By Jarek Czechowicz
The Business-Higher Education Forum (BHEF) was formed in the mid 1970s in the United States by a number of corporate chief executives and university chancellors to cultivate relationships between the two sectors and strengthen the position of the US in an increasingly competitive global market. Lobbying by the BHEF eventually led to the 1980 Bayh-Dole Act, otherwise known as the University-Small Business Patents Procedure Act. It gave corporations indirect access to government funds and it allowed universities in the US to sell the findings of their government-sponsored research. Prior to the act, universities were generating 200 to 300 patents a year. In 1998, they produced nearly 4800 patents.
The computer technology company Intelliwear gave Dattum University $15 million to fund research at Giga Lab, a multi-disciplinary operation that focuses on interfaces between people and computers.
Intelliwear is preparing to release a revolutionary range of wearable computers driven by what insiders call “soft chip” technology. Soft-chip technology was initially developed for military purposes and is undergoing preparations to be incorporated into commercial clothing, glasses, hats and helmets.
In exchange for funding, Dattum University gave Intelliwear first right to all licences on 35% of Giga Lab’s discoveries, some of which are funded by government sources. Intelliwear was given a seat on the Giga Lab advisory board. The company can also require Dattum and Giga Lab to delay publication of research results for up to six months to allow Intelliwear the opportunity to license potentially profitable discoveries.
On hearing of the University’s agreement with Intelliwear, Dr Keith Knight, a respected medical researcher at Dattum, was reported to have said: “Unfortunately, such arrangements retard scientific discovery and could have profound negative implications when considered in relation to public health issues.”
Knight, a director of occupational medicine at Dattum University’s Tiblett Memorial Hospital, is engaged by Giga Lab to conduct some of the research required for Intelliwear. His research reveals evidence of disturbed mental functions among Intelliwear employees working on the “soft chip” products. Their symptoms include heightened anxiety and depression.
On learning of the results of the research, Intelliwear threatens to sue if Knight publishes his findings, fearing that such findings could jeopardise existing military contracts, not to mention wider commercial opportunities.
Knight goes ahead and publishes in the International Science Journal, and within months he loses his position at Tiblett Hospital.
Dail Winsome, a senior science and technology reporter at CBN, has been following these developments. She attends a special conference organised by the American Association of University Professors (AAUP) in support of Knight. The AAUP has long voiced opposition to corporate influence on academia. The organisation presses for an inquiry into Knight’s dismissal and lobbies for his reinstatement.
Winsome knows that Intelliwear’s high-tech products, Giga Lab’s high profile, and the circumstances surrounding Knight’s dismissal are bound to capture the public interest. Intelliwear’s media office is soon fending off the unwanted attention of Winsome and other reporters.
Management is concerned about the growing negative media coverage, which leads to a series of falls in Intelliwear stock. After weighing up its options, Intelliwear decides to sue Knight and Dattum University, citing a number of breaches of their agreement.
Dr Dillon Cayle, the founding professor of Giga Lab, is preparing for another day of TV interviews and high-tech demonstrations designed to impress potential corporate sponsors. He is a consummate publicist and some of his detractors say that he missed his calling. Cayle’s presentations are intended to raise funds for Giga Lab’s upcoming international research projects and a new building project in Britain. Giga Lab is beginning to achieve international cult status due to several ground-breaking inventions and regular media coverage.
Winsome is present and preparing a special report for her high-rating technology program L.O. Cayle wants to keep those sponsorship dollars coming in, as does Dattum University. Dattum’s endowment is about $1.3 billion. Spending has been 6-7% of endowment over the past three years. It should not have exceeded 5%, and the board has been concerned about the trend. Before the news of the Intelliwear lawsuit, the Dattum board was encouraging its deans and faculty to be as enterprising as Cayle. Of the $360 million in research grants received by the university in 2001-02, $48 million was provided by private corporations. Cayle had raised $25 million of that through Giga Lab.
There have been other fund-raising initiatives. Under the new Local Management Program (LMP), which faculty have nicknamed “LIMP”, the university’s colleges are expected to pay their building and utility expenses from their own fund-raising. The university wants college administrators to gain revenue by seeking new commercial opportunities, such as the $30 million deal with Fizzy-Cola, in which the university provides the company with long-term on-campus advertising.
The rehearsals for interviews and presentations at Giga Lab have begun. Win-some asks: “Who owns the work you create at Giga Lab?” Cayle: “Dattum tends to retain ownership of the intellectual property. It then grants certain rights by licence to the corporate sponsor. These can be exclusive or non-exclusive rights. The university can grant licences free of royalties that allow a company to use research results internally or Dattum can grant licences for commercial applications.”
