Initial inventors, cumulative development, and the public covenant in federally supported inventions, 1

In “Overplaying the innovation card: The stronger intellectual property rights and competition law,” Steven Anderman makes a distinction between “initial inventor rights” and the rights of “cumulative” innovation. Anderman argues that intellectual property laws must balance these two sets of rights. Here’s a key passage:

There’s quite a bit going on in this passage. First we see the distinction between initial invention and cumulative invention. This distinction frames differences in incentives. If a first inventor finds an incentive in the patent system to publish an invention in exchange for exclusive rights, we have to acknowledge that these exclusive rights may in turn prevent others, for some time, from either using the invention or improving on it. The initial inventor might make a product, even, and sell that product, and still prevent others from using the invention in other ways, for other applications, even ones that do not compete with the product.

If we consider invention to be a sparsely populated set–so that inventions are few and far between–then initial inventions are pretty much all there is. Invent, have a couple of decades to exploit, and release to the winds. But if invention is densely populated, so that when there’s one invention, there may be many others right beside–variations on the theme, alternative ways to do, applications that are similar but distinct, improvements and extensions, follow-on developments, and supporting developments. That is, the potential for cumulative invention is great. But an initial invention–some random dart in the middle of all this potential–can stink up the entire set. Continue reading

Posted in Bayh-Dole | Leave a comment

Parsing Federal Security Agency Order 110-1 (1952)

There once was an active debate around whether the federal government should support research just to support research. Vannevar Bush’s Science the Endless Frontier formed part of this debate, and did a great deal to seal the case for government support for “basic research”–meaning, actually, government-funded research without a procurement purpose; research for the sake of expanding scientific knowledge, not for any institutional or commercial purpose. For such research, Bush advocated for the “free play of free intellects” hosted by universities, where (so he assumed) investigators would be free of institutional influences but supplied with institutional-grade resources (as grants-in-aid) to pursue exploration where they would.

Bush sought to create a government funding mechanism that avoided procurement contracting but remained accountable for outcomes; that provided public money but justified support for individual scientific efforts to discover and characterize new phenomena, new scientific laws, new scientific tools and methods. You know, an endless frontier of new science. Folks got the part about government funding, but they refused to accept the idea that funding for basic research should come without contractual strings or should be focused in a single extra-governmental organization. Thus, subvention funding for basic research became a special case of procurement funding. Instead of funding individuals, attention shifted to funding projects, since it was easier to manage review of proposals for “quality” than to make decisions about who had the potential and ideas to open up new areas of science. It was easier to turn support for science into a bidding process than to seek out talent and push it to new frontiers.

This new competitive proposal review procurement process retained the idea that inventions should be deliverables to the government, so that the government could decide how the patent system should be used in matters of scientific knowledge. The default was that inventions would be dedicated to the public, or if a patent was sought, to be licensed non-exclusively and preferably royalty-free. This default became known as the “government title” approach. Continue reading

Posted in Bayh-Dole, History, Policy | Leave a comment

The Unofficial University of Wisconsin Patent Policy, c. 1960

In his 1962 compendium of university patent policies, Archie Palmer noted that the University of Wisconsin had no formal patent policy. By then, Wisconsin was an outlier among research universities, most of which had some statement regarding patents and inventions. The private papers of Howard Bremer, longtime patent counsel for the Wisconsin Alumni Research Foundation, provide a copy of the “unofficial” university patent policy, c. 1960. Let’s have a look.

This is a great policy. Faculty have rights to their inventions unless they agree otherwise in accepting money from outside sponsors of research. The policy addresses basic issues:

Does my research performance depend on patenting? No.

Are inventions made in the “regular course” of my research mine? Yes.

Will the university require me to do anything with my inventions? No. Continue reading

Posted in Freedom, History, Policy | Leave a comment

Getting at the truth about Bayh-Dole’s impact, Part 5

Now we get to the crunch of Catherine Kirby’s blog article–published at a Rice University web site for entrepreneurship–with the section “Did the Bill Work?”

Since the passage of the Bayh-Dole Act, more than 5,000 new companies have formed from federally funded university research.

Follow the link to the source–a propaganda piece by AUTM:

Since the enactment of Bayh-Dole, more than 5,000 new companies have formed around university research.

