We are working through the fake history published by the University of Pittsburgh regarding the Bayh-Dole Act and its “key provisions.” “Fake” is too light a word for it, but it’s trendy and so people get the general idea. Really, what’s going on is material misrepresentation of federal law and regulations in a decades-old institutionally self-serving scheme to defraud inventors of the rights to their inventions. All this is put forward as virtuous, endorsed by law, and wildly successful. What better cover for intellectual fraud. No wonder university technology transfer is so complicated–it is built, in most places, on a lie.
The act ultimately has motivated more and more universities to become actively involved in the transfer of technology from the lab to market.
As David Mowrey has demonstrated, universities were active before Bayh-Dole. Many were involved in the IPA program up to its end in 1978. What Bayh-Dole has done is two-fold. First, it has induced (in a misrepresented form) many more university administrations to take patent management in-house. A few universities had done so before Bayh-Dole–notably, University of California, MIT, and Stanford. After Bayh-Dole, however, many more universities did so. Why? For one, Bayh-Dole was misrepresented as requiring university ownership. Second, Bayh-Dole was used to create the impression that the goal of federal research was commercialization rather than public benefit arising from the use of inventions. Bayh-Dole does not require commercialization, but it is drafted so badly that it is easy to deceive the casual reader. And since most university administrators and faculty don’t read the law or the implementing regulations, it’s just too easy to fool them.
The ability of universities, including the University of Pittsburgh, to retain title to and actively license these technologies serves as a tremendous incentive.
“Retain title” here is used without critical context. Here by way of contrast is an accurate statement, if long-winded, to make things clear what the University of Pittsburgh should mean by “retain title”:
The ability of university administrators on behalf of the university to retain title to inventions made with federal support,
when the administrators have previously acquired title to those inventions outside of anything in Bayh-Dole,
relative to any request for title to those inventions by the federal government, and
thus feel free from any government intervention,
to then to attempt to license patents based on these inventions
serves as a tremendous incentive to operate an invention management office as an internal university program.
No doubt a better choice of sentence structure would provide clarity, though clarity is not necessarily an administrative priority. There’s no doubt that having a blank check from the government to keep any federally funded inventions university administrators acquire might serve as a “tremendous incentive.” It’s just that Bayh-Dole doesn’t provide that blank check. Look at the Pittsburgh’s statement, not my long-winded revision. “Actively license” is nonsensical, of course. Does it mean “actively seek to license” or “maintain active licenses” or “license with continuous diligence”? Oh, it doesn’t matter. You see, Bayh-Dole’s statement of policy (35 USC 200) is that the patent system is used to promote the utilization of federally supported inventions. Licensing has nothing directly to do with Bayh-Dole. Use has everything to do with Bayh-Dole. All a license does–if exclusive–is to transfer the monopoly, kick the can down the road. Nowhere in Bayh-Dole is trade in patent monopolies made the goal of federally supported research. University patent brokers have made this goal up all on their own, and apparently believe that their livelihoods depend on trading in patent monopolies.
Finally, in this bit of Pittsburgh’s statement, note the shift from patentable inventions to “technologies.” Bayh-Dole does not concern “technologies.” It concerns inventions that are or may be patentable, and which come to be owned by a contractor–a party to the federal funding agreement. “Technology” is a more general term, and inflates the concern of Bayh-Dole to deal with the problem of patents arising in federal research programs, so that Bayh-Dole is made to appear to be a mandate for universities to create patent monopolies on “technologies” and deal, too, in these monopolies. Thus, one will find that university administrators expand the definition of invention to include “non-patentable inventions” and even “non-inventions.”
And thus, this sort of bombast in the University of Pittsburgh policy on “Patent Rights and Technology Transfer”:
The University claims ownership and control of the worldwide patent and intellectual property rights which result from activities of its faculty, staff, and students.
Just like that we move from patent to “intellectual property rights” and extend this claim to any “activity” of anyone, without regard for assignment of task, employment, or even use of resources. For some reason “patent” rights are not treated as intellectual property rights. I guess the folks drafting the policy were just too darned incapable to notice. So “patent” means “non-patent.” Just to pound the point home, at the end we find:
Certain discoveries and inventions, including trade secrets and know-how, may not be patentable but may have material commercial value or potential as revenue producers. These accomplishments are subject to the same policy as any patentable invention and will be considered by the Technology Transfer Committee and the Office of Technology Management on an individual basis.
