University Intellectual Property Management in the 20th Century
How Did We Get Here and Where Are We Going?
A Presentation for the Conference on Research and Development and Economic Growth in the 20th Century
University of California, Berkeley
March 26 28, 1999
Gary W. Matkin
University of California, Berkeley
This paper traces the shifts that have occurred in the management, protection, and sale of intellectual property by research universities in this century and makes some predictions about the future of university intellectual property management. Early in this century, intellectual property seemed a contradiction when associated with a university because universities were not supposed to "own" the knowledge created within them. Indeed, attempts were made to protect universities from the supposed negative effects of owning and profiting from the important inventions that were increasingly coming from university research. Time has changed this view dramatically, however. Today, colleges and universities are viewed as important elements in the development of the new knowledge and information economy. They are being drawn, often against their will, directly into regional economic development efforts and into activities that seem quite removed from their traditional roles of teaching and research. Universities are now among the largest holders of patents and copyrights and receive millions of dollars per year in royalty income. In 1997, U.S. universities were awarded 2,239 new patents and received a total of $446 million in royalty income, an increase of 33 percent from the previous year. Increasingly they are even engaged in creating companies devoted to the commercialization of university research. The 70 top universities in licensing income started 224 such companies in 1997. The relationship between universities and industry is the subject of intense study and development and industry contributions are becoming more and more important to university financing. At the University of California, for example, industry support of research increased from $79 million in FY 92-93 to $133 million in FY 96-97. Industry increased its share of support of research at all universities from less than 3 percent in 1970 to almost 7 percent in 1995.
As active players in intellectual property commercialization, universities are subject to all the challenges involved in current intellectual property law, including those created by technology itself (the Internet), the creation of new kinds of knowledge (new life forms, for example), and the shift in the way knowledge is created (team knowledge generation). In addition, universities face special challenges of their own; challenges to the traditional university values of openness, objectivity, a search for truth uninfluenced by the prospect of commercial gain, and devotion to the teaching of students. These special university challenges have been faced and answered over the years at each important change in the circumstances related to intellectual property law. An overview of these answers, which have often taken the form of increasingly elaborate policies and administrative infrastructures, provides some guidance for the future.
Handling of Patents and Intellectual Property at the Start of the Twentieth Century
During the very early 1900s, air pollution was a serious problem in the San Francisco Bay area. Air quality was so poor that major effects on public health were clearly evident. The source of the pollution was also clear: tall smokestacks around the Bay spewed noxious fumes into the air seven days a week. Citizens complained bitterly about the discomfort and unhealthy nature of this pollution, nonetheless, the areas economy depended upon the manufacturing and industrial processes represented by those smokestacks.
F. G. Cottrell of the University of California created a solution to this problem: an electrostatic precipitator to reduce air pollution from industrial smokestacks. His invention, which was relatively inexpensive to install, dramatically reduced air pollution in the Bay Area and many other communities. Cottrell obtained a patent for his precipitator in 1907, but in the tradition of many earlier inventors (the Curies, Pasteur, Charles Munroe [smokeless gunpowder] and Marion Dorset [hog cholera serum]), he sought to give away all profits from it. First, he thought of his university: "I wanted nothing in the way of financial profit from it myself", he wrote, "but did want a fair share of any profits which resulted from the invention to come directly to the University." On further reflection, however, Cottrell decided not to involve the university because he believed that it was inappropriate for universities to compete in the marketplace and that concern for profits might cause universities to let their research be controlled by corporations. Even so, the notion that research funding could be generated by income from inventions such as his captured Cottrell. After considerable effort, Cottrell and some eastern investors founded the Research Corporation, which was dedicated to selling university inventions and discoveries and turning the profits of such ventures into research funding for university investigators. Research Corporation operated effectively according to its original charter well into the 1980s, and it exists to this day. We will revisit Research Corporation later in this paper.
