Copy Wronged?

On a Listserv (having nothing to do with these kinds of issues), an off-topic question was raised (passive voice to protect the innocent) about copyright and intellectual property with regards to academic work produced by scholars (faculty) at their institutions. Of concern: apparently Michigan State University now claims copyright to all work produced by their employees - including faculty - under a general "works made for hire" provision. The claim is that while MSU retains these copyrights, they generally "give them back" to faculty, provided they meet certain criteria. The MSU website states:

From a legal perspective, all copyrighted works made by any Michigan State University employee within the scope of his or her employment begin as "works made for hire" and are initially owned by the University. As has been the tradition at Michigan State University and most of its peer institutions, the University assigns the copyrights in such works to their creators, unless one or more "Special Circumstances" exist.

You can read the "special circumstances" at the website, but it does seem to indicate that tenured faculty own their manuscripts at the pleasure of MSU. Interestingly enough, students retain copyright for their own work when done for a class - including theses or dissertations.

I do recall a similar policy when I took time off between undergraduate and graduate school. I worked at a physics lab where I helped put together several experiments for an electron beam accelerator (basically, a Beam of Electrons that Slammed into Other Little Particles to make Smaller and Smaller Particles). When I filled out my employment paperwork, I had to sign a form that said that anything I created or did would fall under "works made for hire," and that I should expect no claim to copyright for anything I produced. I remember feeling very uncomfortable with the form, because it was terribly unclear as to where the boundaries were between personal and professional creation. That ... ahem... must be why I never finished my Great American Novel during my "time off."

I was curious what UMD's policy was, so I did a quick search during my lunch break. This has been the UMD system's policy since 1990:

It is the policy of the University of Maryland System that copyrights arising from aesthetic, scholarly, or other work developed through independent efforts and not part of a directed institutional or University System assignment shall reside with the originator. Independent effort is defined as the product of inquiry, investigation, or research to advance truth, knowledge, or the arts where the specific choice, content, course, and direction of the effort is determined by the individual without assignment or supervision by the institution or System. -- IV-3.10 - Policy On Copyrights from University Memos and Policies

But I'm curious - which model is more the norm for academic institutions? MSU's prose clearly states that they are following the lead of their 'peer institution' - is that true?