The Superior Spider-Man & The March Across the Valley of Death (Part 1)

(This fantastic guest post, the first of two parts, was written by Anthony Cova, who serves as the Corporate Counsel at Addgene, Inc., a nonprofit plasmid repository, where he handles the company’s legal and technology transfer matters.  The views expressed in these posts are solely those of the author and do not necessarily reflect the views of Addgene.)

Since regaining control of his body from Dr. Otto Octavius following the events of The Superior Spider-Man, Peter Parker has had his hands full reconciling with family, friends and co-workers, and restoring Spider-Man’s credibility with the public and other heroes. Yet, despite all the harm Octavius caused during his tenure as Peter Parker/Spider-Man, he still managed to obtain a Ph.D., found a company and restore Parker’s loved ones’ ability to walk.

Now, the cybernetics technology that freed Aunt May from her cane and Flash Thompson from his wheelchair is at risk. In a recent public address, Parker announced that Parker Industries would be putting its cybernetics line “on hold” to research and develop technologies focused on capturing, imprisoning and depowering super villains. Parker, who does not possess Octavius’s cybernetics knowledge, would rather shelve a proven technology than carry out another’s work. Given the benefits of Octavius’s cybernetics technology, can Parker simply halt its research and development (presumably indefinitely) out of pride and insecurity? Will the public be deprived of invaluable cybernetic prosthetics? Who can rescue the technology from the crumbled shelves of Parker Industries?[1]

In Part I, I will provide a brief overview of technology transfer—its history, objectives, and barriers. Part II will then describe the powers and objectives of Empire State University and the federal government and whether they are sufficient to rescue the cybernetics technology on the public’s behalf.

PART I. TECHNOLOGY TRANSFER

The Origin Story

In the sweltering summer months of 1787, a conclave of demigods[2] assembled behind bolted doors and shuttered windows at the Pennsylvania State House. Their task: to bandage a hobbling federal government. However, rather than patching the Articles of Confederation, the demigods chose to create an entirely new constitution. Unlike its penniless, toothless predecessor, the 1787 Constitution empowered the federal government to collect taxes “to provide for the common defence [sic] and general welfare;”[3] to grant inventors an exclusive right (a patent) to exclude others from using their inventions for limited periods of time “to promote the progress of science and the useful arts;”[4] and to make all laws “necessary and proper” to “carry[] into execution the foregoing powers.”[5] While these powers strengthened the federal government, they were intended to be exercised to “promote the general welfare.”[6]

Since the conclave’s end, the U.S. has grown into a global, economic power. Recognizing the benefits of “promoting the progress of science and the useful arts” and the need to remain competitive internationally, the federal government, through its various agencies (collectively, the “FED”), began funding university research. Similar to the FED, universities are “conducted for the common good.”[7] They are committed to the education of their students, the pursuit of unbiased research and the dissemination of knowledge to the public. Moreover, as institutes of higher learning, universities have historically served as centers of innovation. Indeed, many products today can be traced back to a university lab notebook or chalkboard.[8] When innovations are transferred from universities to commercial partners and, ultimately, the general public, this process is referred to as “technology transfer.” Unfortunately, despite FED objectives and university academic principles, technology transfer is not always successful.

The Bayh-Dole Act and the Rise of the Technology Transfer Offices

Prior to 1980, title to any patentable innovations developed through government-sponsored contracts or federally funded research (a federally funded invention or “FFI”) typically vested in the FED. This reflected the rationale that research funded by the public belonged to the public. Ironically, only a handful of FFIs ever reached the public. Neither the FED nor the university possessed the necessary resources to develop and commercialize FFIs for public use, and obtaining developmental help from the private sector was often a slow, circuitous process due to the number of funding federal agencies and/or their inconsistent intellectual property policies.[9] Exacerbating FFI unavailability was the fact that some FED agencies offered FFIs on a non-exclusive basis only, believing that non-exclusivity provided the public potentially with greater access. Unsurprisingly, this deterred many in the private sector from investing in and commercializing a FFI. If the public was ever to benefit from the fruits of its tax dollars, legislative and systematic changes were needed.

In 1980, Congress passed the Bayh-Dole Act (“BD”) in order “to promote [FFI] commercialization and public availability” and “to protect the public against [FFI] nonuse or unreasonable use.”[10] By granting universities the right to retain title to FFIs, BD allowed universities to facilitate technology transfer transactions on behalf of the FED and to streamline the licensing process. Revenue from these licenses also provided universities additional funds to be reinvested into further research. Since its passage, BD has created thousands of jobs, generated billions of dollars and significantly increased the number of FFIs reaching the public. Nonetheless, the right to retain title is not absolute. BD requires universities to timely file patent applications, to prefer certain licensees and, most importantly, to promote a FFI’s utilization, commercialization and public availability. Universities that fail to comply with these and other obligations risk losing title to FFIs and even future research funds.[11]

