Intellectual Property
November 2000 Vol. 40, No. 1
Statements or expressions of opinion or comments appearing herein are those of the editors or contributors, and not necessarily those of the association or section.
Contents
Academia at risk: antiquated IP policy
By Daniel L. Kegan, PhD, JD. Kegan & Kegan, Ltd., Chicago Copyright © Daniel L. Kegan 2000, All Rights Reserved1.
Our schools and colleges face enlarging potholes on the information superhighway because of antiquated intellectual property policies in academia. Many academic institutions have no explicit intellectual property policy; others may have established policies for inventions by faculty and researchers and trademark licensing for major college football teams. However, the current widespread computer literacy coupled with the explosive economic growth of the Internet, multimedia content, and computerized entertainment now enable students and nontraditional academic participants to create valuable assets. Additionally, group-based entrepreneurial classes rarely are structured for clear intellectual property ownership. Traditional work-for-hire analysis was not crafted for students and minors. Most in academia are ill-prepared for the currently needed advance definitions of who owns what.
The traditional academic concern is with copyright, academic freedom, plagiarism, and who gets authorship credit.2 But authorship is more complex. Academic credit is quite different from legal copyright ownership. Academic tradition may grant authorship for key conceptual ideas, innovative research designs, and integrative research theories. Copyright doesn't, patent may or may not.3
Deciding both academic authorship and copyright/patent ownership should generally be done before research begins. If the creators of intellectual property cannot agree or, more likely, neglect to obtain written agreements beforehand, valuable assets will be lost as public domain. Alternatively, if schools and colleges now discuss, adopt, and publish more modern intellectual property policies, fair allocations may be made and assets increased, not wasted.
Congress sought to enhance the "predictability and certainty of copyright ownership," and enacted the 1976 Copyright Act.4 The courts also seek to promote the ready marketability of property.5 Rather than sunshine clarity, current academic practices create not merely clouds on campus-developed intellectual property ownership, but thundershowers.
The American Association of University Professors has recently studied how the Internet is impacting the professorate.6 The AAUP has positions on academic freedom and the ownership of course materials, on the presuppositions and implications of large-scale distance education7, and related matters.8
It used to be that creating a college curriculum consisted simply of drawing up an outline and attaching a reading list. These days, more and more syllabi contain links to material on the World Wide Web, and some courses are laid out in elaborate online productions that may include multimedia content.
The spread of digital course materials has generated a conflict between faculty members and universities over who owns these suddenly valuable syllabi. As universities see a growing profit potential in digital course material, educators worry about losing control of both their work and the revenues that could derive from its sale. In other words, the dispute touches on two compelling issues: academic freedom and money.
What is clear-cut in journalism is a lot more complicated in academe. Universities traditionally have not claimed ownership over the writings of faculty members. Academic authors are usually entitled to keep any royalties generated by the sale of their books. There is a good reasons for this: academic freedom.9
The American Association of University Professors has also recognized that many universities need to review their patent policies to include copyright, multimedia, and the Internet.10 However, a workable academic intellectual property policy needs to include all major stakeholders, including students. A good academic policy anticipates realistic problems and prevents most of them. At today's campus, students and staff often collaborate with faculty.
As one concrete target, I recommend academic institutions publish their intellectual property policy in the academic catalog, thus giving public notice to students, staff, and faculty. This may take time, but open debate and publication are academic traditions. To support such discussion, this article appends a sample one-page draft-for-discussion-and-change academic intellectual property policy. After agreement on general policy, particular schools can draft appropriate implementing procedures.
Most importantly, I recommend an intellectual property policy establish default ownership, administration, and income provisions, so that if the creators of the intellectual property cannot agree, or as is more likely now, neglect to obtain written agreements beforehand, fair allocations are made, not lost as public domain.
Most academic creations do not generate significant commercial income, but for those few which do, lack of clear title costs money. Faculty and students are mobile. A single student of a multidisciplinary team may be a necessary creator to secure rights and effectively market them. Obtaining that signature years later is difficult. Centralized administration is a practical necessity where all creators have not signed a valid agreement for asset control and income distribution.
Facts and problems
Academia is increasing interested in money; students are increasingly creating valuable intellectual property. While the law continues to grow from its long established roots,11 both public and private academia lag in recognizing, much less successfully addressing, capitalism's current stresses at the campus.
