Bayh-Dole reduced to its basics [warning: none of this ever happens]

Bayh-Dole stripped of contingencies, for universities, reduces to this:

Use the patent system to promote the practical application of inventions.

A federal agency is an agency, department, corporation, or other entity of the federal government. A contractor is any party to a funding agreement. A funding agreement is any grant, contract, or cooperative agreement for research, development, or experimental work, including any subcontract, substitution of parties, or assignment. A subject invention is a patentable invention owned by contractor.

Each funding agreement with a contractor shall contain provisions that 

requires the contractor to disclose subject inventions to the federal agency within a reasonable time.

permits the federal government to receive title to any subject invention not disclosed to it within a reasonable time.

requires the funding agreement requirements to be flowed down in any subcontract.

The federal agency may, after consultation with the contractor, permit inventors to retain title to their inventions, subject to the regulations authorized by this Act. 

Federal agencies are authorized to withhold for a reasonable time from public disclosure reports of subject inventions to allow patent applications to be filed. 

That’s about it for universities. I’ve left out the federal invention side of the law, of course. But most everything else arises when inventors assign title. From this account, you can see that Bayh-Dole is actually about dealing with the contingencies of inventor choices. It’s not a vesting statute at all. It’s not even Congress’s little gift to subsidize the livelihood of patent brokers. Rather, Bayh-Dole limits federal agencies in their contracting for research from interfering with inventors making a choice to assign their inventions to a contractor. Agencies may still interfere, but it takes a declaration of “exceptional circumstances.” As with oversight for compliance, the government’s broad license to “practice and have practiced,” right to acquire inventions upon failure of the contractor, and march-in rights, federal agencies also don’t declare exceptional circumstances–almost nothing in Bayh-Dole declared as rights of the federal government gets exercised. Rights not used are waste, are empty, are worthless. The problem with all the government’s rights under the contracting required by Bayh-Dole is that they are merely for show. In practice, they are a mere administrative burden. In political terms, they were there to sweeten the pill down the throat of Congress. But otherwise, they are inoperative.

If one gets right down to it, this is Bayh-Dole:

Federal agencies must use a funding agreement that allows inventors to assign their inventions to any contractor. If an inventor does not assign to a contractor, then a federal agency may permit the inventor to continue to own the invention, but first must consult with the inventor’s employer.

Or, bluntly:

Federal agencies must not interfere with an inventor’s assignment of an invention to the inventor’s employer or with how the inventor’s employer manages patent rights in any invention so assigned.

I expect you have not seen Bayh-Dole described in this way before. There’s not even anything in Bayh-Dole that requires federal agencies to require assignment of inventions if an inventor does not assign to a contractor. Think about that. There’s no guidance in Bayh-Dole or in the implementing regulations that requires inventors to assign to the federal government, other than for a failure to timely report inventions. Even our friend the (f)(2) clause only blocks contractors from making demands on inventors that would conflict with the patent rights clause. Inventors are required (by a contractor) to agree to protect the government’s interest in inventions, but even here, the clause stops short of requiring inventors to assign inventions if requested to do so by the federal government–other than if they don’t report timely their inventions. Otherwise, there would have to be some other clause in the patent rights clause under which a federal agency has the contractual right to require delivery of title if an inventor does not assign an invention to a contractor. But there is no such clause. Maybe it exists as a “presumption”–but if so it is a ghost not a contractual requirement.

That’s how messed up Bayh-Dole is. Perhaps being drafted in quasi-secret took its toll on the law. Or maybe the folks doing the drafting just weren’t up to the task. Or maybe things were screwed up in all the machinations to get something through Congress. In any event, Bayh-Dole strips federal agencies of their control of research contracting in the name of uniform (i.e., arbitrary) requirements, takes precedence over any other statute, but oddly does not expressly pre-empt executive branch patent policies–where federal agencies are required to contract for federal ownership of inventions made in research agreements except for the exceptions.

