Government Interest Patent Activity 1976 to 2016, Part 2

Let’s turn to Research Corporation now. For decades, Research Corporation was the dominant invention management broker for universities. Even where universities created research foundations to manage inventions, those foundations often contracted with Research Corporation to do the actual patent work. By 1976, a few universities were developing their own internal licensing operations–notably MIT, University of California (1960), and Stanford (1972). The Stanford approach, to be called the Reimers model, was just beginning to catch hold. Things heat up after Stanford starts its non-exclusive licensing program for the Cohen-Boyer gene splicing patents, just before Bayh-Dole becomes effective. Here’s a graph of Research Corporation patent activity. Not all Research Corporation patents are necessarily from universities, but many are.

During our study period, Research Corporation doubled its patenting activity, while universities and other nonprofits increased their patenting activity 15x. What about Research Corporation’s work with subject inventions? Continue reading

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Government Interest Patent Activity 1976 to 2016, Part 1

I ran some patent numbers over the past week using the USPTO web search interface. It’s not the easiest search environment to use, and I don’t expect the numbers to be precise. But I expect the numbers are accurate enough to see major trends. The USPTO database populates most of fields starting in 1976, so that’s where I’ll start–though I’d love to have data starting in 1945.

Since 1976, patenting has increased about 5x, from the mid 60,000s to the 330,000s of utility patents issued each year.

Things are flat until about 1984, and then there’s a steady increase until then about 2009, and then a steeper increase. Since issued patents lag filings by about three years, we might look to 2006 or earlier for causes for the increase in the increase. Continue reading

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On Exclusive Licenses For Research Technology

Here’s a response I wrote for a research team that is working through issues regarding the licensing of their inventive technology. The team is spread across multiple institutions in multiple countries, working on an enabling technology in medical engineering.


The question of exclusive licenses is important and challenging. There’s a great lure in hoping for a single company to show up, take an exclusive license, and pay good money for it. That money will be real money, and inventors can expect to share about 1/3 of it, depending on university royalty policies. If a share of money from such a deal is the immediate goal, or at least a goal that’s “good enough,” then an exclusive license is a satisfying outcome.

But exclusive licenses have other effects, as well. Once you have an exclusive license with one company, then other companies have little reason to work with you. In fact, they may have good reason to work against your further research, to undermine what you have done, to avoid it, to make it worthless. If the exclusive license crosses the line and becomes an assignment (and many universities ignore the line altogether, or deny there even is one, despite the case law), then you and your exclusive licensee, by contract, may have created a pact to “go after” competitors who attempt to use your licensed inventions–that is, sue to prevent the use of your research. What, then, do you expect these competitors to do, but to work against your interests in return? Continue reading

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MoFo’s New Bayh-Dole Fakefographic

Morrison & Foerster, a big law firm (revenue near $1b per year, around 1,000 attorneys), has an infographic out about the Bayh-Dole Act, subtitled “5 Steps to Retain Title.” Here’s a bit of their advice–steps 1 to 3. It looks relatively straightforward. Notify the government, elect to retain title, and file a patent application. It’s just that this advice omits a fundamental step. To “retain” title, an organization has to already have that title, and as the Supreme Court made clear in Stanford v Roche, to get title, one has to acquire it by assignment–there’s no vesting of title in Bayh-Dole or even of a right to take title from inventors.

Thus, somewhere before step 2, there must be another step–call it step 0, or step 1.5–in which the organization acquires title to an invention. Once an organization acquires title, according the Supreme Court, then the invention, if made in the performance of work under a funding agreement, becomes a subject invention.

This is a big obvious omission from the MoFo infographic, but it is only part of the misinformation put out by the firm. An invention becomes a subject invention, according to Bayh-Dole, when it is owned by a contractor, and according to the definitions in Bayh-Dole, a contractor is any party to a funding agreement, including by assignment, substitution, or subcontract. Continue reading

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Bayh-Dole’s Mandate to Break-up Patent Monopolies on Subject Inventions

In the past few months, I have spent a good deal of time on the Bayh-Dole Act. One of the great challenges of dealing with Bayh-Dole is to get past what university patent brokers say the law “is” and get at not only what the law says, but also what the law does–when implemented, and when ignored (and most university officials ignore large swaths of the law–call it ignore-ance).