Marc Andreessen invented the Mosaic browser while a 21-year old graduate student at the University of Illinois.12 Motivated to have a simple computer interface for all the functions of Tim Berners-Lee's World Wide Web--to democratize the Web-- Andreessen and Eric Bina, another programmer at the university's National Center for Supercomputing Applications, created Mosaic in three months of night and weekend work.13 Andreessen was then earning $6.85 an hour to write Unix code. Shortly thereafter in spring 1994, Jim Clark and Andreessen launched Netscape Communications Corporation, which exploded Wall Street with its multi-million dollar initial public offering well before Netscape had a profit.
The Apple Developer Connection Student Program, launched December 1998, provides college and university students software tools to begin developing Macintosh software.14
Some see the commercial world wrongly intruding into the classroom.15 Study24-7.com pays students to take notes in college classes and posts those notes on the Internet. The University of California sued a traditional note-taking company that markets lecture notes without university permission.16
Professor Eugene Klotz of Swarthmore College in 1994 founded www.mathforum.com, a popular mathematics education Web site, which employs many students and alumni.17 After a $3 million National Science Foundation grant ran out in 1996, Math Forum was sold to WebCT, an educational business, as Swarthmore College's first spin-off business.18
Ethical problems enlarge when common commercial practices invade the classroom. When a professor of entrepreneuring is also the founder and chief executive officer of a course case study company, his strong promotion of his own fragile company, automatic A grades without class meeting, apparent violations of securities laws, student investments over a half million dollars, and front page national exposure of such unusual practices are results academia may prefer to avoid.19
The Wall Street Journal reports universities are going on the offensive against Virtual Universities.20 Six billion dollars of venture capital has flowed into the education sector since 1990. Cisco System Inc.'s John Chambers considered education "the next big killer application on the Internet."21 The Journal observes that while maintaining a stranglehold over degree granting and intellectual property, traditional schools are also carving out a space for themselves in the for-profit educational world.
"Universities are knowledge entrepreneurs, and intellectual capital is a huge resource for them."22 The University of Illinois has launched an independent venture-capital fund, named iVentures, to fuel campus start-ups and retain faculty entrepreneurs.23 The university will own part of the new companies and reinvest profits back into the fund to support more start-ups. Freshmen college students are mixing their venture capital and student roles.24 Northern Illinois University has given investment responsibility for $220,000 to students; over fifty other schools have similar programs.25
Big university football and related under-appreciated trademark assets prompted the 1986 founding of the Association of Collegiate Licensing Administrators. The 1970s brought a boom in telecasting of collegiate sports.26 Ohio State University may have been the first university to apply for federal trademark registrations for a school name and mascot, November 1973.27 Trademark licensing, even with typically modest royalty rates around six percent, can generously augment traditional academic funding sources.28
College athletic programs seek additional revenue, sometimes using football, basketball, and baseball revenues to support money-losing sports.29 For Louisiana State University, a private, nonprofit group, Tiger Athletic Foundation, issued $40 million of 30-year bonds; Tiger owns a newly built stadium skybox deck, which doesn't physically touch any part of the state-owned stadium.
Biotechnology raises commercial and ethical issues. "Sharing of profits is debated as the value of tissue rises."30 "Biological products raise genetic ownership issues."31 Major scientific and commercial discoveries may not initially have their value widely recognized. Academic and corporate scientists are racing to decode the entire DNA sequence.32
UniversityAngels accepts business plans from entrepreneurs, reviews them, and then posts them on Web sites targeted to university communities.33 Founded June 1999 by four Harvard Business School graduates, their initial site linked entrepreneurial Harvard graduates with Harvard alumni interested in investing. The company now runs 75 sites targeted to university alumni in the US, Europe, and Israel.
