Madey v. Duke

Even after Madey, many researchers continue to ignore patent protections, and continue their work as if they didn’t need to license technology. The result has been increasing claims by license-holders, and a growing sense by researchers that this is complicating their scientific pursuits and introducing extra costs and restrictions.

Universities, now large licensors themselves of new technology thanks to Bayh-Dole and technology transfer offices, have turned to, in the language of Professor Robin Feldman, “open transfer” agreements to lossen up these restrictions. Such agreements are added to agreements when universities license their technologies for industry to develop, and permit both the licensing university and any other nonprofit they allow to use the technology for education and research. This approach co-opts the mechanisms of the market, rather like open-source licensing does, to permit the continued free sharing and publishing in the academic community.

What do these clauses look like? In the case of the University of California, San Diego, Article 2.2 of the sample agreement for licensing captures this “open transfer” provision:

2.2 Reservation of Rights. UNIVERSITY reserves the right to:
(a) use the Invention, and Patent Rights for educational and research purposes;
(b) publish or otherwise disseminate any information about the Invention at any time; and
(c) allow other nonprofit institutions to use and publish or otherwise disseminate any information about Invention and Patent Rights for educational and research purposes.

Part (a) and (b) are relatively standard in all licensing agreements, commercial or not. Most industry licenses also permit the licensor to use their own technology. Part (c) is the interesting part, as it permits other nonprofit institutions to also use and even publish on the technology, provided it is for educational and research purposes. In other words, what the Federal Circuit has taken out of common law, university tech transfer offices have recreated through their own market-focused and neoliberal license agreements.

This approach suggests that, despite efforts to commercialize the “ivory tower,” there remain creative resistance that seeks to maintain the traditional values and benefits of an academic research environment.

There are, of course, numerous challenges for tech transfer offices. Within the university, most scientists are “in it for the science” and not for the money, according to Dr. Montisano. University researchers have the tendency to publish first, forcing his office to chase after them to try to prevent the loss of patent rights (publishing first loses most international rights immediately, though U.S. law allows for a year’s grace). Outside the university, industry values focus on profit first–even if many researchers have been taught to value the science by universities first.

Diagram from James A. Severson, Ph.D., of Veratect Corporation, Kirkland, WA

Industry prefers to restrict use of its technologies to those explicitly licensed—and such licensees generally must pay for the privilege of their use. Methods and materials are kept close, as trade secrets, unless licensed out for approved use. Competitors must be kept from access to preserve corporate profits. Universities, on the other hand, have generally taken a much broader approach to technology use and sharing. Researchers in universities must “publish or perish,” and getting describing methods and approaches garners a researcher the most benefit when readership is broad. One-upping academic competitors is still a key goal, but the method is through demonstration and publishing successes, not through profit-making and market dominance.

The Bayh-Dole Act attempted to bridge the divide, and technology transfer offices are the means of its implementation. Prior to Bayh-Dole, “legislators were concerned that for a variety of reasons, the government”–formerly the federal government owned the research it funded–“had proved ineffective as a shepherd of the inventions created with federal research dollars” (see Open Source, Open Access, and Open Transfer: Market Approaches to Research Bottlenecks). By many measures, the results have been phenomenal: at the end of fiscal year 2009, UCSD alone had more than 400 licenses active around the world, with a steady increase since 2000. Also in 2009, UCSD’s technology transfer office distributed more than fifteen million dollars to inventors ($9 million), joint titleholders ($432 thousand) research labs and departments ($2.5 million), and the UC general fund ($2.5 million).

All the money suggests some obvious problems created by the “intrusion” of a neoliberal, market-focused approach into the “ivory tower” university environment (assuming such pure extremes ever existed). For a cash-strapped state government like California’s, why not emphasize this market-connected activity and turn universities into self-supporting institutions? Such an approach risks compromising the university focus of basic research and–perhaps even more importantly–ignores the less commodifiable teaching and research done at such institutions, especially in the humanities. Even within the sciences, forcing research to fit into license agreements and patent arrangements may impede the flow of data, slow down innovation by restricting information sharing, and, ultimately, force university researchers away from basic sciences that form the core of future applications.

Related articles

• Technology Transfer and the Third Way (kfwhite.wordpress.com)
• Columbia University’s Tech Transfer Guru, Orin Herskowitz, on Turning IT, Biotech, and Cleantech Ideas Into Businesses (xconomy.com)

The main idea is that each side should take charge of their own fate, in a kind of courtroom analog to capitalism and free-market individualism, and that this self-determination is the best way to produce fairness and truth. The judge serves merely as the umpire ensuring each side follows the rules, which themselves are designed to create a level playing field between the parties. The jury must decide whose facts to believe.

