IN THIS CHAPTER, WE move from policy to practice, focusing on students and faculty. As we demonstrated in chapter 3, state and system policies interacted with institutional efforts to capitalize knowledge. The resulting academic capitalism knowledge regime has implications not only for faculty, researchers, and administrators involved in technology transfer but also for the educational process. Legal cases that feature students and patents let us glimpse how movement toward academic capitalism in the new economy affects students. To hear the voice of faculty involved with industry who are subject to institutional and system patent policies as well as federal conflict of interest policies and patent procedures, we draw on interviews with faculty, many from the states whose policies we analyzed, to see how they grapple with the new knowledge regime.
The student patent cases draw on the work of Althusser (1971) and Gramsci (1971), which allows us to see how power shifts relationships among market, state, and higher education as intellectual property becomes the cornerstone of a knowledge economy. The faculty interviews are framed by the norms and values theories used to examine patent policies, and they point to how values change when knowledge regimes shift. Generally, we see case law, as well as state and institutional policy, as interacting with student and faculty approaches to the market. Laws geared toward solving corporate intellectual property problems reshape students’ legal status, and state and institutional policies, combined with interactions with corporate partners imbued with corporate values, renorm academic values (Slaughter and Rhoades 1990). However, these are not cases of institutions reshaping academe; the students, directed by their professors, and the faculty initiated the approach to the market, inviting the relevant institutions to reconsider boundaries.
Students, Patents, and Markets
In considering these cases, we focus on how the state, represented by the courts, refracts capital through its power, organizing production (Althusser 1971)—in this case through commodification of intellectual property—for a knowledge economy, indirectly contributing to an academic capitalist knowledge/learning regime in which students are valued as creators of intellectual property and workers rather than as learners. We also examine how the state, again through the court, contributes to the ideological hegemony (Gramsci 1971) of an academic capitalist knowledge/learning regime by legitimating the students’ role as knowledge producers, affirming the importance of their contribution to the new economy. However, we are also aware that the state and markets do not simply work their will on students and faculty. Faculty, in their capacity as teachers, researchers, and entrepreneurs, direct students toward the market, and students seem willingly to approach it. Students and faculty apparently see themselves as expert professionals, part of the technoscience core of the economy (Brint 1994), and are ready to move across the traditional boundaries that have separated university and market, themselves affirming an academic capitalist knowledge/learning regime.
We analyze three cases that represent all the student cases that came before the federal appellate court since 1980 (Baez and Slaughter 2001). There are no Supreme Court cases because no student/patent litigation has yet reached that level. Although the cases are few, they are instructive. Two cases involve undergraduates; one involves a graduate student. In analyzing these cases, we look at how the power of capital and the state are deployed with regard to the state, non-profit institutions, higher education, faculty, and students.
In re Cronyn (1989)
A corporation sought to declare invalid a Reed College professor’s patent application for a chemical compound used in the treatment of cancer because the information had previously been published in three undergraduate student theses. The patent holder was the students’ chemistry professor and a university administrator. Legally, if the knowledge were previously published, it would be in the public domain and therefore unpatentable. The corporation argued that the student theses should be considered as published even though they were indexed in a shoebox in the chemistry department and listed in the college library by the students’ last names with no reference to their contents. The Board of Patent Appeals and Interferences found for the corporation, holding that the three theses were printed publications that anticipated the patent. The federal court of appeals reversed the board’s ruling, following earlier decisions that students’ work was in the public domain, accessible, and thus unpatentable if it was indexed, catalogued, and shelved in a university library. The court reasoned that the Reed theses were not accessible because the cataloguing was not sufficient for anyone else to make use of the information.
In this case, the corporation was the initiating actor with regard to the courts, challenging a patent taken out by a faculty member that was based on student work. However, the faculty member, who was also the vice-provost of the college, was the initiating actor with regard to the patent, which placed the intellectual property within the commercial system, albeit under the offices of the federal patent system, which issued him the patent. Regardless of whether the professor/administrator exploited his relationship with the students in securing his patent, a point not addressed in the case, his professorial relationship with the students moved away from being based on learning to production of commercial knowledge. Once the intellectual property was in the world of commerce, via the patent, the institution was open to state sanctioned-litigation in the federal court.
Because the federal court of appeals has indicated that cataloguing student theses and shelving them in a university library put that research in the public domain, universities have supported the practice of withholding students’ research results from publication or even placement in the open shelves of university libraries, so that professors or students and their corporate sponsors can patent. As universities have moved aggressively to patent, it has become standard practice, endorsed by the Government University Research Roundtable, to allow universities to withhold students’ work for ninety days (Campbell 1997). Cases have been reported, however, in which students’ work was withheld anywhere from ninety days to three years (Slaughter et al. 2002).
Academic capitalism thus emphasizes students’ identity as producers of knowledge that can become a commodity, yet their rights to that knowledge are constrained. Universities and professors, presumably because they sponsor and supervise student knowledge production, claim title to intellectual property that students work to create. In a recursive pattern, the students learn to create knowledge that can be turned into marketable products and learn as well that they are valued as knowledge workers more than learners, extending the lived practice of academic capitalism.