The rest of the objectives in Bayh-Dole, and the maze of technical requirements, involve what happens when an inventor does assign to a contractor. Nothing in Bayh-Dole requires contractors to obtain such title. The Supreme Court was clear on that point. So, most of Bayh-Dole is about the contingency when an inventor does assign to a contractor. Same for the rights the government needs to protect the public–under Bayh-Dole, if inventors retain their invention ownership, then Bayh-Dole does not stipulate even that the government must get a non-exclusive license. It’s left up to the implementing regulations, and as those stand, a non-exclusive government license is *not* in the list of requirements at 37 CFR 401.9. An agency might add a non-exclusive license to its funding agreement in the event that an inventor does not assign to a contractor, but there’s nothing in Bayh-Dole that expressly authorizes such a clause. It would be, apparently, an “exceptional circumstance” under 35 USC 202(a)(ii):

(ii) in exceptional circumstances when it is determined by the agency that restriction or elimination of the right to retain title to any subject invention will better promote the policy and objectives of this chapter

Note here that “the right to retain title” is not restricted to a contractor. Since inventors also may “retain title” (though they have no right to do so–but they also have no obligation to give up title, other than if they fail to report inventions–and even that is a doubtful obligation unless they have made the (f)(2) agreement, since without (f)(2), they are not contractors and their inventions are not subject inventions and they have no obligation, technically, to report them to either the government or to a contractor. One would think that federal agencies would insist on an exceptional circumstance: “if in the exceptional case that an inventor does not assign an invention made with federal support to a contractor, then the inventor shall, upon written request by the federal agency, such request to be made no later than sixty days from being informed by the inventor of the inventor’s retention of title, to assign the invention to the federal government.”

Everything else in Bayh-Dole, most of sections 200, 201, 202, and 203 is contingency–if an invention becomes a subject invention, if a contractor acquires an invention, if a contractor fails to comply, if a contractor assigns, if a contractor licenses, if a contractor subcontracts, if a contractor makes money, if a contractor is asked to report, if the contractor is a nonprofit . . . .

The Inventor Rights Clause

There still will be an apparatus to deal with what happens when a contractor gets ahold of an invention, but that’s different. There also may be a “standard patent rights clause” for inventors–just as there is presently–but it might be even simpler than we have now, since the only issue in a stripped down Bayh-Dole is what happens if the inventor messes up with management of the invention. As it stands, the patent rights clause specific to inventors in the implementing regulations (37 CFR 401.9) is more favorable to inventors than even to small businesses–

inventors must include a federal funding statement in patent applications (f)(4);

inventors must require U.S. manufacturing for any exclusive U.S. license (i);

agencies may request assignment for patent rights in countries inventors don’t secure         and maintain patents (d)(3);

agencies may request reporting on invention use (h);

agencies may march-in (j).

Pretty simple stuff. I’ve left off (d)(1) because once we get to this clause we are already past failures to report inventions–and for all that, neither reporting or assigning are required by Bayh-Dole, so a standard patent rights clause does not need to worry these things either. But what’s odd is that 37 CFR 401.9 is not a contract with inventors. It’s something that happens after the fact of invention, reporting, and inventors not assigning to a contractor, and a contractor being consulted by the federal agency.

If Bayh-Dole were built to be functional and not a bunch of hand-waving and moralizing about public benefit and the like, then we’d have an (f)(2) clause that expressly referenced 37 CFR 401.9. It would have a clause that said, in effect, contractor will require inventors to make a written agreement to comply with 37 CFR 401.9 in the event that the inventors do not assign their inventions to a contractor. And the contractor would have to actually see that this agreement got made for it to have effect. As it is, it appears that 37 CFR 401.9 is simply imposed on inventors, as if it is a discretionary law, to be thumped down whenever a federal agency wants to. In which case, why not treat the rest of 37 CFR 400 this way–why all the fuss about contractors granting non-exclusive licenses to the government? Why make it a standard patent rights clause to be incorporated into funding agreements? Why not impose it, regardless of the funding agreement? It’s hard to be rational around such goofiness.

