Design Contracts For New Schools Snag Over Rights

By Lynn Olson — October 28, 1992 9 min read

Concerns over intellectual-property rights have thrown a wrench into contract negotiations between the New American Schools Development Corporation and many of its design teams.

As of last Thursday, more than three months after the nonprofit corporation announced the winners of its competition to design “break the mold’’ schools, four out of 11 contracts were still pending and others had been signed only recently.

Attempts to pin down in contractual language who will own the ideas developed as part of the design process have run into a “brick wall,’' in the words of one participant.

NASDC representatives, however, predicted that all but one contract would be signed by the end of last week.

They also said that work was proceeding as planned. “All it’s holding up is that they’re working on their own money, instead of our money right now,’' said C. Reid Rundell, the corporation’s vice president of design-team operations.

But the negotiations have been rough for many design-team members, who expected to be focused solely on the work ahead by this point.

Edwin D. Campbell, the executive director of the Coalition of Essential Schools at Brown University, which is part of the ATLAS Communities design team, said that after working on the negotiations over the past three months, “I feel like I’m ready to go to the Middle East.’'

Everyone involved in the negotiations has the same aim: to insure that the work of the design teams is disseminated as widely as possible.

But design teams are worried about protecting their own rights to use the material. And they are anxious to assert their rights to existing intellectual property and to work that will be produced without NASDC funds.

The long list of members on many design teams--and the fact that many of them have other sources of funding and previous contractual obligations--has further complicated the negotiations.

‘Throughout the Universe’

“Intellectual property’’ refers to the proprietary rights to ideas, inventions, and works, which are protected by copyright, patent, trademark, and trade-secret laws.

Such laws aim to balance the public’s interest in stimulating creativity and facilitating the flow of knowledge with the interests of individuals and firms in profiting from their discoveries.

Recently, the explosive growth of information technologies--combined with signals from the courts that it would be worth a company’s while to defend its intellectual property--have brought the issue to a boil.

Notable battles have occurred in the areas of computer software and biotechnology, in which it is not clear how existing laws and regulations apply.

The original contract language that the new-schools corporation presented to the design teams specified that any intellectual property developed as part of a design would be owned by the nonprofit corporation “throughout the universe in perpetuity.’'

Design-team members could exclude from the agreement previously existing intellectual property, as long as they specified the materials from the start.

But the contract warned that future NASDC funding might hinge on any claim a design team made over intellectual property that it incorporated into its design.

In negotiations, teams have sought to clarify that the nonprofit corporation would have rights only to intellectual property developed with NASDC funds, although it could obtain a license to use and distribute other materials developed without NASDC money.

‘All Inclusive’

Corporation officials said they included the original requirements in the contracts to insure that the designs could be disseminated widely and cheaply.

But one university research administrator, who asked not to be identified, said, “They have one of the most all-inclusive intellectual-property-ownership clauses that I have seen, even in comparison with the industrial sector.’'

“It seeks rights to ownership throughout the universe and in perpetuity,’' he added. “That kind of covers everything. You can’t even publish it on Mars.’'

The issue has been of particular concern to the universities involved in the deliberations, such as Brown, Harvard, Johns Hopkins, Yale, and the University of California at Los Angeles. Traditionally, higher-education institutions have been very protective of the rights of their faculty members--and themselves--to publish their ideas.

Recently, said Joan D. Winston, a senior analyst at the federal Office of Technology Assessment, universities have also asserted their rights over intellectual property for financial reasons, particularly in such lucrative fields as biotechnology.

Several university representatives last week said the NASDC contract threatens academic freedom because the corporation would have the ability to suppress, or refuse to disseminate, materials produced with its funds.

Most participants in the negotiations said such a scenario is unlikely. The corporation has agreed to license back to the design teams, on a nonexclusive basis, any intellectual property developed under the terms of the contracts. That means that both the corporation and the design team could use and distribute such materials, although the precise terms of the licenses would be negotiated in the future.

‘This Is America’

Most design teams said the ability to license back materials addressed their need to have rights to what they produce.

“My sense is that ... we do have a world-wide license,’' said John Richards, the manager of educational technology for Bolt Beranek & Newman, which is part of the CO-NECT School design team,"so that we would, in fact, have the right to make money on it. This is America.’'

Design teams have also tried to protect their previous work, as well as products that they plan to produce without NASDC funds, by including long lists of their publications, works-in-progress, and other intellectual property in the contracts.

