The IPA and Wisconsin’s 1969 Patent Policy, 11

The article starts way back at 1:

The IPA and Wisconsin’s 1969 Patent Policy, 1

Capitalism and commons

The dichotomy between capitalism and commons is even evident in the history of WARF. Here’s a footnote from Cronon and Jenkins on the problem WARF faced.

Here in one sentence we see both elements at play–WARF criticized for being a monopoly even when it acquires lands to be held in trust and kept away from “commercial development.” That is, uses ownership to *prevent* commercial development in favor of creating a commons for all to enjoy (which, in my youth, I visited and had a great time–thank you for the memories, WARF). For patents, WARF makes the argument that monopoly enables commercial development, but when things are “clearly in the public good” (as that’s considered by the authors), WARF is holding property in trust, for public access and to preserve “natural beauty.”

While the dichotomy may be unresolvable–I think of it as a cognitive illusion–in a democracy we have access (in theory) to public policy behind having a patent system, which we might admit is not perfect, though we prefer it to be stable rather than changing every year. Further, many people have recognized that even if the U.S. patent system is perfect in general, there are still somethings that it is poorly suited to–surgery techniques, for instance, or certain kinds of business methods. We might say that it is not appropriate to patent football defenses, so that an opposing team cannot use that defense against your proprietary plays. Games ought to be games and not patent market places. “The game has stopped for a legal review. Tune in again in three years for a preliminary finding.” We might say that it is not appropriate to patent a method of identifying and fixing software security defects, so that no software maker can fix that particular security defect without infringing the patent. The court in the WARF vitamin D case ruled that it was not appropriate to allow irradiation in milk products but not in margarine, when it was the poor that bought margarine and suffered from rickets. That is, you might have a patent, but the patent is itself a matter of public trust, and to suppress the use of a beneficial invention in such a way runs against the public trust and is (in an odd sense) anti-trust.

The government issuing a patent starts the stack of turtles teetering in the void of the universe. We could do without, in the context of subvention research. But we also operate in an environment in which the government also issues patents to others not receiving federal funds, and those patents can then disrupt the path of research and the use of research results. Not everyone wants patents, even “valuable” patents. There’s no requirement that every researcher use the patent system. Not even Bayh-Dole requires anyone to use the patent system. Bayh-Dole’s primary mandate is to use the patent system–but with the qualification that the patent system is used to promote the use of inventions. There would be absolutely no need for Bayh-Dole to state that the use of the patent system does promote use of inventions. That would be meaningless, like a little Congressional aside to justify the law. Nor does Bayh-Dole assert, as a matter of law, that any use of the patent system must be regarded as promoting the use of inventions. That would be a restriction on the freedom of speech. Bayh-Dole instead places a fundamental limitation on when the patent system should be used, and how, for research inventions. But there’s no mandate that the patent system be used at all.

Thus, even now, the turtle stack comes down to judgment. Who should decide when to ask that the government issue a patent? and with what conditions? Should it be the inventor? That’s the way the patent law is written. It makes some sense to use the patent system in this form. But it is the principal investigator that proposes the project and chooses the people to work with to do the project. Should the principal investigator decide when a patent should be sought? Should the principal investigator have the right to make this decision a condition of collaboration (or use of public funds) in any research project. That makes some sense, too. The director of a project ought to have something to say about how anyone stakes out proprietary positions on inventions, just a director might with regard to data that’s collected, or findings to be published, or tools that have been developed. “I made these glass beakers, and no one else may use them for this project or any other project without my permission, which right now, I’m not giving.” And for all that, why not the federal agency that may have a purpose in requesting proposals from university faculty to participate in research. Why shouldn’t a sponsor have a say in whether to request the federal government to issue a patent? Perhaps industry officials should have a say–patent and offer to the one of us that bids the highest, or patent and offer to all of us on fair, reasonable, and non-discriminatory terms, or don’t patent and let us scramble to find our own proprietary positions in improvements and applications.

And in all this, why should university administrators or their legal advisors come to have the primary say in when a patent should be sought? What qualifies them to have any role in the decision?

