ADMINISTRATIVE POLICY REGARDING DISCLOSURE, DISTRIBUTION AND LICENSING OF SOFTWARE
The Regents' Rules and Regulations require that intellectual property belonging to the Board be protected so as to preserve its value for the public's benefit and when appropriate, generate some return on the State's investment in its creation. (Part Two, Chapter XII). Regents' Rules apply to all types of intellectual property, including software 1 . Thus far in implementation of the Regents' Rules, software has been treated exactly like inventions that are patentable; however, there are some fundamental differences between software and other types of inventions. Software is usually not protected by patent; rather, it is most often protected by copyright from the point of its fixation in a tangible medium of expression. Further, even though software may be patentable, its potential commercial value is quite often well below the cost to patent it, and its commercial life expectancy may be shorter than the life of the patent, or even shorter than the time required for issuance of a patent. In fact, in many instances, software may have little or no commercial value at all. Finally, for those faculty members for whom software is the subject of research, or the means or manner of pursuit of research objectives, too fine a focus on potential commercial value of their software places a disproportionate burden on them relative to other faculty who do not utilize software in this way.
Thus, it is now apparent that equal treatment in theory has resulted in some hardship for the inventors of software, their departments and their students, and may be resulting in lost opportunities where publication of software has been unduly restricted or research collaborations involving the creation of software have not been consummated because of the manner in which the Regents' Rules have been implemented.
This procedure memorandum will describe the qualities about some software that would justify its being treated differently from other inventions and develop guidelines for the categorization of software into those classes that may be treated consistent with these special software guidelines and those classes that should be treated just as other inventions are treated. In each case, the faculty member would have a choice about how to treat software; some would choose to utilize these special procedures, some would not. Finally, this statement will set out safeguards that should protect the interests of the inventor, the component institution and the State when software is disclosed, disseminated or provided to research sponsors under these special guidelines.
This memorandum will address the impact of these policies in three areas of endeavor related to the invention of software: 1) public disclosure of certain types of software by faculty informally "sharing" or formally publishing such inventions, 2) public distribution of software under the "GNU's Not Unix" ("GNU," pronounced "guh-new") General Public License or other similar restricted license and 3) sponsored research agreements that provide for royalty-free licensing, software as a deliverable, or assignment of the rights to University software inventions to the sponsor of such research. As will be clear from this discussion, the fundamental judgments that must be made in order to handle software properly will be whether the proposed treatment is in the best interests of the University and the public or more specifically, whether the benefits that flow from the proposed treatment are adequate consideration for the transfer of the software. Faculty inventors will play a critical role in the successful implementation of this policy because it is they who will be making the initial assessment of the value of the benefits that will be received and of the software that will be transferred.
In order to assess whether these procedures have helped to achieve a balance between the sometimes competing interests of the protection and development of University inventions on the one hand and streamlining procedures for public disclosures and licensing provisions on the other, these procedures should be evaluated on the first anniversary of their effective date and thereafter at two (2) year intervals over the next five (5) years. Following evaluation, changes will be made as necessary to appropriately implement the Regents' Rules.
Software inventions may be publicly disclosed when the faculty inventor in consultation with a designated software consultant 2 based upon consideration of the factors enumerated herein, determines that such disclosure is in the best interests of the University and the public.
Software inventions may be publicly distributed under the GNU General Public License or other similar restricted license when the faculty inventor and a designated software consultant determine that such distribution is in the best interests of the University and the public.
Public disclosures and distributions may only be made concurrently with disclosure to the inventor's IPC. Software disclosed concurrently shall be accompanied by a copyright notice as provided herein that protects the University's, the inventor's and the public's interests, as appropriate, in the software.
Software inventions may be provided to research sponsors as deliverables under research contracts or licensed to sponsors on a non-exclusive, royalty-free basis, as requested by sponsors, only when the consideration flowing to the University is adequate to justify the transfer.
The faculty inventor and a designated software consultant should determine the value of software inventions. The decision to disclose publicly, to distribute under the GNU General Public License or to license royalty-free or otherwise provide software to a research sponsor as a deliverable under a research contract should represent their best judgment that the consideration flowing to the University, the inventor and the public from the public distribution or research contract is equal to or greater than the value of a potential royalty stream from the commercialization of the software.
When an inventor determines in accordance with these procedures that a software invention has significant commercial potential and desires to exploit such potential, the invention should be treated exactly as all other valuable inventions are treated under the Regents' Rules: it should be disclosed to the inventor's IPC prior to any disclosure to the public, and should be licensed under terms that are consonant with the Regents' Rules as they have been applied to all inventions heretofore.
