Patent Policy - ACS Publications - American Chemical Society

5 University Technology Transfer—Publish and Perish

Downloaded by UNIV OF MASSACHUSETTS AMHERST on May 18, 2018 | https://pubs.acs.org Publication Date: June 1, 1978 | doi: 10.1021/bk-1978-0081.ch005

HOWARD W. BREMER Wisconsin Alumni Research Foundation, 614 N. Walnut St., Madison, WI 53705

Science and law are both ancient and influential forces in the shaping of any society. While the laws of science are i n violable, the laws of humanity can be broken. Applied sensibly and in concordance with each other, these laws can solve many of humanity's problems; applied thoughtlessly and selfishly, they can be destructive of each other and perhaps of humanity. The patent system constitutes a sensible melding of science and law, a melding which serves to protect that most fragile of assets--intellectual property as embodied in patents. As Chief Judge Markey of the Court of Customs and Patent Appeals said, "No institution has done so much for so many, with so little public and j u d i c i a l understanding, as has the American patent system." With that preface, this paper w i l l describe some of the things that have been accomplished under that system by the Wisconsin Alumni Research Foundation (WARF) and how the system is operating today with the Federal government the major source of financial support for university research and development. An Historical Perspective In the early 1920's, Dr. Harry Steenbock, a professor in the Biochemistry Department at the University of Wisconsin, found that exposure of certain foods, o i l s , or pharmaceuticals to ultraviolet radiation imparted antirachitic properties to the substances. He applied for a patent on this discovery and offered to assign the resulting patent to the University. Dr. Steenbock's objectives were: "To develop a plan for making use of patentable ideas of various members of the faculty that would protect the individual taking out the patent, insure i t s proper use, and at the same time bring financial help to the i n s t i t u tion and in this way further the University's research support." In rejecting this offer, the Board of Regents of the University stated that i t could not "be expected to a l l o t money for a patent application when i t i s not certain that i t w i l l 0-8412-0454-3/78/47-081-055$05.00/0 © 1978 American Chemical Society Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.


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r e c e i v e something f o r such an expenditure." The S t a t e Attorney General f e l t t h a t , s i n c e the U n i v e r s i t y had no power t o defend patents, U n i v e r s i t y ownership o f patents would be o f q u e s t i o n able value. A p l a n was proposed t o organize a n o n - p r o f i t c o r p o r a t i o n , the necessary c a p i t a l o f which was t o be f u r n i s h e d by alumni and f r i e n d s o f the U n i v e r s i t y , and whose management was t o be i n the hands o f t r u s t e e s . Subsequently, a corporate c h a r t e r s e t t i n g up WARF was f i l e d on November 14, 1925, w i t h c a p i t a l f u r n i s h e d by nine alumni, each o f whom c o n t r i b u t e d $100.00. The new o r g a n i z a t i o n was expected t o provide the mechanism f o r accomplishing Dr. Steenbock's o b j e c t i v e s . WARF was the f i r s t foundation formed i n connection w i t h an educational i n s t i t u t i o n which was independent o f f a c u l t y and Regent c o n t r o l and without any endowment, other than the Steenbock patent. WARF was organized f o r and was t o be operated e x c l u s i v e l y f o r the b e n e f i t o f the U n i v e r s i t y o f Wisconsin and, t h e r e f o r e , considers t h a t i t s patent management program i s an o b l i g a t i o n t o the U n i v e r s i t y o f Wisconsin f a c u l t y , s t a f f and students. T h i s o b l i g a t i o n i s expressed i n the WARF c h a r t e r which s t a t e s t h a t WARF i s t o promote, encourage and a i d s c i e n t i f i c i n v e s t i g a t i o n s and research a t the U n i v e r s i t y ; and t o provide means whereby any s c i e n t i f i c d i s c o v e r i e s and i n v e n t i o n s t h a t may r e s u l t may be developed f o r p u b l i c use i n a manner such t h a t funds could be obtained f o r use i n s t i m u l a t i n g f u r t h e r research a t the U n i v e r s i t y . Assignment o f i n v e n t i o n s made i n the course o f r e s e a r c h o r development u t i l i z i n g U n i v e r s i t y f a c i l i t i e s t o the U n i v e r s i t y or t o WARF has never been r e q u i r e d , even when WARF grants have supported research l e a d i n g t o such i n v e n t i o n s . Thus, i n v e n t i o n s which have been brought t o WARF were brought by the i n v e n t o r s on a v o l u n t a r y b a s i s . E a r l y i n i t s h i s t o r y , WARF adopted a p o l i c y , s t i l l e x i s t i n g today, o f r e t u r n i n g t o inventors 15% o f the net proceeds r e c e i v e d . The remaining 85% o f the net proceeds becomes a p a r t of WARF's annual research grant t o the U n i v e r s i t y . Recognizing the compelling need f o r academic researchers to p u b l i s h t h e i r r e s u l t s promptly, WARF does not ask f o r delay i n p u b l i c a t i o n , even o f those i n v e n t i o n s recognized as having p o t e n t i a l p a t e n t a b i l i t y and l i c e n s a b i l i t y . T h i s p o l i c y may r e s u l t i n the " l o s s " o f some i n v e n t i o n s , t h a t i s , i t w i l l be impossible t o f i l e an appropriate patent a p p l i c a t i o n before a p u b l i c a t i o n bar date occurs. Even though such p u b l i c a t i o n w i l l d i s c l o s e the i n v e n t i o n t o others i n an acceptable and convent i o n a l manner, because o f the absence o f patent p r o t e c t i o n , t h e i n v e n t i o n may never be developed f o r the b e n e f i t o f the p u b l i c . T h i s i s the f i r s t example o f the " p u b l i s h and p e r i s h " syndrome a s s o c i a t e d w i t h the t r a n s f e r o f u n i v e r s i t y - g e n e r a t e d technology. Although organized as a separate corporate e n t i t y and although a c t i v e s o l i c i t a t i o n o f i n v e n t i o n s from the U n i v e r s i t y

Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.

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i s not p r a c t i c e d , WARF s presence on the campus i s r e a l , and i t s r e l a t i o n s h i p w i t h the U n i v e r s i t y and i t s f a c u l t y i s not o n l y f i n a n c i a l - and s e r v i c e - o r i e n t e d but i s a l s o very p e r s o n a l . What has been accomplished under WARF s "hands-off" p o l i c y coupled w i t h i t s patent management p o l i c y ? The Steenbock patent was, f o r t u n a t e l y , a "winner", u l t i m a t e l y r e t u r n i n g about e i g h t m i l l i o n d o l l a r s i n new r o y a l t i e s . T h i s income provided the seed money from which s u b s t a n t i a l a d d i t i o n a l a s s e t s were generated. R o y a l t i e s from a number o f a d d i t i o n a l patents continue t o make a s i g n i f i c a n t c o n t r i b u t i o n to WARF s t o t a l income. Since a l a r g e percentage o f t h i s income has been used t o support f u r t h e r r e s e a r c h a t the U n i v e r s i t y , the program o f t r a n s f e r r i n g technology u t i l i z i n g the patent system can be considered s u c c e s s f u l . I n the f i r s t f i f t y years o f WARF's e x i s t e n c e , grants t o t a l i n g over $79,000,000 have been made. I n the years s i n c e 1973-74, the annual c o n t r i b u t i o n has been i n excess o f $4,000,000. During t h i s f i f t y year p e r i o d , out o f a t o t a l o f 62 i n v e n t i o n s l i c e n s e d t o about 650 l i c e n s e e s , about 400 b e i n g under the Steenbock p a t e n t s , 43 i n v e n t i o n s have produced some r o y a l t y income. Of these 43 income-producing i n v e n t i o n s , 14 have produced between $10,000 and $100,000 each, 9 have produced between $100,000 and $1,000,000 each, and 4 have produced i n excess o f $1,000,000 each. The 43 income-producing i n v e n t i o n s r e s u l t e d from the e v a l u a t i o n o f 1,702 i n v e n t i o n d i s c l o s u r e s . A t o t a l o f 415 United S t a t e s patent a p p l i c a t i o n s were f i l e d and 270 United States patents were i s s u e d , r e p r e s e n t i n g about 195 l i c e n s a b l e areas o f technology. One out o f about every 40 i n v e n t i o n disclosures considered f o r p a t e n t i n g and a d m i n i s t r a t i o n thus u l t i m a t e l y produced income. I t i s i n t e r e s t i n g t o consider the e f f e c t t h a t the l i c e n s i n g o f those 43 income-producing i n v e n t i o n s has had on the country's economy. By e s t i m a t i n g the s a l e s which the v a r i o u s l i c e n s e e s would have had t o have made t o generate the r o y a l t y income r e c e i v e d , i t i s estimated t h a t four o f the i n v e n t i o n s , c o l l e c t i v e l y , account f o r about $1,500 m i l l i o n i n s a l e s ; nine invent i o n s , c o l l e c t i v e l y , account f o r about $80 m i l l i o n i n s a l e s ; nineteen, c o l l e c t i v e l y , account f o r about $20 m i l l i o n i n s a l e s ; and e i g h t , c o l l e c t i v e l y , account f o r about $1.5 m i l l i o n i n s a l e s . These s a l e s i n c l u d e s u b s t a n t i a l r o y a l t i e s from f o r e i g n sources thus f a v o r a b l y a f f e c t i n g f o r e i g n trade b a l a n c e s . I n f a c t , a number o f WARF i n v e n t i o n s have produced income from f o r e i g n sources f a r exceeding that obtained i n the United S t a t e s . Even more importantly, although more d i f f i c u l t t o assess, t o what extent has the p u b l i c b e n e f i t t e d from t h i s t r a n s f e r o f technology from the U n i v e r s i t y o f Wisconsin? Numbered among those i n v e n t i o n s which reached the marketplace are: W a r f a r i n r o d e n t i c i d e s , which, widely used, have saved