If there’s a kind of contract represented by 37 CFR 401.9, then it involves some ghostly idea that the federal government has a right to require assignment and in exchange for not doing so, an inventor will happily agree to the few requirements proposed. But again, there is no such requirement to assign in Bayh-Dole, other than for a failure to timely report inventions. And even that report is based on an invention being a subject invention. There’s no requirement on inventions that aren’t subject inventions. And no invention is a subject invention unless an inventor assigns to a contractor or becomes a contractor by making the (f)(2) agreement. What a mess! What an awful way to manage the inventive output of $40b of annual federal support for university research. A dunderheaded hack job all the way down.

Yeah. Go look. There’s no requirement that inventors report anything in Bayh-Dole. Only that contractors report subject inventions to the federal government. And inventors aren’t contractors unless (f)(2) is complied with. And there’s no requirement that inventors assign inventions to anyone, either. Certainly not to their employers. Not even to the federal government. There’s only the generic penalty clause that must be included in any funding agreement that if a subject invention isn’t reported timely, then a federal agency may obtain assignment. So if a contractor owns an invention and doesn’t report it, then the federal agency can take title. Otherwise, Bayh-Dole is silent on the matter. Folks just make things up as they go. You know, because Bayh-Dole isn’t a clear statement on the matter.

Bayh-Dole gives inventors a choice. Without them, the issue is simply between a federal agency and an inventor. Will the federal government take title or not? As 37 CFR 401.9 makes evident, whether a federal agency requests ownership of an invention is a matter of agency policy and throwing its weight around, not the standard patent rights clause nor Bayh-Dole.

Bayh-Dole does not require a federal agency to acquire title to an invention any more than it requires university contractors to acquire title, or inventors to assign title to university contractors. It is up to each agency to decide whether to request title from inventors. Same as it ever was. No uniform treatment. No “title certainty” for the inventor until the federal agency decides. It’s still up to the policy and determination of each federal agency, case by case. So Bayh-Dole makes things “uniform” for contractors–and especially for patent brokers made into contractors by assignment or substitution of parties–and leaves things a mess for inventors. I guess that’s the result of universities and patent brokers writing the law and boohoohoo for inventors missing out. Funny how patent brokers figured out how to pencil themselves in as the primary agents of innovation for American federal research. Clever, if not also morally bankrupt. Certainly the results have been a disaster, regardless.

If a federal agency has a policy under which it may request title to inventions from inventors (and somehow implements that policy so that it applies to inventors, despite the indifference of Bayh-Dole), it is up to the inventor to make a case for retaining title: “I’ll do a good job with the patent rights, to promote the use of the invention, and to make it publicly available on reasonable terms, and maybe even call forth private capital to develop the invention, and if I license, I’ll make sure that exclusivity is short-lived and exclusive U.S. licenses will require making stuff in the U.S., too.” That sort of thing, or whatever will make federal agency officials happy. Official happiness ought to be a primary element of federal innovation policy, after all. The burden is on the inventor to please.

Of course, none of this ever happens, because university administrators refuse to permit it. But their decisions are not based on the core of Bayh-Dole, but on exploiting Bayh-Dole’s contingencies, ambiguities, and lapses.

Add Back the Contingencies

Now let’s add back in those contingencies. According to Bayh-Dole, an inventor may also assign to a contractor–such as the organization that hosts the research or to an organization designated by the research host or to an organization that has as a primary function the management of inventions, or really any organization at all (just as small businesses under Bayh-Dole have no restrictions on assignment), just so long as the assignee is a contractor (and assignment is one of the ways a party becomes party to a funding agreement). It’s just that the inventor is exposed at all points to a federal agency’s request for assignment (if only for lack of timely reporting). So inventors’ actions to assign carry with them an uncertainty with regard to federal government interest in title to inventions, unless the assignments meet the conditions for retention of assigned title. If (f)(2) is used, then inventors are contractors–i.e., parties to a funding agreement–and any assignment they make makes the assignee a party to the funding agreement if the assignee is not a party already.