Variations of F. G. Cottrells story populate the history of university involvement in intellectual property throughout the early 1900s. For instance, in 1921 F. G. Banting and C. H. Best of the University of Toronto discovered a way to produce synthetic insulin. They received a patent for the process in 1922 and, unlike Cottrell, immediately assigned it to their university. The university, in turn, immediately made the process available free of charge and entered into several cooperative agreements to produce and distribute the new drug. The wide acclaim given the inventors and the university for their generosity led to the establishment of the Banting and Best Research Fund, which received donations from the Canadian government and other sources.
Such generosity and concern were not always interpreted so favorably or had such productive results, however. In the early 1920s, George and Gladys Dicks discovered a way to mass-produce the antitoxin for scarlet fever by immunizing horses. They offered their patents for the process to the American Medical Association in 1924, but the AMA declined on philosophical grounds. In 1925, the Dicks, following the advice of the AMA, established a nonprofit committee to hold the patents. The members of the committee received no compensation, and the proceeds from the patents were used to institute a program of quality control for the production of the antitoxin. This program apparently discovered some quality problems in some manufacturing companies and, to protect the public, the Dicks were forced to defend their patents. The Dicks were widely criticized for their decision to hold and defend the patents, and this controversy is believed to have influenced the Nobel Prize committee not to award a prize to them for their important invention.
Another prominent early example of the handling of university intellectual property involves the University of Wisconsin and the founding of the Wisconsin Alumni Research Foundation (WARF). In 1924, Wisconsin professor Harry Steenbock published research showing that vitamin D could be activated by irradiating food. This technique eventually led to the virtual eradication of rickets, or vitamin D deficiency, as a childhood disease in the United States. Concerned that his university receive some of the benefits of his work, that his process be protected against misuse, and that it not be used by commercial interests competitive with the industry of the state of Wisconsin, Steenbock offered his patents to the University of Wisconsin. The university turned down this offer on several grounds: that the university should not benefit from research that had been supported by public funds, that it should not invest in an invention of uncertain financial return, and that it did not have the legal ability to defend a patent. In response, the alumni of the university, angered by a recent restriction by the regents of the university on private gifts and disturbed by the prospect of the universitys losing the financial benefit of Steenbocks discovery, formed WARF in 1925. Steenbock immediately turned over his invention to WARF, and it quickly generated over $14 million in royalty income for the foundation. The university has continued to receive research funding from WARF to this day. However, even this arrangement was roundly criticized during the late 1920 and 1930s as bringing the university too close to commercial interests. And WARF was involved in some very messy activities, using the name of the university to advertise its products (including warfarin, a rat poison), defending its patents, sometimes against Wisconsin firms, and its refusal to license the process to even one manufacturer of oleomargarine, a product competitive with the Wisconsin dairy industry.
The 1930s and 1940s
By the 1930s, things were beginning to change. The desires evident in the examples just described to dedicate inventions to the greatest public good, to preserve the quality of the products of the invention, and to use the fruits of university invention to further university researchbegan to be expressed in a more active use of patent law by universities. The exigencies of the Great Depression had forced many universities to think about ways to generate funding to support the many talented researchers who were seeking to stay in academia until the economy improved. In 1932, MIT adopted one of the earliest patent policies of any university, pledging that the institute "shall hold and administer these [patent] rights for the benefit of the public." A few years later, concerned that the commercial value of the research disclosed under its patent policy was not being realized, MIT entered into an agreement with the Research Corporation in November 1937 "whereby this organization will handle all legal and commercial aspects of inventions assigned to it by Institute inventors." However, MIT was unique. By the end of the 1930s, only a few universities had adjusted their policies to permit patent ownership and to set up procedures for disclosure and assignment of inventions. The issue of patent ownership was still very serious, and for most universities the level of research and resulting discovery was too low to warrant institutional concern.