This presents problems when the facts at issue are steeped in scientific dispute. In the American system (and, perhaps to a lesser extent, in all countries following the Anglo-American legal approach), science and scientific evidence emerges and is interpreted through the actions of the parties involved. Expert witnesses testify for a particular side, and are employed by a particular side.

This also presents some problems for scientific experts, who have historically grounded themselves in disinterestedness and objectivity. How does one keep out the influence of one’s employer, either out of self-interestedness or just a lack of access to anything but what one’s own side provides?

While the U.S. judicial system has developed a number of methods to deal with these problems–from various rules of evidence, to standards for judging scientific evidence from Frye to Daubert–there are still problems for scientific expertise in the courtroom. As just one example, how do you enforce rules against perjury if an expert is testifying to a theory? How are lay juries–consisting of specifically of people unfamiliar with the evidence, the case, and the facts–supposed to evaluate and decide between competing scientific claims?

Scientists and others have come up with a number of suggestions, but all of them have involved too many changes to the process for lawyers and judges to agree on implementing them. Appointing experts as direct advisors to the court, for example, interferes with traditional ideas of the judge as a neutral umpire, merely refereeing each side’s zealous advocacy. (Contrast this with European methods, which place approved experts in direct service to the judge, who, incidentally, often gathers evidence as well as overseeing the trial.) Putting scientists into the jury isn’t too popular with lawyers either–typically, special knowledge disqualifies you instead, because lawyers don’t want jurors with preconceived knowledge or ideas.

But at the very least, why not allow experts–jurors who are “people having ordinary skill in the art”–in the jury on patent trials? Or how about eliminating juries for patent trials entirely? (England, our common-law mother, did this already.) But the Constitution can make such distinctions between types of cases problematic, and in any case, lawyers and judges are invested in the current system. Questioning its fairness in one kind of case might lead to questioning it in other situations.

So what to do? How can juries possibly decide between equally compelling and apparently valid scientific theories? Do we need to change the system? Or can lay juries do just fine, despite the scientific complexities of many cases?

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• The Daubert Standard (socyberty.com)
• SFgate.com Chevron: Outtakes prove collusion with expert (sfgate.com)

Image by ramesh.rasaiyan via Flickr

Techdirt discusses why you shouldn’t be concerned if someone “steals” your work and sells it, noting that “it’s not necessarily a bad thing”:

If someone actually figures out something that works well, then that’s useful info to us, and would allow us to then incorporate those findings into our own offering. That’s actually good for everyone…

via Is It Really Such A Problem If People Sell Your Works? Or Is It Just Free Market Research? | Techdirt.

I don’t disagree with this reasoning, at least in the case of the professional production of intellectual property (not necessarily for profit), and most especially when the producer continues to produce content. Thus, this idea makes perfect sense in the case of Techdirt (or most media companies, Twitterers, blogs, newspapers, and so on), since their real value is not in any one particular story, but rather in the relationship between readers/consumers and producers/innovators.

I do worry about “one-off” artists — painters, designers, novelists, musicians — anyone who may invest countless hours in the production of a single item that can then be easily reproduced at virtually zero cost. (Note that my above points would apply to a music label, perhaps, or even a movie studio, since they produce a constant stream of content which can create relationships.) How do we encourage the small-time innovator who may not produce more than a few works? How do we keep free-riders (I might include music labels and publishers in this list…) from discouraging true, one-off innovations by people who may not be interested in innovating in business as well?

I do not have a good answer to this, but I think it’s an important question. (I also think this possibility is used by media companies to “hide the ball” when it comes to their desire to hold onto profitable IP.) If we don’t find some way to resolve it, I suspect we may never have proper IP reform that works for the “little guy.”

The  (IFOSS L. Rev.) is a collaborative legal publication aiming to increase knowledge and understanding among lawyers about Free and Open Source Software issues. Topics covered include copyright, licence implementation, licence interpretation, software patents, open standards, case law and statutory changes.

via the International Free and Open Source Software Law Review.

Cearta.ie adds some more details:

It is a peer reviewed biannual journal for high-level analysis and debate about Free and Open Source Software legal issues, and it will receive financial and administrative support from the NLNet Foundation, which supports organizations and people that contribute to an open information society. Edited by Andrew Katz and Amanda Brock, its focus includes copyright, licence implementation, licence interpretation, software patents, open standards, case law and statutory changes. Unsurprisingly, it operates a strong Open Access Policy, providing immediate open access to its content on the principle that making research freely available to the public supports a greater global exchange of knowledge.

via cearta.ie » New Open Source Law Journal.