With so much at stake, U.S. universities have established special administrative offices, generally referred to as technology transfer offices (“TTOs”), to manage regulatory compliance and advance university policies. TTO operations can typically be divided into three purposes: (1) generate revenue for the university to supplement federal grants; (2) support the university’s research community (e.g., facilitating industrial partnerships, assisting spinout companies, responding to student and faculty intellectual property queries, etc.); and (3) comply with external laws and regulations. While some TTOs may focus their operations on one purpose over another, most TTOs fulfill, to varying degrees, all three. More importantly, as stalwarts of their universities, TTOs are charged with defending and advancing their universities’ core academic principles. TTOs must be vigilant of any hazards that could interfere with a university’s ability to develop and disseminate innovations and knowledge to the public. For example, contract provisions that restrict publication or intellectual discourse amongst faculty are often immediately struck from any collaboration agreement. Licenses that restrict universities’ rights to use an invention for research purposes are often renegotiated, and any agreements that narrow or remove access to research tools are best avoided. Given these academic principles and the BD obligations described above, TTOs have a duty to promote public availability of FFIs and to ensure that the public will ultimately benefit from federally funded university research.

The Valley of Death

Across the commercial plain, nestled between academia and the consuming public, lies the Valley of Death (the “Valley”). Despite the best efforts of countless TTOs, the Valley has claimed many worthwhile innovations. Some FFIs perish along the way for lack of funding—having failed to attract investors or to maintain sufficient cash flows. Others—having been deemed commercially invaluable—may be immediately abandoned at the Valley’s edge. Although lack of funding and investment support are endemic to the Valley, those wishing to guide FFIs through the financial brambles have many tools at their disposal. Universities and local business groups often offer low cost spaces or business incubators for small businesses. Financial programs like the Small Business Innovation Research Program provide federal funds to support the research and commercial development of small business innovations. Even federal laws, such as the Orphan Drug Act, can incentivize commercial investment and development of less marketable technologies. While these and other tools may not always be sufficient to blaze a path through the Valley, TTOs can help FFI licensees appropriately equip themselves for the attempt.

More troubling within the Valley are the surreptitious barbs of patent trolls or the alluring facades of devious competitors. Patent trolls often use broadly written, and sometimes ambiguous, patents to poke at a company’s portfolio in hopes of spearing forced royalties and/or settlement payments. Although many companies may succeed in routing these attacks, they may find they have suffered significant financial lacerations to continue beyond the Valley. Devious competitors, looking to maintain or promote their own technologies, might approach a TTO with alluring exclusive license terms, only to later bury the competing technology within the Valley. While President Obama and various legislators have taken great strides to cull the patent troll population and professional technology transfer organizations have developed best practices to prevent the burying or intentional shelving of exclusively licensed technologies,[12] many innovations continue to languish in the Valley.

In the present case, Parker has simply decided that Parker Industries will no longer pursue the cybernetics technology. The decision to shelve the technology—thereby abandoning it in the Valley—stems from Parker’s hurt pride rather than for lack of funding. Unlike Aunt May and Flash Thompson who benefitted directly by Octavius’s hand, the public may have to wait years before the cybernetics technology finds its way out of the Valley, just because Parker is ashamed that he lacks the necessary cybernetics skills and knowledge. For some members of the public, access to such life-changing technologies may come too late.

To be Continued . . .

Next time, in Part II of this series, we will consider whether the powers and obligations of Empire State University, the university where Octavius earned Parker’s Ph.D., and/or the FED, are sufficient to rescue the technology from Parker Industries on behalf of a needy and ready public.

[1] This article was originally written shortly after the Ghost had destroyed Parker Industries.

[2] Letter from Thomas Jefferson to John Adams (Aug. 30, 1787), in Hilary, Prologue: Pieces of History, The National Archives, Dec. 5, 2012 (referring to the Framers of the Constitution as an “assembly of demigods”).

[3] U.S. Const. art. I, § 8, cl. 1.

[4] U.S. Const. art. I, § 8, cl. 8.

[5] U.S. Const. art. I, § 8, cl. 18.

[6] U.S. Const. pmbl.

[7] American Association of University Professors, 1940 Statement of Principles on Academic Freedom and Tenure 14 (1940).

[8] For example, Gatorade was developed at the University of Florida; the algorithms for Google were developed at Stanford University; and the components that produce high-definition television were developed at MIT.

[9] There were 26 different federal agency policies regarding the use of federally funded research at the time of the Bayh-Dole Act’s consideration. U.S. Gen. Accounting Office, GAO-09-742, Information on the Government’s Right to Assert Ownership Control Over Federally Funded Inventions 4 (2009).

[10] 35 U.S.C. § 200.

[11] For example, in Campbell Plastics, the Federal Circuit determined that a federal defense contractor had forfeited its right to retain title under BD for failure to comply with BD’s invention disclosure requirements. Campbell Plastics Engineering & Manufacturing, Inc. v. Brownlee, 389 F.3d 1243 (Fed. Cir., Nov. 10, 2004).

[12] See David Kravets, History Will Remember Obama as the Great Slayer of Patent Trolls, Wired (Mar. 20, 2014) (discussing the various implementations to combat patent trolls including five executive orders issued by President Obama and patent reform legislation introduced in Congress); and AUTM, In the Public Interest: Nine Points to Consider in Licensing University Technology (AUTM, Mar. 6, 2007).