The PHS policy from 1963 argues somewhat differently: the Surgeon General should decide. That’s the judgment that matters, what the Surgeon General thinks, or what advisors to the Surgeon General think, or what advisors to those delegated with making the decision on behalf of the Surgeon General think. How is that thinking doing? and will it be better informed than that of the inventor or the principal investigator? The objection to PHS administrators making decisions about the role of patent rights in health-related research inventions is that they did a lousy, slow, inconsistent, and unfair job of deciding on patent rights. They appeared to be a machine to create wasted opportunities, under the spell that public domain and public interest were somehow synonymous or that the equation of the two was desirable.

Our bureaucrats are better than your bureaucrats

The argument opposing the PHS was not that inventors or principal investigators had the better judgment, but that patent brokers acting for institutions would have better judgment than federal administrators. “Our bureaucrats are better than your bureaucrats.” While the IPA program’s premise was that nonprofit organizations might in some cases do a better job deploying inventions in the public interest than a federal agency could do, and calling forth risk capital using patents only as necessary to make deployment happen better and faster and at lower cost to the public, the exploit of the IPA was that institutions have better judgment on the use of patents than inventors or investigators, better judgment than federal grants officers or Surgeon Generals. University of Wisconsin administrators have better judgment. WARF patent attorneys have better judgment. Wealthy Wisconsin alumni serving on WARF’s board have better judgment.

At least with the IPA program, there was some public oversight for the claim. Wisconsin had to have its policies and practices reviewed and approved before it could get its IPA from the NIH. Bayh-Dole ignores all this. There is no requirement in Bayh-Dole that a university have a patent policy, or that its patent practices meet some threshold for competency or public spiritedness (such as expertise in royalty-free licensing that stimulates rapid development of research inventions). There’s no review of anything–if an investigator at the institution can win a federal grant, then the judgment of institutional administrators is better than the judgment of the investigator or inventor or anyone employed by the federal government. That’s Bayh-Dole–or at least the faux Bayh-Dole–in a nut-case.

Again, nothing in Bayh-Dole requires a university to take ownership of any invention made with federal support. The Supreme Court in Stanford v Roche was clear about that. All that’s required of a university is to report inventions, educate personnel about reporting inventions, and require the (f)(2) written agreement. Everything else is a conditional–flow down requirements in a subcontract, flow down requirements in an assignment (even if labeled exclusive license), notification to the government if one elects to retain title, the filing of patent applications with a federal funding statement, nonprofit preference in licensing for small businesses, requirement to promote U.S. manufacturing for exclusive licenses to use or sell in the U.S.–all this stuff is extra, after a decision to own has been made.

Bayh-Dole gives no guidance on the judgment about when to own, and university administrators have–all on their own–decided to own everything they possibly can. Without Bayh-Dole, it’s difficult to believe that they would have come to this position, and certainly not so quickly and so uniformly–it’s almost like they conspired to reach this policy practice, as if they talked with each other and decided that taking all inventors’ and investigators’ interest in inventions would be the best thing in the world, and they could do so by saying that Bayh-Dole required it, or encouraged it, or vested that title, or prevented inventors from assigning title to anyone else.

The pharmaceutical industry boycott and the IPA program

The PHS makes clear in its 1963 policy that if there’s an institutional patent agreement–what would become the revitalized IPA program in 1968–then the patenting decision is a matter of the play of the policy at the institution. At Wisconsin, in 1963, that policy was that inventors owned their inventions and could do anything they wanted with them, other than as required by contract. The PHS says that principal investigators and institutions must jointly comply with PHS regulations on patenting, But the PHS does not require institutions to own inventions, but rather that institutions should follow their policies. For Wisconsin, before 1969, that means leaving inventors alone to decide what to do.

WARF, in its turn, established policies that focused again on non-exclusive licensing, according to Cronon and Jenkins. That is, WARF accepted PHS requirements that patents on inventions made with federal support or related to that federal support would be made available non-exclusively–that is, the patent owner would break up the monopoly represented by the patent right. The idea was, then, that the purpose of holding a patent monopoly on a health-related invention was to break that monopoly up. How that breaking up happened–timing, with whom, for what consideration–was a matter for strategy, with the objective being timely use and public benefit. In other words, licensees paid for the value of breaking the patent monopoly and using that monopoly only to mitigate threats made against the use of the underlying invention. A single licensee did not pay for the value of preserving the patent monopoly. That offer was no longer on the table.