National Research Development Corporation v. Varian Associates (1994)
Hoult, while a graduate student at Oxford University under the supervision of Professor Richards in the early 1970s, invented a method and apparatus for eliminating systemic noise in a Nuclear Magnetic Resonance (NMR) spectrometer. Hoult received a U.S. patent for his invention and assigned his rights to the National Research and Development Corporation (NRDC). However, while Hoult was working on his discovery, Dr. Richards attended a 1973 experimental NMR Conference in the United States. “While traveling to the conference one morning, Dr. Richards had an informal, one-on-one conversation on a bus with Dr. Stejskal, a Monsanto Corporation research scientist. During that conversation, which took place without Dr. Hoult’s knowledge or explicit permission, Dr. Richards disclosed the essence of Dr. Hoult’s invention to Dr. Stejskal. It is undisputed. . . that Dr. Richards at that time did not ask Dr. Stejskal to keep the information confidential and did not inform him that either he or Dr. Hoult intended to file for a patent thereon” (National Research Development Corporation v. Varian Associates 1994, pp. 3–4). When he got back to Monsanto Corporation, Stejskal and his colleagues incorporated Hoult’s invention, as disclosed by his professor, into one of its spectrometers and has used it ever since. The NRDC filed a lawsuit against Varian Associates in 1989 for infringing its patent, and Varian claimed that the NRDC patent was invalid because Monsanto had been using the invention for years. The NRDC argued that the information was understood to be confidential, but the court disagreed, relying on Professor Richard’s testimony and the 1973 conference’s intended purpose of encouraging the “free disclosure of information” (p. 8).
This case underscores how the possibility of commercialization permeates relations between students and professors. Because student research has value as intellectual property, the commercial world can intrude on the professor-student, teaching-learning relationship, inhibiting the ability of professor and student to discuss freely the results of their research. Ironically, a professor’s unguarded disclosure of information to an industrial scientist at a conference designed to encourage collaboration between academe and industry later penalized his student and university through the loss of patent rights. The case also illustrates the contradictory demands of the university on faculty and students who create intellectual property. Universities encourage university-industry exchanges; however, they also encourage patenting, precluding such exchanges. Professors and students have to calculate how they will best serve themselves as market actors, whether working through industry or institution.
Johns Hopkins University v. Cellpro, Inc. (1998)
When Johns Hopkins University sued Cellpro for patent infringement, the intellectual property at issue was the Civin patents, which researchers hoped would make bone marrow transplants safer. Cellpro charged that, after patenting, the university was unable to convert the patents to practice again, rendering them invalid. The university responded that the reason for this lack of progress was that its laboratory used undergraduates, who could be not considered “skilled in the art” of this research. The court agreed with the university and upheld its claims against Cellpro.
Although the court held undergraduate students to a less demanding standard than it would have professional researchers, it nonetheless affirmed the use of these students in creating intellectual property for the university. The institution’s commitment to academic capitalism revalued students as workers who learned rather than as learners who worked for the university in return for instruction. Because the university construed the students as workers, it was able to claim their intellectual property. Not incidentally, students learned that even though the patented products might be crucial to saving human lives and were likely financed in part by public tax dollars used for research, the federal court of appeals gave Johns Hopkins a potentially profitable monopoly on the knowledge they helped to create. Education and ideology combined to recursively reinscribe academic capitalism on the institution and its actors.
In the three cases we have discussed in this chapter, the state, as represented by the court, did not simply affirm the power of corporations. In the Reed case and the Johns Hopkins case, corporations lost. However, in all three cases the court affirmed universities’ commercial rights to knowledge and recognized faculty and students as knowledge producers and market actors. Although the state (court) did not favor capital (corporations), it aligned private nonprofit universities with the market, preferring an academic capitalist knowledge regime in which students were knowledge producers to one in which students were learners somewhat insulated from the market.
The patent infringement cases indicate the federal court of appeals’ preference for institutional and private rights to profit from knowledge rather than for public rights to obtain and benefit immediately from that knowledge. In other words, the courts have generally affirmed the bipartisan legislation that made possible opening universities to academic capitalism. Universities, strengthening their units that litigate, have moved to defend their intellectual property, firmly committing themselves to academic capitalism, even when it puts them in awkward positions with regard to their treatment of students and the public trust. However, movement toward the market is not without difficulties. Academic capitalism unleashes the entrepreneurial energy not only of the institution but also of professors and students with the consequence that professors, students, and institutions frequently follow their own paths to the market, sometimes working at cross purposes, yet all legitimating universities’ engagement with the market.
Professors, Patents, and the Market
In this section we analyze interviews with faculty engaged in the process of transferring technology to the market to see how their work intersects and reflects the federal, state, state university system, and institutional patent policies as well as the court cases discussed so far. We use the same theories as in chapter 3 as well as the theory of academic capitalism. Our analysis of the interviews is framed by the shift from a public good to an academic capitalist knowledge/learning regime. The professors give greater voice to values espoused by a public good research regime than do the patent policies, but they also articulate many values and practices associated with an academic capitalist knowledge/learning regime.
Our data, gathered in 1997, formed a subset of the larger National Science Foundation (NSF) study that explored faculty and administrators’ relations with private-sector firms. (For methodological details, see Campbell 1997; Slaughter et al. 2002; Slaughter and Archerd, forthcoming.) We analyzed data from thirty-eight semistructured interviews with faculty who had interacted with industry in the previous five years (Campbell and Slaughter 1996). Fourteen institutions located in California, Arizona, Texas, North Carolina, and Massachusetts were selected because of their significant research interactions with industry. For the most part, the institutions were large, research-intensive universities. Our sample comprised ten department heads or center directors and twenty-eight faculty members. Nineteen were engineers, of whom five were department heads or center directors; twelve were from the sciences, four of whom were department heads or center directors; and seven were in medical schools, one of whom was a department head. While every effort was made to include professors of all ranks as well as women and members of minority groups, several members of these groups declined to participate, citing a lack of time. Only four female faculty and three assistant professors participated. The sample reflected the majority of faculty who were engaged in collaborative activity with firms: male, tenured, full professors.
The greatest points of conflict for professors were issues that pushed them to make choices between a public service and an academic capitalist knowledge regime. These issues were publishing versus patenting, access versus secrecy, and contested ownership of a wide variety of intellectual property. Publishing was tied to the free flow of knowledge and values associated with a public good knowledge regime, whereas patenting was associated with academic capitalism. Open access to knowledge characterized the Mertonian/public good knowledge regime; secrecy was more typical of academic capitalism. Communalism did not stress profit taking and was associated with the public good regime, while intellectual property was tied to broadening commitment to an academic capitalist knowledge regime. These three issues created tension between professors and firms and professors and their institutions.