In the 1940s, university involvement in war-related research and the tremendous transformation in American research funding patterns and policies made the atmosphere surrounding the use of university-generated research change further. MIT once more was the leader in this movement. A 1942 letter from Howard Poillon, president of Research Corporation, to N. McL. Sage, head of the Division of Industrial Cooperation at MIT, clearly indicates a growing concern about the generation and distribution of income from patents. Contrasting an early proposition that "any income would not be used in a major way to increase the appropriation to the department in which the discovery was made, lest such producer place undue emphasis on the importance of making discoveries," Poillon suggests that "conditions today are quite different in light of certain incomes which are now on the horizon, and if your department is concerned with the possible income from patents that result from discoveries made by men working on projects financed by Institutional appropriations." Such concern was also showing up elsewhere. The commercial potential of the invention of calcium pentathenate, a chicken food additive and later a common ingredient in vitamin pills, by two scientists at the University of California at Davis prompted the regents of the University of California to replace the patent program that the university had formulated in the 1920s but largely ignored with its first patent policy in 1943. Even with the important changes taking place in university research during the 1940s, however, patent policy was slow to develop. By 1949, only 50 universities had patent policies, and half of these had developed their policies within the past 10 years.
The 1950s and 1960s: Federal Governments Growing Role
During the 1950s the federal government, as the dominant funder of university research, began to have significant influence on the administration of university intellectual property. Indeed, the issue of intellectual property rights became an issue in every federal research contract. The goals of government policy were to make the results of federally sponsored research widely available and to protect the public from the wrongful appropriation by private interests of publicly funded research. Despite these common goals, each federal agency adopted its own guidelines, so that by the late 1970s there were at least 26 separate policies and many more regulations. Agencies during this period could be divided by their policies into two categories: "title agencies", which demanded that the government hold all patents resulting from federally funded programs, and "license agencies", which allowed universities to obtain licenses to receive royalty income from federally funded discoveries. The title agencies dedicated their patents to the public good, and the license agencies retained a royalty-free license for government use of the inventions. Spurred by government research contracts, some major research universities by the end of the 1950s had developed not only patent policies but also procedures to deal with intellectual property and the income this property generated. The debate over whether or not the university should own intellectual property had shifted from a matter of philosophy to an argument with the federal government.
The 1960s saw the further evolution of federal policy and further increases in universities attention to the way they managed intellectual property. Many universities, including Stanford and Penn State, largely resolved the issues by using organizations similar to Research Corporation. Other universities, for a variety of reasons, decided to manage their own intellectual property. For instance, the University of California altered its employment contracts and patent policy in 1963 to require university researchers to disclose and assign any inventions or discoveries to the university. The university established a patent office, but this was barely adequate to handle the volume of disclosures that came flooding in. The offices small staff did its best to select the inventions with the most commercial potential for patent protection. During these years, only about 25 of the 200 to 300 invention disclosures that occurred each year resulted in patents.
MIT came to self-management through a different route other than the direct one taken by UC. MIT ended its contract with Research Corporation because of disputes related to the patent for magnetic core memory developed by J. Forrester. MIT felt that Research Corporation had completely mismanaged the licensing of this invention, which was to provide the basis for the computer industry for almost two decades. This "big hit" eventually generated many millions of dollars for MIT, but it also demonstrated the complicated and messy nature of dealing with highly valuable university intellectual property.
Despite these stories and a few others, university interest in patenting and its potential benefits was by no means universal. In a 1967 survey, 7 of the 31 institutions questioned still did not have a patent policy.
