I have been grading final exams and this has cut into my blogging time. I apologize for my strange priorities. The recent Supreme Court ruling against Stanford University in this IP case caught my eye after I read this NY Times editorial. What do university research nerds owe their home institution? Are we all free agents or does the home team receive a large percentage of what we build?
“The case, Stanford University v. Roche Molecular Systems, involved a Stanford researcher who had transferred his rights to methods for testing AIDS treatments to a private company that was eventually acquired by Roche. Roche commercialized the procedure and incorporated it into H.I.V. test kits. Stanford sued Roche, arguing that the researcher’s assignment of rights was invalid under the Bayh-Dole Act. The court held that even though the researcher may have had an obligation to the university, he had legally assigned his rights to the private firm.”
The interesting economics here will concern how star scientists sign future contracts with their home institution. Will a rising university such as Duke say to an Ivy League star; “you transfer to our team and we will only ask for x% of the revenue of any intellectual property you create.” Now, that would generate some movement of academic stars across schools. How would the Dean of Research at a university decide who to offer a low “tax rate” to? The Laffer curve might finally be vindicated as low tax rates on faculty could yield very high revenue for a few universities!