Publishing versus Patenting
According to U.S. patent law, if information about a product or process is published, then it becomes part of the public domain and can no longer be patented. If a product or process is patented, first it must be “reduced to practice” or demonstrated, and an application filed with the U.S. Patent Office. The office reviews the product or process to see if it is original and then issues a patent, which ideally protects the product or process from being copied by another party for seventeen years. The average time from submission to the U.S. Patent Office to issuance of a patent is twelve to eighteen months. Among the difficulties that patents pose for academics is that patenting may hold up publication.
About 60 percent of the faculty we interviewed held patents. Almost all valued publishing research papers more highly than patenting. A few thought patents had some merit, but they were the exception. As a professor of chemical engineering explained: “A patent is hard to get, okay, but a patent doesn’t need to be a scientific document. . . You can patent things that are just scientifically terrible. . . However, some people like to say, well, if you’ve got a patent, it shows you did something novel because you were able to get a patent. Okay. That may be true. But I think most people in academia. . . I think the thing that is valued the most is a high-quality scientific publication.”
Patents were “like icing on a cake. You have to have a cake first,” according to an associate professor of physics. Research was the cake. Most professors did not attend closely to how their institutions set intellectual property policy and to the share they would receive if they “got a big hit.” They understood that the chance of making a great deal of money from a patent was like winning the lottery. As a center/lab director of electrical and computer engineering put it, “I remember when it [intellectual property policy] was first instituted. . . I don’t think people are too concerned about the percentages because typically it’s like a lottery ticket. You either get nothing or there’s going to be a substantial amount. And if it’s percentaged smaller. . . people don’t win the big prize but win the second prize, they’re still pretty happy because their chances were very much that they were going to get nothing. I think that’s the way most people feel about the patent thing.”
Most tenured professors with established industrial connections had figured out how to publish and patent. They employed a technique we call sequencing. Professors who had ongoing shared research agendas with corporations timed their publications so they did not interfere with patenting. As senior faculty, they did not feel pressed to publish and could afford to wait. A chemistry professor said: “Like any other collaboration, you have to be able to get along with the people. . . so there is a legitimate interest of the company in not disclosing things until patent applications are finished and so forth. Generally I have found that that doesn’t have to be very restrictive. I’m slow enough in writing out my papers anyway so that another month or something isn’t going to make a big difference. So, I think it is important to keep in view the academic issues of freedom to publish and so forth, certainly one doesn’t want to compromise those things. In practice, I’ve not run into any big conflicts there.” A professor of endocrinology elaborated this pattern:
As long as publishing is fairly quick. . . as long as things are not so hidden for years, I don’t think it’s that big a deal now. . . if somebody was going to say “patent it or not, we’re not going to tell anybody about this for five years,” then, you know, I think it would [matter]. But. . . we’re talking about a year or so, and I don’t think [it] matters all that much. . . Even if you’re writing a paper without any patent involved or anything, it’s going to be a year to year and a half after you do the work before probably the work comes out, so you write the patent and you write the paper and it’s going to be year, year and a half before it comes out anyway, so I’m not sure it’s that much of a difference.
Because these senior professors had developed close relations with industry, they saw industry as having “a legitimate interest” in not disclosing information until patents were approved. They argued that there is little difference between publishing with a patent or without a patent, given the slow pace of publishing, a somewhat disingenuous position given the prevalence of prepublications and on-line publications in the sciences. Nonetheless, many professors had so naturalized sequencing that they saw no conflict between patenting and the free flow of information.
However, assistant professors were not so sanguine about their ability to publish and patent. A young assistant professor of biology noted that she had difficulty patenting quickly enough to get her publications out in a timely fashion. Her difficulties were with her university, not a corporation.
If you think you have something that is commercially relevant, you are required to file a disclosure to the university before you publish it. So they are essentially sort of censoring what’s being published. . . the university. . . is in business too. . . so it’s annoying in one respect because being in academics, you need to have all this freedom, but if you actually read the university faculty handbook. . . anything that you think is commercially relevant has to be filed first and then they have up to six months to decide the fate of what you are working on. . . and that includes presentations at meetings. So, I don’t know. The lines between industry and universities are sort of merging.
She understood that universities, like corporations, had become invested in profit taking, and both types of organizations now pushed for patents. As a result, the university, historically understood to be more committed to academic freedom than corporations, sought to constrain the free flow of knowledge when patents, licenses, and royalties were in the offing. Despite her insight, this professor was willing to excuse universities. “In a way, I can see the side of academics because times are getting tough and they can’t just wash potential profits down the drain either.”
Many of the professors we interviewed had moved from a public good conception of academe, in which industry scientists patented and professors published, toward an academic capitalist regime. Professors still believed that publications were much more important than patenting, but many were convinced they could publish and patent. This belief was most powerful among senior professors with long-term research programs who published regularly.
Secrecy versus Access
Some professors, especially those who had worked with industry, took the position that universities seeking to maximize revenue flow by patenting and obtaining licensing and royalty agreements were naive. As an associate professor of electrical and computer engineering said:
The issue with patents is very tricky . . .you write the patent and you think that money will start flowing in the next day and then you want to move on to license it . . .writing the patent is the easy part. The hard part is what do you do once you have the patent. You need to go after certain industries to make sure that they carry it. The patent issue in big companies is more like a cold war situation. Suppose you are AT&T and I am IBM. So we both write 200 patents a year. We meet once a year, we have a coffee and we say, “Okay we just exchange and use those things. We can both use it.” But once you suddenly write 200 and I have only 10 then we meet for a coffee and you say, “I’m a nice guy but I have 200 and you have only 10.” So it’s more like a cold war situation. Everyone has his own arsenal and they basically exchange.