Geez–imagine what would have happened if Stanford had complied with (f)(2) when they brought their post doc into the federally funded research. Then, when the post doc’s assignment to Cetus/Roche became effective, Roche would have become a contractor, subject to the nonprofit requirements that applied to Stanford. Roche would still have won the court case on Bayh-Dole vesting, but it would have felt the desire to burp up the rights in a jiffy when it discovered it was constrained to use the proceeds from the use of the invention only for scientific research or education (after recovering costs for subject inventions and sharing its proceeds with the inventors–not with Stanford). I expect Roche would have been more than happy to pay something to Stanford, too, in order to launder its own proceeds to be used in whatever way Roche wanted.

Here’s how Bayh-Dole sets the contingent things up, then for inventor choice:

If the inventor assigns to a contractor–a party to the funding agreement under which the invention was made–then the invention becomes a subject invention and a bunch of things kick in. First, the contractor may elect to retain title, and if so, then the federal agency cannot request assignment unless the contractor fails to comply with invention management requirements in the standard patent rights clause. Second, the contractor has to deal with the requirements of the standard patent rights clause. There’s a version for small businesses, and another version for nonprofits. The nonprofit version has more restrictions. Bayh-Dole trusts the nonprofits less than the small businesses.

If the inventor assigns to anyone else, then if the assignee (now a contractor) accepts the requirements of the funding agreement, may retain title to the invention. If the assignee does not accept the requirements of the funding agreement, then the assignee is exposed to the same federal agency claims that the inventor is exposed to–uncertainty of title until the federal agency decides, burden on the assignee to play nice and make federal officials happy. There’s gaps in all this–Bayh-Dole doesn’t technically do these things, but we can pretend this is sort of what the law may have been intended to do.

So there’s the situation. Inventors own inventions made with federal support like they do any other invention. If a federal agency requires assignment, then the inventor can choose instead to assign a contractor (employer, research host, any assignee accepting the patent rights clause terms of the funding agreement), and then the standard patent rights clause for the contractor-host kicks in. By assigning to a contractor, the inventor may avoid a federal agency’s request for assignment. Notice that while nonprofits are expressly limited in who they may assign subject inventions to, small businesses contractors and inventors are not. Another strike against Congressional trust of nonprofits in matters of invention management.

That’s the guts of Bayh-Dole–if an inventor assigns to a contractor, then the federal agency gets only a non-exclusive license and cannot require assignment unless the contractor messes up or backs out.

The (f)(2) Agreement

Now we must add in one more thing, the (f)(2) agreement requirement. This messes up everything in strange and wonderful ways. Keep in mind, Bayh-Dole does not stipulate the (f)(2) agreement expressly. The only clause that comes close is 35 USC 202(c)(1). But (f)(2) is there, so let’s deal with it.

One effect of (f)(2) is to make every inventor-employee into a contractor. It does this by requiring the contractor to require potential inventor-employees to make an agreement to protect the government’s interest under the funding agreement–and this requirement, set up as it is, functions to require the contractor to substitute parties or assign to potential inventor-employees certain responsibilities under the funding agreement–under the patent rights clause of the funding agreement: to report subject inventions, to sign papers for patent applications, to sign papers to establish the government’s rights.

A second effect: once an inventor-employee is a contractor, then every patentable invention made under the funding agreement is a subject invention, because the inventor-employee owns the invention outright when the invention is made, by common law. Thus, everything in the standard patent rights clause pertaining to subject inventions comes into play–reporting, assigning, and the like. It’s just that inventors are to be treated as small business contractors, even if they work for a nonprofit. So there’s some differences in what parts of the standard patent rights clause apply to them. At least what’s laid out in 37 CFR 401.9–but that’s only if the inventors are allowed to retain ownership–and we aren’t at that point yet–so the other aspects of the standard patent right are still in play.

A third effect: when a contractor requires the (f)(2) agreement, the contractor displaces any other requirement that involves the same subject matter–subject inventions. This is something perhaps unexpected, so consider it carefully. If a contractor requires employees to make a federal agreement as part of a federal agreement, then the contractor necessarily displaces anything otherwise that the contractor might require (by policy, employment, employment agreement, patent agreement). The new requirement displaces prior requirements. The new requirement involves a federal agreement that takes precedence over state contracts.