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m i l l i o n s of d o l l a r s by c o n t r o l l i n g rodent populations; Warfarin a n t i c o a g u l a n t drugs, which are c r e d i t e d w i t h extending and saving countless human l i v e s ; A dextrose-urea p r e p a r a t i o n , which i s used to reduce i n t r a c r a n i a l pressure i n cases o f trauma and surgery; New spark sources f o r s p e c t r o s c o p i c measurements, which permit more complete and accurate diagnoses of metal samples; An ion-vacuum pump f o r o b t a i n i n g extremely h i g h vacuum; and, o f course, The Steenbock process f o r f o r t i f y i n g foods with Vitamin D, r e s u l t i n g i n the e l i m i n a t i o n of r i c k e t s as a childhood d i s e a s e ; and now, Vitamin D d e r i v a t i v e s , which give promise f o r p r o p h y l a c t i c and c u r a t i v e treatments f o r diseases i n v o l v i n g calcium-phosphorus imbalance i n mammals. A Current Assessment During the e a r l y h i s t o r y o f our country, very l i t t l e t e c h n i c a l development work was done with United S t a t e s government support and, t h e r e f o r e , the question o f the government owning a patent never arose. G r a d u a l l y , F e d e r a l agencies began to support development work l e a d i n g to i n v e n t i o n s i n F e d e r a l l a b o r a t o r i e s using f u l l - t i m e government employees. As a r e s u l t the r e c u r r i n g problem arose o f what to do with i n v e n t i o n s r e s u l t i n g from such w o r k — i n v e n t i o n s which, i f made by p r i v a t e p a r t i e s , would have become the subject o f patent a p p l i c a t i o n s . T h i s s i t u a t i o n changed r a p i d l y during and a f t e r World War I I when the t e c h n o l o g i c a l requirements imposed by more and more s o p h i s t i c a t e d m i l i t a r y requirements, as w e l l as by the i n c r e a s i n g complexity o f support s e r v i c e s , showed t h a t s u f f i c i e n t resources d i d not e x i s t w i t h i n the government to handle a l l the s c i e n t i f i c p r o j e c t s necessary to win the war e f f o r t . The n e c e s s i t y t o use the best t e c h n i c a l resources a v a i l a b l e , r e g a r d l e s s o f l o c a t i o n , spawned a p r o l i f e r a t i o n o f governmentsponsored and -funded r e s e a r c h and development c o n t r a c t s . The proper d i s p o s i t i o n o f r i g h t s t o patents r e s u l t i n g from t h i s work was as important then as now, but was never s e r i o u s l y considered as a major problem because o f the exigencies o f wartime needs. A f t e r World War I I the n e c e s s i t y f o r m a i n t a i n i n g continued t e c h n o l o g i c a l s u p e r i o r i t y , a t l e a s t f o r n a t i o n a l defense, r e q u i r e d continued p u b l i c support f o r s c i e n t i f i c r e s e a r c h . T h i s support was not l i m i t e d t o the m i l i t a r y , as hundreds o f m i l l i o n s o f d o l l a r s were appropriated by the government i n the area o f


