Friday, March 11, 2016

Federal judge: In the state of Massachusetts, a student and a PI do not have a fiduciary relationship

Elizabeth Wilson's article in C&EN is a great update in the state of play in the lawsuit between Dr. Mark Charest, Professor Andy Myers of Harvard University and Harvard itself. The back story is that Dr. Charest was (at the time) a graduate student for Professor Myers and developed a new route to tetracycline antibiotics; his work was ultimately was patented, published (he was the first author of 5) and then commercialized via a company, Tetraphase. 

When the Harvard technology transfer department announced that Professor Meyers would be paid a 50% share of the royalties and that Dr. Charest would receive an 18.75% share, Dr. Charest objected. He was seemingly threatened by his research advisor who told him to "be careful" and ultimately refused to act as a reference when Dr. Charest later applied to a venture capital firm.* He ultimately filed a lawsuit, which has continued to grind on until last month, when the judge in the case issued a ruling dismissing Professor Myers from the case, dismissing many of the charges, but allowing the lawsuit between Harvard's technology transfer office and Dr. Charest to proceed on the basis of Dr. Charest's argument that he was not treated fairly by Harvard.

One of the interesting aspects of Dr. Charest's lawsuit was his claim that Professor Myers needed to be acting as a "fiduciary", which is a technical term meaning (according to Wikipedia):
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other asset for another person.
Back when this case came out, we had a bit of a discussion about this on the blog, and I expressed my surprise that there could be a legal basis for a fiduciary relationship between a PI and a student, but I acknowledged that past legal rulings were somewhat murky.

Well, the federal judge (the Honorable Douglas Woodlock) has spoken (PDF), and he rejects Dr. Charest's argument that the there is a fiduciary relationship between a PI and a student. From Judge Woodlock's ruling:
...Dr. Charest claims that Dr. Myers assumed the role of a fiduciary by virtue of his role as Dr. Charest’s supervisor and academic advisor, and as head of Dr. Charest’s laboratory, (Am. Compl. 166-69,) and that Dr. Myers breached his fiduciary obligations by using his position to obtain a more favorable share of the royalties from the tetracycline research at Dr. Charest’s expense. (Am. Compl. 262.)  
Dr. Charest’s attempt to allege a fiduciary relationship fails for two reasons. First, I conclude that under Massachusetts law, a student-advisor relationship is not fiduciary in nature. (emphasis CJ's) Justice Fremont-Smith of the Massachusetts Superior Court addressed precisely this issue in Battenfield v. Harvard Univ., No. 915089F, 1 Mass. L. Rptr. 75 (Mass. Sup. Ct. Aug. 31, 1993), and held that the relationship of an academic advisor to a student does not constitute a fiduciary relationship, xplaining that “[o]ne party cannot unilaterally transform a business or academic relationship into a fiduciary relationship by reposing trust and confidence in another.” Id. at *9. (Citing Comstock v. Livingston, 97 N.E. 106, 108 (Mass. 1912)). [footnote follows]
Judge Woodlock's footnote: Dr. Charest contends that the relationship at issue in Battenfield v. Harvard Univ., 1 Mass. L. Rptr. 75 (Mass. Sup. Ct. Aug. 31, 1993) was an employee-employer relationship, making that case inapplicable. It is clear that, as to at least one defendant in Battenfield, Sue Weaver Schopf, the relationship was purely that of an academic advisor, which the court determined was not fiduciary in nature. Id. at *9. 
Dr. Charest also relies upon Chou, 254 F.3d 1347, for the proposition that a student-advisor relationship is fiduciary in nature. In addition to being decided under Illinois law, there were specific facts existing in Chou that are absent in the present case. These include the fact that Chou’s advisor “specifically represented to her that he would protect and give her proper credit for her research and inventions” and had “responsibility to make patenting decisions regarding Chou's inventions.” Chou, 254 F.3d at 1362.  
There is no allegation that Dr. Myers made any such promises or assumed such responsibilities with respect to Dr. Charest. (emphasis CJ's)
Well, just in case you thought your adviser had your best financial interests in mind (if you were in the great Commonwealth of Massachusetts), the answer is "not on a legal basis, no." 


  1. Harvard's behavior in this matter was outright vile and the law certainly needs to be changed to prevent such abuses. A neutral third-party arbiter should be deciding how to distribute patent royalties in the case of a dispute, not Harvard's obviously conflicted internal tech-transfer department!

  2. Around the time of my graduation there was a drive to unionize RAs and TAs. The schoool's argument against the drive was that PIs are really teachers and student's caretakers rather than employers. While there were many great PIs the behavior of some required a strong OpForce.

    I am happy that the relationship is clear now and all moral obligations have been clarified.

  3. Even a win would probably have reduced his net income from the 18.75% he already had!

  4. I think the most difficult aspect of this is how academic departments seem to intentionally keep IP issues opaque. Also, every case seems to be reinventing the wheel. Chemistry departments could do themselves a big favor by developing a policy around student IP and being clear and upfront about it with students.

    When I was visiting graduate schools one professor told me upfront that his (personal) policy on IP is 50/50 him/student(s). I have never heard any other professor be this open. I was pretty shocked.

  5. Always, always assume any PI's first, foremost, and only interest is their own. If you're lucky, that might align with your best interests, but it will be a happy coincidence, and not by design.

    Think of it like a 19th century marriage where one party holds 90% of the power.