Five ways to attack Bayh-Dole corruption, short of repeal

Powerful interests protect Bayh-Dole. But Bayh-Dole should be repealed. Heck, 23 senators led by Sen. Harrison Schmidt tried to do that the year after Bayh-Dole was passed, to replace Bayh-Dole with a comprehensive law regarding research inventions! But short of repealing Bayh-Dole, here are five areas to attack that might change university patenting and licensing practice. Maybe, even, change those practices for the better.

1. Demand that universities (and their patent brokers) report publicly on the status of each subject invention that they claim. Bayh-Dole makes subject invention use reports exempt from FOIA, but these reports are not necessarily exempt from state public records law. Universities should include sufficient information to determine whether the standard of “practical application” has been met. For each subject invention, identify the date of first commercial use or sale. For each subject invention, identify whether the invention has been licensed exclusively, non-exclusively, or not at all. Identify whether the invention has ever been offered for non-exclusive licensing (and if so, on what terms, since these terms would be necessarily public).

Shame the universities that don’t report publicly. Argue that they should not receive federal research funding. That’ll scare them. Introduce state legislation that requires public reporting of invention management. When the use statistics get out, Bayh-Dole will have nowhere to hide. It is a dismal failure. University monopoly patent practices under Bayh-Dole are a dismal failure.

2. Demand that federal agencies enforce the public protection elements of the standard patent rights clause. Bayh-Dole should not be a do WTF you want law. The law requires the use of a standard patent rights clause but does not require agencies to enforce that clause. Clever trick, but corrupt. In particular, federal agencies must

  • require the (f)(2) written agreement;
  • challenge exclusive patent licenses that are also subject invention assignments;
  • object to litigation for infringement that violates the patent system policy statement of Bayh-Dole (a part of federal patent law);
  • march-in on all instances of nonuse of subject inventions;
  • demand that universities favor small businesses in the licensing of any subject invention; and
  • audit the nonprofit use of income arising from the exploitation of subject inventions to ensure such income is not being misspent.

Federal agencies do, roughly, none of these things. They should. Bayh-Dole  would be a different law, perhaps even a kinder, gentler dismal failure.

3. Demand federal agencies–and states–use their rights under the government license to practice and have practiced. No patent on a subject invention is a monopoly with regard to anything on the government-side of invention use. We are not talking march-in here, as march-in is specific to the private-side of invention use. If the government (and states) do not use their license, then that asset is wasted and the public pays monopoly prices for things that it should pay only a reasonable cost–the cost of development, a little profit on that cost of development, and the cost of manufacture and a little profit on the cost of manufacture. If Xtandi, a subject invention, can be sold profitably for $3 a pill under the government’s license for medicare patients, then why should the government pay $88 a pill? Only if the government is in cahoots with the monopolists or lacks the diligence to exploit its license to practice and have practiced.

4. Demand federal agencies use exceptional circumstances. Challenge the use of the standard patent rights clause for medicinal chemistry. Go right after the heart of the pharmaceutical monopoly and skip the general fight over all other areas of technology. Use the high price of drugs as the entering wedge. See if pharma has enough money to buy a majority in the Senate. Challenge as well the use of the standard patent rights clause for information technology. Many big tech companies would welcome a clause with exceptional circumstances that required FRAND licensing of subject inventions in information technology, especially those involving a method whether in software or firmware or circuit.

5. Restore the express public covenant for competition. In the original Bayh-Dole Act, nonprofits could offer exclusive licenses to non-small companies only for limited terms–five years from date of first commercial sale or eight years overall. Those limits were removed in 1984–before any meaningful assessment of Bayh-Dole could be made. But removing the express requirement for limits on exclusive licenses did not remove the Bayh-Dole policy requirement that the patent system be used to promote “free competition and enterprise.” All the amendment did was remove express guidance about how to achieve free competition and enterprise.

The law, as part of federal patent law, remains the same, just with less guidance. Adding guidance does not have to involve amendment of the law. Instead, use the “exceptional circumstances” provision in the law to create a standard patent rights clause that limits exclusive licenses to a term of no more than eight years. “Exceptional” does not mean “rare” or “infrequent”–it means “outside the defaults specified in the law for the standard (i.e., unexceptional) patent rights clause. But while you are at it, why not get back to the Kennedy patent policy term limits–limit patent monopoly practice to three years from the date that the patent issues. If one can’t develop a product in six years (three years to get patent, plus three more) and recover one’s development costs, then don’t bother with the patent monopoly–deploy patent rights in some other way, by breaking up the patent monopoly. 

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