Or, as a professor of organic chemistry put it, “There’s no one patent you can get which will make a lot of difference to one company because if it’s in an area of their major concern, they’ll create a network of patents, process patents, little changes in structure and so on. So your patent can’t even be independent of their patents. So I think university administrators have a very unrealistic idea about this.”
These professors were making the point that industries saw patents as valuable not because they promoted discovery and free competition but because they precluded it. Indeed, these professors thought industries saw patents as a strategic means for staking out future directions for product development and thus preventing investment in these areas on the part of other firms. If universities held only one or two patents in a product area and were unable to deploy them strategically, they were unlikely to reap a rich revenue stream. If universities began to treat patents as strategic for a line of product development, as has the University of California system with regard to its biotechnology patents, then they become more like corporations, engaging in prolonged, complex, multistate litigation to protect themselves and align research endeavor with business plans, shifting higher education toward an academic capitalism knowledge regime.
If the strategic potential of patents becomes paramount for corporations, problems other than withholding publication arise. As an associate professor of biomaterials pointed out, when a product essential to the research process is patented, a whole field can be constrained.
Patenting a product really does create some problems. Let me give you an example. There is a growth factor that we use, bone growth factor. . . you can derive it from animal bones but it takes. . . tons and tons of bones to extract it and not every place can do that. It’s very expensive. They [the corporation] have a way of chemically doing it, recombinant, but that technology is licensed. It’s owned by one company, and they don’t give out their stuff to anybody unless. . . you sign. . . an obscene agreement. You sign your life away. . . Everything that will come out of it belongs to the company. . . Now, to me, that’s a deterrent to progress because there are so many people who’d like to use that and if it was freely available, the whole field can move forward. But since one company’s controlling it and wants to control everything that comes from it, I think it’s negative. It. . . might make money in the long run but. . . its impeding science.
Other professors were less concerned with patents blocking whole fields of science and more concerned with industry blocking profits for universities, colleges, and faculty members. As a head of electrical engineering said: “You got to be careful because if you give the rights to industry, they can shelve it which is [what their] competition does. . . They have to have performance guarantees. So if they want to shelve it, I don’t care as long as they are paying. They are paying the university. They pay the researchers. Everybody is part of this. The university gets a percentage, the researchers get a percentage. . . [The university needs an agreement with industry that says] ‘Here’s what we think this thing will do. You agree to this. If you don’t do that, either give all the intellectual property rights back, or you pay the retainer whether you sell it or not.’”
These two professors were at opposite ends of the spectrum. The first raised questions about what happens to free inquiry when knowledge becomes alienable and patents are used as a protection strategy that keeps scientists away from data. The second insisted that industry not take university discoveries and “shelve” them so competitors were unable to use them unless industry was prepared to pay a fee for doing so. Both thought that patents were part of a larger game, perhaps even a “cold war,” in which universities were peripheral players but the consequences were significant.
However, patents were not professors’ major interface with industry. Professors routinely interacted with industry as consultants. As consultants, they encountered a variety of restrictions on their free use of information. They often had to sign nondisclosure agreements with industry, had to deal with industry’s data management conditions, and had to submit research papers to industry for prepublication review.
Many professors were not troubled by prepublication agreements. As a chemistry professor said, “I have no problem at all with them [the sponsoring companies] wanting first glance at anything. . . the bottom line. . . is that if they can’t have some way of knowing what’s coming out ahead of time to do damage control if they have to, they’re not going to give you a contract. It’s just black and white.” He was convinced the corporations he worked with would “correct errors” but not tamper with his interpretation of the data, nor hold up his publications, even if they contained material detrimental to the corporation. He interpreted the corporations he worked with as supporting his academic freedom, even though he understood they would “do damage control” prior to the release of his results, perhaps undercutting and challenging his science.
Other professors were willing to accommodate corporate requests for secrecy with regard to data analyzed as part of consulting agreements so long as they were able to publish. A professor of earth sciences explained: “With the oil companies, that’s the most important thing to clarify up front. . . how much freedom do I have to publish my contributions? The scenario where the work I do remains secret is not an attractive one at all. Usually, if I’m shown the data at all, then it’s available to me. Sometimes it’s muted in the sense that the locality is very generalized so that I know sufficient for my purposes where the oil well was drilled. I don’t know whether it was a well that produced oil or not and I don’t know accurately enough which well within a large field it might be. . . So they don’t necessarily give me all the data.”
According to an assistant professor of mechanical engineering and materials science, he would not consult with industry if he could not publish, although he had to manipulate his data presentation to get his material past corporate reviewers and into journals. “This is a big problem with high tech industry. Proprietary rights and all this kind of stuff. . . if a company comes to you and says, ‘Well, we’d like you to work on this. We have the money for it but you can’t publish anything,’ well, then I wouldn’t do it because there’s nothing in it for me because I really do need to be able to publish it. Now, frequently you can get around that by writing publications where you don’t divulge all the secret recipes that they don’t want to give away. Or you can wait a little bit and often for high-tech industries if you wait six months it’s already old hat and they don’t care about it anymore.” Although this professor experienced corporate censorship, he saw it as an irritation rather than as a substantive challenge to his academic freedom. When he talked about submitting a paper for prepublication review, he related the following: “You have to go through a couple of passes, often. You write a draft proposal, a draft paper, and it goes through the company bureaucracy, and you know, it goes through various peoples’ desks. And they always get paranoid about the most innocuous little words that you might have in the paper. It’ll come back all red-lined and “Can you take this word out?” and yeah, of course, it doesn’t make any difference. So those little things can easily be done without compromising the basic idea.” In some cases, he gambled that the corporation would be so “desperate” for his work, that they would continue funding him and allow him to publish despite the company’s unhappiness with the situation.
