Back in 2010, Roop Singh and Sonali Tare published an article in the Journal of Emerging Knowledge on Emerging Markets, “India’s Emerging Technology Commercialization Policy: Lessons from the American Model.” It is not at all clear that the authors are clear on even the faux version of Bayh-Dole. Well into the article, we get a standard version of the faux Bayh-Dole Act that recites the now-standard claims about federal agencies and the 28,000 patents. No one today talks about the 30,000+ patents in even worse condition held by American universities–worse because unlike the federal patents, which were generally available to all, the university patents are not generally available, held for exclusive licensing deals that mostly never happen.
Here’s the “nuts and bolts” of the authors’ Bayh-Dole paragraph:
The Act brought about a cohesive set of rules, granting ‘contractors’ – be they universities or other non-profits or small businesses – the prerogative to hold the title to the patents.
Mind you, this is from 2010–before the Supreme Court ruled on Stanford v Roche. So we might cut them some slack. But the “prerogative” in Bayh-Dole has to do with resolving disagreements between federal agencies and contractors–nothing in Bayh-Dole disturbs the common law rights inventors hold in their inventions, and nothing in Bayh-Dole requires inventors to assign to their employers. So Bayh-Dole did not address the fundamental step–what an inventor is free to do, having invented. Our authors don’t appear to comprehend this step and fixate instead on the idea that Bayh-Dole mandated institutional ownership of inventions and that somehow this was and is a really good thing–“cohesive” and all. It’s this second bit–that it’s really good to prevent inventors from owning their inventions and hand that ownership to bureaucratic management–that bothers. Even if a law did require such a thing, why would people embrace it?
The architects of the Act were sensitive to criticisms arising from the possibility of granting licenses to a small number of powerful commercial organizations. In order to get this potential criticism out of the way, the ‘contractors’ were required by law to give preference to small business while making licensing decisions.
Under Bayh-Dole, the preference for small businesses was restricted to exclusive licenses granted by nonprofits and even that restriction was removed after four years. In any event the implementing regulations prevented federal agencies from doing anything other than recommending changes to the policies of nonprofits that did not give preference to small business. The worser thing, though, is that what universities do instead is to start their own shell companies and license exclusively to these “small businesses”–and so exclude existing small businesses from access to university discoveries. A few of those small companies then get purchased by big companies–a “small business” license but a “big business” acquisition. What a nifty end-run around a public policy. If anyone had bothered to make such practice front and center of future university patent practice, do you think Bayh-Dole would have passed?
The architects also included manufacturing preferences – if a product was to be sold in the US, US manufacturers were to be the first choice.
Not so. Bayh-Dole stipulates that if a contractor grants an exclusive license to use or sell in the U.S., then the contractor must stipulate U.S. manufacture, but with a set of walk-backs that make even that requirement mostly for show. If the license is non-exclusive, there’s no requirement with regard to U.S. manufacture.
The government had ‘march-in-rights’, and could under certain circumstance change a licensing decision made by the ‘contractor’ [2].
But the “march-in rights” were so burdensome–by design–that they have never been used. Howard Bremer boasted about how he had to lead university patent brokers to ensure that the march-in procedures would never work. The Supreme Court in Stanford v Roche found that there were no protections for inventors or for “third parties”–that is, for the general public, and these would be “deeply troubling” if not for the limitations inherent in the law with regard to patent rights. Stanford v Roche was decided a year after this article was published–so the authors wouldn’t have known–but in any event, no one cares what the Supreme Court ruled. The drift of Bayh-Dole is to strip inventors of rights and prevent public accountability. Neither tolerates the idea of “march-in.”
The citation at the end of the authors’ paragraph is to the anonymously written “The Bayh-Dole Act at 25,” a wonderful document of faux history and statutory misrepresentation. Consider one statement, pertaining to the time before Bayh-Dole:
Before then, no simple mechanism existed to take the fruits of academic research out of university laboratories and bring them to the marketplace.
Pure nonsense. Or in current idiom, “fake news.” Universities had a number of simple mechanisms. Many used Research Corporation or a research foundation, for instance, and did not have to deal with patents at all. A few, following MIT, University of California, and Stanford, had created their own licensing offices. Even in the context of federal funding, there was a simple mechanism: the Institutional Patent Agreement, which HEW and NSF both used. The problem was not one of complexity–it was one of delays where the patent research foundations wanted monopoly control over inventions made with support from federal agencies that did not want to permit private monopoly control. That was a policy disagreement, not a problem of complexity in some process of commercialization.
There is not much simpler than making research inventions freely available, patented or not. The complexity comes in when a private party asserts a monopoly position that has the potential to disrupt broad access. The claim that some inventions might not be useful unless developed with private capital conveniently ignores the fact that other inventions may readily be developed without significant private capital, and certainly without the need to offer a monopoly to obtain that capital–and even if a monopoly is necessary, that monopoly does not have to run for the entire term of a patent.
But the Bayh-Dole at 25 sentence is not a one-off. Look what follows:
To be sure, many of the largest research universities did engage in successful technology transfer on a limited scale, but the process for so doing was both complex and confusing.
This is also just bullshit–making things up without regard for the truth. The point that the universities made to Congress was that their practice in managing inventions was better than the government’s. Even that argument was sketchy on the evidence. The main thrust was that patent middlemen “closer” to the inventors would be better advocates to industry for the adoption of research inventions, and for this effort needed financial incentives for both the brokers and the potential investors–hence, private patent ownership.