Notice the misquote in the patch writing here. AUTM does not report how many companies formed around federally funded research. AUTM does not report how many inventions claimed by universities are subject inventions. Bayh-Dole keeps that information secret. AUTM doesn’t ask for it. Instead, AUTM counts the total number of startups reported to it “since” Bayh-Dole. The impression is that these companies must be the result of Bayh-Dole. There’s no evidence presented for a connection, however.

At the University of Utah, they went on a company-creation tear, forming 20 companies a year for five years–most of which were shell companies with no employees, no operations, no funding. But Utah was for a time viewed as the startup leader in the country. Just an administrative illusion to secure millions in state economic development investment to realize even more “potential.” Continue reading

Posted in Bayh-Dole, Metrics, Policy | Leave a comment

Getting at the truth about Bayh-Dole’s impact, Part 4

We are looking in on a student blog post at the Rice University McNair Center for Entrepreneurship and Innovation. The article is useful for reciting in the wild a number of arguments that claim Bayh-Dole has had a positive impact. I have lived, professionally, with these claims for decades, so they aren’t new to me, nor do I have much reason to believe any of them. But I have met people who truly have wrapped their careers around these claims, almost as if they represented a prophecy about Bayh-Dole. When claims rise to the level of prophecy, of course, no amount of disconfirming fact or reasoning will cause someone to alter their position–instead, they are likely to double down on it and become all the more evangelistic.

Here’s another sentence for discussion:

Before 1980, only 5% of government-owned patents were ever utilized in industry.

This is a nonsense factoid that’s been repeated without context or even backing data since before Bayh-Dole became law. Rebecca Eisenberg ripped it apart decades ago, but like a zombie, it continues to half-live, though lacking any reason to live, except to devour the brains of the unsuspecting. Continue reading

Posted in Bayh-Dole, Policy | Leave a comment

Getting at the truth of Bayh-Dole’s impact, Part 3

We are working through a student account of Bayh-Dole posted at a Rice University entrepreneurship center. The post is helpful in repeating commonly accepted claims about Bayh-Dole. Our interest is not so much in arguing the limitations of the post as using it as a springboard to look more closely at the claims made for Bayh-Dole, and thus, also, to look more closely at Bayh-Dole itself. Here’s another claim made by our student author, Catherine Kirby:

The Bayh-Dole Act was intended to improve the commercialization of federally funded research.

No doubt there were some who intended just this. But commercialization is not an obvious stated policy or objective of Bayh-Dole. We might say, “The Bayh-Dole Act was intended by university licensing officers and patent brokers to improve the commercialization of federally funded research.” In the Act itself (35 USC 200), all we get is “use the patent system to promote the utilization of inventions arising from federally funded research or development.” Utilization is practical application, which is defined by Bayh-Dole to mean established use with benefits available to the public on reasonable terms. Ah, but there’s also this objective buried in the list:

to promote the commercialization and public availability of inventions made in the United States by United States industry and labor

Read it slowly. It doesn’t say “improve the commercialization” of inventions–but to promote “commercialization and public availability.” There are two objectives, stated in parallel and given equal weight by that happy little coordinating conjunction and. Continue reading

Posted in Bayh-Dole, Policy | Leave a comment

Getting at the truth about Bayh-Dole’s impact, Part 2

We are working through the opening paragraph of a student’s account of the Bayh-Dole Act. The account creates the opportunity for a discussion about the impact of Bayh-Dole and the strange spin that has become widely accepted about what Bayh-Dole has done. At times I find myself reading about Bayh-Dole as if it is some sort of whispering god of innovation and wealth rather than an odd law that makes a show about what federal agencies must include by way of patent rights in funding agreements but then don’t have to enforce.

Now consider our next sentence:

However, the act did help universities license patents, creating positive economic benefits especially in the biotechnology industry.

There’s much packed in here. It’s the standard story. How on earth did Bayh-Dole help universities license patents? Bayh-Dole places the greatest restrictions on nonprofit patent management. It’s difficult enough to license patents, especially exclusively–Bayh-Dole requires one to license patents with a fly on your forehead. Gack. How many times does a university licensing officer have to deal with questions about what “substantially manufactured in the U.S.” means, or what information might be demanded for federal reporting, or what the effect of march-in might be, or that non-exclusive license to the United States to “practice and have practiced”? Might such things somehow help the proposed transfer of a patent monopoly from a university to a company? Bayh-Dole is a total crap (a term of art, here) when it comes to “helping” license anything. There are no incentives for companies to license a posi–a patent on a subject invention. I have never, ever heard a company representative go, “Oh, good! It’s a federally funded invention–this is great news, as these licenses are always better than ordinary licenses.” I’m willing to bet nothing of the sort has ever been emitted from the negotiation-hole of any company officer, other than as sarcasm, perhaps aided by over- much alcohol.