The result of the PHS’s 1963 policy, directed apparently at WARF’s 5-FU practice, was the pharmaceutical industry boycott of PHS-supported compounds. Pharmaceutical companies refused to screen these compounds or otherwise work with them unless the company involved could obtain exclusive rights. This is the crux of the policy debate. This is the basis for the Harbridge House report chapter on medicinal chemistry. That in turn was the rationale for restarting the NIH IPA program as a work-around to PHS policy by providing a pathway for exclusive licensing (in sort of keeping with the Kennedy patent policy, but in defiance of PHS policy). And when the effort to expand the IPA program government-wide was blocked, and the PHS terminated the NIH IPA program, all the tools were in place to create Bayh-Dole, to stick it to the competing public policy that government administrators should decide the disposition of inventions made in federal research, with a default of dedication to the public. Bayh-Dole upset that policy and made commercialization through exclusive licensing the default, but with an apparatus that concealed this default behind a vocabulary of public interest–an apparatus that has never operated. In both formulations, both PHS and Bayh-Dole, inventors and investigators have no role. They are hens that lay eggs. The public policy dispute was how the eggs should be served to the public–given away like an invention food bank? or held in vast refrigerators until there’s an opportunity for some few to be sold at a high price?

One might think that neither approach is very good. One might begin to think that the principal investigator or the inventor might have judgment regarding the proper role of patents on their particular research discoveries and inventions that is every bit as good as that of any government official or university administrator. Indeed, in the voluntary approach to patents that most universities took–inventors or investigators did decide when something ought to be patented, and then how that patent might be used–and sought outside agents such as Research Corporation or WARF to do the work. That approach was doubly selective–the inventors decided what should be patented, and the agents decided if it was worth their effort to patent. That approach did not address the particulars of biomedical inventions made in university research, or especially with federal funding, but it got a lot further toward being focused on inventions that might be suited to commercial investment than either the PHS or the IPA/Bayh-Dole approaches.

Wisconsin, then, in describing the options for inventors, gets its policy statement wrong with regard to the PHS requirements. Inventors don’t have two choices under the PHS policy, as Wisconsin has it:

Option 1. He may submit the invention to WARF

Option 2. He may assign the invention to the Federal government

Actually, Option 2 should have read “He may submit the invention . . . ” and actually, Option 1 should have read “He may submit the invention to any invention management agent . . . .” The university, under its informal patent policy–and even in its 1969 patent policy created to accommodate the IPA program–doesn’t give the university administration standing to require inventors to assign inventions simply because there are federal funds involved. That is, the administrators have no standing under their own policy to negotiate an agreement with the federal government that requires inventors to assign to the university, nor do they have standing, even if they negotiate such a deal, to dictate what agent that university should “designate” to manage any given invention.

Of course, the Wisconsin administrators did these things anyway. The IPA requires the university to obtain assignment but leaves open who the university might designate to manage inventions. But administrators create a policy in which they decide it should be WARF, regardless of other options (such as Research Corporation) that were available to inventors. WARF becomes a “captive venture” in another way–holding inventors “captive” to its money-making interests.

Cronon and Jenkins provide a coda to the 5-FU dispute.

The agreement that’s mentioned is of course the IPA that we have been working through, that Wisconsin had wanted for some time. Our authors, citing an authority, get the assignment requirements of the IPA wrong, but then they aren’t aiming to be experts. The IPA requirement is that the university requires an agreement to assign inventions if the university (or its designee, WARF) decides to file patent applications–so things work the other way. If WARF’s patenting is *definite*, not *possible*, then the inventor must assign. Even then, the ending is not a “more positive note” with regard to the rights of inventors–the IPA induces the university to undermine its own long-standing policy and force inventions to WARF.


The IPA and Wisconsin’s 1969 Patent Policy, 12

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