The 1970s: The Birth of Universitys Industry Partnerships
The early 1970s saw a downturn in the American economy, producing grave concern about American productivity and business practices. The success of Japan in turning the results of research into economic goods and services drilled deeply into the American consciousness. At the same time, a succession of well-publicized university discoveries were turned to extraordinary economic advantage in electronics, computing, and medicine. These events caused industry to become tremendously interested in university research, and the alignments between major universities and major corporations that have since characterized university-industry relationships and created so much controversy began to appear. For instance, a contract, negotiated in secret between Monsanto and Harvard in 1974, which provided Harvard with $23 million in research and other support related to discoveries involving the tumor angiogenesis factor (TAF) blocking agent, produced a dramatic change in Harvards policies. The universitys original policy, adopted in 1934, required Harvard to dedicate discoveries concerned with "therapeutics or public health" to the public interest. Monsanto understandably was not willing to provide support under this policy, so Harvard changed its policy in 1975. This same kind of agreement was replicated, often with considerable controversy, at other universities, including Washington University (again with Monsanto), MIT (with Exxon), and Massachusetts General Hospital-Harvard Medical School (with Hoescht). The formation of growing numbers of partnerships with industry forced universities to adopt more extensive, sophisticated, and flexible intellectual property policies and procedures.
The federal government opposed some of these partnerships, but overall it began to encourage them through a number of programs. For example, the National Science Foundation (NSF) began a "centers" program in 1971 that was designed to promote partnerships between universities and private enterprise and to foster university research that was relevant to industry. By 1981, 118 centers had been formed under this program.
By this time, it was clear that government policies regarding intellectual property developed with federal funding were not working in the favor of the country. Indeed, they were, in fact, even working against it by making American technology available to foreign firms. By preventing companies from securing intellectual property rights, furthermore, they were keeping inventions from being developed, since in many fields the obtaining of exclusive rights to intellectual property was becoming essential to the economic development of that property. In medicine, for instance, bringing a drug to market, including clinical trials and FDA review, involved such a huge up-front investment that no company was willing to undertake the task without fully securing intellectual property rights to the drug for a long period.
Very few inventions "dedicated to the public good" ever resulted in any public good because of their lack of investment potential. In 1980, fewer than 5 percent of the 28,000 patents being held by the federal government had been licensed, as compared to about 30 percent of the patents for which the government had allowed companies to retain title. The complexity of federal regulations also continued to be a burden to everyone, especially as more corporations became involved. Something obviously had to be done, and that something proved to be the passage of the Bayh-Dole Act (P.L. 96-517, December 12, 1980), also referred to as the Uniform Federal Patent Legislation because it finally clarified federal policy and abolished the maze of regulations that had governed the ownership of intellectual property under federal sponsorship. This act, which had a major effect on university intellectual property management, allows nonprofit organizations to own intellectual property developed with federal funding if certain conditions are met, including that the inventor share in the financial rewards of the ownership, that the nonprofit organization have a clearly established "licensing capability," and that any excess of profits be used to fund further research. The Bayh-Dole Act, combined with P.L. 98-620 passed in 1984 and the Executive Order: Facilitation of Access to Science and Technology issued in 1987, clearly indicates that a major purpose of federally sponsored research is now encouragement of the transfer of technology from research to commercialization.
The 1980s and 1990s: From Protection to Marketing
With federal policy finally clarified and plainly encouraging university ownership and management of intellectual property, universities began to expand their investment and concern in this area. The establishment of the Stanford Office of Technology Licensing in 1970 was the earliest example of a major shift that has now occurred in most universities. Unlike other university patent offices which were designed primarily to protect intellectual property developed by the university, the Stanford office, under the direction of Niels Reimers, was dedicated to selling intellectual property. By the late 1980s, most universities that had decided to "go it alone"- that is, not to turn over the management of intellectual property to an external entity like Research Corporation (or its spin-off, Research Corporation Technologies) or a foundation - had made the shift from a protection to a sales orientation. This happened at MIT in 1985, at the University of California in 1988 and at other major research universities in the late 1980s and 1990s.
By the early 1990s, most major research universities had established effective technology licensing operations that were generating royalty income and licensing activity at a rapidly growing rate. In addition to the normal intellectual property activities of patenting, copyrighting, and licensing, quite a few universities are now venturing into new territory; the starting up, owning, and managing of for-profit companies dedicated to commercializing technology developed at the university. This increased maturity and sophistication has developed just in time for an unprecedented assault on intellectual property law by new technologies and new processes for generating knowledge. The universitys role as a major creator of intellectual property, combined with its new activism in the marketplace, has given it a uniquely prominent place in the debates that swirl around developing intellectual property law.