First, the mind-bending equivalence of discovery with trade secret or know how all wrapped in the abstract “accomplishments.” But then, without a theory of patent ownership in policy to stand on, these accomplishments are also claimed under the patent policy. That is, the university claims to own faculty “know-how,” at least if administrators think it has “potential” as a “revenue producer.” The university owns your work if administrators think they can make money from it, regardless of whether it is patentable. That’s pretty much bombast. We might see why administrators at the University of Pittsburgh might venerate Bayh-Dole if they see in the law a mandate to be what they are.
The description of Bayh-Dole continues with an odd selection of “key provisions”:
- The University is entitled to retain ownership of any inventions created as a result of federal funding, unless the funding agency informs the University up front that the agency will retain title to inventions derived from the funded projects because of specifically identified “exceptional circumstances” or other specified conditions.
“entitled to retain” deliberately conflates ownership with regard to federal agency claims with ownership with regard to an inventor’s initial ownership of an invention. The university is in no way entitled to obtain ownership of inventions by Bayh-Dole. The Supreme Court in Stanford v Roche made this crystal clear.
Stanford . . . reads “retain” to mean “acquire” and “receive.” That is certainly not the common meaning of “retain” . . . .
The Bayh-Dole Act does not confer title to federally
funded inventions on contractors or authorize contractors
to unilaterally take title to those inventions; it simply
assures contractors that they may keep title to whatever it
is they already have.
Administrators at the University of Pittsburgh apparently find it acceptable to thumb their policy noses at the Supreme Court. Here’s what administrators write regarding Bayh-Dole in the “The Pitt Innovator’s Guide to Technology Commercialization“:
The federal law gave universities title to inventions developed by their faculty and staff using federal funding.
The federal government supported that goal with the enactment of the Bayh-Dole Act of 1980, effectively giving universities title to federally funded university technologies
Pittsburgh administrators apparently refuse to accept the Supreme Court decision and correct their representation of Bayh-Dole. It would appear to be contempt of court for a university to persist in claims about Bayh-Dole after the Supreme Court struck down those claims. Notice in the second passage how “inventions” has changed magically into “technologies” and the adjective “university” has been added, as if these technologies are outright the university’s. Rather seems like conversion, or adverse possession, or eminent domain. Take your pick.
“as a result” is overly broad. The scope in Bayh-Dole is “conceived or first actually reduced to practice in the performance of work under a funding agreement.” Bayh-Dole’s policy statement uses “arising from.” The implementing regulations take some effort to make clear that the determining elements are the “planned and committed activities” of a sponsored project–that is, look to the statement of work–or that the inventive work has “diminished or distracted” from those activities–in which case, look to the use of the project’s budget or to the failure to complete proposed work.
“The University is entitled to retain ownership of any inventions created as a result of federal funding” shows a fundamental ignorance with regard to the law. Bayh-Dole applies to federal agencies. It requires federal agencies to use a default patent rights clause. That clause may be tailored in various ways. Bayh-Dole does not give a university any general right to inventions. Each funding agreement distributes whatever rights in inventions are available, based on the patent rights clause that is included. Thus, it is each funding agreement–in the form of a federal contract–that controls the disposition of subject inventions.
As for the goofy attempt at qualifying the misrepresented general claim, the account here manages to work in “exceptional circumstances” but fails to recognize that an agency can modify the invention requirements in any number of ways. Only one of those ways is that the agency requires assignment of title. The agency cannot “retain title.” It never has title to begin with. All an agency can do in a contract is refuse to allow a university, if the university obtains title, to keep that title. Gosh, clarity would be a good thing.
- When a University innovator discloses the creation of an invention derived from federally funded research, the University has two months from that date to disclose that information to the appropriate federal agency. The University also must patent all inventions it elects to own and commercialize.
“derived from” is even broader and wronger. See 37 CFR 401.1 for the discussion of how the scope of subject inventions operates. The conception or actual reduction to practice must be specified (“planned and committed”). Something may be derived from federally funded work and not be at all a subject invention. Applications of discoveries, inventions made using equipment purchased for a project. These may be “derived” from federally funded research but are not within the scope of Bayh-Dole’s definition of subject invention.
