court decision on University’s intellectual property policy

June 29, 2005

To: The University Community

From: Frederick P. Schaffer General Counsel and Vice Chancellor for Legal Affairs

I am writing to describe the background and significance of a recent court decision regarding the University’s intellectual property policy.

In the fall of 2000, the University convened a committee, which I chaired, to review its policies concerning patents and copyrights. Those policies had been in effect since 1972 and needed revision in light of changes in law and technology and the University’s renewed emphasis on research and scholarship. In May 2001 the committee submitted to the University community and posted on the University website a draft revised intellectual property policy. Following release of the draft, the University held two public forums and several meetings with the PSC. After further revisions, a new intellectual property policy was adopted by the Board of Trustees in November 2002.

That policy was, in every respect, significantly more favorable to the faculty than the prior patent and copyright policies. For example, under the prior patent policy, faculty who created a patentable invention received 35% of the royalties; under the new policy that share was increased to 50%. Similarly, the prior copyright policy, which provided that faculty who had produced copyrightable material owned the copyright, applied only to material produced under a grant administered by the Research Foundation; the new policy made clear that, as a general rule, faculty ownership extended to all copyrightable material produced by them. In addition, the new policy continued the prior practice of providing its own dispute resolution procedures and of including computer code within its coverage (while clarifying that computer code may include both patentable and copyrightable material).

The development of the new intellectual property policy coincided with collective bargaining between the University and the PSC. The 1996-2000 contract expired July 31, 2000, and during the negotiations for a successor contract, the PSC sought to bargain over the draft intellectual property policy. The University declined to do so on the basis of a longstanding provision of the contract, contained in Article 2, which provides that the Board of Trustees retains the right to make or amend policies, including those affecting the terms and conditions of employment, after giving notice to and consulting with the PSC, so long as the new or amended policy does not conflict with a provision of the contract. The University contended that the provision constituted a waiver of the PSC’s right to bargain collectively about a modification of the University’s intellectual property policy. This was consistent with the fact that for almost 30 years, the prior patent and copyright policies had been adopted and amended unilaterally by the Board without objection by the PSC and that the PSC had never before sought to collectively bargain about this matter.

The PSC filed an improper labor practice charge with the New York State Public Employment Relations Board (“PERB”) alleging that the draft policy affected mandatory subjects of bargaining and that the University had refused to bargain in good faith in violation of the law. In June 2002, the parties entered into a contract covering the period from August 1, 2000 through October 31, 2002. Following the expiration of that contract, the PSC again sought to collectively bargain about intellectual property; the University again declined; the Board adopted the revised policy; and the PSC amended its charge with PERB to allege that the University had unilaterally implemented the policy without collective bargaining.

After a hearing in February 2003, an Administrative Law Judge (“ALJ”) at PERB found that Article 2 of the contract contained a clear and explicit waiver of the PSC’s right to bargain about modifications of the University intellectual property policy and that the University was entitled to unilaterally implement the new policy in November 2002. However, the ALJ also ruled that after the expiration of the contract, the University was required to negotiate with the PSC about those aspects of the intellectual property policy that affected the terms and conditions of employment. The University appealed to the full board of PERB, which in its decision in March 2004, ruled in favor the University on both issues. PERB held that Article 2 of the contract constituted a waiver by the PSC of its right to bargain about changes in policy by the University’s Board of Trustees and that the University had the right to unilaterally amend its intellectual property policy in November 2002. PERB also held that the waiver survived the expiration of the contract and that the University therefore had no obligation to bargain with the PSC about intellectual property during the post-contract period, unless and until the University and the PSC agreed to amend Article 2 of the contract.

The PSC appealed to the Appellate Division of the New York State Supreme Court, which affirmed in part and reversed in part, in effect reverting to the decision of the ALJ. Agreeing with the University, the Appellate Division held that Article 2 of the contract contained a valid waiver provision that permitted the University to unilaterally amend its intellectual property policy. Agreeing with the PSC, the Appellate Division held that once the contract expired, the University was required to bargain about those aspects of the policy that affected the terms and conditions of employment. The University is considering an appeal to the Court of Appeals, the highest court of the State.

Frederick P. Schaffer, General Counsel and Vice Chancellor for Legal Affairs at City University of New York, at 2:53 pm EDT on June 29, 2005