So what’s in the first edition? Here’s the (very interesting) table of contents:

Foreword and statement of purpose: an introduction to IFOSS L. Rev., Iain G Mitchell QC

Articles

• The Fiduciary Licence Agreement: Appointing legal guardians for Free Software Projects, Ywein Van den Brande
• Collaborative Approach: Peer-to-Patent and the Open Source Movement, Christopher Wong, Jason Kreps
• Bad Facts Make Good Law: The Jacobsen Case and Open Source, Lawrence Rosen
• Introducing The Risk Grid, Shane Martin Coughlan, Andrew Katz

Case Law Reports

• Jacobsen v Katzer and Kamind Associates – an English legal perspective, Mark Henley

Book reviews

• ‘Open Source Technology and Policy’ by Fadi P. Deek and James A.M. McHugh, Andrew Katz

Tech Watch

• Tech Watch, Adriaan de Groot

Platform

• Collaboration Among Counsel Celebrating the Formation of a Community of Lawyers for the Advancement of Understanding of Free and Open Source Licensing and Business Models, Karen Faulds Copenhaver

This looks like a journal to watch going forward.

Related articles

• International Free and Open Source Software Law Review Launched (computerworlduk.com)
• New Free/Open Source Software law journal launches (boingboing.net)

A recently published law review article takes an interesting approach to testing the hypothesis that patents foster innovation:

Patent systems are often justified by an assumption that innovation will be spurred by the prospect of patent protection, leading to the accrual of greater societal benefits than would be possible under non-patent systems. However, little empirical evidence exists to support this assumption. One way to test the hypothesis that a patent system promotes innovation is experimentally to simulate the behavior of inventors and competitors under conditions approximating patent and non-patent systems. Employing a multi-user interactive simulation of patent and non-patent (commons and open source) systems (“The Patent Game”), this study compares rates of innovation, productivity, and societal utility.

via Patents and the Regress of Useful Arts.

ReadWriteWeb has a good write-up describing the study and its conclusions:

The game is an online simulation of a pure patent system, a patent-free commons system, and a mixed system. Within each environment, first year university students were asked to license, assign, infringe, and enforce patents. The study found that while a mixed patent environment and pure patent environment did not offer substantially different results, students in a commons system generated significantly higher rates of innovation, productivity and social utility. Essentially, the study supports what Lawrence Lessig and free culture advocates have been saying for years: a society free from intellectual property monopolies is a society that is better off.

via Study says Patents Hurt Innovation.

The article concludes that experiments with “PatentSim” do not support the general justification of our current patent system:

Data generated thus far using PatentSim suggest that a system combining patent and open source protection for inventions (that is, similar to modern patent systems) generates significantly lower rates of innovation (p<0.05), productivity (p<0.001), and societal utility (p<0.002) than does a commons system. These results are inconsistent with the orthodox justification for patent systems. However, they do accord well with evidence from the increasingly important field of user and open innovation.

This comports well with my own feelings about the patent system after research and work with intellectual property issues during and after law school. As the article points out, the Constitutional basis of our patent system is to “promote the progress of science and the useful arts” — if this isn’t happening, then our system is not living up to its Constitutional mandate, and ought to be rethough (not, I think, abandoned).

Modern treaty obligations that the United States has supported might make this more difficult to accomplish, since now we are also bound by international obligations as well as constitutional ones (although the courts consistently say the Constitution trumps international treaties and agreements). But simply because change is difficult does not mean we shouldn’t consider it — and doing so may well benefit us and encourage business and innovation.

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• Does Copyright Foster or Hinder Innovation? (inpropriapersona.com)
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• Economists: Abolish Copyright & Patents to Save the Economy (inpropriapersona.com)

Economists Felix Oberholzer-Gee and Koleman Strumpf have just released a new Harvard Business School working paper called File Sharing and Copyright that raises some important points about file sharing, copyright, and the net benefits to society.

via Michael Geist — Harvard Study Finds Weaker Copyright Protection Has Benefited Society.