The second part of this paper describes some relatively recent events that may provide a clue to the future of university intellectual property management. As all historians know, it is difficult enough to determine, describe, and place in perspective what has happened. Attempting to make sense of what is happening now is almost impossible, particularly in what is supposed to be an academic paper duly supported by evidence. Such descriptions are inevitably based upon a small number of anecdotal experiences and events, and the discovery of trends among these seemingly isolated events is highly speculative. In some academic circles the projections of such vaguely perceived trends into the future is considered irresponsible and disreputable. However, as someone involved in day-to-day circumstances, I am continually forced to place isolated events into a larger picture and to make projections of the future to guide present actions. Thus, at the risk of seeming rather random in my approach, I will now accept these challenges and describe some events and trends that I think will have a significant impact on the future of university intellectual property management.
The University as Beneficial Holder/Clearinghouse of Intellectual Property Rights
In passing the Bayh-Dole Act of 1980, Congresss main purpose was to increase the number of federally sponsored inventions that reached the marketplace. Another powerful reason for allowing universities to own and license patents was the "beneficial holder" idea - the idea that universities, since they did not act primarily to make a profit, would administer intellectual property for the good of society as a whole rather than for personal enrichment. For instance, given their responsibility and responsiveness to the community, they would be more likely to grant nonexclusive licenses to many firms than to give an exclusive license to a large, dominant firm, and they would be likely to have job generation and community development much higher up on their list of criteria for distribution of rights than a private firm or another kind of holder might. Furthermore, in highly competitive industries such as the electronics industry, in which technology changes quickly and "time to market" is an important factor, it is difficult for individual firms to do basic research and then share it among themselves. Some industries therefore have turned to universities to do much of their basic research and to distribute rights to inventions according to an agreed-upon set of criteria. In this case the university becomes a kind of escrow holder of the intellectual property, charged with the task of assuring a fair distribution of the products of jointly funded research. In still other cases, the university serves as the holder of "bundles" of technology, the components of which could not otherwise be combined to produce a commercial result. It is increasingly clear that an entire product cannot be based upon a single patent or copyright and the amount of time and money required for one company to accumulate all the rights it needs to exploit a patent it owns is often prohibitive. In addition, firms that pool or swap rights to technologies, sometimes governed by "field of use" restrictions, can often avoid costly legal negotiations. Here, too, the presence of a noncompetitive beneficent escrow holder in the form of a university, which might already own a portion of the bundle, is valuable.
One or more of these reasons is probably behind in the action recently taken by E. I. du Pont de Nemours in donating some of its patents to three universities. The patents were valued by an independent third party and will undoubtedly result in some form of tax credit to du Pont. The largest giftnine biotechnology patents valued at a total of $35 millionwas given to the University of Iowa Research Foundation, which manages intellectual property for Iowa State and several other universities. Virginia Tech received $23 million worth of patents related to the manufacture of fiberglass, and Penn State received a single patent worth $6 million related to the controlling of mites in food. It is notable that each of these universities is known to have patents of its own in the areas related to its gift from du Pont. While still quite rare, this sort of corporate use of intellectual property for philanthropy is growing. The size of the du Pont gift is unusual and, I believe, foreshadows many similar gifts, especially as long as United States tax law favors such gifts.
The factors cited above and many more, including the advent of the Internet, are contributing to the growing need for intellectual property clearinghouses. Universities, because of their historical role, are good candidates for performing this function as well as that of beneficial holder.
Big Hits, Strange Bedfellows, and the Universitys Changing Persona in the Marketplace.
