also view lawyers with the same suspicion that they view their tech transfer office and hence, aren’t very saavy about the whole world of IP (other than they might be able to capitalize on their discoveries), and the tech transfer offices are not very good at educating them. Contracts signed years in the past are distant memories and policies change. Consequently, the universities often lose out, the professors aren’t leveraging their discoveries in the most efficient matters and sometimes it all spills over into court. The bottom line is that we want the scientists to keep inventing. The ability of private companies to market and further develop the invention benefits the university and the scientists. The univerisities should not cut off the golden egg, nor should the scientists bite the hand that fed them though the lean years. Given the generally fickle nature of scientist-inventors (I have been in academia – I love scientist-types and their quirks!) who by their free-thinking and out of the box thinking drives the creative engine, I’m not sure the problem will be easily fixed.

  27. UC Berkeley Grad Student December 17, 2010 3:53 pm

    Mark, researchers get to choose what they work on — this freedom is part of their compensation, in exchange for a drastically lower salary (for example: Google pays new PhDs about twice what an R1 university will pay an assistant CS professor).

    If you take away this freedom, you’ll have to double the salaries — which universities can’t afford (and would probably also lead to attracting the wrong kind of people).

    As long as this freedom is in place, grabby IP policies will simply lead researchers to choose to work on topics that are unpatentable, like pure mathematics.

  28. Mark Nowotarski December 17, 2010 5:30 pm

    Copyright ownership of scholarly writings are almost never owned by the universities, but by the authors, for example.

    Thanks. That helps me understand. If university professors and students normally own their publications and other creative works (i.e. copyrights), then I can see how they would expect to own their utilitarian works (i.e. patents) as well.

  29. renee kaswan December 17, 2010 6:31 pm

    The ownership issue isn’t much about who profits, its more about, ‘ can the invention become a success?’. If the PI cannot make strategic decisions about how to develop, who to work with, where to apply the invention, they are in an unbearably helpless position. Scientists will not make great personal sacrifices only to watch a turnstile of administrators who are well meaning but ignorant — or have conflicted assignments — call the shots on their project and ruin their life’s work. If we cannot choose the development pathway we cannot effect success. Professors are driven people, helplessness is not an acceptable option. Noble laureates can’t be bent into bureaucrats’ toadies – even with 30 years of trying – ( ask Yale about John Fenn). Unlike the corporate equivalent, the administrative hierarchy is not the intellectual hierarchy at a university….and professors are usually amongst the most trustworthy of mankind. The people who don’t respect or trust them….they are worth keeping an eye on!

    The fact that 40 Universities hopped on this bandwagon to say that inventors have no original rights in their invention, that anytime any federal money touches creative work, it automatically and suddenly by federal decree belongs exclusively to them – might be a cause for alarm. At least it fails the smell test.

  30. UC Berkeley Grad Student December 28, 2010 2:04 am

    Scientists will not make great personal sacrifices only to watch a turnstile of administrators ,,, call the shots on their project and ruin their life’s work

    @renee, thank you, I couldn’t have said it better myself. This summarizes my feelings exactly.

    I trust my university to decide upon and pass along to me to me a fair share of any money which might arise from my inventions. However, I also know with complete certainty that they will bungle the process of commercializing my creations, or at the very least turn it into such a quagmire that I rue the moment of conception.

    I wish the people writing university IP agreements understood this dynamic. You can have the money (all of it even!) as long as you don’t interfere with my ability to make the decisions.

  31. Chris December 30, 2010 1:17 pm

    Are we seriously considering that the solution here is customized IP agreements per invention? That would only make the least bit of sense if there was something different going on in a Professor’s or Graduate Student’s life that differed from project to project. Simple fact to me is that if you are a university employee working on projects that are within the scope of your employment using federal funds, it is work for hire and the instant conception is complete you are an inventor but never an owner. It may be that these employment contracts need to be clearer on that point. But the naive assumptions of an employee with respect to these issues shouldn’t be the controlling consideration, especially 30 years after B-D. Do university employees really have a reasonable expectation that they gain ownership and control of the fruits of the work they were hired to do, paid to do, and that were funded by another? They might have that expectation, but it’s far from reasonable.

  32. UC Berkeley Grad Student January 4, 2011 3:59 am

    Chris, you are confused.

    University faculty are not hired to generate intellectual property. Quite the opposite: they produce *knowledge*, and efforts to turn this into intellectual “property” actually interfere with the knowledge-production task which is their primary job!

    If you don’t believe this, ask yourself: why do universities hire mathematics professors?

    Mathematics cannot be patented or trademarked, and universities never copyright the articles written by their faculty (many reasons, one being that the journals insist on being sole holders of the copyright). We have an entire department which has never produced a single iota of intellectual “property”. Are you saying they should all be fired for failing to do their job? I think you’d have a hard time convincing people of this.

    Your argument that generating intellectual property is “within the scope of employment” is completely bogus. It seems to stem from your conflation of knowledge and property.

  33. IANAE January 4, 2011 1:25 pm

    Quite the opposite: they produce *knowledge*, and efforts to turn this into intellectual “property” actually interfere with the knowledge-production task which is their primary job!

    That’s not quite accurate. The efforts of any particular university to turn knowledge into intellectual property will, at worst, interfere with the knowledge-production task which is some other university’s primary job. The more knowledge that particular university produces and turns into patents, the better it can be (relatively speaking, anyway) at producing more.

    If it is within the scope of a professor’s employment to give his employer a competitive advantage in the conversion of coffee into theorems, patents (where available) can properly be considered within that scope.