Winsome: “Do such arrangements pose any problems for you?”
(In recent months there have been a number of well-publicised departures of staff from Giga Lab and Cayle knows he will have to answer the question sooner or later.)
Cayle: “Well, we’ve had a number of researchers wanting to develop their ideas through their own companies. Problems have arisen when their ideas have been developed under corporate sponsorship. In some cases, the desire to exploit their own ideas has been so great that it led to their entering into arrangements with third parties, which then led to conflicts of interest with the sponsoring organisation, and with Giga Lab.”
Winsome continues with a few more questions until the stage manager calls an end to the rehearsal.
Cayle leans over to Winsome and says: “I’d prefer to stay away from the topics of Intelliwear and our departing lab staff.”
Winsome gives an understanding nod but they both know that these topics need to be aired.
Standing in the wings is Ed Walton, a physics professor at Dattum who describes himself as an occasional interloper at Giga Lab. Walton is talking with Eli Harris, one of his PhD students. Walton says: “This place is becoming a glorified marketplace where treasure hunters gather to forage for potentially profitable information.”
Harris: “Universities have always had a relationship with money, be it from governments or corporations.”
Walton: “Yes, well look at where this relationship is going. Today’s education is being provided increasingly by part-time and temporary teachers who are struggling to make a living. Meanwhile, more courses are being automated on a daily basis. The National Adjunct Faculty Guild says there are about 400,000 teachers like you in our universities. That’s about 40% of the country’s total academic workforce.”
Harris: “The chances of getting tenure are slim. What do think about this business with Intelliwear?”
Over subsequent months there are similar conversations among disgruntled faculty. The divide between educators and administrators seems to widen. The Intelliwear lawsuit goes to court. The court rules in favor of Knight, and Tiblett Hospital has to reinstate him. Cayle loses a number of potential corporate sponsors, scared off by the court’s ruling.
Mergers often suffer from cultural clashes. Are there similarities here, or is this a case of one culture imposing its values on another? Negative results are a natural part of academic and scientific inquiry.
Are there practical solutions to the problems this causes for private enterprises, other than trying to prevent publication of research results?Does the commodification of higher education pose a threat to democracy at the university?
What are the areas of conflict of interest in the relationships described and how could they be resolved? Is the idea of intellectual property counterproductive? Will it retard scientific research by increasing secrecy and conflict?
Proposed Solution #1
Clare Sullivan FAIM, is a commercial lawyer and management consultant with experience in executive management in Australia and overseas. A published author, she has taught in law and MBA programs and is currently lecturing in international marketing at the International Graduate School of Management at the University of South Australia.
The Bayh-Dole Act permits universities to retain ownership of patents, providing they commercialise inventions by granting licences in favor of US industry, on the premise that the private sector is best equipped to commercialise the patent.
The substantial increase in the number of patents generated since the act came into force has been touted as an indication of its success. However, questions have been asked about the quality of the patents and whether societal benefits have really increased. The act’s effect on the public availability and integrity of university research has been of particular concern.
The agreement and relationship between Dattum University and Intelliwear exemplifies these concerns. The right given by the university to the company to delay the publication of research directly affects the independence of the university, the perceived credibility of its research programs and its academic reputation.
Restricting publication also has public-benefit ramifications and there are legal issues for Intelliwear if it has misrepresented soft-chip technology as safe or has engaged in misleading or deceptive conduct. Of even greater concern is the potential for a public relations disaster if it is revealed that the company tried to delay (cover up) the publication of relevant research that had consequences for public health.
The difficulties resulting from the relationship between the university and Intelliwear cannot be attributed to a cultural clash of the nature often encountered when businesses merge. Those conflicts dissipate over time, usually because the dominant culture prevails or a new culture emerges. The university may be adopting a more commercial attitude but, by virtue of their several objectives and constitutions, the university and Intelliwear have fundamental strategic, operational, financial, and ethical conflicts that cannot be expected to resolve themselves over time.
The university’s academic and research expertise is founded on a collegiate approach in which information is widely disseminated and shared for the primary goals of education and public benefit. In contrast, Intelliwear is driven by business objectives, based on competition and confidentiality. The two organisations are thus diametrically opposed in many important areas, and in many respects they have opposing motivations that, if not carefully managed, will result in short and long-term repercussions and ultimately undermine public trust and confidence in both entities.
Repercussions are already evident in the “well publicised” departure of lab staff from Dattum and in researchers exploring other commercialisation arrangements, as they try to participate in the financial successes of their ideas. The dismissal of Knight no doubt added to an atmosphere of pressure and uncertainty, as well as apparently resulting in the loss of potential corporate sponsors.