Lets go back to the Research Corporation, which was described earlier in this paper. After its formation in 1912 by F. G. Cottrell and his associates, it remained basically unchanged until 1987. In that year, following the trend of increasing university involvement in the commercial exploitation of technology, it formed an independent, nonprofit but taxpaying, subsidiary named Research Corporation Technologies, or RCT. Research Corporation loaned the new corporation $35 million and assigned all its rights to patents to RCT. As a charitable institution, Research Corporation felt it could not invest directly in for-profit enterprises, but under the newly passed Tax Reform Act, RCT could make such investments. Unlike Research Corporation, RCT does not make research grants.
RCT began to handle two big hits from Michigan State University, which had signed an agreement with Research Corporation in 1950. These two patents, for the anticancer drugs cisplatin and carboplatin, have produced over $160 million since their commercialization in 1978; they are just about the only patents that produce revenue for Michigan State, and they account for about 20 percent of RCTs annual income. Under the terms of the original contract, Michigan State and RCT were to split the profits from these patents 50/50 after 15 percent had been subtracted for administration costs. In 1995, however, Michigan State grew uncomfortable with its 50 percent share and with the fact that RCT was not making research grants, and sought to terminate its contract with Research Corporation, a move that would have provided the university with 70 percent of the royalty income under the contracts termination clause. This action resulted in a suit between the two entities, which was recently settled by providing Michigan State a larger share of the royalties. The main contentions of Michigan States suit was that RCT were becoming "unjustly enriched" from the patents and that it had breached the contract signed in 1950, which had provided for research grants to the university. At the same time this suit was in process, RCT and Michigan State joined together to defend the patent extension for cisplatin, filed in 1996, against the challenges of four generic drug companies that sought to invalidate the extension. This circumstance of antagonists in one action joining together in another may seem odd but is fairly common, particularly where "big hits" are concerned. For instance, the University of California at San Francisco and the biotechnology and pharmaceutical firm Genentch have engaged in a whole series of alternating fights and joint ventures over the years. Similarly, after trying for six years to license a gene-splicing process to Eli Lilly that was essential for the production of Lillys insulin product, UC sued Lilly. The suit was filed the same week that another campus of the university submitted a major proposal for grant funding to the Eli Lilly Foundation.
These examples illustrate several points. First, "big hits" require special handling that is often beyond the capacity of the university administering agencies. Highly valuable intellectual property draws a lot of attention, much of which is not beneficial. This was the case with the Michigan State-RCT controversy and with the earlier conflict between MIT and Research Corporation concerning the magnetic core memory patent. Universities that are lucky enough to generate a big hit have to be willing to sue and to defend themselves aggressively against the suits of others. In many cases they have no choice: licensing agreements require university support of patents, and good business practice demands that universities be willing to defend themselves in order to preserve the integrity of their intellectual property administration.
As universities walk in the marketplace they will surely get mud on their boots, and they are likely to exchange their traditional image for a more business-oriented one. They will be criticized for this change, as Michigan State was for the RCT suit. Although some commentators will see this new orientation as a natural extension of the universitys role that brings it closer to the center of the economy, others will decry the loss of its traditional aloofness from commerce. This debate will no doubt bubble on for years before a new understanding and appreciation of the university and its economic contributions is reached. For its part, the university will have to recognize and honor the increasing trends toward concurrent cooperation and competition in business, and the dissociation of commercial enterprise from specific legal actions. This may be difficult in the politically charged environment in which universities must operate.