Bayh-Dole is a set of requirements having to do with inventions and contracting regarding inventions, patents, licensing, and money from inventions and patents. University patent brokers have selected a few bits to emphasize. But the other bits are there, too, even if university patent brokers don’t call them out. And it turns out, the other bits are rather more important than the bits that university patent brokers focus on in their talks and their articles and in their policies and in their “training materials” and in their talks at AUTM.

If we listen to university patent brokers, we get repeated assertions that Bayh-Dole gives universities the right to take title to inventions made with federal support (which isn’t true–universities have a conditional contractual right, not a statutory right, to keep title to inventions if they obtain that title). We see articles and slide decks and policy documents that explain that Bayh-Dole gives universities incentives to commercialize inventions (though there’s nothing in Bayh-Dole about incentives and commercialization is not a stated objective of the law–Bayh-Dole places restrictions on university management of inventions and makes commercial use as important as commercial sale). The patent brokers mention the government license (without including “practice and have practiced” or what “practice” means) and the dread march-in procedures (which were designed not to work and in three decades have worked as designed and have never been successfully used). And we see odd bits and pieces about compliance, such as the time period in which to elect to retain title, when patent applications must be filed, and the substantial U.S. manufacturing requirement for exclusive U.S. licenses (often omitting the limitation “to use or sell”).

In fact, almost everything university patent brokers claim about Bayh-Dole turns out to be wrong, skewed, spun, repeated out of context, or just made up. It’s rather remarkable. I have been through hundreds of university policy and guidance documents–and written up my findings here at Research Enterprise.  Continue reading

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Why is Bayh-Dole not part of the Federal Grants and Cooperative Agreements Act?

Why is Bayh-Dole a part of federal patent law? It concerns how federal agencies contract for research, not (apparently) how patents are awarded. Why didn’t Bayh-Dole become part of the Federal Grants and Cooperative Agreements Act of 1977? If Bayh-Dole is part of patent law, then might we expect that Bayh-Dole makes patents on subject inventions different from patents on ordinary inventions? Let’s have a look.

Here’s the original statement of purpose for the Federal Grants and Cooperative Agreements Act (things got revised in 1982, two years after Bayh-Dole):

(b) The purposes of this Act are—

(1) to characterize the relationship between the Federal Government and contractors, State and local governments, and other recipients in the acquisition of property and services and in the furnishing of assistance by the Federal Government so as to promote a better understanding of Federal spending and help eliminate unnecessary administrative requirements on recipients of Federal awards;

(2) to establish Government-wide criteria for selection of appropriate legal instruments to achieve uniformity in the use by the executive agencies of such instruments, a clear definition of the relationships they reflect, and a better understanding of the responsibilities of the parties;

(3) to promote increased discipline in the selection and use of types of contract, grant agreement, and cooperative agreements, and to maximize competition in the award of contracts and encourage competition, where deemed appropriate, in the award of grants and cooperative agreements; and

(4) to require a study of the relationship between the Federal Government and grantees and other recipients in Federal assistance programs and the feasibility of developing a comprehensive system of guideline for the use of grant and cooperative agreements, and other forms of Federal assistance in carrying out such programs.

The FGCAA (“fig-caw”) established (overtly) simple rules to determine whether the government should use a grant, contract, or collaborative agreement. A contract was to be used for procurement, a grant for providing support for a public purpose, and a collaborative agreement when the work involved substantial involvement by the federal government.

In the FGCAA, we have elements that we find in Bayh-Dole: matters of sponsored research, especially at universities; a need for uniform policy that’s government wide; and rules on acquisition of property and services by a contractor relative to the interests of government. Continue reading

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Free Competition and Enterprise in Bayh-Dole

One reason that Bayh-Dole is so difficult to parse is that there are multiple levels at work. It’s easier to just say that Bayh-Dole gives universities ownership of inventions made with federal support, and they can do anything they want with those inventions because whatever they do is done with good intentions and in the public interest. That sounds simple and wonderful. But it’s not the law, and it’s not true, and universities can’t show that what they are doing with inventions is at all in the public interest. Mostly, they acquire patents and sit on them, dragon-like. Every now and then someone does a huge financial deal and these deals inspire all the other universities to try even harder to patent everything. No one bothers to look at why there is such value changing hands, and so rarely. Is it the monopoly pricing? Is it speculative exuberance? Is it misrepresentation of what’s been done and what’s possible?