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f

medical r e s e a r c h beginning i n the 1950 s. Since the government could not do a l l the necessary work i n i t s own f a c i l i t i e s , q u a l i f i e d p r i v a t e companies, u n i v e r s i t i e s and n o n - p r o f i t o r g a n i z a t i o n s were sought out to perform many o f the programs under c o n t r a c t u a l arrangements. The same o l d problem o f ownership o f patent r i g h t s e x i s t e d i n every one o f the c o n t r a c t s . Since no s i n g l e o r o v e r r i d i n g government-wide patent p o l i c y e x i s t e d , each governmental agency has developed i t s own p o l i c y . At one extreme, some agencies advocated a " t i t l e " p o l i c y ; a t the opposite extreme other agencies advocated a " l i c e n s e " p o l i c y . The p o l i c i e s o f s t i l l other agencies range between these two extremes. Governmental agencies o p e r a t i n g under the " t i t l e " p o l i c y acquire t i t l e t o a l l contract-generated i n v e n t i o n s and patents i s s u i n g on them, i n c l u d i n g i n v e n t i o n s which were o n l y i n c i d e n t a l to the major purpose o f the c o n t r a c t , and then d e d i c a t e them t o the p u b l i c through p u b l i c a t i o n , o r by o f f e r i n g , on request, a non-exclusive, r o y a l t y - f r e e l i c e n s e under any patents obtained. The argument i s t h a t a l l these i n v e n t i o n s , i n c l u d i n g the i n c i d e n t a l i n v e n t i o n s , should be acquired because they had been "paid f o r " by the government and should, t h e r e f o r e , be owned by the government. Agencies which adopt the " l i c e n s e p o l i c y " permit the c o n t r a c t o r s t o take and keep t i t l e t o i n v e n t i o n s and patents a r i s i n g under the c o n t r a c t , while a r o y a l t y - f r e e l i c e n s e i s reserved t o the government to p r a c t i c e the i n v e n t i o n f o r a l l governmental purposes. The theory which these agencies apply i s t h a t i n v e n t i o n s and patents are o n l y i n c i d e n t a l t o the s p e c i f i c r e s e a r c h o r products c o n t r a c t e d f o r and t h a t e q u i t y r e q u i r e s nothing more than a r o y a l t y - f r e e r i g h t t o be vested i n the government t o use the i n v e n t i o n s f o r i t s own purposes. Other t h e o r i e s and contentions made by the advocates o f the two p o l i c i e s , each i n support o f t h e i r own p o s i t i o n , tended t o p o l a r i z e the two groups so t h a t u l t i m a t e compromise seems d i f f i c u l t , i f not i m p o s s i b l e . T h i s was the s i t u a t i o n which p r e v a i l e d i n t o the 1960 s. Even where the government agencies had the r i g h t t o waive t i t l e to a c o n t r a c t o r o r grantee, i t was almost never done. The r e s u l t was t h a t fewer and fewer i n v e n t i o n s generated from u n i v e r s i t y r e s e a r c h were r e p o r t e d , s i n c e the v a r i o u s governmental agencies a s s e r t e d the r i g h t o f patent ownership, even where the f e d e r a l funds i n v o l v e d i n making an i n v e n t i o n were a f r a c t i o n of the t o t a l funds expended. As a consequence, i n v e n t o r s a t u n i v e r s i t i e s were no longer f r e e t o dispose o f t h e i r i n v e n t i o n s as they saw f i t , because the o b l i g a t i o n s which the u n i v e r s i t i e s and the i n v e s t i g a t o r s had t o assume under government-financed grants o r c o n t r a c t s took precedence. At t h i s p o i n t , l e t us consider the s i t u a t i o n t h a t p e r t a i n s when the government does take ownership o f a patent. The i d e a of the government owning a patent i s , i n a sense, an anomaly. f



