SD Board of Regents
306 East Capitol Ave
Suite 200
Pierre, SD 57501
605 773 3455
info@sdbor.edu
Preface

 

Preliminary questions

 

Many questions have undoubtedly occurred to you already.  Three should be addressed right at the onset.  Why is the Board revising the policy at this time? Will there be major changes in ownership rights?  What prompted the Board to seek comments directly from faculty members, administrators and professional employees?

 

Why is the Board revising the policy at this time? 

 

The need to revise the policy became obvious as South Dakota’s investment in faculty research yielded increasing numbers of disclosures of potentially valuable intellectual properties.  Experience proved that important elements in the disclosure process were unworkable. 

 

The original policy treated the process of evaluating a disclosed invention or other potentially valuable intellectual property as though it involved a routine series of administrative tasks that could be discharged without the involvement of faculty creators and that could be completed in all cases within a standard time frame.   The truth is very different, for the decisions that need to be made in order to move from the laboratory to the marketplace involve a prolonged collaborative effort between the inventor and the administrators who try to determine whether the disclosed intellectual property, or important elements of it, may already be patented or copyrighted, whether modifications to the intellectual property could make it patentable, whether there might be a market for the intellectual property and whether the intellectual property may require additional research before any potential investors would be satisfied that it will perform as predicted.

 

The current policy’s strict deadlines for processing disclosures also fail to recognize that research results may suggest a valuable application of an early stage invention or discovery that has not yet progressed to a point where it has commercial value.  For example, patenting early stage discoveries presents particular problems for the pharmaceutical market.  Patent protection lasts twenty years, but it may take eight to sixteen years to conduct the trials needed to secure Food and Drug Administration approval to market a product.  Pharmaceutical manufacturers have little interest in licensing drugs at an early developmental stage because the longer the trial period remaining before the drug can be marketed, the less the opportunity for the manufacturer to realize a reasonable return on its investment over the remaining life of the patent.  Thus, where a prospective pharmaceutical has not been through any animal trials whatever, it has very little prospect for commercialization, and policy deadlines that press for quick patenting and licensure simply fail to reflect actual market conditions.

 

In the end, the policy’s deadlines, fashioned to operate like those of a legal proceeding, simply did not jibe with the real world tasks that must be addressed cooperatively by administration and inventor in order to protect ideas and to bring them to market.

 

Will there be major changes in ownership rights? 

 

The short answer is that the working draft proposes little change in matters relating to the ownership rights of faculty members, administrators, or professional employees who create intellectual properties.  Board ownership would continue to be limited to intellectual properties created within the scope of employment or created in whole or substantial part using funds or facilities administered under the Board’s authority.

 

The working draft does advance two changes of note.  First, it differentiates between scholarly writings and the data or similar research results on which the scholarly writings are based.  The working draft preserves the assurance that authors will ordinarily obtain ownership of the copyrights in scholarly writings, but ownership of data and similar research results would vest in the Board.  Second, the working draft applies the policy to students whom faculty members or other employees authorize to participate in sponsored research or in other research that employs Board controlled intellectual properties.  This addition to the working draft would balance the interests of students with the interests of researchers in assuring that data and other research results remain under their control.

 

What prompted the Board to seek comments directly from faculty members, administrators and professional employees?

 

Several considerations entered into play here. 

 

In 1997, when the Board originally adopted a system-level intellectual property policy, the policy itself became very controversial.  The controversy reflected many factors. 

 

At the time, South Dakota investments to encourage active research and technology transfer were minimal and the systematic creation or adaptation of instructional materials to new communications media was in its infancy, so involvement with intellectual property issues played a marginal role in the professional activities for faculty members and administrators whose primary activities focused on delivery of instruction and the publication of scholarly writings. Since universities rarely claim copyright ownership for instructional materials or scholarly writings, significant numbers of faculty members would never have had occasion to consider the complexities of copyright ownership over materials that they prepared as instructors or scholars.  Except for persons who worked closely with utility patents, questions involving ownership of intellectual properties created on the job were quite alien to the instincts shaped by day-to-day work of most university professors, administrators, or professional staff members.  The subject matter was strange and the fact that the Board, as employer, would assert rights to intellectual properties created on the job raised significant apprehensions, notwithstanding the fact that the 1997 policy (and the revisions to it here proposed, by the way) included the customary exceptions for scholarly writings. 