Thus, the fourth effect: the new requirement secures for inventors rights in their inventions until they make a decision on assignment, and if they refuse assignment to another contractor (which is their right under (f)(2)), then their ownership of invention is contingent on federal agency approval, per 35 USC 202(d) and the corresponding patent rights clause at 37 CFR 401.9.

The (f)(2) requirement is clever. It has an arguable standing under Bayh-Dole–more so than, say, the residual rights held by the contractor when the government takes title, which is nowhere in Bayh-Dole. If complied with, (f)(2) makes every inventor a contractor, makes the patent rights clause take precedence over any other contractor agreements, and gives inventor-contractors a choice between assignment to another contractor or take things up with a federal agency.

Again, nothing in Bayh-Dole compels inventors to assign to their employer. And (f)(2) compels employers to substitute the patent rights clause for whatever demands their policies and agreements and conditions might require. Inventors get a choice, then, between assigning to another contractor (employer, invention management agent, or otherwise) and dealing with the federal agency. Three possible outcomes: inventor assigns to contractor, inventor assigns to the federal government, agency allows inventor to retain ownership–and the inventor’s employer can’t do anything about it, having already delegated ownership via (f)(2). That is, the inventor’s employer can’t wait for the federal government to allow an inventor to retain title and then invoke policy or employment agreement or whatever to demand assignment of title. (f)(2) precludes that.

Essentially (f)(2) does for inventors what a parallel requirement in the standard patent rights clause does for subcontractors (a requirement also not in Bayh-Dole): contractors are prohibited from having an interest in subject inventions made by subcontractors. An inventor becomes, in effect, a subcontractor, not as an independent party (since inventors subject to (f)(2) must also be employees, per (f)(2)) but rather as a substituted party.

When Everyone Knows the Options Everyone Else Has

This discussion is sort of like working through a family tree. Fathers, mothers, sons, and daughters are easy. Aunts and uncles and cousins and grandparents are okay. But if we go a bit further, things tend to get murky–great uncles, cousins twice removed–even if we accept that the relationships are there. For subject inventions, the next step out is to consider how folks might behave if they know the options available to everyone else.

First, if inventors know they own, subject to a promise to assign to the federal government on request, then they can use that position to negotiate with their employer and any other contractor. The employer, having delegated via (f)(2) the responsibility for and ownership of subject inventions to the inventors, must negotiate to acquire rights back. This negotiation sets up the opportunity for the inventor–the employer (or any other organization that will accept the patent rights clause the employer accepted) must make a case to the inventor that’s better than assigning to the federal government or retaining title (with federal government approval). If the inventor knows that the federal government will require assignment, or that the federal government won’t require assignment, then the decision is even simpler.

Similarly, if the federal agency knows that an inventor can assign to another contractor, then the agency has to make a case if it wants title. If the inventor does not want to assign to the government, then the inventor is free to assign to another contractor. The federal government, then, can change the inventor’s bargaining power with other contractors by deciding on whether the agency will request title. That’s the interesting thing.

Bayh-Dole has no protections for inventors or third parties, as the Supreme Court noted. But the standard patent rights clause does–for subcontractors (g) and inventors (f)(2). It’s just that no university implements the (f)(2) provision–deliberate non-compliance–and even federal agencies (like NIST, apparently) believe the widespread misrepresentation that (f)(2) is supposed to be a requirement that inventors must assign subject inventions to their employers.

The Supreme Court made clear that Bayh-Dole does not require assignment of subject inventions to employers. And the Supreme Court also made clear that an invention is not a subject invention until it is “of the contractor”–meaning owned by a contractor. Without (f)(2), no invention made in the performance of a funding agreement is a subject invention until it is owned by a contractor. Without (f)(2), inventors have no obligation under the funding agreement to report their inventions, nor to assign to the federal government. Fascinating. University administrators can scramble to fix the problem in strange, draconic, and non-compliant ways (such as requiring present assignment agreements), but federal agencies have a responsibility to enforce the (f)(2) provision as it stands, the only provision in the whole complex of law and regulation that protects inventors and provides a check on contractors’ patent policies and practices.

