Following the death of a friend in Oregon’s backcountry, Caleb Carr was driven to develop gurney stabilization technology for first responders during helicopter rescues.
Carr says he developed the technology about two years ago while a student at the University of Colorado Denver.
But as Carr navigated the usual hurdles every entrepreneur encounters on the way to market, he came across one he had not been expecting.
“As I continued development, I ran into an issue with the university that stated anything I created, 75 percent was owned by the university, although none of the development was paid for by the university,” he said. “I worked on this in my dorm or the library.”
‘VEIL OF AMBIGUITY’
Intellectual property lawsuits involving universities, faculty and students, are growing.
The basics needed to begin a business are more accessible to all ages, but college students are encountering strict IP policies that many say they didn’t know existed.
The policies within the University of Colorado system led Carr to begin the advocacy group Students for Intellectual Property.
He is currently lobbying for passage of federal laws that would bring what he considers “fairness” to the student-university IP conversation.
Among other reforms, Carr is advocating for at least 75 percent ownership for the inventor — and as much as 100 percent if the student is using facilities that are typically open to the general student population or university assets that are available to the public.
“I learned that unfair and unequal IP policies can be found at schools across the country,” Carr said, “and constantly impact a student’s ability to create, discover andinnovate new possibilities that could benefit them long after graduation.”
According to Fast Company, a technology- and innovation-focused website, there were “more than $22 billion in sales of products created and based on academic research” in 2013.
Reports indicate Stanford University’s stake in Google (where the web search algorithm was created by students), is around $340 million. The actual amount of IP revenue going to universities is unknown, however, because agreements vary and some are confidential.
Many universities and their tech-transfer arms determine how much money students receive based on how much of the concept was created using campus resources.
But there isn’t a standard to determine how that line moves, Carr said.
“They operate under this veil of ambiguity,” he said.
‘A LARGER SLICE’
According to Ken McConnellogue, vice president for communication at the University of Colorado, the university doesn’t have a specific IP policy for students.
“Our policy is generally geared toward faculty,” he said. “They are the ones — in 99 percent of cases — creating patentable IP. But we do have a number of students who have created IP. For student inventors, we certainly encourage them to work with us. More often than not, if they’ve invented something, we will help them.”
The 75 percent statistic cited by Carr, McConnellogue said, applies to faculty and breaks down to 25 percent of royalties going to the inventor, while the inventor’s department, the campus and the tech transfer office each receive 25 percent.
McConnellogue said there were gaps in Carr’s design, as determined by the university’s tech transfer arm, and that a formal agreement for the technology wasn’t pursued.
Regarding the use of “substantial university resources,” McConnellogue said, “The university can’t articulate every contingency. … Our policy is deliberately flexible.”
There are numerous examples of the university “going out of the way to help students if they have a patentable invention,” he said. “We want students to be successful. And if one of our students invents the next Snapchat, we hope they remember their alma mater.”
University policy, particularly regarding faculty IP, is in place to protect the inventor, McConnellogue added.
“Very few of these [IPs] are created by someone working by themselves. It’s almost always a group effort,” he said. “If faculty is working on something and grad students are helping, the policy is intended to protect those doing the primary body of work. Lots of people can float into and out of a lab and say they helped invent [something].”
“And if one of our students invents the next Snapchat, we hope they remember their alma mater.”
— Ken McConnellogue
The university has had some IP windfalls in the past, McConnellogue said, including a faculty member who invented a use for Botox to treat bladder cancer, which amounted to a $30 million sale to a pharmaceutical company.
Most IP revenue for the university system comes from medical devices, with most of those coming out of Anschutz Medical Campus and UCCS, McConnellogue said.
“We foster innovation,” he said of the university system. “That’s demonstrated by the innovation startup centers we have on our campuses. We don’t stymie, we encourage innovation because it benefits the faculty, the university and the students. This notion that the university’s policy inhibits innovation is wrong.”
And while some students may be caught off-guard, faculty likely can’t claim ignorance.
“I’m not seeing this as getting fleeced by the university,” he said. “Faculty members particularly fully understand that part of their job is research and, in some cases, inventions and patents. They recognize they are fully able to do those because of their position at the university, as well as the research labs and their ability to collaborate with other universities.
“Any inventor would like a larger slice of their invention,” he said. “But I don’t know if I’d say we’ve had a groundswell of complaints that the university is unfair.”
It all boils down to the Bayh-Dole Act, according to Dan Johnson, a professor of economics at Colorado College.
Passed in 1980, the law says federally funded research conducted on the premises of higher education institutions could be owned by those institutions and not necessarily the person who did the research.
“Within different institutions, that can mean different things,” Johnson said. “But as soon as you’re part of the campus community, it’s your obligation to know [the rules].”
States make those rules for state universities, he said. Since Colorado College is a private school, it creates its own policies.
Johnson said schools most likely encounter problems with student entrepreneurs because students aren’t aware of IP policies.
“They don’t think to ask,” he said. “It’s like saying to the police officer that you didn’t know the speed limit. Sad, but it’s still a rule.”
Colorado College doesn’t have many faculty and student inventions that make it all the way to market, Johnson said. That’s partly because it’s a liberal arts school with limited research and development resources, and partly because the school is entirely made up of undergrads.
“Our policy has been, ‘We would just love it if you did stuff. Go out and explore,’” he said. “The number of times a really amazing, talented undergrad comes up with a world-changing profitable invention is very few.”
The college’s policy is meant to foster goodwill, Johnson said, adding that, if a “one-in-a-million” invention comes from a CC student, there’s nothing binding.
He has launched a number of businesses while employed by the college.
“I’ve documented which college resources I’ve been using and clarified with the [college] president, the dean and legal counsel as I went along,” Johnson said. “At no point did CC ask for a share, but we did talk about what seemed reasonable. ”
The college would share in 10 percent of the profits from one of his businesses, but that number has yet to exceed $100.
“In principle the policy exists, but in practice it’s not meaningful,” he said. “We’ve been talking about forming an official policy, and we have one tentatively framed, but we’re in no hurry. The informal understanding we’ve had has served us well in the past.”
YOUR TOTAL IS …
So when is it fair for a university to step in and take its share?
“It’s an interesting ethical and moral question,” Johnson said. “What belongs to you and those supporting you? How much should you owe your parents in assisting and enabling you to perform?
“Very few parents would itemize what you owe and say they want ‘x’ dollars for babysitting you. It would be equally weird for an educational institution to have such a legalistic framework that itemizes the services performed that educated this person enough to have a new idea. It’s just as laughable. … What bothers students is that they didn’t know in advance.”
Fairness aside, Carr said such policies mean entrepreneurs may wait until they are out of college before bringing products to market — essentially stifling innovation. Johnson said it depends on why the individual is innovating in the first place.
“If it’s for pure financial profit, then innovation may be slower,” he said. “But I don’t know if most innovators are driven by profit; many are driven by social need.”
University intellectual property policies, however, might impact the commercialization of an invention, Johnson said.
“The person may still do the work and a solution is invented,” he said. “But what the policy might stifle is the willingness to go the extra step and take the innovation to market. The solution exists, but what about the financial incentive to do something further?”
If nothing else, Johnson said Carr’s efforts should open a dialogue about the university or college’s responsibility when services are rendered and what is fair payment for both the institution and the inventor.
“There is so much ambiguity. The more we get rid of it, the better,” Johnson said. “I applaud the effort.”