“A number of us went to some pains to make sure that NASDC was aware of what our intellectual properties were individually,’' said Denis P. Doyle, the project director of the Modern Red Schoolhouse. “We wanted to make sure that we had an exclusive understanding that work that we had done previously to signing the contract was, in fact, ours; that work in progress was, in fact, ours.’'

Nonetheless, several people involved in the negotiations said they remain uneasy. “People are concerned about whether or not they’re going to sell their entire careers or their primary career work to NASDC in order to participate in this exciting process, which they want to truly get into,’' said the university research administrator who criticized the intellectual-property-ownership clauses.

Unexpected Problem

Mr. Rundell last week said that the corporation did not anticipate the dispute over intellectual-property rights with the 11 design teams.

The issue, however, had emerged earlier in public meetings held around the country last year to help set the terms of the competition.

In those meetings, individuals raised concerns that software products and other materials that they included in their proposals not be broadly disseminated.

As a result, the “request for proposals’’ specified that submissions would not be released by the corporation to the public, to other bidders, or to persons not directly involved in the selection process “unless such release is authorized by the bidder.’' All unfunded proposals would be destroyed.

At the same time, the corporation made it clear that its primary interest was in disseminating the results of its efforts as widely as possible. “Intellectual property developed with NASDC funds will be the property of NASDC,’' it stated bluntly.

According to participants in the negotiations, the need to develop contracts that would be fair to all 11 design teams has put the corporation in a difficult position.

“They’re understandably reluctant to take off on 11 different pathways to a contract,’' said Mr. Campbell. “So it’s a tough one.’' Mr. Rundell noted that some of the design-team members are public, some are private, some are school districts, some are states, some are university-based, and some are community-based. “We’re trying to have a standard contract that covers it all,’' he said.

For some design teams--such as the Odyssey Project in Gaston County, N.C., and the Community Learning Centers in Minnesota--the wrangle over intellectual-property rights has not been an issue.

“It was our view that we were dealing with public schools,’' said John Cairns, the principal of the Community Learning Centers team and a lawyer in private practice. “So it was hard for us to figure out anything that we would do that would not be part of the public domain.’'

But for others, the issue has been more complicated.

For example, the National Alliance for Restructuring Education plans as part of its design to incorporate performance assessments now being developed by the New Standards Project--with millions of dollars in funding from the John D. and Catherine T. MacArthur Foundation and the Pew Charitable Trusts.

“Taken literally,’' said Michael Cohen, a co-director of the Alliance, “the contract that NASDC offered us would have made NASDC the sole owner of the exams.’' In addition to raising security concerns about the examination questions, he said, “think of the perverse disincentives that would be created if states that had no involvement in New Standards, financial or otherwise, got the product by writing a letter to NASDC.’' Once the problem was raised with the corporation, Mr. Cohen said, the issue was resolved.

Other design teams expressed concern that commercial publishers would be reluctant to handle their materials.

“It becomes very difficult for a publisher to want to invest the marketing and sales money in something that somebody else could pick up the next day for free,’' said Mr. Richards of the CO\NECT team.

Same Objective

In the end, most of those involved in the negotiations said, the issue comes down to trust. “We all have the same overall objective,’' said Mr. Campbell, “which is to get a design completed, which is to get it disseminated, which is to see it receive the maximum amount of exposure, and to make sure that nobody gets charged anything exorbitant.’'

“And as long as we all have the same objective,’' he argued, “then we ought to be able to resolve it.’'

The biggest problem for many design teams is time. “We’re under substantial pressure. We’re building up enormous expenses,’' said one design-team member. “And everybody is expecting us to do something. So we can’t just sit on our hands. But every day that goes by, things get more and more awkward.’'

The contracts that had been signed as of late last week range in size from $997,000 to $2.5 million. They include: $1.25 million for the Bensenville Community Design; $2.33 million for the CO\NECT School; $997,000 for Community Learning Centers; $1.84 million for the Modern Red Schoolhouse; $2.5 million for the National Alliance for Restructuring Education; $2.12 million for the Odyssey Project; and $1.92 million for Expeditionary Learning.

Contracts for the College for Human Services, the ATLAS Communities, Roots and Wings, and the Los Angeles Learning Centers were still pending last Thursday.

A version of this article appeared in the October 28, 1992 edition of Education Week as Design Contracts For New Schools Snag Over Rights