If Kirby’s point is rather that “help” means “help themselves”–the act did help universities help themselves to patents to license–then there may be some true impact there. Continue reading

Posted in Bayh-Dole, Policy | Leave a comment

Use the government license in Bayh-Dole

According to news reports (here’s where I first read about it–follow the link there to the article in the Baltimore Sun), the state of Maryland is attempting to deal with high drug prices through legislation that gives the state the right to sue companies that raise drug prices without a good cause. Perhaps that will work. If I’m at a drug company, then, I start with an outlandish list price (so I never have to raise it) and discount as necessary to get to my optimal market price.

For drugs based on compounds invented with federal support, such as in research at universities supported by federal grants, there’s another way. The Bayh-Dole Act, which controls patent rights on inventions made in federally supported research, requires federal agencies to receive a license “to practice and have practiced” each invention for and on behalf “of the United States.” Here’s 35 USC 202(c)(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 .  .  .  .

Continue reading

Posted in Bayh-Dole, Freedom, Policy | Leave a comment

Getting at the truth about Bayh-Dole’s impact, Part 1

Last December Catherine Kirby, a student at Rice University, posted “The True Impact of the Bayh-Dole Act” at the McNair Institute for Entrepreneurship and Innovation. Her article got called out in a tweet by Daniel Garisto as an instance of the welter of conflicting claims about Bayh-Dole. While we may not hold a student writing a blog post at a university entrepreneurship center to the same standards as, say, an Ashley Stevens writing articles that make an implicit claim (at least) for being authoritative, Kirby’s work does provide evidence for what someone reviewing the spin on Bayh-Dole might reasonably surmise–that Bayh-Dole has had an important impact, and that impact has, at least for biotech, been generally positive, and that’s the “truth.”

Let’s work through Kirby’s discussion as a document that repeats the things anyone can find in a casual inspection of the upper reaches of a Google search on Bayh-Dole’s impact. It’s a clue perhaps that the primary literature questioning Bayh-Dole that shows up early in a Google search comes from authors in other countries debating whether Bayh-Dole has done what’s claimed, and whether what is claimed will do the same thing for their country. If creating fragmented ownership, institutionally licensed technology outside public oversight and without government intervention is the goal, then Bayh-Dole may be just the ticket. If there’s a strong wealthy class with a fixation on monopolies *and* a willingness to pay to acquire those monopolies, then one can even create a nice speculative market in patents on research findings. No matter whether anything actually arises from the use of the inventions that motivate the trade in such patent properties. The prospect of new patent monopolies alone is sufficient for those that have the monopolies to separate money from those that want the monopolies and potentially even more money from those that ignore the monopolies or reject them.

As for Bayh-Dole, keep in mind that the law makes its own metrics a government secret. Any account of the “true” impact of Bayh-Dole needs to consider the obvious: information about the deployment of university research inventions under patent–posi–has become a secret. That’s an impact of Bayh-Dole. Right there in the law. Continue reading

Posted in Bayh-Dole, Metrics, Policy | Leave a comment

SPRCing of Bayh-Dole, Expanded

I added an additional section to an article I wrote in 2010. It drives at the mistaken claim that Bayh-Dole endorses the idea that nonprofit institutions should own the inventive work of faculty supported by federal funds. There is nothing in Bayh-Dole that makes such an endorsement. Whatever happens with Bayh-Dole’s standard patent rights clause (SPRC) apparatus does so after a university acquires ownership. Bayh-Dole does not authorize the taking of ownership, give first right to take ownership, or prevent inventors from doing anything other than giving universities ownership. Universities do not have to take ownership of inventions to comply with Bayh-Dole (or even with the SPRC). To comply with Bayh-Dole universities do not have to make inventors promise to assign, or make inventors agree that they have already assigned future inventions. All these claims are garbage, or muddle, or self-serving incompetence, or abuse of authority, or fraud, or a denial of civil rights under the color of law.  Continue reading

Posted in Bayh-Dole | Leave a comment