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The Regents' Rules require that inventions be disclosed to the inventor's IPC before public disclosure and even before disclosure under confidentiality agreements for the purpose of exploring commercialization. Chapter XII, Section 5.21. The premise for requiring disclosure to the IPC before public disclosure is that public disclosure starts the clock running in this country on the one year window for patenting discoveries. In other countries, public disclosure terminates the right to patent a discovery. Much time and effort has been expended to inform faculty inventors of the reasons for and the obligation of disclosure to each component's IPC. For this reason, whenever a determination is made that software should be patented, the policy regarding public disclosure must not be compromised.
In the case of patentable inventions, this procedure works well because it allows for timely protection of inventions and publication by inventors. Today there is considerable controversy about the wisdom of patenting software. The premise herein will be, consistent with the state of the law at this time, that almost any software program can be the subject of a patent application. This form of protection for software is the subject of heated debate among those in industry, academia and government. At this time there are issued patents whose subject matter would surprise (and some would say, offend) many computer scientists, both in academia and in industry. Most major software companies are now aggressively pursuing patent protection for their software inventions. Others are actively fighting to discourage patenting. The hurdle to acquiring patent protection is no longer whether the program recites an unpatentable algorithm, but whether the invention is novel and most importantly, whether it will be worth the time and expense of pursuing patent protection, here and abroad. The safest assumption should always be that patent protection is available; the question will be whether it is desirable and worthwhile.
Unlike patent protection which requires considerable time and expense to pursue, copyright protection is secured by the mere act of creating the software and fixing it in a tangible form of expression from which it can be perceived, even if the aid of a machine is required. No notice is required, although notice is still recommended, and no application for registration is required, although this, too, is recommended. Thus, public disclosure does not create the same obstacle to protection for most software that it does for other inventions that may only be protected by patenting. This is not to say that publication is risk-free, even for software that will not be patented for the reasons indicated above. In many cases, if source code is available publicly, programming that might have taken a commercial developer months can be accomplished in a fraction of that time thus depriving any potential licensee of the edge that might have made marketing the software attractive. Thus, there are economic losses that might accompany public disclosure; however, in most cases the risk of economic losses does not justify the time and energy that must be spent to procedurally address issues of value and ownership before public disclosure or public dissemination ("publication" in effect) may be reasonably undertaken.
For example, an inventor may solve a particular problem that has plagued associates for some time and be quite eager to share the solution. The program may be simple and elegant, (once you know how to do it, of course) and be of little commercial value; nevertheless, the procedure required before the solution can be put on the 'net, shared with an associate in Maine, or whatever use the inventor chooses, will take weeks or even months and the judgement of the IPC is likely to be consonant with the inventor's: release to the inventor, and reserve a royalty from any commercialization.
Software inventors should be permitted to choose to make concurrent disclosures of any software to the inventor's IPC and to the public as the inventor sees fit in consultation with a designated software consultant 3 . In each case, a decision to publicly disclose or disseminate concurrently with disclosure to the IPC represents the faculty inventor's and software consultant's determination that the benefits from public disclosure or dissemination are adequate consideration for any loss of the potential commercial value of the software and, in general, that such disclosure or dissemination is in the best interests of the University and the public.
There are many faculty members who are keenly interested in the opportunity to benefit from commercialization of their software inventions and for those individuals, sensitivity to commercial potential and the structure of the U. T. System Intellectual Property Policy will motivate careful consideration of these issues before disclosure or dissemination.
There are also those faculty members who are quite disinterested in the returns from commercialization and who are much more finely focused on the returns from scientific recognition, progress and contribution. These faculty members have not, heretofore, had a reasonable choice to exploit their inventions in ways that maximized the benefits they perceived. This change in procedure gives all faculty an option; it does not mandate or require a particular treatment.
The procedures outlined herein will result in the treatment of some software more like scholarly publications and less like patentable inventions, thus giving the software inventor control over "publications" of software. Thus, the fundamental issue at the heart of these procedures is whether faculty inventors' determinations of the relative values of costs and benefits of public disclosure, dissemination or other transfers of software should form the basis for how a particular software invention is treated. The question has been framed so far as "under what circumstances may a faculty inventor disseminate" but at some point the question becomes simply "may a faculty member disseminate" software inventions. Currently this decision is made by the IPC, but this procedure is perceived to be very time consuming and too slow for the fast paced field of computer science.