Mike Masnick of Techdirt adds:

To understand the key points made by the paper, you need to understand the purpose of copyright — something that many people are confused about. It’s always been about creating incentives to create new works. Copyright maximalists and defenders of strengthening copyright laws always suggest that without copyright, there would be much less creative output, because there would be much less incentive to create. History has shown that to be false. If you look back at the age when all creative output had to be registered to be covered by copyright, studies showed that only a very small fraction of content creators even bothered, because copyright wasn’t the incentive. It’s only now, when copyright is automatic, that people seem to think that copyright is somehow necessary.

via Yet Another Study Shows That Weaker Copyright Benefits Everyone | Techdirt.

There are many who disagree, but the study appears to raise interesting issues regarding the benefit to society of copyright protections. As Mike Masnick writes above, copyright is about balancing benefits (incentives to create with the benefits of distribution). Thus, the United States Constitution, in granting to Congress the power to regulate patents and copyrights, says that the point is to

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.

In other words, although we consider copyrights and patents to be property, it is property that functions differently than many conceptualize. It explicitly lasts “for limited times,” for example (although other forms of property also may be limited — law students learn early on that property is a “bundle of rights,” not some kind of absolute grant).

I am not convinced that eliminating copyright is the best approach, even if this study suggests that file sharing may actually benefit creators. Instead, I think perhaps a better balance of rights may be appropriate, and may even benefit creators (musicians, authors, etc.) over the current regime, which tends to benefit current owners of intellectual property (labels, publishers, etc.). But I remain open to exactly what that balance should look like, and studies like this help to provide evidence for which approaches might be better than others.

Colleen Chien has a paper in SSRN, dated April of 2009, that explores the narrative of patents, from the epithet of “troll” applied to patent owners who seek only to leverage their patent through licensing, and not application, and including our rather romantic perception of an inventor:

While each patent dispute is unique, most fit the profile of one of a limited number of patent litigation stories. A dispute between an independent inventor and a large company, for instance, is often cast in “David v. Goliath” terms. When two large companies fight over patents, in contrast, they are said to be playing the “sport of kings.” Some corporations engage in “defensive patenting” in order to deter others from suing them. Patent licensing and enforcement entities who sue have been labeled “trolls.” Finally, observers of the patent system call the use of patent litigation to impose or exploit financial distress “patent predation.”

These stories, routinely invoked by the press, advocates, and academics, shape public understanding of the patent system. In this Article, I describe, then match, these stories to data on patent litigations to determine which types of suits are most prevalent. I focus exclusively on the litigation of high-tech patents, covering hardware, software, and financial inventions, using data from the Stanford Intellectual Property Clearinghouse for cases initiated in U.S. District Courts from January 2000 through March 2008.

via SSRN — Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents by Colleen Chien.

Recommended reading for anyone interested in how our society, including the press, speaks about the patent system

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Michael Geist explains the current status of business method patents in Canada where, so far, they have been firmly rejected — unlike in the United States:

Most people think of patents in terms of legal protection for new technological inventions. There is another form of patent, however. A business method patent is one awarded for a special technique for doing business such as improvements to a company’s accounting or sales department.

Business method patents have proven very controversial in the United States, which has been home to dozens of lawsuits over their validity. By contrast, Canada has tried to craft a balance that neither embraces nor completely rejects them. That policy may be changing, however, as the Canadian Patent Appeal Board recently denied an appeal by Amazon.com over a “one-click” ordering system patent with strong language that challenged the notion that business method patents are patentable under Canadian law.

via Michael Geist — Panel Strikes Blow Against Business Method Patents in Canada.

Although recent rulings in the U.S. have cast doubts on business method patents here, it is interesting to see their fate in a neighbouring country with a related — but quite distinct — legal system.

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Ashby Jones writes:

This just in: The Supreme Court on Monday agreed to hear the case In re Bilski, on appeal from the Federal Circuit.

At issue is the viability of so-called business-method patents, that is, whether business methods and processes are patentable. Click here for coverage from Scotusblog.

via Bilski! Supremes Grant Cert on Business-Method Patent Case — Law Blog — WSJ.

Michael Risch has more:

I was extremely critical of the Federal Circuit opinion when it came out, and not just because of sour grapes that the amicus brief I wrote with three other professors was largely ignored (and worse yet, uncited!). I predicited in my prior posts that the new test would be a disaster, and — to my mind — it has been. Bilski’s machine or transformation test (see here for a description) has led to rejections of a variety of patents that were otherwise seemingly inventive, and that were completely unrelated to the much maligned business methods of Bilski. Worse (and a focus of my article), the opinion leaves the test so vague that no one can really know if they have patentable subject matter until after a long process.

via PrawfsBlawg: Hello Again and Bilski Redux

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