Stanford drags Apple into court over lawsuit against Dean Saloner

The ugly court case pitting a former Stanford Graduate School of Business professor against Stanford University and GSB Dean Garth Saloner has ensnared one of the world’s most prominent corporations. Stanford has dragged the mighty Apple – reluctantly – into the lawsuit by former professor Jim Phills, who alleges Saloner railroaded him out of the business school while sleeping with his wife, high-profile organizational behavior professor Deborah Gruenfeld.

The university’s latest hard-ball gambit in its costly battle against a former employee is bound to ignite fires of rage across academia, as the university brazenly and against established academic tradition asserts ownership over course materials that Phills, who now teaches at Apple’s in-house training facility, developed while working at Stanford.

“The claim represents a broad assault on the principle of academic freedom,” Phills claims in a statement to Poets&Quants. “Universities almost universally recognize faculty ownership of the fruits of their academic labors. Stanford’s attempt to appropriate a faculty member’s intellectual property in order to gain leverage in an employment dispute constitutes a profoundly chilling precedent — not only for professors at Stanford, but also for academics everywhere.”

‘STANFORD HOPES JUDGE WILL FORCE APPLE TO GIVE IT AN EX-PROF’S TEACHING MATERIALS

The university is in California Superior Court in San Jose seeking a judge’s order forcing Apple to give Stanford all Phills’ teaching materials from Apple University, the company’s training facility. Stanford does not make clear in its court filings exactly what it is laying claim to. But prominent University of Pennsylvania Wharton School marketing professor Peter Fader says that in general, university ownership of faculty work “only becomes an issue in medicine or engineering when a product is created in a university lab by a faculty member.

“When it’s just ideas, it is a night-and-day difference. A university can’t claim to own your ideas.”

Apple hired Phills in 2012 to teach at Apple University while he was on leave from the GSB, where he taught organizational behavior and had directed the school’s social innovation center. The tech giant has kept him aboard as a highly compensated faculty member, but now has been forced to take on some of his baggage.

STANFORD CLAIMS PHILLS IMPROPERLY ACCESSED UNIVERSITY PROPERTY

Stanford claims it needs the material in part to oppose Phills’ claim that he was harmed financially by his treatment at the GSB, but the demand is clearly aimed at the teaching materials themselves: “Stanford has reason to believe that Phills improperly accessed and saved Stanford property (including course information and documentation owned by Stanford) via its computers and computer network,” according to the Stanford filing. “When Phills failed to return the computers in their entirety at the conclusion of his employment, he may have kept documentation/electronic data which was rightfully Stanford’s property and used it in the creation of his Apple University course materials.”

Apple’s lawyers found Stanford’s demand mind-boggling, says Phills’ lawyer Andrew Pierce of Pierce & Shearer. “In fact, one of the lawyers said he’d never seen anyone do anything like this,” Pierce says. “This is an unusual thing, for (Stanford) to come after Apple for the materials. No one’s ever seen anything like that.”

The development strikes an especially discordant note given the close relationship between Stanford and Apple, he says. Pierce, however, was not surprised by the university’s move. “They’ve been telling me from the beginning three years ago that they’re going to find out whether Jim’s teaching the same courses,” he says. “I really think it’s more to harass him than anything else. They want Apple University to be upset with Jim.”

STANFORD ALREADY HAS SPENT HUNDREDS OF THOUSANDS OF DOLLARS IN LEGAL FEES

Stanford’s assertion of ownership over course material gains a profound element of irony when considered in light of the $1 million book advance Phills’ wife and GSB professor Gruenfeld recently earned for her forthcoming book “Acting With Power,” scheduled to be published in 2017. Gruenfeld, a GSB professor since 2000, teaches a single course, having developed it – starting around 2007,according to the GSB – on the foundation of two decades of research into power dynamics. The course’s title? Same as the book’s. Gruenfeld also sells “Acting With Power” DVDs for $95 through an online employee-training company. Many other business school professors spin course materials they’ve developed at their schools into lucrative speaking engagements, consulting gigs, and books, never having to share that income with their universities.

