The Compliance Apparatus is Essential to Bayh-Dole

The Bayh-Dole Act is often presented as a boon to universities. Yet a reading of the law as it makes its way into federal funding agreements suggests otherwise. Universities are a problem, and a lot of apparatus of Bayh-Dole is to provide protections for the federal government, for faculty inventors, and for the public. Indeed most of the Bayh-Dole apparatus is protective in nature. If these protections do not operate–whether from lack of compliance, federal agency indifference, or failure in their purpose–then the $40 billion per year of federal support provided to faculty-led research is at risk to be exploited by all sorts of characters.

If Bayh-Dole had been a vesting statute, it could have been as simple as Article 39 of the UK Patents Act of 1977 with some U.S. language stuffed in (my version of a substitute Bayh-Dole requirement is in bold):

Notwithstanding anything in any rule of law, an invention made by an employee shall, as between him and his employer, be taken to belong to his employer for the purpose of this Act and all other purposes if: it was conceived or first actually reduced to practice in the performance of work under a federal funding agreement. The Federal government shall have the right to practice or have practiced for or on behalf of the United States any such invention throughout the world.

There. That does it. No need to chase this through all federal funding agreements, no need for separate reporting and the like, no need for universities to issue pro forma licenses to federal agencies, no need for requirements to file, march-in, preferences for small companies or US manufacture, sharing royalties, assignments, residual rights to the contractor if the government takes title through non-compliance. Done.

This kind of change is what the Supreme Court was referring to in the Stanford v Roche decision when the majority wrote:

We are confident that if Congress had intended such a sea change in intellectual property rights it would have said so
clearly—not obliquely through an ambiguous definition of
“subject invention” and an idiosyncratic use of the word

The complicated compliance apparatus in Bayh-Dole is not a matter of inefficient bureaucratic bloat to restate the obvious, chase its own textual tail, and blow and puff in order to achieve such a simple outcome. First and foremost, university ownership was not the outcome that Bayh-Dole proposed, encouraged, mandated, or vested. Way more is going on, and was going on at the time that Bayh-Dole was being debated.  The compliance apparatus is essential to Bayh-Dole. A lot of folks did not trust the universities and their brokers to be ever and always the good guys. Some of brokers pushing the hardest for Bayh-Dole had history. It wasn’t necessarily being the good guys.

The part of the compliance apparatus that gets emphasized by the university administrators and brokers is the part about the fussy paperwork for notifying the government, the bit about electing to retain title as if “title certainty” was about “entitlement” for administrative control of faculty scholarship, and the importance of using remaining funds after expenses for scientific research.

What does not get mentioned are the standard patent rights clause or the written agreement to protect the government’s interest that flows down contractor duties to potential inventive employees, and which gives them choice, the restrictions on patent ownership behaviors such as licensing and litigation, or the emphasis throughout Bayh-Dole on practical application and public availability, not simply on “commercialization.”

The metrics collected and reported by the brokers reflect the growth of their model at the expense of government stewardship, the use of specialized and national invention management agents, and collaboration with industry. That is, the growth recited by AUTM is the growth of an administrative bureaucracy, reflecting increasingly compulsory controls on faculty scholarship, an increasing emphasis on institutional profit at the expense of public interest (or a convenient conflation of the idea that institutional profit is the public interest). More patents does not reflect more research productivity or impact, but rather more technology being sequestered for speculative profit-seeking too soon, before it is validated, before others can independently verify it through use.  Same thing for licenses that do not establish use where the benefits are available on reasonable terms to the public. Beneficial use by investors isn’t nearly enough. Financial return to the university, without public beneficial use, is empty toots.

From a perspective not one constrained to the conventional spin of Bayh-Dole, in the hands of the brokers that have implemented the law at universities, the Bayh-Dole Act has:

  • destroyed a national network of invention management agents relying on faculty choice
  • eliminated an invention equity approach in favor of institutional invention ownership
  • introduced compulsory assignment of inventions based on a claim of federal law
  • led administrators to abandon institutional governance to seek profits from patents
  • shifted brokers from agent services to speculative patent portfolio management
  • run up substantial costs that have often detracted from instruction and research
  • disrupted industry collaborations by demanding ownership of inventions
  • triggered patent infringement lawsuits that have damaged industry relationships
  • reduced the flow of university-hosted technology to the public
  • fragmented emerging research platforms in favor of exclusive patent positions
  • attracted speculative investors more interested in money than use
  • limited federally funded technology as a source for new standards
  • encouraged the expansion of institutional controls over all university creative work
  • allowed speculators to hold practice and public availability hostage to commercialization
  • run up development costs and delayed adoption through winner-take-all licensing

Yes, I know, the current system by popular university administration accounts has been all good, and ever successful, and growing, and important, and connected somehow to everything good like economic development, jobs, and transformational innovation. How then can I write the list above? Because I believe it is more true than the broker spin will ever be. I wish it weren’t, but the consequences are there for anyone who decides to go looking for them past the sugary coating of promotional brochures and reports.