Other professors found company prepresentation and prepublication review more problematic. A professor of earth sciences recounted how a paper he and a student had planned to present at a scientific meeting was barred by the oil company whose data they were using.
The oil companies can be a little bit paranoid about who gets to see the research when it’s done. Initially, they were convinced that the work that my student wanted to do on the side was of no particular merit to the oil exploration process and that was fine. We made the mistake of talking about it as the project developed. We got permission for him to give abstracts at meetings, and others from the company decided that this is really rather interesting—we could use it. So suddenly, the project was no longer available for reading outside of the company and so, well within the first year, that project essentially folded as an option for a PhD. So we found another one and then we took the tack of not talking about it outside of the department, essentially.
Industries often required professors who consulted with them to sign nondisclosure agreements. These agreements protected any industrial data the professor might use and captured the potential profit that might accrue from intellectual property derived from faculty work. Because professors often had complex relations with a variety of companies and government agencies in order to keep their labs and graduate students funded, they sometimes agreed to keep confidential information from several companies. A professor of chemical engineering recounted that faculty had great difficulty in keeping verbal agreements straight, so his institution devised a policy whereby professors could only accept confidential (nondisclosable) information in writing. “We were sitting in a room like you and I are and we talked about something and then half a year later [the corporate representative says] ‘well you can’t work on that because I mentioned this to you in the room’. . . which happened before. . . it’s hard, you know, especially when you’re dealing with so many different companies and stuff. I can’t remember who said what in that kind of detail two years down the road. So now, it’s up front in the language from [his university] that if anybody. . . give[s] us any confidential information it has to be in writing that it is confidential and we both sign it so we don’t get into trouble.”
In contrast to the professor of chemical engineering, a professor of aeronautical engineering was confident of his ability to manage multiple nondisclosure agreements.
Q: Many faculty have told me when they work with private data, sensitive data, they sign a nondisclosure agreement. Is that something that you’ve done?
R: Yeah, I’ve signed a lot of those.
Q: And do you find it hard to keep track of which ones you’ve signed, and, you know, do they usually have a length of time on them or is it forever and ever?
R: Actually I never looked that closely. I should go look for the ones that I have. Do I—I honestly don’t know that. And do I find it hard to keep track of? No. I keep them strictly separate.
Yet another professor and department head in electrical and computer engineering took pride in having signed only a single nondisclosure agreement with industry.
My students and I have only signed one nondisclosure agreement and probably won’t sign any more. Like we haven’t signed one with Intel even though we have. . . extensive collaboration. It’s much simpler for them. They simply don’t tell us things that are very secret to them or. . . important for confidentiality. And we are working in an area where that’s okay. So an example might be that we will know what materials are present in some structure they build for us, integrated circuit structure, but we may not know how exactly those materials were deposited because [knowing] the means of deposition. . . is a big competitive advantage. I don’t want to be responsible for knowing what those very expensive, very important secrets are and we don’t have to know that. So often when you read scientific papers, there comes a point where in the classic paradigm anyone with the right equipment and competence can read a scientific paper and reproduce the results. That’s the ideal. That’s rarely the case.
This professor disliked nondisclosure agreements because he found it difficult to keep track of what was public and what was secret. He preferred to let companies draw the line for him and keep their secrets. He realized he had violated “the classic paradigm” in which “anyone with the right equipment and competence can read a scientific paper and reproduce the results,” but he did not care.
Other professors did not wait for the company to draw the line for them. Sanitizing, a term used by a full professor of aeronautical engineering, involved removing data from a thesis that industry wanted to protect so that the professor could publish.
R: I mean, you know, you can, you can go in for various [types] of sanitization of a thesis, right?
Q: Sanitization meaning. . . what do you mean by that?
R: Well, you know, you’ve gotta ask. . . what’s really objectionable in this thesis to the company? I mean, usually it’s the specific numbers [that] might be in there. . . Usually it’s not the entire thesis, right? The objection to the entire thesis is. . . a real big problem. But if it’s. . . numbers, then take the numbers out.
Q: And just don’t. . . report those?
R: Yeah.
The professors were convinced such omissions did not compromise the integrity of their research and seemed not to understand, or disregarded, that it might undermine the scientific method, which calls for the possibility of replication. Instead, they affirmed property rights that constrain the free flow of knowledge and scientific accountability.
Most professors normalized the constraints—prepresentation, prepublication, nondisclosure agreements—that corporations imposed on their consulting agreements and managed to publish regardless. Even when there seemed to be egregious violations of traditional academic norms, as in the case when a student was prevented from using data he had analyzed in a presentation and in a thesis, professors were willing to excuse it and work with the company. As they sequenced their research write-ups when they worked on patents, so they sanitized their data when they consulted. Although having multiple nondisclosure agreements with industry raised the possibility of legal difficulties should a company make the case that a professor had used its data in ways that benefited another sponsor, most professors did not seem to take this seriously.
Although university policies tried to regulate professors’ behavior with regard to disclosing, patenting, and publishing, and corporations also wrote consulting contracts with professors that aimed at controlling their behavior, professors were able to some degree to manipulate their employers and sponsors. In large part that was because professors were the experts, the pioneers at the frontiers of knowledge, and their employers and sponsors often did not know enough to regulate them. Faculty in their labs were difficult to monitor because very often only they were in a position to decide whether something should be disclosed to the institution, shared with a corporation through a contract that might include a bonus for a patent, or, as we will explore below, become the basis of a start-up company. Faculty took advantage of their knowledge on the grounds that, as a professor of biochemistry put it, “extraordinary people do extraordinary things.”
Start-up Stories
Approximately 40 percent of the professors in our sample were involved with start-up companies. We used the term start-up loosely, including companies in which professors received stock equity in return for knowledge as well as companies that professors initiated themselves. The defining characteristic of startups was that professors owned stock based on their discoveries, so they were simultaneously holders of human capital and shareholders with investment capital in their own knowledge.