Phills has spun his aborted business school career into far more financially rewarding employment at Apple. Details of his income and finances have already been revealed through court filings. Working at the tech firm since 2012 has sent Phills’ income skyrocketing from less than $250,000 when he was at the GSB to $1.7 million last year. A great deal of his income, however, is going toward lawyers and court fees, as he simultaneously fights the lawsuit for wrongful dismissal and a bitter divorce battle with Gruenfeld, a board member of the women’s leadership group Lean In.

The divorce had cost Phills $260,000 in legal expenses by May 2015, according to the New York Times. Stanford, which inserted itself into the dispute in a largely unsuccessful attempt to prevent embarrassing public disclosures, has no doubt spent a hefty sum on that case. Total legal costs for Phills and Stanford in the lawsuit have not been disclosed in court (Phills told Vanity Fair earlier this year that his legal expenses were approaching $500,000, presumably including divorce-related billings), but the lawsuit has generated nearly three times the volume of legal filings as the divorce, and each side must have spent many hundreds of thousands of dollars on the fight – money that, for Stanford, could perhaps have been better spent on enhancing education for students.

SALONER AND STANFORD SUFFER SETBACKS IN LAWSUIT

Stanford and Saloner suffered a significant blow of late, when a judge threw out three claims made by the university and the business school dean in a “cross-complaint” they filed against Phills, seeking punitive, exemplary, and compensatory damages from him. The court found that Saloner’s claim of intentional infliction of emotional distress upon him by Phills did not hold up. Also the judge ruled invalid the two claims by Saloner and Stanford that Phills, who has admitted to using his wife’s passwords to access her email and social media accounts, broke U.S. and state law in accessing and saving the communications between Saloner and Gruenfeld. However, the ruling did leave open three allegations by Saloner: that Phills invaded his privacy by taking the communications; that Phills broke his employment contract; and, of relevance to Phills’ GSB teaching materials, that Phills “converted” – legalese for “stole” – Stanford property.

Saloner declined to comment on the ruling, on the advice of his lawyers, because of the ongoing litigation.

Phills calls the allegation that he stole university property by retaining teaching and research materials he’d created a “ludicrous and transparent attempt to intimidate me and drive up my legal costs.”

Stanford contends that a protective order it entered into with Apple in November protects the company from public disclosure of proprietary information.

As for Stanford’s claim that Phills may have misappropriated university course materials for use at Apple University, the issue of ownership of professors’ work is a charged one. “[I]t has been the prevailing academic practice to treat the faculty member as the copyright owner of works that are created independently and at the faculty member’s own initiative for traditional academic purposes,” says a statement by the American Association of University Professors. The association also reports that, “Despite this general practice and legal understanding, some colleges and universities still proclaim that even traditional academic works are ‘works made for hire’ (done by an employee as part of his/her job), and that the institution is the initial owner of copyright. The most common standard employed by universities for claiming ownership of faculty works is the ‘use of university resources’ or ‘significant or substantial use of university resources.’ However, since there is no tradition of applying this standard, the process of defining it will be one of uncertainty for both parties.”

IF A SCHOOL OWNS PROFS’ WORK, WHO CONTROLS THE CONTENT?

The professors’ association notes that the issue of ownership over instructional materials hasn’t been well tested in court, although rulings to date have favored professors as owners. The group stakes out a strong position on faculty ownership of the instructional materials they create: “Administration ownership of faculty scholarly works, lecture notes and teaching materials would profoundly contradict the practices of the academic community. Faculty scholarship as work-for-hire doesn’t fit, legally or policy-wise, into academic scholarship,” a statement from the group says. “Academic freedom requires that faculty be free to produce work reflecting their own views and theories – not those of administration or trustees. If all work belonged to the administration, then its content would also have to be controlled or at least accepted by the administration, which would vitiate any freedom of thought or inquiry.”

Stanford, in its university copyright policy, cites federal copyright law, but the policy’s list of works that can be copyrighted adds details not found in the U.S. Copyright Office definitions. Stanford’s policy expands the definition of “literary works” to include instructional material and tests, while adopting the rest of the definitions mostly verbatim. Under federal copyright law, ideas, concepts, and principles cannot be copyrighted.

A hearing on Stanford’s motion to force Apply to fork over the teaching materials is scheduled for Jan. 19. Apple did not respond by press time to a request for comment. Stanford said it would not comment because of the ongoing litigation.