Will B. Rich, Peerless University's brilliant finance professor, consultant and textbook author, has signed a $100,000 contract with Educorp, an educational broadcast network, to create a three-session seminar for a consortium of six Fortune 500 companies.

As part of the seminar series, Educorp will conduct videotaped interviews with three CEOs, tape a satellite feed of a panel discussion at a monetary conference in Geneva, and provide studio time and camera operators for role-play dramatizations by MBA students. The professor and his teaching assistant will use the b-school's extensive multimedia laboratory to create instructional materials for the seminar.

Peerless business dean, E. King Bayh, has a few questions about the arrangement: Who will actually own the seminar series? Professor Rich? Peerless University? Educorp? The six Fortune 500 companies? How many times will the seminar series be re-broadcast and who will be compensated when it is? How will the school be credited and compensated for the use of its name, facilities and employees?

This fictional dean is posing real-life questions. They revolve around intellectual property rights. And, for universities and business schools, the answers are far from clear. In fact, those trying to deal with intellectual property believe it to be one of the murkiest topics on the horizon.

The growth of distance education, the possibilities of multimedia technology and the pervasiveness of Internet communication are all combining to raise new issues around the intellectual efforts of faculty. Some campus-based and for-profit educators are seeking fair ways to disburse compensation for the products that come from their efforts. They also are designing contracts to cover possible future uses or partial uses, finding ways to secure the property against infringement or theft, and creating their own policies for dealing with intellectual property.

"The intellectual property issue is a big one and it's not going to be straightened out quickly," said Milton Jenkins, director of the Information Systems Research Center and chaired professor of MIS in the School of Business at the University of Baltimore. "It's going to be a combination of law and practice, similar to the issues that arose with electronic commerce. People took shortcuts there, trying to specify rules in one-page agreements. That's resulted in thousands of lawsuits and claims."

One of the major costs of having to establish policies and guidelines, or even laws, Jenkins fears, is that the power of technology will be severely hampered by legal issues. "It was a wonderful thing to envision technology enabling us to do things like have the best lecturer in the world on a particular topic being heard by everybody, not just people paying high tuitions," Jenkins said. "Now, I see that vision fading away, or at least retarded, by these issues of intellectual property."

While some may wish that questions of intellectual property rights could be avoided because of the complexities they raise, Lester Thurow, professor of management and economics at MIT's Sloan School, in the September-October 1997 issue of the Harvard Business Review, suggests that the "time has come not for marginal changes but for wide-open thinking about designing a new system from the ground up." Minor tweaking here and there, he believes, will not fix the problem. "Fundamental shifts in technology and in the economic landscape are rapidly making the current system of intellectual property rights unworkable and ineffective," Thurow wrote.

His concern is that knowledge expands through the synergy of publicly and privately generated research and thinking. If for-profit enterprises feel they only can stay profitable if they keep their knowledge a secret, then the generation of new knowledge in both sectors is inhibited.

Distributed Learning/Distributed Income

"There definitely is no authority on this," said Marita Bell, director of strategic planning for EXEN (Executive Education Network). EXEN, a division of PRIMEDIA Workplace Learning, founded in 1995, serves as a producer/broadcaster of management courses for corporations looking for educational packages from universities and consultants. "Intellectual property in distance learning is all over the place, and it has become quite murky. Up until recently, there haven't been many continuing products to worry about."

Before the explosion of distance technologies and the possibilities they open up, instructors would lecture in the campus classroom and the only lasting remnant would be student notes, or perhaps an audiotape or videotape for absent students.

"Intellectual property" resided primarily, if not exclusively, in textbooks. And universities took a laissez-faire approach to faculty publishing and consulting, viewing them as part of the professorial career. "We know the rules about textbooks and consulting, research and teaching generally," said Gene Ziegler, director of Advanced Technology Projects in the Johnson School of Management at Cornell University.

For years, when a faculty member wrote a textbook, he or she could do it on university time and test it with university students. But the university never claimed ownership. The issue of ownership is more prominent now, many say, first, because distributed learning demands enhancements to the faculty output and, second, because the product's reach is much greater.

"Now we're introducing distance learning, which has the ability to leverage someone and bring in a lot heavier revenue stream," Ziegler said. "Who gets that revenue stream? Who are the players, and who are the contractors? That gets a little sticky. It's even murkier when you talk about asynchronous materials. Stuff on videodisks maybe can be used for months or years."

Ziegler said he recently saw a videotape he helped produce 20 years ago. It has been used continuously at Cornell to introduce titration in chemistry labs. "The residual value of that tape would have been tremendous if we had put that on a digital server, delivered it up to chemistry laboratories in 3,000 universities in the United States and charged each one eight cents every time it was used," said Ziegler.