If NIST wants to “clarify” (f)(2), they should “clarify” that non-compliance is not an option. They should “clarify” that (f)(2) creates a substitution of parties and that inventors become contractors. They should “clarify” that (f)(2) takes precedence over any other contractor claims to subject inventions. It’s there to protect inventors from the predatory practices of other contractors. Bayh-Dole’s contingencies should remain contingencies–If a contractor obtains title (by assignment), then these are the conditions under which the contractor-assignee may retain that title.

So here’s the standard sequence, once everyone is clear on everyone else’s contingencies:

Funding agreement.

(f)(2) agreement (by inventors; become contractors).

Invention is made.

Inventor reports, per (f)(2), via another contractor, to the federal agency.

Employer has no claim per (f)(2) delegation to inventor.

Inventor asks agency whether agency will allow inventor ownership.

In parallel, the inventor may negotiate assignment with employer with regard to the terms of the assignment. 

If the employer has a take-it-or-leave it patent policy (called a “uniform” approach), then the inventor may consider any other alternative, provided the federal agency does not demand ownership. 

Agency consults with employer (a contractor).

If the agency indicates it will claim, then inventor decides whether to assign to government or to a contractor.

If the agency does not claim, then inventor decides whether to retain ownership or assign to anyone without restriction–not limited to employer or contractor– other than the requirements of 37 CFR 401.9. 


This sequence, as far as I know, also never happens, even though it tracks the law, the regulations, the standard patent rights clause, and the inventor’s rights clause.  Instead, we have rampant predatory institutional behaviors, really amazingly awful licensing practices and performance outcomes, monopoly-happy drug prices, and very happy patent brokers.

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What happens if a contractor fails to report a subject invention?

James Love and Knowledge Ecology International have made a request to the Office of the Inspector General at Health & Human Services to examine whether Cold Spring Harbor Laboratory and Isis Pharmaceuticals failed to disclose two inventions as required by the Bayh-Dole Act. Their request is well documented and it will take some work for Cold Spring Harbor and Isis to explain the situation. “Facts, facts, facts,” said Thomas Gradgrind–and that’s what will matter here, too.

The definition of subject invention is a place to start. Bayh-Dole defines subject invention–a new class of invention in patent law–and these definitions are repeated in the implementing regulations and standard patent rights clause:

The term “subject invention” means any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement

The term “invention” means any invention or discovery which is or may be patentable or otherwise protectable under this title

The term “funding agreement” means any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government. Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.

So an invention has to be patentable and made “in the performance of work” under a funding agreement. Once there is a patentable invention, then either the “conception” or the “first actual reduction to practice” must have been made in the performance of work. That is, the statement of work for the funding agreement must set out one or both of these actions.  Continue reading

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Institutional Patent Licensing–One of the least “direct” ways to obtain new technology

A few weeks ago I was involved in a discussion about how a region might import new technology developed at distant universities. One of the participants, with a background in AUTM-style technology transfer, made the off-hand comment that if we wanted to acquire technology, licenses were “the most direct way” to do it. I’ve been thinking about that comment. On the face of it, one might think it makes a lot of sense. But the more I thought about it, the more it bothered me. I could think of many more “direct” ways to acquire new technology and not a lot of less “direct” ways.


A really direct way is to be given a new technology. “Here, have at it.” That’s much more direct than licensing patents. Or read an article that describes just how to use it, and then use it. Or work with someone who knows the technology cold and teaches it to you. “Here, let me show you.” That’s direct. Even adding, “If you want to use what I’ve showed you how to do, I’ll send you a note confirming that I’ve given you permission to do whatever you want. Will that work?” is more direct than licensing–even if that permission is something like a license. Continue reading

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Government and non-government markets and federal government waste under Bayh-Dole

Bayh-Dole requires that when a contractor retains title to a subject invention, the contractor must grant to the government a non-exclusive license. Here’s Bayh-Dole on that government license (35 USC 202(c)(4)):

(4) With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world

Let’s look at the boldfaced phrases. First, what does “practice or have practiced” mean? There’s no definition provided in Bayh-Dole, and “practice and have practiced” is not among the rights set out in federal patent law. But the phrase has a long history of use in federal patent policy. Here’s the Kennedy patent policy, defining “Governmental purpose” license:

The right of the Government of the United States (including any agency thereof, state, or domestic municipal government) to practice and have practiced (made or have made, used or have used, sold or have sold) throughout the world by or on behalf of the Government of the United States.