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The patent system was c r e a t e d as an i n c e n t i v e t o i n v e n t , develop and e x p l o i t new technology - paraphrasing the C o n s t i t u t i o n to promote science and u s e f u l a r t s f o r the p u b l i c b e n e f i t . When the government owns a patent with the contention t h a t the i n v e n t i o n covered by a patent should be f r e e l y a v a i l a b l e t o a l l , much the same as i f a d i s c l o s u r e o f the i n v e n t i o n had been p u b l i s h e d , the patent system cannot operate i n the manner i n which i t was intended. The i n c e n t i v e inherent i n the r i g h t t o exclude others c o n f e r r e d on a p r i v a t e owner o f a patent as an inducement t o develop the i n v e n t i o n i s simply not a v a i l a b l e . F i n a l l y , i n 1963, a P r e s i d e n t i a l memorandum was i s s u e d s e t t i n g f o r t h g u i d e l i n e s f o r a more uniform government patent p o l i c y . A f t e r s t a t i n g t h a t i n v e n t i o n s r e s u l t i n g from government c o n t r a c t s and grants were a v a l u a b l e n a t i o n a l resource, the g u i d e l i n e s a f f i r m e d that government patent p o l i c y should stimul a t e the use o f such resources t o meet government needs while at the same time s e r v i n g the p u b l i c i n t e r e s t and r e c o g n i z i n g the e q u i t i e s o f the c o n t r a c t o r o r grantee. These g u i d e l i n e s were used by a number o f government agencies t o r e v i s e t h e i r p o l i c i e s . Notably the Department o f Health, Education, and Welfare (DHEW), and the N a t i o n a l Science Foundation (NSF) developed general agreements, I n s t i t u t i o n a l Patent Agreements (IPA) , which allowed u n i v e r s i t i e s t o r e t a i n patent r i g h t s subject t o certain r e s t r i c t i o n s . S i n c e these two agencies f u r n i s h a large share o f the f e d e r a l support d o l l a r s t o the U n i v e r s i t y o f Wisconsin, the U n i v e r s i t y entered i n t o IPAs with DHEW i n 1968 and NSF i n 1973. Under these agreements, the U n i v e r s i t y , o r WARF as the designee of the U n i v e r s i t y , may take t i t l e t o any i n v e n t i o n made u s i n g DHEW o r NSF funds. The use o f the IPAs i s h i g h l y s i g n i f i c a n t , f o r o f the $3 b i l l i o n spent a t the u n i v e r s i t i e s on r e s e a r c h and development each year by the government, about one-half i s administered by these agencies. Strong evidence i s mounting t h a t use o f IPAs enhances the t r a n s f e r o f technology f o r the public benefit. In a d d i t i o n , there i s a l s o i n c r e a s i n g evidence t h a t where an IPA i s i n e f f e c t the a t t i t u d e o f commercial o r g a n i z a t i o n s towards i n v e n t i o n s generated with government funds w i t h i n the scope o f t h a t agreement i s changing. For example, there are now more i n s t a n c e s where commercial o r g a n i z a t i o n s have made some c o n t r i b u t i o n t o government-funded research p r o j e c t s a t u n i v e r s i t i e s where o n l y the p r o s p e c t i v e r i g h t s t o i n v e n t i o n s , yet unmade, i s i n v o l v e d . The c e r t a i n t y o f the i n s t i t u t i o n having the f i r s t o p t i o n t o any i n v e n t i o n made under an IPA i s the prime m o t i v a t i o n f o r such c o n t r i b u t i o n . Knowing t h a t patent r i g h t s t o inventions are t o remain with the u n i v e r s i t y under the terms o f an IPA a l s o permits e a r l y f i l i n g o f a p p r o p r i a t e patent a p p l i c a t i o n s , thus p r o v i d i n g a s t r o n g hedge a g a i n s t the p u b l i s h and problem. In the nine years s i n c e the IPA with DHEW became e f f e c t i v e ,