Let’s look at just one part of Bayh-Dole to show how it has gone so horribly wrong. When Bayh-Dole was passed, it contained the following elements with regard to competition:

35 USC 200

It is the policy and objective of the Congress to …  to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise

35 USC 202(c)(7)(B)

(c) Each funding agreement with a small business firm or nonprofit organization shall contain appropriate provisions to effectuate the following: …

(7) In the case of a nonprofit organization…

(B) a prohibition against the granting of exclusive licenses under United States Patents or Patent Applications in a subject invention by the contractor to persons other than small business firms for a period in excess of the earlier of five years from first commercial sale or use of the invention or eight years from the date of the exclusive license excepting that time before regulatory agencies necessary to obtain premarket clearance unless, on a case-by-case basis, the Federal agency approves a longer exclusive license….

These provisions go together. The general statement of policy and objective requires patents on subject inventions to be used to promote free competition and enterprise. This is a general restriction on how patents on subject inventions are used. This restriction is placed in federal patent law, not in executive branch procurement policy as was the case with the Kennedy and Nixon executive policies. The definition of “subject invention” is also placed in federal patent law, not in a master agreement between a federal agency and a university. The statutory definition applies regardless of what happens in any specific funding agreement. The statement of policy and objective is law quite apart from who happens to own a subject invention or anything else that Bayh-Dole might require. And a statement of policy is not the same thing as a statement of purpose. A policy binds the policy-maker. A purpose envisions. Federal policy states that patents on subject inventions are to be used to promote “free competition and enterprise.” What does that mean? Continue reading

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Negotiating a share of royalties under Bayh-Dole

In his amicus brief to the Supreme Court in the Stanford v Roche case, former Senator Birch Bayh made an odd claim–that inventors had the right to negotiate royalties with the universities that took ownership of their inventions:

Rather, Congress rewarded individual inventors by requiring their employers to provide them with a share of royalties to be negotiated with the universities or nonprofit organizations. See 35 U.S.C. 202(c)(7)(B).

But at 35 USC 202(c)(7)(B) we find only this:

(B) a requirement that the contractor share royalties with the inventor;

There’s nothing in the law about negotiation. And nothing in the standard patent rights clause. And nothing in most university patent policies–in fact, those policies are written, now, to preclude negotiation. Some policies even declare such negotiation to be an ethics violation–since an inventor would then have a financial interest in the university’s management of contracts under which the invention was licensed.

Even Sen. Bayh’s own arguments regarding the standing of inventors (last in line for rights, which vest conditionally with their employers) appears to eliminate any prospect for negotiating royalties. Continue reading

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Affordances, Innovation, and University Patents

I first hit affordances in Don Norman’s book The Design of Everyday Things. Here’s some key points:

The term affordance refers to the relationship between a physical object and a person . . . . An affordance is a relationship between the properties of an object and the capabilities of the agent that determine just how the object could possibly be used. A chair affords (“is for”) support and, therefore, affords sitting.

The presence of an affordance is jointly determined by the qualtiies of the object and the abilities of the agent that is interacting….

But affordance is not a property. An affordance is a relationship. Whether an affordance exists depends upon the properties of both the object and the agent. (11)

The door handle on a car door is an affordance. It looks like something you can stick your hand into, and poof! you feel a latch and the door opens.

My mother had all sorts of trouble with a television cabinet because she couldn’t get the doors to open. She didn’t know that she had to press on the door to trip a latch to make it open. Pressing on a door to make it open towards you is counter-intuitive. And there was no affordance to suggest pressing. So she was prying the doors open with a wooden ruler. Why not? Continue reading

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University IP Bustle and Evidence for Bayh-Dole’s Performance

There are any number of assertions that the Bayh-Dole Act has been wildly successful. Even many critics of Bayh-Dole start from the position that Bayh-Dole is successful, and then carp about bits of collateral damage and beg for crumbs and mercy. We saw that in the article by Boettiger and Bennett, with all its sad irony–since Bennett at one time was the director of the UC System-wide technology transfer program and did not make policy changes to the licensing program then, when he had the chance.

The problem with these discussions about Bayh-Dole is that the actual information regarding performance of the law is not publicly available, and apparently not even tracked or collected. In 1984, Bayh-Dole was amended to make secret all information regarding use reports, not merely the parts of those reports that were determined by federal agencies to be confidential or privileged.

The fundamental metric set forth by Bayh-Dole is “utilization” of inventions made with federal support–subject inventions, as Bayh-Dole defines them. This goal is announced as the first objective of the law, at 35 USC 200:

to use the patent system to promote the utilization of inventions arising from federally supported research or development.

“Utilization” then becomes the basis for the key definition of “practical application,” at 35 USC 201: Continue reading

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