The Uniting of Research Universities
In 1985, Brian Sauer, a duPont employee, presented what he called the Cre-loxP system at a biotechnology conference in San Francisco. It got little attention there but by early 1994 his technique was in wide use and highly acclaimed. Sauers technique could be used to produce transgenic mice with selectively inactivated or "knocked-out" genes which are extremely valuable in many areas of biological research. DuPont made this technology widely available through a licensing agreement that did not require any cash payment but did provide some very aggressive terms for subsequent use, including "reach through" provisions that seemed to imply that any invention or discovery made using these mice or the Cre-lox technology would be owned by duPont. The license also prevented the transfer of materials unless all parties to the transfer had signed the agreement. Because the knockout mouse was so important for research, over 100 universities signed the license agreement, but a handful of important institutions, including the University of California, Harvard, Johns Hopkins, and MIT, refused to sign. Since much of the research done with knockout mice is funded by the National Institutes of Health, the institutes director, Howard Varmus, also became concerned about the effect this duPont practice was having on the flow of information among NIH-funded projects. This group of major universities combined with an important federal agency eventually persuaded duPont to alter its agreements to conform more closely to accepted scientific norms. In a similar way, a number of research universities have joined to oppose certain consulting agreements between Intel and faculty recipients of Intel summer research fellowships, as well as certain contractual provisions insisted upon by the Semiconductor Research Corporation.
Attempts to gain access to university-produced intellectual knowledge are sure to increase, and the aggressiveness of some corporations in seeking to wring a return from corporate-owned technology will also increase. In this atmosphere, universities will more frequently have to stand together to resist inappropriate incursions on their rights and values. Here the major research universities, where the most valuable research is conducted, are key. It will also be increasingly important for universities to stand with government and other organizations that have a clear view of the public policy agenda for intellectual property. New or stronger relationships among university research provosts and intellectual property officers are likely to be formed to articulate and defend the rights of universities.
Changes in University Employment Practices
During the mid 1990s, the University of California was involved in a series of legal actions related to intellectual property brought by employees or former employees. Two of the most important were Shaw vs. Regents and Singer vs. Regents. Although litigation may continue, the university lost on important elements of both cases.
The Shaw case was fairly straightforward. The university hired Shaw in 1986 to teach and do research in the science of the cultivation of fruits. He signed an agreement in which he promised to disclose all inventions in return for a share of the proceeds from them, which, at the time he signed on, was 50 percent. In 1992, Shaw and six others disclosed their invention of six new varieties of strawberries, but by then the patent policy had changed so that inventors received income from patents on a sliding scale. Shaw was asked to sign a new agreement but he refused, charging that the university was unilaterally abrogating the agreement he had signed when he came to work. The court ruled in Shaws favor.
The Singer case was a bit more complex. Singer had disclosed inventions related to the development of MRI machines and he became very unhappy with the universitys management of his intellectual property. Like Shaw, he sued for breach of contract over the change in the inventor share proportion, but he also charged that the university was lax in its efforts to protect the invention and to secure high returns from it. Among other things, he charged that the university should have sued some infringers, that it should have negotiated higher royalties, that the machines should have been marked more clearly with patent indicia, that his royalty income had been improperly impounded, and, most troubling of all for some, that some research funding received from the licensees was in reality, royalty income of which he should have received a part. Singer lost on all but the last charge, which is still in litigation. Should the university lose this action, it would mean that no licensee could provide research funding related to the licensed technology without providing a share of it personally to the inventor, thus destroying one of the fundamental justifications of an aggressive technology licensing program.
These events indicate to me that intellectual property policies and employment contracts in universities will have to be considered together and, that intellectual property management may become an important factor in the researchers selection of the institution they will work for. An aggressive, well-supported, stable technology licensing office will become thus become both a valuable recruiting tool for universities and an important way to avoid subsequent conflicts with faculty members.
Collective Ownership of Intellectual Property
In 1956 Seymour Melman, a professor of engineering at Columbia, was commissioned by the U.S. Patent Office to make a study of the patent system. Among the issues he discovered that the patent law was unable to address adequately was the question of collective discovery. The patent system had been based on the notion of a single inventor, was science was and is still moving in the direction of group research. This inadequacy persists to this day and is especially troublesome in universities where teamwork and openness of communication are strong traditions.