Continue reading

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Ten Years After 25 Years After Bayh-Dole, Part 8

While the patent system might give freedom to just any inventor and patent owner, the federal Government is not any ordinary patent owner, but has particular purposes and interests and expectations–and those may be present in federal patent policy, in government funding agreements, and in stipulations on government-issued patent licenses. Don’t like those? Don’t play. There’s a flip side to the pharmaceutical industry boycott of promising medicinal compounds discovered with federal funding–the government could ignore the industry and build a new one based on a different funding and product development model. It’s possible. There’s plenty of room at the low end of the market, as generic (i.e., off-patent) drug manufacturers have made clear. Why does the federal government then choose not only to favor the monopoly version of the industry, but to subsidize it and act as if it is a virtue for universities to play to the monopoly version of the industry? Why is that? Preference, I guess. We may as well state the policy directly.

Our authors, however, argue for a different policy for Bayh-Dole. Perhaps. But they don’t need Bayh-Dole to dictate such a policy. If it did, it would cease to be Bayh-Dole and would revert to something closer to the failed IPA program, but now with requirements on the nature of exclusive licenses–it’s not enough that a patent license is differentiated by territory and “field of use”–it also must be differentiated by segmentation of the market. Is a product using the subject invention “upmarket” or targeting the “general public”? What pricing is “reasonable”? What features can be tied with the subject invention that are “reasonable”–and what features constitute a “tie” to drive up the price (and perhaps the profit)? Continue reading

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Ten Years After 25 Years After Bayh-Dole, Part 7

We are working through Boettiger and Bennett on changes they would like to see in Bayh-Dole practice. Here’s the fourth change:

access to patented, publicly funded technologies for humanitarian purposes

We now reach a deeply ironic portion of our authors’ discussion. Boettiger and Bennett started with a worry about research rights and research tools–both of which require apparently some degree of compulsory licensing or limitations on exclusivity or limitation on the property right in patents on subject inventions. These are perfectly legitimate concerns, especially for research that’s conducted to advance research.

The moves proposed by Boettiger and Bennett, if done at the federal level, correspond to a substantial reversal of Bayh-Dole and a return to the Kennedy patent policy, in which a portion of the patent right is held by the government, for non-exclusive access, and any monopoly portion of the patent had better act promptly to “call forth private capital” and disseminate an invention more rapidly and with better results than could the federal government.

As our authors examine the anticommons created by university administrators, they are led to repudiate Bayh-Dole–without coming out and saying so–for a range of publicly funded projects. Continue reading

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Ten Years After 25 Years After Bayh-Dole, Part 6

We have worked through the set up to a review article on the Bayh-Dole Act from the perspective of a couple of university licensing office practitioners. It’s a fascinating exercise in repeating the conventional vocabulary of university licensing offices but ignoring the Act itself in setting up what needs to change. Clearly university licensing practices are (in general, but not everywhere) a mess, and Bayh-Dole has created the opportunity for that mess to grow. Changing Bayh-Dole–tweaking the law as it twerks–won’t do much to get at that university licensing practice, which is now reinforced by new university patent and research policies.

But our authors Boettiger and Bennett have some suggestions for changes in Bayh-Dole, and these come despite the efforts of stalwart Bayh-Dole advocates to control the changes to the law. While it was, apparently, good to make secret all reports of subject invention use, and to remove the restrictions on exclusive licensing, and to remove the conflict of interest provisions for nonprofit assignments of subject inventions to invention management organizations, and would make it acceptable if patent positions “encumber” future discovery and research–just so long as the encumberment isn’t “undue”–most anything that would actually promote the use of subject inventions has been resisted, if not openly mocked by AUTM and other organizations.

