February 1, 2012 (Vol. 32, No. 3)
Gerald Barnett director Research Technology Enterprise Initiative
Universities Need to Reconsider Patent Policies in Light of Stanford v. Roche Ruling
The cornerstone of American invention is the constitutionally protected right of inventors to own their inventions. The advantages of this approach to patents have been demonstrated in university research for the past 100 years. The very earliest faculty-initiated efforts to use the patent system created the idea of the university affiliated research foundation, the National Science Foundation, and the modern university technology transfer office. Now many of those same technology transfer offices are trying to put an end to faculty-led invention management.
Over the past 30 years, inventors’ rights—and initiative—have been greatly diminished in American universities. University administrators have pushed for policies that require faculty, and even students and visitors, to assign rights in their research results to universities.
This disturbing trend can be traced to a fundamental misunderstanding of federal research invention policy. In 1980, Congress passed the Bayh-Dole Act, which required that federal agencies adopt a uniform policy regarding the claims they could make to inventions made with federal support at universities, nonprofit organizations, and small businesses. Some university administrators interpreted the new law to mean that universities owned inventions outright when made with federal funding.
After the passage of Bayh-Dole, universities became much more involved in patent licensing. Biotechnology inventions, such as those developed at Stanford University, the University of California, the University of Washington, and Columbia University, set the standard for licensing strategies and income.
Over time, university patent licensing officials simplified these early licensing successes to a basic formula: own all inventions, file patents, license exclusively, and sue those who refuse a license. They turned to the Bayh-Dole Act to support their desire to own inventions, telling faculty, and each other, that it is the law that requires faculty to assign their federally supported inventions to the university.
This practice came to a head in the case of Stanford v. Roche, a legal dispute between a university and a company that had received assignment by an inventor to rights in an invention that arose as a result of the inventor’s work at the company, but also benefited later from the use of federal funds at the university. The university, supported by over 70 other institutions, argued that the Bayh-Dole Act vested ownership of the invention with the university, voiding any prior agreements that the inventor may have made.
The ruling of the Supreme Court was clear: inventions made at a university using federal funds are the property of the inventors. The Bayh-Dole Act does not require that the university own federally supported inventions, nor grant the university title in such inventions. Quite the opposite; the Act anticipates a diversity of approaches to the private development of research inventions. Only when the university happens to be the owner of the federally supported inventions do most of the requirements of the Act apply.
According to the Supreme Court, the Bayh-Dole Act simply sets out uniform rules for when and how federal agencies can claim rights to inventions made with federal support.
University Ownership of Inventions
Universities have never had any claim to ownership of inventions based on the operation of Bayh-Dole. Many university patent officers—and university attorneys—have been wrong about the law, but have relied on this misunderstanding to require assignment of inventions to bolster their patent licensing operations.
After the Supreme Court ruling, rather than re-examining the basis for their ownership claims, universities have doubled down to find new reasons to take ownership of research inventions. In doing so, they have forgotten the practices that made American university research the envy of the world.
The University of California, for instance, has required its faculty to sign an amendment to their patent agreements that would change how they assign to the university rights to their inventions, and how the university reviews inventions reported to it. The University of Washington has tried a similar approach with an approval form for outside consulting. A number of faculty members have questioned whether they should sign these amendments but many researchers are not aware of the implications of the Stanford v. Roche decision.
The ruling in Stanford v. Roche points to a fundamental element of federal research invention policy. The government does not dictate the disposition of invention ownership. The federal policy anticipates private freedom and a diversity of opportunities. The Bayh-Dole Act limited federal agencies from claiming outright all inventions made at universities with federal support.
In an ironic twist, many university patent administrators have ignored the message of freedom set out in the Bayh-Dole Act. Universities are implementing the very same onerous ownership policies that Bayh-Dole did away with at the federal agencies.
Instead of the federal agencies, it is the universities that are making the compulsory claims to faculty inventions. Where university inventors once enjoyed a wide range of opportunities, they are now increasingly required to give over their inventions without even so much as a review step to university administrators.
University administrations have important roles to play in research innovation. They develop and maintain facilities, manage compliance with regulations, provide training, and manage conflicts of interest. In short, they act as stewards of innovation. It is this stewardship that Bayh-Dole anticipated, and which is the distinguishing characteristic of university-based research, with independent investigators supported by world-class facilities.
In university work, the faculty investigators decide on the research, seek the funding, assemble the team, and decide the merit of the results. The university does not assign or direct the research, and does not control publication. In short, faculty research is not done for the financial benefit of the university. If a university is to profit from patent ownership, someone other than university patent licensing officials should be making the decision.
Why is this issue so important? At stake are the fundamental rights of inventors and the core concept of independent, basic university research. The federal government invests billions of dollars in university research each year. If the research output is held captive by university administrators, instead of being developed in a free and open exchange, then both research innovation and entrepreneurship are stifled.
The present university approach to inventions has placed ownership ahead of stewardship, and the result is an administrative quagmire as patent officers attempt to acquire more intellectual property, earlier, and with less review, in order to make claims against future users to generate income. This, not the introduction of new products into the market, is what university patent administrators mean by “commercialization”.
IP Advocate, a nonprofit organization that promotes awareness of intellectual property rights among university faculty and inventors, has received support from the Ewing Marion Kauffman Foundation to focus attention on the implications of the Stanford v. Roche decision and on the opportunities we now have to diversify and improve the university technology transfer practice.
In the face of global economic challenges, it is critical for America to maintain its leadership in innovation and entrepreneurship. While government, universities, and corporations have a role to play in that innovation, America’s greatest power is in the imagination of the individual—whether it is the student, the scientist, or faculty inventor. This is the strength of our free and open society, and it must be nurtured and protected, even against some of our most respected and powerful institutions. For that, we need universities to act as stewards, not entitled owners, of research innovation.
Gerald Barnett ([email protected]) is the director of the Research Technology Enterprise Initiative, and a former director of university technology licensing offices at the University of California and at the University of Washington.