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WARF has f i l e d 65 United States patent a p p l i c a t i o n s under the p r o v i s i o n s o f the agreement, 40 o f which have matured i n t o patents. C u r r e n t l y , 22 l i c e n s e s under these a p p l i c a t i o n s and patents have been e x e c u t e d — s t r o n g evidence t h a t the arrangement i s working. Although the current DHEW and NSF p o l i c i e s have been e f f e c t i v e , there are reported t o be 22 d i f f e r e n t patent p o l i c i e s being u t i l i z e d by the other government agencies. These p o l i c i e s , some s t a t u t o r y and some a d m i n i s t r a t i v e , some w r i t t e n and some a t t i t u d i n a l , have created a d i f f i c u l t environment f o r a c h i e v i n g the t r a n s f e r o f technology from u n i v e r s i t i e s t o the p u b l i c sector. Some attempts are being made t o untangle t h i s web o f p o l i c i e s and reach greater u n i f o r m i t y . One a c t i o n which may be b e n e f i c i a l i s the recent announcement t h a t the F e d e r a l Procurement Regulations are proposed t o be amended t o provide f o r the use o f IPAs by a l l government agencies i n c o n t r a c t s w i t h u n i v e r s i t i e s and n o n - p r o f i t o r g a n i z a t i o n s . However, the most s i g n i f i c a n t c u r r e n t attempt t o c o n s o l i d a t e the fragmented and i n e f f i c i e n t system o f handling the r e s u l t s o f f e d e r a l l y sponsored research i s the Thornton B i l l , H.R. 8596, which was introduced i n t o the House o f Representatives e a r l y i n 1977 " t o e s t a b l i s h a uniform f e d e r a l system f o r management, p r o t e c t i o n , and u t i l i z a t i o n o f the r e s u l t s o f f e d e r a l l y sponsored s c i e n t i f i c and t e c h n o l o g i c a l research and development..." The p r o v i s i o n s of t h i s b i l l move s t r o n g l y i n the d i r e c t i o n o f e s t a b l i s h i n g a uniform patent p o l i c y f o r a l l agencies and are responsive t o many o f the problems involved i n and a n c i l l a r y t o the s u c c e s s f u l t r a n s f e r o f technology f o r the p u b l i c b e n e f i t . In today's environment, the p u b l i s h and p e r i s h problem f o r the u n i v e r s i t y community i s magnified by many laws and r e g u l a t i o n s , some e x i s t i n g and some p r o s p e c t i v e , which have been promulgated without a c l e a r understanding, o r perhaps even a c o n s i d e r a t i o n , o f how they might reduce the a b i l i t y t o t r a n s f e r technology. J u d i c i a l i n t e r p r e t a t i o n , o r perhaps m i s i n t e r p r e t a t i o n , o f some o f those laws r e s u l t i n g from p u b l i c i n t e r e s t g r o u p - i n i t i a t e d l i t i g a t i o n may a l s o add d i f f i c u l t i e s t o the t r a n s f e r o f technology. Among the most i n s i d i o u s o f such laws i s the Freedom o f Information A c t (FOIA) and i t s a s s o c i a t e d a c t s , the F e d e r a l Advisory Committee A c t and the Government i n the Sunshine A c t . As a b a s i c premise, we b e l i e v e t h a t the existence o f a l i c e n s a b l e patent r i g h t i s a primary f a c t o r i n the s u c c e s s f u l t r a n s f e r o f u n i v e r s i t y i n v e n t i o n t o i n d u s t r y and the market. A f a i l u r e t o e s t a b l i s h such r i g h t , o r t o p r o t e c t the a b i l i t y t o e s t a b l i s h such r i g h t , may f a t a l l y a f f e c t such a t r a n s f e r . T h i s r i g h t can be precluded by premature p u b l i c a t i o n - another example o f p u b l i s h and p e r i s h . Since the FOIA g e n e r a l l y r e q u i r e s the d i s c l o s u r e o f government records upon request, research p r o t o c o l s , hypotheses and designs submitted t o a government