Since each individual may be expected to value costs and benefits differently, each individual will have a unique answer to the question of whether to disseminate in a particular circumstance. Similarly, the IPC could be expected to agree with some inventors in their valuation and to disagree with others. This shift in interpretation of U. T. System Policy means that the right to determine the disposition of software is reserved in the first instance to its creator, even though the University owns the software under U.T. System Policy and retains the copyright.
These are some examples of factors on the "commercializing" side that might be considered in the determination of the best way to disclose software: assuming that the current application is noncommercial, are there any commercial applications beyond the immediate application; are there any potential licensees; what is the length of time the software can reasonably be expected to be useful; and how easily may the software be reverse engineered, were it to be commercialized?
On the "disclosing" side, the inventor should be able to identify the benefits that he or she, the University and the public derives from public disclosure. For example, public dissemination may increase external research funding. Some funding agencies, especially those in the federal government, have less interest in helping universities commercialize software than in seeing the fruits of the research they fund disseminated widely, and with minimal expense to the public. Such agencies may be more likely to fund research at component institutions if U.T. System permits public distribution. Many of the most prestigious computer science departments, those at MIT, Berkeley, Carnegie Mellon and Stanford for example, have a long tradition of public distribution of very fine software.
Computer science faculty benefit from dissemination of their software, just as they benefit from the distribution of other fruits of their research by publishing technical papers. Such dissemination enhances professional stature, which in turn may increase their chances of external funding, promotion and cooperation from other researchers around the world, thereby advancing science by building the scientific community. Faculty who are highly respected in the eyes of the scientific community increase the stature of their universities insofar as universities are often judged by their levels of research funding and the number of their faculty who are members of national academies.
Following are several circumstances wherein U.T. policies should support a faculty member's choice to publicly disclose or disseminate in that the benefits of such disclosure are adequate consideration for the transfer:
Much of the software that faculty inventors might wish to share with colleagues is probably short, in unpolished form, and with little commercial value by itself. Examples include simple versions of standard algorithms. It would probably not be helpful to try to set a "line length" under which concerns should vanish; rather, faculty inventors should use their judgment, taking line length into consideration.
Similarly, rudimentary programs that are not useful to those unversed in the field would tend to be of less value than those that are more finely developed, debugged, or improved upon over the years.
The inclusion below of two subcategories does not mean that all research software or all educational software is beyond concern. It would be an error to ignore, for example, the considerable market for educational software. Inventors should carefully consider the potential commercial value of all software, including educational and research software, before deciding to distribute it publicly.
Sharing software with other researchers has been compared to publishing experiments in order that their results may be tested. The commercial value of such software is likely to be small, as where the software is in rough form, short, and of little value or interest to those outside a narrow field; thus, such sharing is appropriate.
Sharing educational software with other faculty is appropriate when the commercial value of the software is low. Component institutions are in an equally good position to support other Texas institutions of higher education by sharing such software. The commercial indicators should be examined carefully, however, and any software that represents considerable effort and that might be of interest to a wide range of educators should be evaluated further before the inventor makes a public disclosure that might compromise its value.
Again, there is a widespread custom of sharing bug fixes for programs widely used by the research community. The likelihood that a bug fix would have independent economic value is slim and thus, in the usual case, the value derived from sharing would outweigh such benefit.
Faculty inventors may utilize and benefit tremendously from the large body of public domain software available today. Improvements, modifications and updates of such software are usually shared with the community. So long as such modifications meet the criteria set forth herein (i.e., benefits of sharing are greater than potential commercial value), sharing such software in accordance with custom is appropriate. If, however, a faculty inventor were to conceive a commercially viable software product based upon public domain software, this circumstance might shift the balance away from concurrent public and IPC disclosure and in favor of further evaluation by the IPC before public disclosure.
Even though faculty may have the prerogative to disclose or disseminate their software inventions publicly, it is reasonable for the University to require that certain procedures be followed to protect the inventor's and University's interests; the interests of the public will be better served as well with these procedures. The GNU General Public License and the GNU Lesser General Public License (each a "GNU License"), each a product of the Free Software Foundation, Inc., offer a convenient and widely accepted method of public distribution that ensures the public access to and use of software intended for their benefit. The GNU Licenses include a form of copyright notice, a restricted right to further disseminate, disclaimer of warranties, and straightforward, plain English explanations of the user's rights and responsibilities under the license agreement. Distribution under the GNU Licenses will assure the widest possible public benefit with very little cost to the University. Public distribution should, in the usual case, be accomplished under the GNU Licenses.