The inducement to Congress was that by requiring the agencies that disagreed with private monopoly approaches to permit it anyway, somehow universities would prove to be a better manager of innovation than was the federal government. The evidence available doesn’t support this claim. It would appear that universities are doing an order of magnitude worse than the rates they ascribed to the federal government.
Bayh-Dole had little to do with simplifying any “technology transfer process.” Bayh-Dole turned a flexible federal patent policy into an arbitrary federal policy. The arbitrary policy appeared to hand all patentable inventions made with federal support to university patent brokers, at first with some protections, but within four years most of the protections had been stripped out by implementing regulations designed to be unworkable and by amendment of the law itself. But moving invention ownership from inventors to institutions to promote private monopolies hardly simplifies “technology transfer”– where before there was only the federal agency and broadly available technology, now we have non-practicing bureaucrats withholding research findings from immediate practice in the hopes of securing exclusive licenses from monopoly-motivated investors. Any other uses, investors, or developers are excluded by the university patent broker “model.”
Who was confused? I haven’t seen any evidence of confusion. The Harbridge House pointed out areas in which private contractors wanted patent rights and federal agencies refused, or delayed in making a decision–why? because the burden, under the Kennedy patent policy–was on the contractor lacking a commercial position to make a case for the public interest. If there was no compelling case for a private monopoly, then the federal agency had mandate to permit one anyway. What’s confusing about that? What’s complicated? Sure, there’s a disagreement, and federal agencies might move slowly–but that some federal agencies moved slowly to grant special requests for a private monopoly over publicly funded research results isn’t a reason to disable the basic premise that publicly funded research directed at advancing scientific knowledge or addressing matters of public welfare should be available to all who can use or act on that research. It’s only when no one can use or will act that one might consider a monopoly as an alternative. The monopoly comes after the commons, not to prevent a commons.
It’s an entirely different thing to disagree on how a research invention might be developed–and who should get to profit if that development creates a commercially successful product. That discussion may have all sorts of arguments, complicated or otherwise. But Bayh-Dole prevented that discussion.
So this is the article our Indian authors have chosen to follow. What could possibly go wrong? Skip to the “lessons”:
Bayh-Dole act was successfully able to harmonize different technology commercialization policies existing at that time.
Bayh-Dole required federal agencies to use the same patent rights clause in funding agreements. Bayh-Dole made patent policy arbitrary, without regard for the capabilities or performance or practices of whoever happened to acquire patents on federally supported inventions. Bayh-Dole didn’t “harmonize” anything. University patent brokers used a misrepresentation of Bayh-Dole to induce universities to abandon their past approaches and replace them with a policy that began by claiming ownership of everything inventive, even if not patentable, and holding all such stuff for possible profit-seeking from the creation of private monopolies wherever possible. It’s not clear, then, what the meaning of “successfully” is here.
Bayh-Dole act was successfully able to fix issues in Stage 2 of the technology commercialization process. Specifically it allowed more patents to move from the federal bureaucracy into the marketplace. This factor alone is credited with having had a significant effect on the cumulative economic impact.
The authors call “Stage 2” the time between a patent application and when an invention is “placed in the market place.” How does Bayh-Dole “fix” issues in this “stage”? The authors conflate moving patents from universities to companies with moving inventions into market use. They don’t appear to understand that a monopoly license does not move an invention to market; it shifts who has authority to prevent the making, using, and selling of an invention or products based on an invention. Passing around monopolies for profit is not equivalent to supporting a more rapid or improved or wider spread use of a research invention. Why is this distinction so difficult?
By the time Bayh-Dole was envisioned, the US already had a set of enabling factors in place. We believe these enabling factors coupled with the Bayh-Dole act was a potent recipe.
And now we bite our own tail. According Bayh-Dole at 25, the university situation was a mess before Bayh-Dole. But our authors apparently didn’t read Bayh-Dole at 25 carefully and argue that there was a “set of enabling factors in place.” Well, yes–a private network of invention management agents, largely voluntary, working with inventions made by university faculty, including inventions made with NIH and NSF funding, as well as DoD funding. University patent brokers, after Bayh-Dole, promptly worked to destroy this private network–that is, they destroyed those “enabling factors” as soon as they could. Certainly Bayh-Dole offers a “potent recipe”: let monopoly speculators loose on matters of public effort without public accountability and prevent federal agencies from having a leading role in enforcing the law or choosing the best course of action in the public interest, and you are bound to have a fine gold rush as the speculators destroy whatever public infrastructure was in place or could be developed.
That’s a fine ideal to export to India and the rest of the world, if you believe that private monopoly speculation is the best, first, primary, only engine for transforming public research to public benefit. If private monopoly is the way to progress, though, why should a federal government hand the monopoly to bureaucrats rather than seek to preserve for inventors their monopoly rights? Why is federal support for monopolizing bureaucrats so attractive? Why is a policy of making sure federal bureaucrats are involved in every innovation decision so attractive?
Despite these metaphysical questions regarding clowns and innovation, the reality is that Bayh-Dole monopolies are not producing product in the marketplace. There’s plenty of wealth-seeking and even some wealth-producing activity, but the evidence for “success” on the primary objective of Bayh-Dole–practical application–is simply not there. Bayh-Dole is a failure, except as a law to create a livelihood for patent bureaucrats. There, it has been wildly successful.