“innovator” and “creation” are inappropriately broad. Inventor and invention are the proper terms here, since we are dealing specifically with Bayh-Dole. Except that at the University of Pittsburgh, apparently the proper term (in its ugly way) is more like accomplisher.
“must patent.” No. Basic confustion. Instead, try “must file patent applications.”
“it elects to own and commercialize.” More confustion. The university does not elect to own anything. It elects to retain what it has come to own by other means. Further, what it does with the invention does not come into the decision to retain ownership. Bayh-Dole does not require commercialization–its mandate is use of inventions using the patent system as indicated. I doubt the folks at Pittsburgh can give a coherent account of what they mean by “commercialization” anyway. Likely they mean, in practice, trading in monopoly patent rights to produce revenue for the university while calling the effort virtuous. That is, “commercialization” means, as well, speculation in the future value of anything that can otherwise be held behind an institutional paywall. Commercialization means, in that case, also non-commercialization. But this is just speculation.
Here’s a diagram prepared by the University of Pittsburgh to describe the “process” (there’s a second diagram, with gears as heuristics, for startups):
It is worth asking what’s missing from this diagram. First, there’s no acquisition step under which the university negotiates assignment of an invention. That part is entirely suppressed, and for good reason. It’s part of the lie that that step doesn’t exist. Second, the “process” ends at “Licensing,” but the requirement under Bayh-Dole is “practical application” not “licensing.” All licensing does is promise not to exclude practice, in exchange, typically, for money. While licensing may be the last step in the Pittsburgh process of commercialization, it is not the end point for actual real-life commercialization, which would be commercial sales. Finally, there’s nothing here to indicate that the licensing is generally exclusive. That is, the “process” creates monopolies and then trades in them. I know, it’s not there so perhaps Pittsburgh uses lots of non-exclusive licenses. Perhaps. But I’m betting not.
In the second diagram, one can see that for startups, clearly, an exclusive license is the default:
Here, getting past the basics of finding “pain points” and planning to exploit them, the core of the university’s IP involvement is buried in the third gear as “license.” There’s not even a step in which the startup sells product based on the university’s patent. Thus, here, commercialization is not of any particular university-owned invention. Rather, commercialization is using an invention as an excuse to create a company. The company is the goal, and is not the means to the goal of practical application–use of a licensed invention with public benefit on reasonable terms. Creating a company is good enough.
Thus, taken two ways “commercialization” as diagrammed by the University of Pittsburgh does not involve actual commercialization. Signing a license is the end of it. You can see then what Pittsburgh must mean, despite what a reasonable reader might be led to understand in the next key provision:
- The University must attempt to develop and commercialize the invention. If an attempt is not made, the federal government retains the right to take control of the invention. The government also may take control of the invention for other reasons, such as a need to alleviate health or safety concerns. This provision is referred to in the law as the government’s “march-in” rights.
“must attempt to develop and commercialize.” No, rather “promote the utilization.” Enable practical application or use of the invention “under such conditions as to establish that the invention is being utilized and that its benefits are . . . available to the public on reasonable terms.” Commercialization might be one way to achieve practical application. But industry use is another–no product necessary. Or even DIY use, or research use. To stipulate commercialization is to rule out these other uses, or to make efforts to commercialize take precedence. Pittsburgh may as was well argue that the law says, “Leave us alone to speculate on patent rights without accounting to anyone who would otherwise use this invention.”
“if an attempt is not made.” The federal government may require the university to grant one or more licenses. That’s not quite “take control of the invention.” It’s just that in the history of the law, the government never has taken control of an invention. March-in is not a key provision of the law, as it has never operated and was designed by university patent brokers so that it would not operate. March-in serves exactly the purpose used for here–to give the appearance of protections for the public that in practice do not operate. But worse, Bayh-Dole does not require commercialization, so it is simply untrue that an attempt to commercialize “must” be attempted. Again, a misrepresentation to make it appear the law mandates the patent management program Pittsburgh has.
Here’s the language from 35 USC 203:
has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application
A proper account of the law would then be: “If the university has not taken effective steps to achieve practical application of a given invention, the federal government may require the university to grant one or more licenses under its patent rights–but in practice the federal government never has done this.” If Pittsburgh wants to hold itself to this federal standard, it will have to have some such mandate in its own policy, with accountability for failure. But, alas, it doesn’t.