The GNU General Public License includes the following basic provisions:
Software distributed publicly by other major research universities has been distributed without a formal license agreement, but with a modest number of restrictions contained in a single paragraph below the copyright notice. This form of distribution is acceptable, but may be less protective of the public's right to utilize the software fully since such a rudimentary license does not impose upon users and modifiers of the software the obligation to make the software available to other users, in accordance with the license's original provisions. The GNU Licenses do impose such an obligation. Nevertheless, the option to distribute with such a minimal license may be appropriate in some circumstances. An example of such a license follows:
Copyright (c) 1990 The Regents of the University of California. All rights reserved. Redistribution and use in source and binary form are permitted provided that distributions retain this entire copyright notice and comment. Neither the name of the University nor the names of its contributors may be used to endorse or promote products derived from this software without specific prior written permission. THIS SOFTWARE IS PROVIDED "AS IS" AND WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Component IPC's are encouraged to develop an electronic software invention disclosure form that would allow inventors to easily disclose software to the committee at the same time that it is disclosed publicly. Since public disclosures may actually take place electronically, such a form would greatly facilitate disclosure to the committee. Each disclosure should include the following:
All disclosures that occur before the IPC has had an opportunity to review software disclosures and to release the inventions disclosed therein to the inventors must include either an appropriate notice on the first page of the software program or, if licensed under the GNU General Public License, the notice required thereunder. An appropriate sample notice follows:
Copyright 2004, The University of Texas at Austin ("U. T. Austin"). All rights reserved.
By using this software the USER indicates that he or she has read, understood and will comply with the following:
U. T. Austin hereby grants USER permission to use, copy, modify, and distribute this software and its documentation for any purpose and without fee, provided that a full copy of this notice is included with the software and its documentation.
[OPTIONAL: INCLUDE ONLY IF YOU WANT TO LIMIT COMMERCIAL EXPLOITATION] Neither the software nor its documentation, nor portions thereof, may be sold for profit. Any commercial sale or license of this software, copies of the software, its associated documentation and/or modifications of either is strictly prohibited without the prior consent of U. T. Austin.
Title to copyright to this software and its associated documentation shall at all times remain with U. T. Austin. No right is granted to use in advertising, publicity or otherwise any trademark, service mark, or the name of U. T. Austin.
This software and any associated documentation are provided "as is," and U. T. AUSTIN MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT USE OF THE SOFTWARE, MODIFICATIONS, OR ASSOCIATED DOCUMENTATION WILL NOT INFRINGE ANY PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY. U. T. Austin, The University of Texas System, its Regents, officers, and employees shall not be liable under any circumstances for any direct, indirect, special, incidental, or consequential damages with respect to any claim by USER or any third party on account of or arising from the use, or inability to use, this software or its associated documentation, even if U. T. Austin has been advised of the possibility of those damages.
Submit software operation questions to: *****, Department of *****, U. T. Austin, Austin, Texas 78712.
[OPTIONAL: INCLUDE ONLY IF YOU WANT TO LIMIT COMMERCIAL EXPLOITATION] Submit commercialization requests to: Office of the Executive Vice President and Provost, U. T. Austin, 201 Main Bldg., Austin, Texas, 78712, ATTN: Technology Licensing Specialist.
Increasingly, the Office of General Counsel is called upon to review contracts whose terms require that software be delivered to a commercial sponsor of University research as part of the University's obligations under the contract. In other cases, software inventions may be anticipated to result from sponsored research and though they may not be technically termed "deliverables" under the contract, the sponsor expects to be granted a royalty-free license to use, make or even sell any such software invented or created by a University inventor. Neither of these arrangements appears to conform to the Regents' Rules in that they seem to contemplate a transfer of University intellectual property to private industry without adequate consideration.
Sponsors have long argued that their support of University research is or should be adequate consideration for any transfer to them of intellectual property created by University inventors in the context of research they sponsor. The University has consistently taken the position that sponsor support, while considerable, is not complete in any case; there has always been a wealth of other contributions from the state and federal governments to the creation of University intellectual property. It is the University's responsibility to the state and federal governments to insure that inventions are developed for the public good and that when possible, some return is provided on the public's investment. University ownership of intellectual property created in this context with exclusive licensing to the research sponsors has proven to be a very useful method of meeting institutional goals, especially in the medical and biotechnology fields; however, software inventions have been treated similarly and it may be that such an approach with software is not the best one to achieve desired objectives.