For all that, the Bayh-Dole Act has some good points. University invention licensing offices have some really talented, good people in them. There will be even more good things when Bayh-Dole’s compliance apparatus is taken seriously by university administrators, and the Standard Patent Rights Clause has been implemented to respect inventor choice and promote industry engagement, rather than treat inventors as sources of patents, investors as money-bags, their investments as bragging rights, and industry and the public as targets for exploitation. Sounds really bad.

If you don’t like it, stick with the sugary coating. Love the confirmation bias and the moral pat on the head. It’s a good life if you can get it. You know, that unseen hand of institutional self-interest will somehow work it out for the betterment of everyone in the end, or so the convenient theory goes. If you do care, however, then it’s time to do something about it. A fully functioning Bayh-Dole is highly compatible with a lot of good things–with strong programs of intangible asset management, with invention and discovery, with new opportunities for companies to build products and make money, and with the prospect for putting university talent into teams that really do change things for the better, for better health, security, and jobs.

If you are in science policy, then document how things have changed. Ask for the raw data. Ask for the data that isn’t being collected or reported and figure out why. Do your own analysis rather than relying on the unaudited, conflated, self-reporting. Get informed on how intellectual property works, what the laws and regulations say, how policies are written and practiced, what actually happens at licensing offices. Reason about things.  What you see at first is not all there is.

If you are a member of a university faculty, start a review of IP and research policy and guidance for compliance with Bayh-Dole. Create a faculty committee attached to faculty governance to monitor ownership claims, interpretation of IP policy, licensing and litigation behaviors, and use of royalties. Ask for the raw data, especially data backing public statements promoting economic development, jobs created, and public benefits. Don’t tolerate the incursion into institutional (and for public universities, state) ownership of your creative work.  The institution has a right to your work when you decide it should.  Take back what you had in 1980, and restore an invention equity approach to institutional interest in your work.  Be willing to share the financial benefits of your efforts, but on your terms, and reflecting real assistance that you have received.   And don’t shack up with the first wealthy investor who smiles at you across a patent bar date.

If you are a student, don’t get screwed by unscrupulous folks. You don’t have to bring your best ideas into funding environments that will give university administrators the chance to take them from you on a patent claim or even less. You don’t have to let your educational records be disclosed by the university administration–not even to the patent office.  And you don’t have to accept university “help” only to find out that that help came with fine print in policy that purports to give ownership of your work to the university. If you are going to assign to the university, then negotiate your deal. Assignments have to be in writing.  Contracts have to carry consideration that represents a fair deal.  Your deal doesn’t have to be for money, though money sure can be sweet when you are in school.  Remember there’s attribution, and control, and liability. Keep your good name, and make sure you can use your work anywhere, any time, until you decide you will never want to use it again.

If you are in industry, it’s time to speak out and to act. Tell universities to comply with Bayh-Dole rather than cheat the law as if they are doing you a favor. Tell the federal government to enforce the compliance provisions, or repeal the law. We have learned a bunch in thirty years. Don’t sit on your hands thinking there will be a huge breakthrough happening all on its own. Don’t fund university research with institutional ownership claims; require your own version of the (f)(2) agreement and work with faculty and students directly. Shift your funding to the universities that are ready to play a new game.  Use university research for what it is really good at–an independent space to aggregate technology for broad access to promote interoperability, standards, validation, and instruction. Keep in mind that some of the best ideas are cross-catalytic: they will come from areas of study that you don’t expect. Keep things open and you have a better chance of getting them.

If you are in government, especially state government, it’s time to ask for an accounting of your public universities. What are they spending on patent administration?  What’s the time between the lucrative patent deals? How many inventions claimed are being used commercially? How many jobs have been created as a result? How many are in your state–not just from your state university discoveries, but from any state’s universities’ discoveries? Do the policies that take ownership of faculty scholarship comply with academic freedom? With eminent domain?

If you don’t like the answers, conduct an audit to check the answers. Do not put up with being flattered, patronized, stonewalled, bullshitted, or snookered. Make someone talk truth to power. If you want to spark creative output at your public universities, then sponsor Freedom to Innovate legislation in your state. Prohibit your state universities from claiming invention ownership of scholarly work based on employment, use of resources, participation in extramural research, approval for consulting, nada. Allow instead a finding of institutional equity in inventions based on independent review. That could be acknowledgement, reimbursement of costs, a shop right, a non-exclusive license, a share of royalties, an equity stake, or even ownership, if the circumstances really warrant it.  You are the last line of accountability for public universities being too deep in the patent game to admit what they are actually doing and its impact on research, industry, and the public. Get it done then.


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