Abstract

As federal and state funding for academic institutions becomes more difficult to procure, colleges and universities have sought new ways to generate revenue. A source of potential income is money generated from licensing agreements or assignments of faculty and graduate student generated inventions. In just over a decade royalty income from faculty generated inventions increased nearly 40-fold, from $7 million to over $260 million. The latest figures indicate that during the fiscal year 1993 the top ten institutions in licensing royalties received a total of $170 million. While this number is small compared to the total amount of revenue required to run a major college or university, it is not insignificant, especially considering that many universities have only recently begun to institute policies that allow for patenting and transfer of technology derived from faculty research. The economic incentive, coupled with any increase in prestige that accrues to a university that successfully commercializes a product derived from one of its own, provides a significant inducement to patent and license inventions generated by faculty research. In their haste to commercialize the fruits of academic labor, many universities have simply assumed that any invention generated by its employees, especially faculty and graduate students, is property of the university. This article attempts to outline some of the legal aspects of ownership with respect to faculty generated inventions. There are three areas of the law which deal with ownership issues in this context: common law ownership, pre-employment assignment agreements and federal and state legislative initiatives. Although it appears to this author that the common law decisions concerning ownership of employee generated inventions culminating in Dubilier is the most equitable solution to the ownership problem, the truth is that pre- employment assignments, university policy, and state and federal statute are controlling. There is little doubt that a pre-employment assignment of intellectual property rights from faculty to university will be enforceable absent unconscionable or coercive acts by the university. Overreaching, assignment of any and all inventions, is likely permissible in the absence of a state statute to the contrary. Federal statute likely does not preclude faculty ownership of inventions derived from federal funding, but in the absence of case law there is no guidance as to how the law might be interpreted.

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