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4. Academic Rogues

By Graham Richards

The outside world, and perhaps particularly industry, often views academics as rather unworldly, naïf and fundamentally gentle souls. Nothing could be further from the truth. The university sector, and in particular science, is a competitive game and one which is much less closely regulated than most economic sectors.

All experienced academics know of colleagues who have elbowed and even cheated their way to preferment and who have done down colleagues. In my own early experience I recall putting in a grant application which was turned down by an eminent referee in the days when one could recognise a particular typewriter’s output. My proposed experiment was supposedly deemed impossible, but within months the referee had published the same piece of work as his own.

In my area of research there was a trick played successfully on one of my colleagues who had a track record of devising novel, exciting experiments. On publishing one such breakthrough, he received a flattering letter from a researcher in the same field with a high reputation. The letter said how impressed the writer was with the work, particularly as he himself had done the same experiment and had been just about to publish himself but had been pipped at the post. He went on to say that the next obvious step could be something that the original author was bound to be about to do and proposing that they should collaborate rather than compete. My colleague agreed and did virtually all the work, but when it came time to publish this extension in a major paper the writer of the flattering letter became very awkward and insisted on being the first author, as it had been his idea. My colleague learned that this scientist had played the same trick on a number of other innovators.

Some scientists can play very rough. One of the most distinguished British chemists was known in his early days to go to the apparatus of a laboratory colleague and rip out a pump during the night so as to be able to use it immediately notwithstanding wrecking a colleague’s experiment. The same man once visited a major laboratory, saw what was being done with a novel piece of equipment and then returned to his own lab, bribed the technicians to work overtime and then hurried to rush out a publication on the subject so as to establish priority.

When it comes to the commercialisation of research, the lax governance under which academics operate has enabled quite a number to take intellectual property which rightly belonged to their universities, but to ignore this and just to set up companies as if they owned the IP. Occasionally they have even been known to do this in a foreign country.

The Owen Case

The most flagrant case of academic misbehaviour is probably the Owen scandal at Oxford University, which was so grotesque that it had a major and long-lasting impact on the commercialisation of research.

Following the first world war the British government was sensibly concerned about food production. In 1924 the Ministry of Agriculture established and funded an Institute of Agricultural Engineering at Oxford University, whilst pressuring the administration to appoint one of the Ministry’s own employees as the director: Professor Brynor James Owen. It was not long before it became clear that where money was concerned Owen was, at the very least, devious. By the end of his first year the university’s auditors were informing the Vice-Chancellor that they found the finances of the institute difficult to fathom.

For the following four years Owen continued to make the finances opaque with significant blurring of the distinction between his own private income and that of his institute. In the university committee hierarchy, Owen’s institute was overseen by the Committee for Rural Economy, which was increasingly concerned by the size of the overdraft of the institute. In 1929 the committee realised that £22,000 was missing from their institute’s accounts, but was present in those of a company Sugar Beet & Crop Driers, which had earlier bought patents from Owen (whose research concerned the extraction of sugar from sugar beet). Owen managed to convince his supervising committee that this money would be placed in a trust which he was forming on behalf of his institute and which would receive the money due to him for the patents. The committee even allowed Owen to be a technical advisor to Sugar Beet & Crop Driers with a salary, large for the period, of £3000 per year plus 2.5% of profits, never to be less than £1000 for five years.

Owen meanwhile was describing the institute accounts, kept at Coutts in London, as his own while being secretly kept in the university’s name. By 1930 these were overdrawn by £16,000. The university did nothing even though from Owen’s own reports it knew that he had erected a sugar beet factory in the village of Eynsham some six miles outside Oxford.

It was not until 1931 that the Registrar of the University, Sir Douglas Veale, heard from a friend in the Ministry of Agriculture that Owen had forged letters from the Ministry and from the Treasury. Owen was suspended but this was not the end of the affair. In 1931 Sugar Beet & Crop Driers, with two other plaintiffs, sued the university for the colossal sum of £750,000 on the grounds that the patents sold by Owen to the company were fraudulent in claiming the superiority of methods of extracting sugar, which was not true. Since the university’s name gave creditability to the patents and Owen was its agent, it was seen as liable. The patents were in fact worthless, which led to heavy losses for the company. The company suffered further losses by following the advice of Owen, who was acting with consent of the university and on its behalf.

A huge potential loss

The threat of a £750,000 loss hung over the university until 1939 when the case was settled out of court for £75,000. This was a sum many times larger than the government grant to the university but Veale was successful at a special tribunal in persuading the government that it should shoulder most of the blame, leaving the university to find the smaller, but still significant for the time, sum of £25,000.