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agency as p a r t of an i n i t i a l grant a p p l i c a t i o n must be presumed to be p u b l i c l y a v a i l a b l e . The only exception which could conceivably prevent d i s c l o s u r e of the content of grant a p p l i c a t i o n s was intended to deny access to "trade s e c r e t s and comm e r c i a l or f i n a n c i a l information obtained from a person and p r i v i l e g e d or c o n f i d e n t i a l " . However, recent l i t i g a t i o n has r a i s e d s e r i o u s doubts as to the p r e d i c t a b i l i t y o f p r o t e c t i o n of p r o p r i e t a r y information under t h a t exemption. In a landmark case denying the use of t h i s exemption f o r s c i e n t i s t s , the court stated: " I t i s c l e a r enough t h a t a noncommercial s c i e n t i s t ' s research design i s not l i t e r a l l y a trade s e c r e t or item o f commercial i n f o r m a t i o n , f o r i t d e f i e s common sense to pretend t h a t the s c i e n t i s t i s engaged i n trade or commerce. T h i s i s not to say t h a t the s c i e n t i s t may not have a preference f o r or an i n t e r e s t i n n o n d i s c l o s u r e of t h i s research design, only t h a t i t i s not a trade or commercial interest..." As a consequence, i n g e n e r a l , i t may be presumed t h a t research p r o t o c o l s contained i n grant a p p l i c a t i o n s w i l l be made a v a i l a b l e to those r e q u e s t i n g them under the FOIA, unless i t can be shown t h a t they c o n t a i n t r a d i t i o n a l forms of trade s e c r e t or other v a l u a b l e commercial i n f o r m a t i o n such as patentable i d e a s . Here again i t i s p u b l i s h and p e r i s h f o r the u n i v e r s i t y i n v e s t i g a t o r . But i t i s not only the i n v e s t i g a t o r i n such s i t u a t i o n s who i s the l o s e r . I f the a b i l i t y to o b t a i n v a l i d patent p r o t e c t i o n i s l o s t as a r e s u l t of requests f o r informat i o n under the FOIA, i t i s h i g h l y probable t h a t the p u b l i c w i l l never b e n e f i t from the r e s e a r c h , even i f u l t i m a t e l y funded by the government, s i n c e the i n c e n t i v e needed to o b t a i n p r i v a t e r i s k c a p i t a l , an e x c l u s i v e l i c e n s i n g arrangement, presumably, simply w i l l not be a v a i l a b l e . Consider a l s o t h a t t h i s i n f o r m a t i o n i s r e a d i l y a v a i l a b l e to f o r e i g n companies and c o u n t r i e s , l i t e r a l l y without r e s t r i c t i o n , and f r e e of any r o y a l t y or other f e e . The p o t e n t i a l l y adverse impact of such a s i t u a t i o n on our country's p o s i t i o n i n the world economy i s r e a d i l y apparent when one r e a l i z e s t h a t the $4 b i l l i o n returned every year to the United States as r o y a l t i e s and fees f o r technology t r a n s f e r i s more than nine times the amount p a i d out t o f o r e i g n patent holders i n r o y a l t i e s and fees by U.S. f i r m s , and that i t i s estimated t h a t the t o t a l value of production a s s o c i a t e d with those r e c e i p t s i s c l o s e to $85 b i l l i o n . As Rimmer de V r i e s , V i c e P r e s i d e n t and C h i e f I n t e r n a t i o n a l Economist f o r Morgan Guaranty T r u s t Co., s a i d i n a recent BUSINESS WEEK a r t i c l e : "We

need a n a t i o n a l export p o l i c y to r e f u r b i s h and


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strengthen our i n d u s t r y . Through f i s c a l p o l i c y , we should s t i m u l a t e research and development... We have t o develop new technology and go out and s e l l the s t u f f . "