If that titration video had been used to generate income, awarding the revenues from it would have been simple because the university produced it. But when dealing with revenues from the
disseminated knowledge of a faculty member, it is not so clear cut.

The electronic dimension of education is being seen as a dividing line, the opportunity to establish a new tradition in revenue sharing, said Ziegler. One major justification will be the start up costs in distance learning that have to be recovered by the university.

"Invariably the university is going to cover a lot of the infrastructure costs," Ziegler said. "The university is saying, 'There's this new game coming on really strong, it's going to cost us a lot of money, but we don't see where we're going to get anything back for it. We don't see how it will flow our way.'"

Part of the university's challenge will be to determine whether to establish its own infrastructure or partner with other suppliers. Many start up companies already are providing multimedia packaging and building the distance technology for videoconferencing and broadcasting. "We need to figure out who the smart partners are and how is the cash going to flow," Ziegler said.

Contract Partners

Among the potential partners for b-schools are educational producer/broadcasters, like EXEN, that are springing up to satisfy the demand for quality distance programs. These companies hire instructional designers, producers and writers to work with professors in converting a course to a media-friendly package. The program might include taped interviews with CEOs, demonstrations, role-playing or actual scenes from a plant or a staff meeting.

EXEN, primarily video-based, generally deals with executive education staff at leading universities or consulting firms in contracting for instructional packages.

"We like dealing with executive education departments," said Lynn Maize, head of EXEN. "They bring a lot of value to the relationship. They can work with faculty. They help with training. They're there on a day-to-day basis to make people feel at ease about converting their seminar-based courses to a distance learning format."

EXEN's contracts stipulate that slides and videotape that it prepares for the program are owned by PRIMEDIA Workplace Learning. Images containing the logo or scenes of the university, the professor or proprietary course materials are the university's.

"We jointly own all of the footage we put out," Bell said. "In our agreements it is necessary for us to delineate exactly how we are going to use the program and ask permission for other derivative products we might use in the future, for example, CD-ROMs, videotapes and other things."

Maize added that either partner can entertain other options for use of the program footage, but permission has to be given by the partners, both of whom would receive residuals. "We work from a publishing model," she said. "We may hold the copyright or have access to actual footage from the broadcast. But it would be a violation of intellectual property trust for us to go off and do some other program based on the ideas that were broadcast. We would not do that."

Other such for-profit companies may prefer to contract with an individual faculty member and just negotiate directly with him or her. By working with the individual, they avoid paying the university and the individual is just a consultant, and the company owns it.

Robert Sullivan, business dean at the University of North Carolina at Chapel Hill, previously was director of IC² Institute at the University of Texas at Austin. While there, he would invite faculty from other business schools to give lectures at the Institute. Presenters were asked to sign a form that stated the school had a right to use the material and the videotape. But sometimes those speakers refused to allow a lecture to be videotaped because they said it was their property and they wanted to control who saw it.

"Most faculty who don't do a lot of distance learning or are not in executive programs and not earning a lot of money couldn't care less," said Sullivan. "But for those who are entrepreneurial, they are very restrictive. They would say, 'Only use it in this Institute, no where else.' If it were to be used outside the school, we needed to get their approval and we needed to pay for it," Sullivan said.

Upon returning to their own schools, these entrepreneurial professors are going to be asked more often to share the profits they make from outside engagements, said Roy Herberger, president of Thunderbird, American Graduate School of International Management.

"You'll find a lot of conflict in places that never had conflict before," said Herberger. "Traditionally, most universities and colleges of business have sat on the sidelines as book publishers contracted with faculty for their time and their resources. I don't think that's going to change. But in the modern technology, from an administrative point of view, the notion of having other people simply come in and contract for your faculty and use that resource is a giving up of content. Not only are you not being compensated for it, you also are paying for it." Schools will try during this early phase to convince their own faculty that this is a partnership from which everyone can win, Herberger said, but the concept of "independent contracting" will become outdated.

The constraint for some schools in trying to create new ways to divide the revenue is the faculty attitude that they are being exploited. Administrators say they can understand why faculty are protective of what they now have. There is a legitimate argument that intellectual content is theirs. And to do distance education well takes a lot of effort and preparation. Some say it takes 12 hours of work for every hour of delivery-many more hours than the standard classroom preparation.

But administrators also see a serious problem if faculty are allowed to continue claiming that everything they do outside of their university for pay is simply an extension of the traditional textbook model or the consulting model. The university might not get any piece of the revenue pie, even though it is providing an institutional name, time, staff and facilities to support a faculty member.

