We are working through the problems with federal laws permitting federal agencies and nonprofit contractors, in particular to deal in patent monopolies. Although there’s plenty of rhetoric about how patent monopolies are in the public interest, behind it all is an interest in money. When one talks with university administrators about their technology transfer operations, they don’t talk about getting new findings into everyone’s hands, or about helping other organizations develop things. No, they want to know about licensing money. They are not generally interested in making enough money to make licensing a self-supporting service–they want big money, way more than it costs to run a technology transfer office. And they want whatever practices in place that will get them that big money. When a big university donor shows up all critical of technology licensing practices that don’t make big money, they are all ears. And usually those donors’ schemes involve monetizing patent portfolios by more effective exclusive licensing practices. Put another way, practices that move even more toward trying to create a few lucrative deals at the expense of everything else.
If money is the incentive that as a matter of policy should drive such licensing, then one might expect both the licensor institution and its inventors to rally toward the money. And that runs against the idea of public service, does it not? Do nonprofits and federal agencies really need a patent money incentive to fulfill their missions? Do the inventors who choose to work for them need patent money on top of their salaries to try to cure disease? Does that money need to come from patent choke points to engage in monopoly pricing and suppression of anything that might compete or otherwise use any bit of what’s claimed by a patent, even the stuff not used for some commercial venture? Continue reading
Folks want to repeal Bayh-Dole–and that would be good–but Bayh-Dole is like a shield and folks still have to get at what motivates corrupt practices under Bayh-Dole. Bayh-Dole does not require corrupt practices–it just creates the conditions that make it harder for anyone to act to stop them.
Here’s a typical tweet:
I’d say to President Trump, “Repeal the Bayh-Dole Act.” That act gave government workers the right to patent their discoveries, so to claim intellectual property for discoveries that the taxpayer paid for.
The president cannot repeal laws. That’s for Congress. But the president can issue executive orders that alter regulations that implement Bayh-Dole. For instance, an EO could require federal agencies to enforce the patent rights clause, or use an alternative patent rights clause for all research and development directed at public health, or relieve federal agencies of all Bayh-Dole compliance (since they so obviously don’t do it) and shift that to a federal agency that does not award grants and contracts for research and development. That’s stuff a president can do. Even if the president leads an effort to repeal Bayh-Dole (which would seem to be a low priority at the moment), one is left with a huge hole–what will fill it with regard to inventions made in federally supported work? That hole will take years to deal with. And there’s the damage caused by Bayh-Dole practice, especially in the universities and nonprofits. That may take decades to unwind and rebuild. Continue reading
We are working through examples of the claim that Bayh-Dole has led to the creation of 200 new drugs. There’s been a lot of post hoc fallaciphizing–that because Bayh-Dole came before some of these new drugs, they must have come about because of Bayh-Dole. Worse, we find that a bunch of these drugs apparently were developed before Bayh-Dole or before Bayh-Dole had a chance to have produced anything approaching a drug available for commercial sale.
In all this, the only reason for Bayh-Dole is to offer the opportunity for federal contractors and federal agencies to deal in patent monopolies. The only reason for all the apparatus in Bayh-Dole is to ensure reasonable pricing when contractors and federal agencies do deal in patent monopolies. The problem with this scheme, however, is that as soon as a contractor or federal agency gets into an exclusive license arrangement and takes a financial interest in the licensee’s income or stock value or both (and on secret terms), there is no way for the public protection apparatus to operate. The contractor or federal agency licensor is so deeply conflicted that it cannot compete with its own licensee and it cannot march-in on that licensee even if a product is made available to the public on unreasonable terms. It has contracted itself out of the role of protecting the public interest with regard to reasonable pricing.
Here’s BIO’s version of the 200 drugs meme:
We are working through claims that Bayh-Dole has produced 200 new drugs where before there was nothing, nothing, nothing at all. In back of it all are three key points:
Bayh-Dole means nothing if federal contractors and agencies license non-exclusively. Bayh-Dole does not prevent non-exclusive licensing or require exclusive licensing. Contractors and federal agencies decide to deal in patent monopolies on their own, with no help or mandate from Bayh-Dole.
The only reason for Bayh-Dole to exist is to offer to contractors and federal agencies the opportunity to deal in patent monopolies–to license exclusively or assign and to hold back everything else in the hope of one day attracting an exclusive licensee or assignee.
Without reasonable pricing, Bayh-Dole fails utterly. There is no point to Bayh-Dole or any of its public protection apparatus if pricing is unreasonable. This is only one way Bayh-Dole fails. It fails in practice all sorts of ways! But this one way is plenty for now. Continue reading
The claim of “200 drugs” made after Bayh-Dole came into effect floats around the internet. Here’s an instance from a law firm:
The Bayh-Dole Act has been credited with developing over 10,000 start-up companies and at least 200 drugs and vaccines, and contributing more than $500 billion to the economy, in part, because it provides for certainty of ownership of patent rights.
Notice merely that the figures are “has been credited.” It’s not that the figures are true, but the statement that someone has claimed the figures represent Bayh-Dole’s effect is true. The figures could be totally untrue and the statement still remains, in a lawyer sort of way, accurate. As it is, you won’t find anything to support *in reality* the 10,000 startups, 200 drugs and vaccines, or $500 billion.