It is possible to maximise the benefits sought by both entities, and by the public, while effectively resolving the areas of actual and potential conflict.
The key to success is to recognise the basic requirement for independence as a prerequisite for effective co-operation and collaboration. The two organisations must establish a clear, published policy of technology transfer that recognises and respects the autonomy and integrity of each.
In its technology-transfer policy and procedures, the university should at least:
- Establish a protocol for capturing research information and claiming title to intellectual property.
- Specify the types of inventions and discoveries that should be patented and whether other intellectual property rights – for example, copyright – should be claimed.
- State the conditions under which the university will grant licences, including the requirements for a plan for development and marketing that is required by the Bayh-Dole Act.
- State how income will be equitably applied and adequately provide for university staff.
In addition to regulating and managing the risks inherent in the relationship, this approach can work to the further advantage of Dattum University and Intelliwear, because consider-able public and business recognition can be gained by organisations that are leaders in this area.
Proposed Solution #2
Dr Robert Heath PhD, BA (Hons English Literature), BA(Hons Psychology), BA, MAPS FBCI, is a psychologist and is associate professor (strategic management)at the International Graduate School of Management at the University of South Australia. He is writing a theoretical and practitioner text on risk management that includes risk balancing and consequential decision evaluation.
Universities and research institutes need funds from non-government sources to continue to operate, and non-government sources look increasingly to universities for research. This leads to a positive frame for establishing alliances but not necessarily a good working base for alliance management because the goals are sympathetic but not aligned.
How well such alliances function depends on how well the outcome goals can be made to align and on the nature of national, state and local legislation in areas such as intellectual rights, contract law, industrial relations and workplace agreements.
Although mergers often do suffer from cultural clashes, the fact is that this is a question of alliance management and not a merger. In mergers, a struggle for cultural dominance between the merged parties arises that includes informal expectations and practices. Alliances rarely include cultural interpretations and informal expectations leading to potential conflict when formal understandings do not cover an emergent situation.
In the context of the Dattum-Intelliwear alliance, negative research presumably means findings prejudicial to a party (Intelliwear). Knight’s intent to publish needs to be considered in terms of the probity of the findings, the disclosure of the findings and his dismissal. The probity of findings has three levels. First, scientists are usually cautious about single-study claims for negative effects. Second, the causal relationship can be questioned, as abnormal findings may stem from factors in the workplace environment, many of which may not be under the control or responsibility of management. Third, permission to access the sampled employees needs management consideration. Was the sample taken with open-ended permission, with restrictions on communication of findings, or without the knowledge of senior managers from Intelliwear?
A partial solution for these types of problems is for all parties to accept an ethics committee overseeing the research. Knight’s action in publishing is less an issue of democracy and more of perceptions of freedom of expression. No organisation is without elements of confidentiality, perceptions of culturally acceptable activities, and areas in which contrary opinion is discouraged or actively negated. Even universities have codes of conduct and inhibitory attitudes over communication and action. Equally, Knight may not be so noble: important motivators to publish may be the desire to be first to do so or to press a personal moral precept.
Knight’s re-instatement indicates that his dismissal probably contravened the provisions of the relevant industrial legislation, or the agreements between Giga, Dattum and Intelliwear and existing Dattum and Giga employment conditions. Managers need to have a clear awareness of the legal inhibitions on their actions in contractual, workplace and industrial settings.
The commoditisation of higher education has always existed. Without external funding, research would not take place and those doing the research may not be so employed. On that basis, the investor has rights to the product from the investment.
The determination gets fuzzier when we “buy” expert talent to act as a means to an end product. The investor tends to own the output but not necessarily the process, and cannot (unless contractually agreed) prevent the developer from producing a similar product. Most copyright and patent laws deal with identical, not similar, products.
Regarding areas of conflict of interest, several have been identified. From the perspective of the Dattum-Intelliwear alliance, is Giga a quasi-business parented by Dattum, or does it operate as a real business, perhaps employing the wrong people (university researchers)? The blurred positioning of Giga and its employees may promote conflict as management bounces between business goals and university objectives.
Finally, the accountability and performance judgment that is involved in any external investment means that research administrators will tend to favor safe projects with high-outcome likelihood but minor advances in knowledge or products, rather than risky projects that often fail but may provide big advances in knowledge and products. The bottom line is that whoever pays for the research tends to get the product.
The investor tends to own the output but not necessarily the process and cannot (unless contractually agreed) prevent the developer from producing a similar product.