In the government's first study to address commercialism in schools, the General Accounting Office concludes that corporate marketing in public schools is rising sharply.34 The nation's 47 million students are an increasingly lucrative target market, and school boards consider exclusive soft-drink contracts and computers displaying continuous advertisements one way to supplement spare budgets without raising taxes. However, educators are "trained in the three R's, and the R's don't include retail"--some fear school officials are out negotiated.35 Educators are seen as "terrible negotiators."36
Computer oriented youth are supplementing or replacing their student status with that of technological employee.37 A college freshman, Dr. Wall Street, moonlights as an Internet stock-market analyst.38 For-profit corporations are using taxpayer-supported institutions to sell their products, with programs such as stock options to have students market textbooks to other students.39 In a marketing class funded by a local Saturn dealership, Sonoma State University students will be graded on how well they promote Saturn autos to their peers.40
The Wall Street Journal announces that "Entrepreneurs don't just seem younger these days, they are younger."41 Consumer grade camcorders and computers now permit young teenagers to shoot technically high quality movies.42 Students can make films and multimedia computer presentations for classes, post them on the Internet, and be stars of prime time reality television.43 Companies are paying minors for Internet projects.44 It's likely many such deals lack informed consent, written copyright agreements, and cosignatures by the youths' guardians.45
Many students use Napster, MP3, and Gnutella for sharing copyrighted music; their legality is being tested and defined in the courts.46 With high financial stakes, unclear social norms, and Internet interest, surprising legal theories join traditional intellectual property cases. Shawn Fanning wrote the code for Napster when he was 18.47
MP3Board Inc., a defendant in a copyright infringement suit brought my major music companies, filed a third-party complaint seeking indemnification by Time Warner Corp. and America Online, because the latter's employees developed the Gnutella technology for peer-to-peer sharing of copyrighted music.48 MP3Board alleges that Time Warner and America Online, through subsidiary Nullsoft, created and distributed Gnutella knowing it would be used to find and copy MP3 music files. Different from Napster, which requires a central registry of available MP3 music, Gnutella is a peer-to-peer system. This charge to corporate management parallels possible negligent supervision complaints for schools for the acts of students and employees.
Academia has many blurred roles and jurisdictions; increasingly they have financial consequences. Are teaching assistants employees or students?49 Illinois has found that a nonresident Internet-based professor is not subject to Illinois tax.50 Public and private schools hire foreign citizens as teachers.51
Misjudgments and crime have also accompanied the Internet's growth. A Georgetown University graduate school student launched a stock tip-sheet, FastTrades.com, obtained over 9,000 online users, created a stock scam, made for himself and collegiate friends $345,000 trading profits, and committed securities fraud.52 Academia sometimes forgets that high status students need appropriate norms as much as others.53
High school student Jonathan Lebed began manipulating small-company stock prices when he was 14 years old, and at 15 became the first minor accused by the Securities and Exchange Commission of stock fraud for his pump-and-dump Internet postings, which earned him $270,000.54 Reportedly, Lebed felt he had done nothing illegal, telling SEC investigators "Everybody does this." A very young minor, Sho Yano, enrolled as a Loyola University college freshman at the age of 9.55
Harvard Law School professor Arthur Miller videotaped eleven lectures for an Internet course by Concord University School of Law on civil procedure.56 Concord is an online degree granting school established by Washington Post Co.'s Kaplan Educational Centers. Harvard policies bar faculty from teaching for another educational institution during the academic year without getting permission.
In 1998 three-quarters of the public four-year colleges and universities offered distance education classes.57 For a "Competing in the New Economy" course at the University of Michigan Business School, students and instructors will collaborate, largely over the Internet, to devise new ways to run businesses.58 For another Michigan course, "Idea to IPO in 14 Weeks," students start the course with dot-com ideas, hear venture capitalists, and three months later ask the same VCs for investment money.59 At Wharton School, established executives are learning to create and run e-businesses through "reverse mentoring," being paired with Wharton M.B.A. and undergraduate students.60
During an entrepreneurial course at a midwestern university, a wise student inquired of his savvy instructor what rights the student would have were he to share his idea with classmates; the student decided to keep his idea secret, and use a different project for the course.61
The American Psychological Association reports that schools are unready for the technology boom.62 Web access may provide more students with access to course materials and library resources, but unresolved is who develops, pays for, and supports the new technology; typically faculty haven't been compensated for the extra time and money spent developing multimedia and online materials.
Traditionally faculty have owned copyright to their academic works, and students have freely used university resources. But academia is seeking more funding and many entrepreneurial and group courses obtain supplemental college funding. What was once considered a free good is increasingly being considered private property.63
The osmosis of market capitalism into academia is summarized by educator Gary Trudeau, as the Walden University president gives the 2000 commencement address:64
As newly minted Walden graduates, you are the hope of tomorrow! We believe in you, and we believe in your future!