 

The complexity of the 1997 policy itself, and the technical language in which many provisions were expressed, exacerbated the natural apprehensions about a seemingly fundamental shift in practice.  While the policy may have been legally sound, it communicated poorly. 

 

The discomfort with the policy among faculty members, administrators, and professional staff members required action.  Consequently, the Board sent its staff out to explain the policy to all interested members of the university community, faculty members, administrators, and professional staff members.  The ensuing dialog helped to clarify the intent of the policy and revealed areas where additional clarification in policy language could further assuage concerns.

 

The 1997 experience informed the effort to redraft the policy to state more clearly its operation.  That experience also strongly suggests the necessity of engaging directly those who are most directly affected by a policy that regulates the ownership and use of intellectual properties that they create. 

 

The changes in communications technology since 1997 make it possible to initiate the dialog in ways that assure that each potentially interested faculty member, administrator, or professional staff member has an equal opportunity to become informed about the policy and to contribute to its review.  The attached survey will permit each person to comment directly on proposals and with greater candor, deliberation, and precision than is humanly possible in the ebb and flow of debate during an open campus forum.  This is not to say that there will not be open campus fora, to the contrary, there will be, but your prior commentary will help the institutional staff who organize those fora to identify concerns and to sharpen the focus for the public conversation.

 

The hope is that the resulting process will assure that the revised intellectual property policy will have earned the confidence of those whom it affects most directly by the time that it is recommended to the Board for action. 

 

Why is the policy presented without tracking changes?

 

The number of changes to the policy is so large that no attempt has been made to highlight insertions or deletions.  The scope of the changes reflects two circumstances.  First, the revised version strives for clarity of expression that eluded the original policy.  Second, the numerous examples and explanatory passages of the original policy have been removed in order to avoid obscuring policy statements with interpretive material that is more properly developed in ancillary documents.

 

Why has the Board not negotiated the changes that it desires with the Council of Higher Education as the exclusive representative of faculty members in the bargaining unit?

 

Three considerations arise here.

 

First, although the policy affects faculty members assigned to the bargaining unit that COHE represents, it equally affects faculty members who are not part of that bargaining unit, administrators, professional employees and, potentially, certain students.  While the Board has a legal obligation to bargain about matters involving terms and conditions of employment with unions that have been selected by employees, it also has a legal obligation not to bargain with those unions about terms and conditions of employment for employees who have not chosen to be represented by that union.  Courts are reluctant to require bargaining where a policy uniformly affects unionized employees, nonunionized employees and students, since neither union nor government body may derogate the right persons who are not represented by the union to participate in government policy decisions that affect them.

 

Second, the Board took stock of court decisions that strongly suggested that core portions of the intellectual property policy cannot be negotiated.  The cases suggest that the questions who should own intellectual properties public employees create on the job or using public funds and resources and who should control the commercialization of such intellectual properties present fundamental issues of public policy.  It has also been held that negotiations cannot be required where administrative procedures necessarily vary case by case, as happens with the diverse forms of intellectual property created at university systems and disclosed at various stages of development, and sometimes long before an idea has been proven sufficiently to be ready for commercial application.  

             

Third, having negotiated the application of intellectual properties policy to members of the bargaining unit with COHE in 1997, the Board waited to move forward with changes in its intellectual properties policy until it renegotiated the bargaining agreement.  In the course of those negotiations, the Board provided detailed explanations of its reasons for removing from the collective bargaining agreement all of the intellectual properties policy other than the revenue sharing provision.   Negotiations eventually reached impasse, and COHE invoked its right to review by the South Dakota Department of Labor.  In due course, the Department of Labor issued a decision that recommended that COHE and the Board adopt the Board’s proposals.