Whereas a pharmaceutical compound may take tens or hundreds of millions of dollars and five to ten or more years to develop, software may take only weeks or months to develop, and even programs worth millions of dollars today probably cost only a small fraction of the cost to develop pharmaceuticals. It should be clear that the incentive to patent pharmaceuticals and pursue the years of development costs will be very different from the incentives needed to bring a software program to market. Further, in many cases the return that may be expected from a software invention might be short-lived, either because of future technological advances that may make the invention obsolete, or because competitors may be able to reverse engineer the invention and/or make a compatible or competitive product. As the software industry matures, patent protection becomes more common, and the life of software inventions lengthens, this analysis will change; for now, the differences between most software inventions and other inventions are fundamental and should be taken into consideration in the determination of the means and manner the University chooses for licensing inventions.
Under appropriate circumstances, University software may be disseminated publicly, provided to research sponsors as a deliverable under a research contract or offered to sponsors on a royalty-free nonexclusive basis, when and if requested by the research sponsor. In order to determine whether such a distribution or grant of rights is appropriate, the University must know whether the benefits received in consideration for the license rights or transfer of ownership is adequate consideration. While it is recognized in many instances that the commercial value of software is not very high, and present and prospective research funding, faculty and department scientific stature, continuing good sponsor relationships, access to industry technical expertise and equipment, and student attraction and training opportunities may be more than adequate compensation for its transfer, this determination cannot be properly made without a clear understanding of the potential value of software generally, including the fact that most any software program may be eligible for patent protection, and the potential value of each particular software invention. The decision should be made by the faculty inventor and a designated software consultant. In this context, the determination represents a judgment that the potential royalty stream would be less than other consideration that will flow from public dissemination or that may be offered for the grant of rights requested by a research sponsor and that a departure from the stated preference for University ownership and exclusive licensing is justified.
The benefits that may derive from public disclosure and dissemination have been discussed above. Following are several indicators in the sponsored research context that commercial value may be low. This list is illustrative rather than exhaustive:
In order to support such transfers under the proper circumstances, and to minimize the paperwork that would otherwise have to accompany a contract that does not conform to the Regents' Rules, contracts containing software license terms that describe software as a University deliverable or that grant a royalty-free license to the research sponsor under the facts set forth above or other similar circumstances, may be submitted for approval on new Form F-S, which shall include the following proviso:
Intellectual property terms of this agreement provide for [delivery] [a non-exclusive royalty-free license] of University software to the sponsor; however, other consideration received by University adequately compensates it for the transfer for the following reasons:
[State justification as illustrated by the circumstances described above or other facts that may apply.]
New Form F-S is attached hereto as Attachment 1.
Software may, consistent with the Regents' Rules, be treated differently from other inventions generally subject to patent protection with respect to public disclosure, dissemination, and royalty-free licensing of such software.
Each component should make available to faculty inventors such information on this subject as is needed to adequately inform the determinations that are required of faculty hereunder, and put in place procedures suggested herein to document public disclosures of software inventions.
U.T. System, in coordination with those component institutions with faculty software inventors who have chosen to utilize these options, shall evaluate the success of these procedures after one year, and then at two year intervals for five years to determine whether changes are necessary to achieve a balance between protection of software inventions in general and ease of transfer of same where such transfer or distribution is in the best interests of the University and the public.
1 Subsection 2.2 of the Regents' Rules, which describes the types of intellectual property to which the Intellectual Property Policy applies, specifically excludes faculty authored scholarly works as described in Subsection 2.3 and commissioned works and works for hire as described in Subsection 2.4. Thus, a work that is primarily a faculty authored scholarly work, but contains lines of code or includes some software or is implemented in software ordinarily will not be subject to these procedures, since such a work ordinarily would not be subject to the Intellectual Property Policy at all.
2 A "designated software consultant" is the name used throughout this memorandum to refer to identified institution personnel with software expertise.
3 The purpose of consultation is to facilitate consideration of more than one point of view. A committee structure has proven too cumbersome and time consuming and a single designated consultant would tend to create a bottleneck that could defeat the purposes of modifying current procedures. Thus, to foster adequate and responsive discussion, each component institution should designate a sufficient number of individuals with appropriate expertise to permit faculty inventors to discuss informally the relative benefits of disclosure and commercialization and reach a conclusion within a day or two. Prior to or in the absence of specific designations, department chairs shall be deemed designated software consultants.
Attachment 1: Form F-S
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