Gatorade - A cautionary and success story on the importance of having a university IP Policy

I just came back from a very productive trip to Cebu and Dumaguete. My mission there was to teach university administrators and faculty members about intellectual property rights (IPRs) and why every school should have its own IP Policy.

Conducting Basic Orientation Seminar on Intellectual Property Rights to university administrators and faculty members from different schools all over the Visayan islands.

It was no surprise that there wasn't much accurate knowledge about IPRs floating around. I have been visiting schools all over the country for some time now and the same old recurring theme always comes to greet us: educators need to be educated about their IP rights and those of their students. They need to learn how their copyrights, trademarks, industrial designs, trade secrets, utility models and patents figure into their daily work.

After the basics, we then go into the more difficult task of crafting IP Policies for each individual school, institution or university. 

So what is an IP Policy and why is it so important when we already have the IP Code? 

IP Policies are rules set by a group, institution or even an individual to govern the ownership, management and transfer of IPRs. It's important for institutions and schools because the people working for them need to know how much of their IPRs they get to keep and how much they need to give up to be part of that group. 

Even if the IP Code is sufficient to provide protection of IPRs, the law also leaves us with a wide latitude of contractual freedom so that people and institutions get to decide how IPRs are managed among them. Upon this wide space, institutions need to craft a predictable rulebook on IPRs so that those who create them are able to manage their expectations as to how much money and credit they will receive for their work.

Universities and colleges are IP manufacturers of the highest grade. It's only a matter of time before that student stumbles upon that formula to destroy that formerly incurable disease or that professor invents human teleportation. What we believe to be science fiction is explored and made real every day in these schools. With such prolific intellectual activity, there is great potential for creation and commercialization of intellectual assets. 

The classic success and cautionary story on the importance of IP Policies is the story of how Gatorade came to be.

What we recognize today as the gold standard in sports drinks was created in the laboratories of the University of Florida in 1965 by a team of university researchers, upon the request of Florida Gators assistant coach Ray Graves -- the drink of course was later named after the team.

Taken from Wikipedia.org and used for educational & historical illustration only.

This drink was designed to quickly hydrate a player and replenish the carbohydrates and electrolytes lost during physical exertion. The invention was a massive success and was considered to be the tipping point that led the Gators to win their first Orange Bowl championship against the Georgia Tech Yellow Jackets.

Word would then spread to the different schools and the different states and sports teams started ordering Gatorade by the truck. Gatorade was then purchased by the Quaker Oats Company and then by PepsiCo. It would be marketed worldwide and was accepted as the official sports drink of the NFL, the NBA, the NHL and even NASCAR. Today, Gatorade makes roughly a billion dollars in revenue each year. From this, the University of Florida has received $100 million in royalty payments alone. (http://www.gatorade.com/history/default.aspx)

Taken from www.gatorade.com and used for educational & historical illustration only.

So what's the problem here?

Well, for starters, there were a number of serious lawsuits as to the ownership of the Gatorade formula. Because there was no clear IP Policy in place during the time of its creation, the government was said that the researchers had no proprietary rights over the formula because they were using federal money to fund their research. The University of Florida also claimed IP rights over the formula because its facilities were used for its creation. 

After the bloody legal battle, a settlement was reached awarding 20% of the royalties to the university. 

Indeed, the story seems to end well. But one can't help but wonder how much more the university could have received if it only had an IP Policy in place. 

Going even further, could the researchers have had a larger share in the revenue? could the coach who initiated the project have received a small cut? could the student assistants who helped the researchers have received a portion of the rewards or at least credit for the invention?

All these things could have been clarified a school's IP Policy. A mere chapter in the student handbook could have spelled the difference between a million dollars and nothing. 

Discussing Copyright and IP Policy with faculty members of the Notre Dame University in Cotabato City (Photo by M.R. Dy © 2010)

Here in the Philippines, these same questions and conflicts arise every day. Each time a student submits a thesis or dissertation, the faculty member who spent long hours refining the work and advising the student wonders if he or she should get credit for the extra effort. Such credit could have been used to secure a professorial promotion or a study grant had there been a policy in place.

Each time a professor publishes a book that was edited by a team of students, they wonder if they should be credited as co-authors or if they deserve tiny bit of the royalties as a reward for their work. Such acknowledgement could have been included in the student's CV, giving him or her a chance at better employment and further studies.

Fair is only fair if you agree upon a set of rules before playing the game. People working in a university setting miss so many opportunities to improve their careers, their portfolios and their incomes because no IP Policy exists to manage their rights. I myself have been a victim of this. If we had an policy when I was still in college and law school, I could properly claim to be an author of at least three books. Right now, I don't even know what rights I have over my thesis.

A hotbed of invention and innovation -- The Agricultural Engineering Workshop at the University of Southern Mindanao, Kidapawan Campus (Photo by M.R. Dy © 2010)

We have been traveling the country from Baguio to General Santos City and have found the response of the different schools to be very encouraging. Today we have over 30 colleges and universities with active IP Policies and 20 others that are drafting theirs. This gold mine is slowly being excavated one school at a time.

Genius is everywhere. We simply have to manage it.