Let’s look then at these suggestions for changes to Bayh-Dole. There are four. Let’s take them one at a time. Continue reading

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Ten Years After 25 Years After Bayh-Dole, Part 5

We have been considering an article reviewing the Bayh-Dole Act published in Nature Biotechnology ten years ago. The purpose in working through the article is to show just how deeply the rhetoric of university “technology transfer” has gained a life of its own, detached both from Bayh-Dole itself (and its standard patent rights clause) and from discussion of what leads to public benefits from projects funded to advance science or public welfare–or what leads to the use of inventions made in such projects–or even, somewhat aloof from pesky purposes of funding projects to help the public, of what leads to a lot of money from the exploitation of patents on these inventions. Strangely, these things aren’t up for discussion among university patent managers. Other than a few enlightened folks, the discussion is about how to defend current practice from any outside changes–that is, how to preclude accountability, enforcement of the law or patent rights clause, or changes in the law that might improve outcomes, starting with the public purpose of the projects, and moving to the use of inventions made in such projects.

What’s fascinating about the article by Boettiger and Bennett is that it proposes changes to Bayh-Dole from within the university technology transfer community. This is, in its way, a breaking of ranks, a violation of the code of silence. For that, there’s some respect due the authors for their efforts, despite their inability to characterize Bayh-Dole accurately.

We now take up a statement regarding the experience of university patent administrators. It’s a few sentences long. We will take it a clause or two at a time:

Over time, universities have come to a more subtle understanding of the benefits and the limitations of technology transfer.

That is, their approach doesn’t work. Continue reading

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Ten Years After 25 Years After Bayh-Dole, Part 4

We have looked at an article by Boettiger and Bennett reviewing the Bayh-Dole Act after 25 years. We have picked over the description of the law and pointed out how our authors mischaracterize the law to their own disadvantage. Bayh-Dole doesn’t “shift the incentive structure”–it suppresses an approach without an “incentive structure” and lets an approach with an incentive structure to dominate. Bayh-Dole also doesn’t require a change in university policies–it implements a federal policy through a standard patent rights clause that supersedes any university policy or agreement on the same subject matter. Bayh-Dole doesn’t require patenting (a university must choose to patent), doesn’t require anyone to “encourage development” (a university must promote use). This stuff isn’t subtle unless one doesn’t know the law or has been conditioned to university-speak for years.

Having characterized Bayh-Dole, our authors make an insightful observation:

Many of the issues that are identified today as negative consequences of Bayh-Dole can be traced to the institutional policies structured to optimize institutional benefits and income, rather than to the Act itself.

There is something to this statement, but again, the cognitive dissonance is intense. Continue reading

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Ten Years After 25 Years After Bayh-Dole, Part 3

Boettiger and Bennett look at Bayh-Dole after 25 years and discuss how things ought to change. To set up their discussion, they first characterize Bayh-Dole as having “shifted the incentive structure” for patents. Parts 1 and 2 of this series discuss how Bayh-Dole didn’t so much shift a structure but rather allowed patent brokers to take more federally supported research into an existing structure–and then change that structure to favor institutional profit-seeking from exclusive patent licensing (and ascribe the change to Bayh-Dole).

Imagine a federal law that requires all locks to be removed from homes. That law does not endorse robbery, but what do you think will happen? Bayh-Dole removes the authority of federal agencies to impose restrictions that limited private patent monopolies from interfering with the dissemination of discoveries and inventions made to advance scientific knowledge or the public welfare. Bayh-Dole did not shift the federal agency incentive structure. It allowed incentives that had nothing to do with the federal purposes of the funding in the first place. Bayh-Dole made the implied purpose of all funding–Bayh-Dole is arbitrary–to promote the creation of private patent monopolies. However those monopolies operate is necessarily, by decree, to be in the public interest. Yes, there were vestigial “march-in procedures” included with Bayh-Dole, but they were designed not to work–and in the implementation phase, university patent brokers made sure they would not work, and bragged about it afterward.

Boettiger and Bennett describe the basics of Bayh-Dole:

The Act also requires the institution to establish patent policies for its employees, to actively seek patent protection and to encourage the development of their inventions.

These descriptions are wrong, each in its own way.  Continue reading

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