As we noted in chapter 3 on patent policies, university acceptance of equity increased dramatically in the 1990s, creating conditions conducive to start-ups (Feldman et al. 2002a). Start-ups captured the imagination of many of our sample participants because they were emblematic of the transformations academic capitalism brought to the academy (Slaughter and Leslie 1997). Start-up stories generally emphasized the wealth available to professors able to transform discovery into public stock offerings and marketable products. Even if they had not participated in such ventures, roughly a quarter of the professors interviewed told start-up stories, suggesting the power they held over the professorial imagination. These stories sounded somewhat like fairy tales in which the hero finds an object with magical properties that convert dross into gold. In the professors’ case, the object was a discovery, and the alchemical process was “taking it public” or “going public.” The discovery led to a product or process, a company was formed, and its stock was sold to the public on national and international exchanges, making millions of dollars for everyone involved, often before a product was fully developed, let alone successfully marketed. Most of the elements that professors emphasized are contained in an engineering department head’s story.
You know, we had a guy. . . a faculty member in computer science where this is the easiest to do this today, he started a company. . . eighteen months ago, probably built it up to something like fifteen employees, never had a dime of profit of course, probably never sold anything, just getting going. Eighteen months old, the company was bought for $220 million. And this was in the paper. Bought by a big company, Cisco Systems. So his corporate days are over, he had 10 percent of the company. He comes back as a. . . faculty member after his eighteen-month leave of absence and he’s worth $22 million. So his [university] salary becomes his pocket change. . . They always take leaves of absence. . . our new dean, our brand-new dean of engineering did this, started a company in [19]84. Two-year leave of absence, got the company going, continued to be involved after he came back from his leave of absence. The company actually was probably going to fail but the parts that it made were so important to Silicon Graphics, which is the world’s foremost high-end work station, that they bought. . . [his] company because they needed the company to survive. So they captured it for themselves for $480 million. So I don’t know how much our dean owned at the time as a founder, not 10 percent, but judging by his estate. . . just north of here, where the very, very wealthy people live, he got plenty. And he’s forty-four.
The professors in the story are hard-working innocents (“never had a dime of profit. . . just getting by,” “the company. . . was probably going to fail. . . but the parts it made were so important to Silicon Graphics”) not motivated by greed. They took leaves of absence, clearly separating academy and corporation. Their work was transformed by corporate interest and investment into multimillion-dollar companies, but the professors were not captivated by the corporate world. After the corporations took over their companies, the professors returned to their origins, the university. They reaped their rewards in private lives, moving into lavish estates, perhaps living happily ever after as princes of the new economy.
The dazzling feature of the start-up story was the transformative power of corporations, conferred by their almost unimaginable wealth. What was not commented on by the tale-teller was how the professors fit back into the university, given that their salaries were “pocket change” and that the professors were now stars, although not necessarily in an academic firmament. This story, as did many of the other uncritical stories told by participants, represented an uncomplicated imaginary in which professors could profit enormously from their discoveries without changing themselves or the universities in which they worked. The start-up stories threw into sharp relief the differences in compensation packages between the academic and the corporate world.
When professors moved away from mythic start-up stories to talk about their own experiences, their accounts became more complex. The issues they struggled with were similar to those discussed previously but intensified because equity and ownership interests made the stakes even higher. Among the issues were (1) who owned what, or how to sort out faculty, institution, government, and taxpayer claims to intellectual property that was developed at least in part using (public) university facilities and federal research funds; (2) how to preserve professors’ traditional use of expertise in external settings given institutional intrusion into these practices when both professors and institution shared equity in a company; and (3) how to insure that graduate students involved in start-ups were not exploited. Another issue the professors involved in start-ups sometimes faced that did not appear in other professors’ relations with industry was (4) how to guarantee that the products and processes they worked on were safe and sound, given that they were not able to exercise much oversight or influence over the companies that developed their products and processes into consumable goods.
The legal line that determined whether the professor or the institution owned a discovery depended on time and use of facilities, as we saw in our discussion of state system and institutional patent policies. Universities sought a share of professors’ profits, arguing that if faculty used university facilities in developing their ideas, then the ideas belonged to the university, while the professors who made the discoveries could claim only a (negotiable) percentage of the profits from university licensing and royalties. Given professors individualized use of expertise, universities sometimes encountered difficulty knowing what faculty discovered and what resources they had used.
Some professors in our sample still claimed that their intellectual work was independent of the university and they were therefore entitled to all the profits of the start-up. In making this claim, an associate professor of chemical engineering distinguished between spin-offs and start-ups. For him, a spin-off was derived from university work on federal grants while a start-up was independent. When he talked about his company, he said, “I make a real effort to keep them very distant. . . The start-up has nothing to do with my research and I have vigorously resisted having anything in my home lab. . . Now there are a variety of reasons. One of them is I’m protecting my own financial interests because if the university can claim that I used university resources to facilitate the start-up, then the university has a legitimate claim on the company. . . This would not be good. I would get crucified by my co-start-up people. But the other thing is I just don’t want to create even the hint of guilt. . . I just want it to all be perfectly clear.” This professor mediated multiple, conflicting claims to his knowledge: his own financial interests (personal), the interests of his co-start-up founders (private sector), and the interests of the university (public sector). He sought to evade punishment (getting “crucified” by the private corporation) by avoiding “even the hint of guilt.” As if to atone for the independent start-up from which he was profiting, he said he was engaged in another one, a spin-off, from which the university too would profit.