Some say schools should share the wealth, just as a matter of fairness. And some say the economic perspective is important, as well.

"I see it mostly as a fairness issue," said Scott Cowen, business dean at Case Western Reserve University. I'd love to be in a position someday where it would be a resource generator of some magnitude. For us, it is not." (This summer Cowen will become president of Tulane University.)

But, said Sullivan, "We really are talking about resources, and universities are strapped for resources so they will look for every dollar they can get."

Questions Of Security

With distance education, there also are questions about how to keep intellectual property secure, and there are differing views about the importance of security. Some say that creators of intellectual properties need to have control over their creations, while others contend that knowledge can't be controlled.

"There is an inherent risk when you want to start broadening the scope of what you can do, in terms of having more people gain access to your thinking," EXEN's Maize said. EXEN protects the satellite delivery of its video broadcasts as much as possible by encrypting the signal. About 100 of EXENS's client companies have their own satellite installations, while other companies pick up programs at other sites. "We do it partially to assure our receiver sites and our providers that we do have some control of who's receiving the signal," said Maize.

"At the downlink site, the only way we're able to protect from piracy is trust, to be totally frank," Bell said. "We tell all of our customers that they are not allowed to videotape a broadcast. It is against our agreements with the universities and they are fairly sensitive to that. By and large, they have been willing to obey that."

Materials that EXEN plans to deliver in the near future over the Internet, in partnership with UOL Publishing (University On Line), will be secured for subscribers by means of a password. But codes on the Internet can be broken. "If they can get into NORAD and NASA, they can probably get into anything," said Maize.

"We want to put in place all of the controls and checks and balances that would be standard industry practice," Maize said. "But at the same time we drive home the view that if you are interested in disseminating your intellectual property in the marketplace, because of technology, because of people's accessibility, you just have to live with losing more control over it then you did when you signed up to publish a case at HBS Publishing."

When it comes to derivative products like CD-ROMs that can be spun off of an educational program, warnings can be placed on them, but there is not much else that can be done. "And as you expand international distribution," Bell said, "your risk is much, much higher for piracy."

For-profit companies that make money by broadcasting lectures from high-level executives also are concerned about protecting the exclusivity of the lectures by requiring a code or a password.

"It's a very big issue," Sullivan said. "Companies like IBM and MCI are working to develop commercial security systems for the Internet. But nothing is ever foolproof. Everything someone says is infallible, someone else spends his or her life showing that it's not."

Ziegler believes it would be a mistake for educators to become too preoccupied with the issue of safeguarding knowledge. "The real problem with security in education," he said, "is that you end up chewing up too much of your energy trying to protect what you've got." Maize agrees. "From a business standpoint, you get to the point where it is a cost/benefit question. What is the risk, versus what does it cost you to protect it?" she asked.

But Thunderbird's Herberger thinks that schools should at least try to secure their property. He said he is surprised that he can go to the Internet and get right into the course syllabus of a Harvard professor. "They say it is the property of the Harvard Business School, but anybody who wants to use the material can do so. There is no practical stop and no control over the variations it might yield." Thunderbird requires its own distance learning users to use a code number to access a program. "A lot of folks have not figured out that this is property they at least need to have some say over," said Herberger.

At the School of Computer Science at Carnegie Mellon, however, the view is that all knowledge should be free, said Sullivan, who once was business dean there. The school has posted some 300 classic lectures in computer science on the Internet. "They don't claim ownership. Their mission is to make it available," he said.

Another free disseminator, Sullivan said, is the National Academy Press, one of the largest scientific publishers in the United States. It makes all of its publications available through the Internet for free. "They don't claim ownership, either," said Sullivan.

Baltimore's Jenkins shares the philosophy of less protectionism. He believes there should be no barriers to people sharing expertise on many topics in lectures that can be videotaped and broadcast via the Internet or other mechanisms.

The Internet's accessibility definitely calls into question what can be owned and what is in
the public domain.

Paul Danos, dean at Dartmouth's Tuck School of Business, said he is not going to get embroiled in those questions, even though lawyers may have to work it out. "To me, a defensive game here is just an absolute wrong thing to do," Danos said. "This stuff is changing so fast that the things you're protecting won't be worth anything. Even if you lose something, you gain a lot more. You can't play it safe."

A few schools, though, have begun to worry about their intellectual property policies, or lack of them, as a result of watching universities get caught up in cases where there was no policy, said Cowen. He believes that coming to grips with the questions of intellectual property is essential.