AUTM does not track Bayh-Dole inventions in its licensing surveys, and does not track for what assets any given startup has been formed in anticipation of taking a license, and does not even track when universities double count startups because the startup has co-founders from both, or co-inventors, or the startup needs licenses from both. For that matter, AUTM does not bother even with actual counts–its instructions tell universities to estimate where they haven’t bothered to count. Just make things up that sound about right. Leave it to others to turn those estimates into “facts” by stripping off all the qualifications, double counting, and room for puffing things up.
The 200 drugs and vaccines similarly does not report anything about federal funding, patents, or Bayh-Dole practices. It’s just a number. We will get to it in a bit. Continue reading
[updated to add some comments among the elements of the list]
Bayh-Dole recovers and expands the opportunity for universities to deal in patent monopolies on inventions made in federally supported work. Bayh-Dole does not require such behavior, does not give any special privilege for such behavior, and indeed does not force inventors to use the federal patent system. University administrators choose to deal in patent monopolies all on their ownsome. But they should not do it. It’s bad for their research health, bad for technology transfer, bad for the reputation of their universities, and bad for the public–and the public is starting to figure it all out, albeit via the usual path involving pitchforks and the like.
There are a number of reasons why universities should not deal in patent monopolies, even though Bayh-Dole holds out this offer. Indeed, there’s nothing in Bayh-Dole that matters except for this offer. There’s no point to Bayh-Dole but bureaucratic paperwork if a university ignores Bayh-Dole’s offer to deal in patent monopolies and instead licenses non-exclusively. There’s even the shadow of an idea that university administrators adopt dealing in patent monopolies–first taking inventions from their faculty and students, and then holding back those inventions in the (mostly vain) hope of finding an exclusive licensee (i.e., assignee) willing to pay big bucks–so that they don’t appear ungrateful for Bayh-Dole’s offer to go off the rails and license exclusively.
Prior to the NIH Institutional Patent Agreement program, the Kennedy executive branch patent policy required federal agencies to do the following:
Allow contractors with real businesses in non-governmental markets to own inventions made under federal contract, except in research directed at public health or safety.
Require everyone else–both federal agencies and contractors–to make a case that their dealing in patent monopolies better served the public interest than open innovation.
This is not all that difficult to comprehend. Companies contracting with the federal government could patent stuff as might be their practice, except for biomedical inventions–those, by default, were to be made open. Thus, the company still had full access to those inventions, as did the company’s inventors, as did everyone else. If the company wanted exclusive control (but for the government) of a given invention, it had to show how that exclusive control worked out better for the public than open access. Continue reading
There are many things we could do, but choose not to do. Some of those things, people could make money doing, but we refuse. We could sell body parts, or eat them, or we could make people slaves–good money in all of that, apparently, but we reject these practices. Start with this idea.
Here’s a proposition. The proper purpose in a public institution taking an interest in any patent is to distribute that right, not to hold it to exclude all others or to take a financial interest in someone establishing a monopoly based on that property right. Whether a federal agency, state government, or university, the institutional purpose–the public mission–is to serve everyone. That necessarily means breaking apart patent rights. It does not mean to choose favorites or pick winners and losers or to exclude all others. It does not mean, also that to serve “everyone” public institutions should withhold access to a discovery or invention or work of authorship in the hope of making money (or a product covered by an exclusionary right) with the claim that such money then can serve “everyone” or that even the attempt to make money this way is somehow virtuous and deserving of public approval, if not gratitude and acclaim. Continue reading
Bayh-Dole re-establishes a patent monopoly pipeline from federal funding to the pharmaceutical industry.
The NIH first created this patent pipeline in 1968 when Norman Latker, patent counsel at the NIH, restarted the Institutional Patent Agreement program that had been allowed to lapse in the late 1950s. The IPA program ran from 1968 to 1978 when it was shut down as ineffective and contrary to public policy. Latker drafted Bayh-Dole and based it on the IPA program. Thus, Bayh-Dole restores a patent pipeline that the NIH had previously built.
In the early 1960s, the pharmaceutical industry boycotted inventions made in federally supported work. The problem was not that the federal government made inventions available non-exclusively, royalty-free. Rather, the problem was “contamination” of pharma inventive work. If a company brought in an invention carrying a federal interest, the Public Health Service might claim that anything the company subsequently developed that was related to that invention was subject to a federal claim–either a license or joint ownership. As a result, the pharmaceutical industry declined to participate in federal research funding initiatives.
These two issues, then–contamination and participation–were the problem, not open innovation vs patent monopoly. But these issues provided an opportunity for the NIH to undermine the federal government’s policy of open access for health-related inventions in which the federal government had an interest.
Bayh-Dole re-establishes a pipeline of patent monopolies on federally supported inventions in public health running from federal agencies to the U.S. pharmaceutical industry.
This patent pipeline operates directly from federal agencies granting exclusive licenses (35 USC 207-209) and through nonprofit contractors such as universities, doing the same (35 USC 202-204). Universities, in turn, may work through patent speculators, using startups to attract investment capital before flipping any startups that survive to the pharma industry.
We can talk about restoring American technology leadership, commercializing inventions, giving incentives for universities to take an interest in inventions, and public benefits all we want, but none of this has to do with the driving force behind Bayh-Dole, and that’s re-establishing a patent monopoly pipeline. The driving force is to create patent monopolies and hand these patent monopolies arising from federally supported public health research to pharmaceutical firms, and otherwise to delay anyone else using such inventions.
There are multiple effects, all necessary to the scheme.