In the c u r r e n t climate o f non-uniform f e d e r a l patent p o l i c y , and a n c i l l a r y impinging l e g i s l a t i o n , along with some j u d i c i a l m i s i n t e r p r e t a t i o n s , the charge from Mr. de V r i e s becomes a c h a l l e n g i n g one to meet, indeed. A P r o s p e c t i v e Concern Since the e a r l y 1960s, a few p o w e r f u l l y - s i t u a t e d and h i g h l y v o c a l title-in-the-Government proponents have shown almost a r e l i g i o u s f e r v o r i n t h e i r advocacy. T h i s group has r e c e n t l y again been a c t i v e , o b v i o u s l y prodded by the apparent f a v o r a b l e r e a c t i o n o f v a r i o u s government agencies toward the Thornton B i l l , and are urging a new P r e s i d e n t i a l P o l i c y Statement r e q u i r i n g a l l agencies i n the Executive Branch t o adopt the p o l i c y they advocate. They do not present any hard data from which a well-reasoned document i n support o f t h a t p o s i t i o n could be d e r i v e d . Rather, they take refuge i n catch-words such as "give-away", " w i n d f a l l " , " a n t i - c o m p e t i t i v e " and l a s t , b u t c e r t a i n l y not l e a s t , a phrase that i s most s i m p l i s t i c , but appealing t o the uninformed: "What the Government pays f o r i t should own." I t i s indeed a noble motive t o give t o the people the b e n e f i t s of p u b l i c l y supported research and we can agree t h a t tax d o l l a r s should not be used as a means o f e n r i c h i n g p r i v a t e p a r t i e s . We must, however, be v i g i l a n t , f o r the views on the i s s u e s i n v o l v e d lend themselves t o emotional molding. Making outspoken claims t o the guardianship o f the p u b l i c i n t e r e s t o r p u b l i c welfare i s a r i c h f i e l d f o r enhancing p o l i t i c a l power. A deadening r e s u l t o f p o l i t i c a l emphasis on such guardianship i s the p r o l i f e r a t i o n and growth o f the b u r e a u c r a t i c maze where a c c o u n t a b i l i t y becomes a f e a r . Under such c o n d i t i o n s , the atmosphere generated tends to be one o f s e l f - p r o t e c t i v e c a u t i o n r e s u l t i n g i n the operation o f the system becoming a d i s p r o p o r t i o n a t e p a r t o f the o b j e c t i v e . E f f o r t i s fundamental t o the t r a n s f e r o f technology t o the marketplace, and, wherever e f f o r t i s needed, i n c e n t i v e i s r e q u i r e d . Not only does the title-in-the-government p o l i c y r e j e c t the need f o r the i n c e n t i v e provided by patents, i t a l s o r e j e c t s c o n t i n u i n g p a r t i c i p a t i o n by the i n v e s t i g a t o r - i n v e n t o r — an important c o n s i d e r a t i o n with u n i v e r s i t y generated i n v e n t i o n s which tend t o be embryonic i n nature and which almost always r e q u i r e a d d i t i o n a l development. And remember t h a t a flow o f f r e e i n f o r m a t i o n i s a v a i l a b l e t o f o r e i g n companies and c o u n t r i e s , an i n v i t a t i o n t o them to i n c r e a s e our trade d e f i c i t even f u r t h e r . In today's t e c h n o l o g i c a l l y i n t e n s i v e atmosphere, some p r o t e c t i o n f o r the heavy investment r e q u i r e d i n development i s


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more than ever necessary. The lead time given by exclusive knowledge or patents is shorter than ever before. If that lead time i s reduced or disappears through further weakening of the patent system—and i f the government takes and holds t i t l e to thousands of inventions, that system is weakened—it may become economically sound to be second in the f i e l d . There i s already evidence of a "second-place" philosophy in some industries today. Further erosion of the exclusive rights to intellectual property afforded under the Constitution could lead to a second-place attitude, generally, in a l l U.S. industry. The next step i s the development of a willingness to be a second-place nation. It is indeed publish and perish. Abstract A successful technology transfer mechanism operating under a workable university patent policy is described in h i s t o r i c a l perspective and as to current a c t i v i t y . A concern for the future of this type of operation is explored in light of today's economic, legislative and p o l i t i c a l climates. Biographic Notes Howard W. Bremer obtained baccalaureates from the University of Wisconsin in both chemical engineering and law. He is admitted to practice law in Wisconsin and before the Patent and Trademark Office, Court of Customs and Patent Appeals and the United States Supreme Court. After a two-year stint in the U.S. Navy, Mr. Bremer served for 11 years as a patent attorney with the Procter and Gamble Company. Since 1960 he has been patent counsel for the Wisconsin Alumni Research Foundation. He i s a member of various professional law associations and is currently serving a term as President of the Society of University Patent Administrators. RECEIVED June 20, 1978.


Patent Policy - ACS Publications - American Chemical Society

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