This scandal was however not the limit of Owen’s wrong doing. Following a conference of British Empire Prime Ministers he went to the office of International Harvester Company of Great Britain (IHC Ltd) and said that his Oxford institute had been commissioned by the Imperial Conference to nominate firms from whom 100,000 tractors costing £65,000 ($325,000 at the then current conversion rate) would be purchased to carry out a four-year plan of Empire Development. In their eagerness to be accepted IHC Ltd agreed to give Owen £30,000 to conduct experiments. All this was backed up by documents on stationery headed ‘Treasury’ and ‘Imperial Conferences’ and he even gave himself a doctorate. He persuaded the Ministry of Agriculture to pay for a visit to the USA to study advanced methods in agricultural schools. When he returned to England he made up the story that his wife had inherited an annual income of £50,000 from a long-lost mother who had oil wealth. This accounted for his lifestyle when his university salary was only £1000 per year.

The International Harvester Company of America became concerned and its assistant treasurer confronted Owen who remarked “Does this mean that the company doubts my bona fides?” Somewhat contemptuously Owen offered to repay all the money IHC Ltd had advanced and wrote out a cheque for $150,000 asking if the company wanted this with all that such a transaction would imply. They did, but the cheque bounced.

The court case

Owen then became involved with the Ford Motor Company who were keen to have the order for the Imperial Conference tractors, although they were surprised that such a large order should be placed in one go. Owen talked his way out of this and persuaded Ford to advance $170,000 for his institute’s experiments, giving him enough to cover the cheque to IHC and $20,000 for himself. At precisely this time Oxford finally suspended Owen and on hearing this Ford contacted Owen, who was at the time staying in a luxury hotel in Cannes. He told Ford that his Oxford suspension was due to a personal quarrel which would not affect Ford’s nomination. It then became clear that the letterheads and supporting documents were fraudulent and Owen was arrested and appeared at Bow Street Police Court. He pleaded not guilty and said to the Chief Magistrate, Sir Charles Biron, “I have a perfect answer to these outrageous charges”.

At his trial at the Old Bailey he was found guilty and sentenced to four years penal servitude. Legend had it that while he was in prison, Owen swindled some of the wardens of their savings. Prison was the end of Owen’s career, but the ramifications for Oxford University and the wider academic entrepreneurial world were more long-lasting.

As a result of the near catastrophic impact of the Owen affair Oxford and Cambridge, at the time the overwhelmingly dominant institutions in Britain, were terrified of a repeat incident. Thus even when I was first an Oxford academic in the mid-1960s, the university policy was that it neither owned nor sought to own the intellectual property of work done by me or my colleagues even though it might have been performed in university laboratories, using university equipment and technicians. The whole system was dominated by the fear of risk.

The UK Patent Act

The 1977 Patents Act made it quite clear that employers own the intellectual property of work done by their employees. For most universities, as with companies, this clarified the situation and almost universally institutions make claim for inventions made by their employees. Immediately after the passing of the Act, Oxford and Cambridge universities attempted to retain the old system by handing the IP back to individual researchers.

This is not as generous as it seems since the costs of patenting them falls on the researcher rather than his or her employer. Although a small number of significant companies have emerged from the laissez faire approach, in general it is unwise. Patent costs are initially not very significant, but once one reaches the national phase after a couple of years, then the costs become onerous. If the patent holder drops the patent at that stage then we have the worst of all possible worlds: as has been mentioned earlier the work is then unprotected, but the wider community has been alerted to its existence and possible value.

Changing the culture was not achieved over night. In Oxford the system was modified in stages over a period of a dozen years so that now all work done by its employees and its students belongs to the university, albeit with the duty to exploit or, if not, let the employee have the IP.

Cambridge took rather longer to reach similar conclusions and still does not lay claim to work by students. Although such an attitude may seem to be one of generosity, in practice it is a real hindrance to exploitation since there may be a residual fear that having funded a venture, it may be possible for a student to turn up claiming part ownership of patents. This fear can discourage inventors.

In general, however, universities at last do have coherent policies on intellectual property and in-house professionals to negotiate royalties or equity shares in spin-out companies. The business world has at last realised that academics are not selfless saints, but prone to all the attitudes that can be found in the commercial world.

It is equally important that academics understand the financial drivers of those in the business community with whom they have to deal. Venture capitalists are answerable to their own shareholders, not to the negotiating partners. A major company employee acts for his or her company in agreeing a deal and this must be remembered. So too, and it is helpful to be sufficiently aware, are some of the examples where things have gone wrong with disastrous results.

Having set the scene, we will now turn to experienced practitioners to provide their individual insights.