Although this professor tried to avoid guilt, he found it difficult because crossing the boundaries between academe and industry created so many quandaries. The most obvious source of guilt was the issue of who benefits and who pays. As he noted, “We’re sitting here in a building paid for by taxpayers and the stuff in my lab. . . a lot of it’s federal money. . . the electricity, the lights, the ventilation and stuff are all taxpayer supplied. I draw my salary from tax bonds. And to go and say that I’m now going to start a company and it’s going to be my company and it’s not going to be yours. . . seems just not fair. I mean the university’s intellectual property policies are reasonable. . . I can license it from them for some reasonable amount of money. . . and they can get a cut.” Even though the professor seemed to be profiteering at public expense, the question of who benefited and who paid was not a black-and-white decision. As the professor noted, “The legislature probably likes [start-ups] a lot because you’re creating jobs for the people of your state.” There were pros and cons across the spectrum of issues. The start-up could become a “consuming interest” so that faculty “neglected their other tasks.” Yet at the same time, “You can get a real sort of intellectual synergy [between the department and the corporation] because the company’s poised to take what comes out of the academic fountain.” Similarly, start-ups created intense competition—“there’s a certain testosterone aspect,” yet “it makes. . . uniformly stronger faculty.” So, too, student projects could “be made too biased to the interests of the company,” yet students who participated in start-ups were often “much more savvy about the job market and in the end they have jobs.”
The question of ownership sometimes became far more complex than making decisions about whether the professor, the institution or the corporation owned intellectual property. In some cases, the state in effect acted as a venture capitalist, backing a professor’s company. Rather than licensing the discovery to a private corporation, the state engaged in financing production and profit taking, acting, along with the professor, in an entrepreneurial capacity. In these cases there was no boundary between academe and industry.
An endocrinology professor who acted as a state-subsidized entrepreneur outlined some of the complexities of his situation. He was the head of a large bone-research group that worked on drugs for osteoporosis. In his words, “It [osteoporosis] became popular with the pharmaceutical companies because all of a sudden they realized there was an enormous market. . . they had a big-time disease out there affecting millions of people with no decent drugs. . . and the chances of enormous profits if they had a good drug. . . and so when I first starting working in research about twenty, twenty-five years ago, it was like really tiny, hardly anybody in it.” His situation was transformed by corporations seeking profits in new areas. Rather than allow corporations to capture all the profits, the professor worked with his university to develop a plan from which the institution, the state, and the professor benefited.
So, what the university has done is, we have decided on this specific area of research of direct discovery for osteoporosis. . . and they have allowed me to go out and hustle, form a separate company, and hustle companies from outside for money to support this. They get part of the equity and it’s just like a sense of gift for them, and. . . I’m still a full-time faculty member. . . At this stage. . . I have a company which has gotten the right to actually license its products to any big major pharmaceutical company out there, but in addition, I’m responsible for this big operation at the school which is also dealing with other companies, but through the school. So, we have some patents which are handled through the school which involve usually pharmaceutical companies through the school, so that the school owns the patent and the school is actually doing the licensing. And, then we have this other operation where the school is like a minority shareholder. So, it’s a little complicated.
This professor never touched on the many conflict of interest issues inherent in his situation. What would the professor and his institution do if the clinical trials suggested that there were health problems related to the drug? Neither university nor professor could claim to be disinterested parties to the trials, given their direct economic interest in the outcome. How did the professor decide which discoveries to channel through the basic discovery group, in which the university was a “minority shareholder,” and which to route through the school, where the university owned the entire product and controlled the licensing? How did the professor avoid “disclosing” knowledge he gained in one project to participants in another, given that all the knowledge was contained in his mind, and very likely one discovery cross-fertilized others?
Start-up stories did not always avoid exploring the professional dilemmas professors encountered when they crossed boundaries between academe and industry. A chemistry professor described how he began working with a corporation as a consultant, became enmeshed in corporate decision making and the company’s future, and found himself sliding toward unethical behavior. He was recruited as a consultant by a former undergraduate student because he worked on related (and federally funded) research. Because the company ran short of money, the professor took an equity position and funding for a postdoctoral fellow, who worked for the company, in lieu of consulting fees. He acknowledged the potential ethical problems in his course of action.
That’s why you have to file all sorts of financial disclosures and so forth because, of course, the university wants to make sure that you’re not working your graduate students or post doctorates to death to put dollars in your pocket. And so in that case, and this was the first time I’d ever done this, it was a small company and they didn’t have huge amounts of money and so the agreement was that they would pay me half my usual consulting fee with the other half being in stock options. And so, I mean, I didn’t get a huge equity position in the company but it ended up, you know, being a smart financial move because when the company was sold, I was obliged to sell that stock but at a substantially higher price.
Although the professor understood the ethical issue of student and post doc exploitation, he nonetheless let the company fund the postdoc, perhaps because otherwise the company would have failed and he would have lost his consulting fees and stock options. He did not speak to whether the postdoc received an equity share in the company. The chemistry professor justified his corporate success by saying that there was “a new paradigm,” noting that “times have changed. . . companies are. . . looking to invest money” in “university laboratories,” as was the case with biotechnology.
Not all faculty were happy with their start-up experiences. An associate professor of biomaterials who held an equity position in a start-up discussed what he experienced as loss of control of his research. The loss of control came in two ways: first, he was shut out of the company with which he was working; second, he implied that he could not control the way the company presented his findings to the world, which confronted him with ethical quandaries.
He took an equity position with the company in trade for his technology. However, his equity position did not entitle him to a voice in corporate decision making, let alone a seat on the board. Within a year, he was pushed out of the company, although his technology stayed and he retained his equity position. “I’ve had a very bad experience [with the spin-off]. . . after we got the company up and going, we were asked to leave within a year. . . the technology [was taken] from us, it was basically my lab. . . [but] these products, or so-called products, don’t really see the light of the day, especially in this area. By the time they see the light of the day they are so different and there are patents upon patents that any gain that you might get from royalties is almost nonexistent. . . And once the company starts, it’s got a life of its own. . . the faculty members are not officers.” He was concerned with having a voice in how his discovery was used and feared that it might be buried in the company’s overall strategic deployment of patents (which would also, as he noted, diminish any royalties he might hope to receive). He also implied that corporations, perhaps even the corporation that held his technology, sometimes misrepresented what the technology could do, creating ethical dilemmas for academics.