Case Western defined two aspects to the issue. One was creating a policy regarding conflicts of interest on the part of the faculty, and the second was a policy for dividing the gains from intellectual property developed with campus resources and offered in the public domain. After negotiations between faculty and administration, a policy was written that was acceptable to the faculty. It is a high-level statement, without much detail, Cowen said. The school now has implemented a fairly active annual conflict of interest reporting system that went into effect two years ago. But, said Cowen, there hasn't really been a hard test of the policy so far.

"First, we set up a system of disclosure and awareness so that we know what projects are going on that might fall into the realm of intellectual property. That's one of the biggest issues," Cowen said. "Faculty do lots of things and most deans are unaware of the things faculty are working on and they find out about it too late.

"Most of the conflict of interest has revolved around disclosure," said Cowen. "When a faculty member is working on software or anything where they are using university resources and are subsequently selling that product commercially, there is a potential for conflict of interest that has to be disclosed."

The policy has to describe what constitutes services developed on campus and what resources can and cannot be used. "You want to make sure the faculty is not using university resources for their own private gain," Cowen said.

Second, there has to be discussion of how benefits from that get divided. Cowen sees the revenue explosion occurring mostly in software. Like other schools, his did not take textbooks into consideration on the policy of conflict of interest.

"We could legitimize textbooks in the context of the more traditional teaching and research mission of the institution and therefore somehow didn't pay as much attention," he said. "But, quite honestly, it does constitute intellectual property, they do use resources, and it should fall under the domain of what we are doing."

The only cases his school has dealt with so far have been positive, Cowen said. One group of faculty formed a company to market software and a revenue sharing plan was worked out so that the school receives some of the profits.

At Thunderbird, Herberger said that when they realized they had to put something in black and white, "We surveyed other schools and saw there wasn't a lot out there. We looked all over the country and we didn't get any policies that were marketable or manageable from other places."

With nothing to use as a standard, Herberger's school created its own intellectual property policy, as an addition to the faculty handbook. The policy has been in effect since April 1996. In it, the school waives the rights to any compensation for textbooks, monographs, dictionaries or translations unless the faculty member was asked by the school to produce it and the school provided funds, time and materials to produce it.

Just as at Case Western, Herberger said that even though the case could be made for the school's being reimbursed for textbook profits as well as distance materials, Thunderbird decided on something more palatable for faculty to accept. "Fundamentally, we slack off on the textbooks," he said, "and become much more assertive on the electronic cases and the electronic long distance learning."

Still, the policy was the hardest part of the handbook for the faculty to address because the school was going from nothing, with no claim on revenues or copyrights. "The actual transactions in the policy are individual," Herberger said. "The agreements we have with faculty who are producing electronic deliverable products are individually contracted, referenced against the general principles."

As a first principle, Thunderbird asks its faculty members to put everything they are working on out on the table. The policy allows the school to learn what the faculty is producing and the circumstances surrounding that development. If it pertains to the normal course of work for the school and directly involves their profession and the school's resources, Thunderbird would ask for partial or total ownership, on a scale from 0 to 100 percent, and have the right to copy or use the property any time. If the project is something totally unrelated to their school involvement, the school would probably claim zero ownership.

Normally, if a faculty member makes a formal, written request for a waiver, the school will waive claim to the first $10,000 in revenues from any applicable project and take its proportionate share after that. Most of the projects, Herberger said, will likely be split on a 50-50 basis.

The document is considered an interim policy because of the speed with which the field is changing, Herberger said. It hasn't yet been tested by a case, but he expects it will be when Thunderbird begins broadcasting its courseware into Mexico with another institution.

Even though some believe that faculty may be antagonistic toward a policy on intellectual property, there are advantages to professors knowing where the university or school stands on the issue.

Uncertainty about compensation could be keeping some faculty from jumping into the field of distance education, Baltimore's Jenkins said. Whereas schools that have a clear policy regarding how revenues would be shared could create an incentive.

"Some universities are advising their faculty not to engage in outside contracting for lecture material that will be used essentially for a virtual university to compete with them using their own faculty," said Jenkins. "Clearly, the schools are interested in trying to protect their rights to the productivity of their faculty. But if the faculty doesn't see how they will be compensated for the effort of creating more innovative courses, they will not invest the time and energy to prepare material and integrate computing presentations with the video presentations."

A clear policy that states how income-generating efforts will be rewarded would possibly put in motion the faculty who have been hanging on to the conventional ways of teaching, Jenkins believes.

Policies still will be evolutionary, most agreed, spreading case by case until a body of standard practices or precedents can resolve who owns intellectual property and how they should be paid for sharing it. But the significance of the questions and the speed with which they are springing up demands a more innovative response from a new generation of technology-wise teachers and their institutions.

It's a textbook example of a case where textbook answers no longer apply.