Early on, in recognition that most discoveries come from the efforts of many people, university inventors established a tradition of assigning income from their inventions back to their university and, often, back to their home departments or the particular laboratories they worked in. Royalty income distribution policies in universities, including that of the University of California, have increasingly included provisions for the return of income to specific departments. A recent agreement signed between the University of California, Berkeley, and Novartis Corporation has taken this trend one step further. In this case, an entire department in the biology group sought a private research funder. Under the agreement concluded with Novartis, that department will receive $5 million per year for five years, to be distributed among members of the department on the basis of peer-reviewed research proposals. In return, Novartis will receive rights to a number of elements of intellectual property; the number to be determined by the proportion that the Novartis funding bears to the total research funding of the department. This agreement caused a good deal of controversy even though the federal government approved it and it violates no existing university policy. Observers of this agreement saw in it the possibility that a large corporation, and a foreign-owned one at that, could gain privileged access to publicly funded research. It seems to me, however, that the agreement is a natural extension of the notion of collective research and may pave the way for more such agreements.
Collaboration in Education
The collective, collaborative mode of working has gone beyond research and the generation of new knowledge to the teaching and learning process so central to our notion of higher education. New technologies, including the Internet, present both a promise and a threat to the education establishment. What has until now been a process largely controlled by the individual instructor, who both produced and provided the education given to students, instruction and learning now can be provided through intermediaries such that producer and provider are being separated and teacher and taught are also separated by both time and distance. In this new mode, the instructional process becomes a group activity in which content experts, instructional designers, technologists, artists, editors, and others work on a project together. Once generated, a course may be continuously updated by the same or another team. University faculty therefore are now asking a question unheard even five years ago: Who owns a course? This blending of educational process with education products is sure to have profound effects on intellectual property management involving this traditional function at the very heart of the university. While the interplay of intellectual property law and university research is natural and has evolved over time, the sudden importance of intellectual property law in the instruction and learning process is surprising and unexpected, and its outcome is unpredictable. Perhaps for the first time, IP law has the possibility of profoundly affecting higher education.
This paper has traced the course of universities management of intellectual property in this century from the early days when these institutions and their constituencies held themselves aloof from involvement in intellectual property concerns, through the evolution of increasingly elaborate and sophisticated management techniques and administrative forms. Pressed by the society that supports it, the higher education establishment first became a major producer of new knowledge and then an active purveyor of it. Like it or not, the research university is now a major factor in the economic life of any region or country. Through most of its history and even yet, the university has been a relative bystander in the development of intellectual property law and the public policy developments that have shaped it. The time for standing by, however, is over. Society today both expects and demands that universities become involved in the development of intellectual property law.
This need for involvement arises for several reasons. First, universities are producing the inventions and, increasingly, the resulting technologies that are outstripping the ability of intellectual property law to handle them. The first patent on a genetically engineered microorganism, for instance, was awarded in 1981 to Ananda M. Chakrabarty for a patent he filed in 1972. Harvard received the first patent on an animal in 1988. These patents created two of the many new categories of patents filed in the 1980s and 1990s. The rapid advance of the Internet, a technology invented by universities for their own use, has caused a virtual meltdown of intellectual property law that we are only now beginning to deal with. Universities contain a pool of talent that not only produces new kinds of knowledge but also is in the best spot to predict where that knowledge is going so that intellectual property law can be developed.
Second, as universities add the function intellectual property purveyance to their traditional role of intellectual property producer, including purveyance associated with the beneficial holder and clearinghouse functions, they become larger actors in the arena of intellectual property management in our country. Third, as indicated in the last section above, new developments in intellectual property law may profoundly influence both the internal workings and the external relationships of universities. Fourth, there is simply no other institution available to manage effectively, on a large scale, the new intellectual property produced in universities. Private industry and government play important roles, but no social institution except the university can facilitate the transformation of new knowledge into public good in the way universities can. To interpret new technologies, to support their roles as producer and sellers of intellectual property, to protect themselves, and to fill a needed gap, universities must take an active role in intellectual property management, development, and interpretation.