At least repeal Bayh-Dole for everything other than pharmaceuticals

No other industry writes fakographics about the glories of Bayh-Dole. Only pharma. No-one in university research writes fakographics about the glories of Bayh-Dole. Only patent bureaucrats and their stooges in front organizations like AUTM, COGR, AAU, and APLU. Oh, maybe there’s some happy support for Bayh-Dole from the agri-bio corporate giants, too. Pharma-bio industry.

Does it take so much to figure out what’s going on? Bayh-Dole, the law for bureaucratic patent stooges. Not a law for research. Not a law for inventors.

Forget the blather about American innovation and the hand-waving about government exclusive licensing rates in 1978. Bayh-Dole came about for one reason only–to supply the pharmaceutical industry with monopoly positions on discoveries made with federal support. To back that objective, Bayh-Dole was placed in federal patent law rather than in federal procurement regulations to make it more difficult to get at. To cover this move, the law was given the appearance of a general approach to innovation, applicable to all federal agencies and all inventions. That’s what the code word “uniform” means. Bayh-Dole is not uniform, any more than the Kennedy and Nixon patent policies were uniform. But Bayh-Dole tries to hide the fact that it exists for the sole purpose of ensuring that pharmaceutical companies get private monopoly positions in discoveries made with federal funds.

Anyone who challenges Bayh-Dole, then, finds themselves accused of attacking the patent system, or attacking innovation, or preventing inventions from being developed for public benefit. It’s all total crap.

Here’s what needs to be done to contain the Bayh-Dole crap. If we can’t get rid of it, at least keep it in the toilet of pharmaceuticals and not flush it all over the house of research innovation.

Divide subject inventions into two groups–pharmaceutical compounds and everything else. Now repeal Bayh-Dole for everything else and return to some reasonable version of the Kennedy-Nixon executive branch patent policy. This change can be done as simply as adding a restriction to the definition of “subject invention” at 35 USC 201:

The term “subject invention” means any invention of the contractor in the field of therapeutic compounds intended for human use conceived or first actually reduced to practice in the performance of work under a funding agreement.

At the same time, eliminate the expansion of the definition of invention to include plant variety protection. Stick with plant patents for patent law.

Focus Bayh-Dole on the task of creating private monopolies for speculative investors hoping to make a killing, as it were, on human suffering. The point of Bayh-Dole should be–as it presently is–to make it clear to everyone that it is federal policy that when discoveries are made that might involve new drugs or vaccines, the rights to these discoveries are to be turned over to monopolists–either companies willing to maintain the monopolies or speculators hoping to broker a monopoly transaction with such companies. These monopolists, then, may charge whatever price the market assisted by their federally endorsed monopoly might bear–even if that “market” is primarily backed by federal subsidies for health care. The federal government’s policy, as set forth by how Bayh-Dole operates, is to redistribute national wealth to the drug industry–open wide! The “giant sucking sound” you hear is the pharmaceutical industry sucking out as much as they can from the federal government budget–first by treating federally supported research as a welfare subsidy and then charging prices 10x to 80x more than even a reasonable profit, based on the federal wink-wink of monopoly positions, and thus obtaining billions of dollars more in profits. Oh wow. No wonder the fakographics are coming up so thick and slimy!

As for whether Bayh-Dole is great public policy for pharmaceutical inventions, consider:

At the time Bayh-Dole passed, despite the repeated claims by its advocates, university licensing rates for federally supported inventions under the IPA program–almost all pharmaceutically directed–were under 5%, while the federal government’s reported rate for pharmaceutical directed inventions was 23%. University licensing practice was crap compared to the federal government’s own licensing.

Even for non-pharmaceutical inventions, university licensing practice was crap by comparison. Federal service agencies, such as the Department of Agriculture, had a 100% commercialization rate using non-exclusive licensing, according to the Harbridge House report, while the best university licensing programs reported 25% or 33%. University licensing practice at the time was crap.

Now for the present. Bayh-Dole is designed to try to keep all reports of utilization federal secrets. Probably those reports could be got from public universities under state public disclosure law, but not without a legal fight. AUTM, too, does not track subject inventions or “practical application”–the objective of Bayh-Dole’s machinations. Apparently no one who loves Bayh-Dole wants to reveal just how good the law actually is. The public, I guess, would be so overwhelmed at its success that they would want to, um, dismantle it on the spot. What actually happens is that the propagandists for Bayh-Dole use the absence of utilization reports to substitute their own–mostly meaningless and inane–statistical proxies for Bayh-Dole’s success.

Of the few reports of invention to product via university licensing that we have, it appears that in the Bayh-Dole era, universities create commercial products via licensing about 1 in 200 inventions–and that’s at the best university programs. Commercial products that have any sort of meaningful financial existence are even rarer. Stanford reported fewer than 1 in 1,000 inventions earning $1 million cumulative over the term of their patent, or over $50,000 or so a year. $50,000 a year in royalties translates into $1 million to $2.5 million in annual sales–a minimal threshold for a commercial product worth the title. That is, a reported commercialization rate for universities of 25% or so pre-Bayh-Dole has become a commercialization rate of 0.5% now. If Bayh-Dole is in any way involved, its effect can only be said to be a huge negative.

The reality is, Bayh-Dole influenced university invention management has been a disaster. Most universities don’t make money, most inventors don’t see a dime, most inventions are never licensed and never released, short of patent expiration, for broad public access. Most universities won’t even release inventions for research use by industry. They hold out for a speculative monopolist or nothing. Horrid stuff.

But the pharmaceutical industry claims that Bayh-Dole is God’s gift to innovation. Well, perhaps to pharmaceutical monopoly practices. But for most everything else, Bayh-Dole has been a bane, a monster, awful. Let’s then separate pharmaceutical inventions made with federal support from everything else.

At least end the pig-headed, unthinking policy tyranny that claims that the only way an invention is ever to be used for public benefit is if inventors are stripped of their invention ownership and told they have no say in the management of their inventions, which are then patented and offered for exclusive license until pigs grow wings or a pharmaceutical company takes a license, or a biotech company aiming to sell out to a pharmaceutical company takes a license, or a startup (usually university-created) aiming to sell out to investors who aim to sell out to a pharmaceutical company take a license. In the meantime, to suck even more money from government, the university gets its startups to apply for SBIR grants and state “economic development” funds, diverting this money from small companies to university shell companies. Wunderbar. If this is the dream vision for public benefit from significant discoveries and inventions made with federal support, then let’s have at it for pharmaceuticals. But let the rest of inventing alone to find its own way. Let inventors have a say. Let principal investigators have a say. Leave the university bureaucrats out of it. Let the speculators make their case directly to inventors, to principal investigators, to research teams who wish to remain teams. Let’s see what they do. It cannot be any worse than what the university bureaucrats are doing now!

Get rid of Bayh-Dole for everything other than pharmaceutical inventions. Let those who want it, have it. For everyone else, return our freedom and allow us to be free of bureaucrats and their monopolist buddies. Even if we pursue monopolies, we’d like to do so without always a university bureaucrat with a hand in the pie. Leave the bureaucrat will get us our monopolies strategy to the pharmaceutical industry which must truly love Bayh-Dole. Just don’t ask the rest of us to play-act to make that strategy look good or generally true. Don’t ask us to be the cover for what looks like a really ugly public policy. But if ugly it is, let it be the ugly dream-child of the pharmaceutical industry and the bureaucrats who love that ugliness because it gives them their livelihoods. Repeal Bayh-Dole for everyone and everything else.

 

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