We see so many problems. I mean, the silicon problem, now we have polyethylene wear on the total joint. I just feel wrong in supporting something. . . that the indications [show] might be a problem. Even though it’s my technology. But just because you have a technology doesn’t mean it’s working right now. It might need another five years working on it to fine tune it. . . I do believe. . . young start-up companies—not the big established ones, the big established ones don’t have to worry about it too much—the young ones, in order to survive, do tread very close to that ethical line, if not cross it at times. Whereas sometimes not all the data is shown and it should be shown. You know, if you are testing one hundred animals and you put in a gray implant and three of them do well and the others don’t do well. Then in the pictures you show. . . those three perfect ones as representative. Now that’s kind of. . . You’re not saying that all of them were like this but when you show those pictures, you imply that all your cases were like that. . . Now is that ethical? To me, it’s not.
Start-ups dramatized the issues faced by professors involved with industry. Once, the boundaries between university and industry had been fairly clear. According to (mythical) custom and tradition, professors had been responsible for basic science and industry for applied, neatly separating science and commerce. Now, the professors were not only pressured and tempted by industry, but also the institution in which they worked, the university, had moved toward market values. As a full professor and head of a chemical engineering department said, “the wall [between academe and industry] was really high. . . We didn’t want anybody in the world to say that. . . Joe Blow was using the state resources for gain. . . Then what happened was, about ten years ago, it shifted markedly to the sort of idea that something else could pay the toll booth. . . there was then a push and a great liberalization of what universities could do.” Like industry, universities encouraged professors to capitalize their knowledge. Although universities and states had rules to guide professors’ work with industry, the regulations were to some degree undercut by institutions’ insistence on their rights to intellectual property and their share of profits. For the most part, professors dealt with the issues that emerged when they negotiated knowledge regimes on their own as individuals.
Generally, the professors seemed to accommodate industrial and institutional demands because they saw no other way of maintaining their core identity as teachers of graduate students and researchers. The new narratives about competitiveness, told outside universities, stressed the intrinsic value of money and the willingness of the neoliberal state to fund university-industry government ventures. These narratives made it easier for professors to elide academic and commercial values. (That professors often benefited economically from work with industry was perhaps not incidental to their accommodation.) Even when professors criticized industry and academic institutions (and they were usually more critical of academic institutions than of industry), they often recognized the utility of the new partnerships, whether these were making students more ready for the market, bringing new revenue streams to the institution or state, or building regional economies.
Our analysis of the interviews with professors engaged in technology transfer indicated they were moving away from a public good model toward an academic capitalism knowledge regime. Many still held to some values of the public good regime—for example, the importance of publishing and the corresponding value of the free flow of information—but they were willing to alter those values and sometimes delayed publication. The patent policies we discussed in chapter 3 opened up new possibilities for professors and created powerful market incentives. Professors responded by straddling both worlds, retaining a place in the university community but also assuming the role of (state-subsidized) entrepreneurs who were sometimes consultants, officials, or even presidents of their own companies.
Conclusion
The Bayh-Dole Act was passed early in the Reagan administration as part of the new federalism, which was aimed at privatizing, deregulating, and reregulating government to better serve the needs of commerce. The law was a signal to universities that academe and industry were no longer divided by a “fire wall.” Some faculty, primarily in the sciences and engineering, and a cadre of administrators and professionals, like technology licensing officials, moved into the territory opened by the new regulatory climate. The biotechnology revolution, occurring at roughly the same time, spurred faculty and university interest in the market because so many discoveries had product potential. The states experiencing (periodic) fiscal crises began to support universities’ technology transfer mission with their own funds, hoping to create economic miracles like Silicon Valley and Research Triangle that would increase the tax base. Corporations were very supportive because the new policies reversed three decades of federal ownership of research. Universities became conduits for cutting-edge commercial R&D, replacing industrial laboratories that in the past had focused on long-term development. Even when corporations had to pay for royalties and licenses to university intellectual property, these were less than the costs of corporate laboratories because university research was federally funded, faculty salaries were low relative to those in the corporate sector, and student labor was very inexpensive.
Theoretically, our analysis shows that values are attached to organizational forms as well as state and federal policies. These do not change the norms and values of a knowledge regime in and of themselves but rather frame opportunities for change. When groups of actors within universities form coalitions and networks in response to external opportunities, they can shift knowledge regimes. Universities are segmented, and some actors were always engaged in technology transfer, as evidenced by patent policies developed well before Bayh-Dole (1980). When the federal and state regulatory climate changed and corporations signaled interest in university intellectual property, this segment of the university—a loose coalition of faculty, administrators, and support professionals aligned with market actors—were already committed to an academic capitalist regime. After Bayh-Dole, more faculty, students, and administrators were drawn into these networks. The organizational changes that occurred in the national research apparatus over the past twenty years supported the academic capitalist regime and made sustenance of a public good regime more difficult.
Our analysis of state university system and institutional patent policies shows that rules and regulations have codified academic capitalist values and practices. Members of the university community are required to identify and disclose any inventions or discoveries with revenue-generating potential that could be patented or protected in a variety of ways. The managerial capacity of institutions to engage in academic capitalism has greatly increased. As faculty became state-subsidized entrepreneurs, administrators became venture capitalists who invested in faculty technology, participated in IPOs, and litigated to protect an increasing variety of intellectual property. Higher education institutions, arms of the state if public, and nonprofit entities, chartered by the state if private, were no longer separate from the market. They took on business functions, often run through foundations or other “arms-length” organizations that intermediated between (state) higher education institutions and the market. By the turn of the twenty-first century, increasingly broad segments of universities were involved with the market and had incorporated market functions within universities.