In fact, we believe in you so much that the university has decided to forgive student loans in return for modest equity positions in any businesses you may have created here!
All interested parties please run your numbers by the dean before leaving.
Thank you and good luck!
[Students]: You wish!
[President]: Um... Excuse me? Who gave you all high-speed lines?
Laws
Patents. A patent owner has the exclusive right to make, use, offer to sell, and to sell the patented invention.65 An employer generally has a personal, nonexclusive "shop right" to use its employee's invention created using the employer's resources in the employer's business without paying a royalty.66 Nonprofit organizations and small businesses may, under certain conditions, elect to retain title to federally funded inventions.67
In the United States, a patent application generally must be signed by the actual inventors.68 When an invention is made by two or more persons jointly, they shall apply for patent jointly and each make the required oath, except as otherwise provided by the Patent Act.69 If an inventor refuses to join in a patent application or cannot be found after diligent effort, the application may be made by the other inventor(s) on behalf of all the inventors.70 However, title is less clear and disputes more likely when named inventors have not signed the patent application.71 Legal representatives of minors and of deceased inventors may apply for a patent.72
Copyright. The copyright owner has the exclusive right to reproduce, distribute, prepare derivations of, publicly display, and publicly perform the copyrighted work.73 Balancing these proprietary rights are the statutory fair use exceptions74 and the Constitution's First Amendment.75 Fixing a copyrightable work in a tangible means of expression automatically grants the author(s) a copyright, which currently lasts about a century.76
Copyright in a work vests initially in the author or authors of the work.77 The authors of a joint work are co-owners of copyright in the work.78 The employer or person for whom the work was prepared is consider the author of works made for hire, unless the parties have expressly agreed otherwise in a written instrument signed by them.79 A transfer of copyright ownership requires the actual signature of the person who executed it, or a true copy and certification.80 Ownership of copyright is distinct from ownership of the material object.81
A "work made for hire" is defined by statute and has been extensively construed by the courts.82
A "work made for hire" is--
(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a "supplementary work" is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forwards, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer materials for tests, bibliographies, appendixes, and indexes, and an "instructional text" is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities. 17 USC § 101.83
An agreement altering the statutory presumption under the Copyright Act must be express and must appear on the face of the signed written document, a statute of frauds.84 However, misunderstandings and litigation are likely as long as academic maintains antiquated intellectual property policy statements meant for faculty scholarly publications but written to encompass broader terms.85 A policy statement directed to "staff" may logically include research assistants, janitors, teaching assistants, and undergraduate part-time students working in the cafeteria.
Although copyright automatically vests in its author(s) at creation, copyright registration is generally a prerequisite to most remedies for infringement.86
Trade secrets. Any formula, pattern, device, compilation of information, plan, tool, mechanism, or compound which gives its owner a competitive economic advantage and is not generally known in the industry may be protected as a trade secret.87
Minors, contracts, and conflicts. A minor is a person under the age of legal competence. State law defines when a person is no longer a minor, generally 18 in the United States88. A contract is a legally enforceable promise, and generally requires the parties to be competent. Most agreements by minors are voidable.89
Conflicts of laws provisions seek to determine which forum law should be applied. When a seventeen year old national of a foreign country creates intellectual property in a college classroom and at home on vacation, choice of laws becomes more complex than a simple place of making the contract or the place of the tort. The Internet, with its cutting edge issues of jurisdiction and copyright, furthers the complexities.90
Academic perspectives. The US Supreme Court, in Community for Creative Non-Violence v Reid, 490 US 730 (1989), unanimously addressed the work for hire doctrine. The Seventh Circuit has recognized professors' copyright in their academic work, granting more weight to the importance of academic freedom than to work-for-hire. Hays v Sony Corp. of America, 847 F2d 412 (7th Cir. 1988).
Solution
It seems rare for students, before disclosing proprietary ideas, to be adequately informed of their rights, the intellectual property laws, contract and partnership basics, and the common problems of hopeful new ventures. It seems rare for students to be sufficiently informed of intellectual property laws to be able to give informed consent. It seems rare to have minors' guardians involved in the process of increasing commercialism on campus. Yet, "students, academics and business professionals increasingly are functioning more like a learning team."91