The Rat in Bayh-Dole’s Rotten Pickle Barrel: 35 USC 202(c)(5)

Most of the Bayh-Dole pundits out there in the university patent and license world have never understood Bayh-Dole. I’m not sure all that many have read the statute. Certainly if they did so, they read without comprehension. Take this recent article on Bayh-Dole copyrights. Pure incompetence–but also designed to mislead, to make it appear that federal law gives universities a mandate to take ownership of everything created by their faculty, in defiance of that “free play of free intellects” that Vannevar Bush so highly regarded, and in defiance of what used to be important ideas, such as freedom to publish. And not to mention the idea baked in to federal patent law that inventors own their inventions and employment alone does not give an employer any equitable right to an employee’s invention.

Bayh-Dole is a law that doesn’t get read. Instead, people rely on pundits who have set up shop with a faux version of the law. They claim that Bayh-Dole gives invention rights to universities (despite the Supreme Court ruling not); they claim that Bayh-Dole requires commercialization (no, the standard is practical application); they claim that Bayh-Dole applies to universities (bah–the law is directed at federal agencies); they claim that universities must create new IP policies to comply with Bayh-Dole (there is no requirement that a university even have an IP policy in Bayh-Dole); they claim that universities must take ownership of inventions to comply with Bayh-Dole (absolutely not–there is nothing in the standard patent rights clause that requires ownership–and anyway, all substantive elements of the patent rights clause are not enforced).

And, of course, they claim Bayh-Dole has been wildly successful when university administrators refuse to comply with the key provisions of the standard patent rights clause–and here the pundits are wrong on two key points: (1) whatever universities are doing, they are doing under some other regime, not Bayh-Dole, since they refuse to comply with Bayh-Dole’s standard patent rights clause; (2) their practice is anything but wildly successful–it is, in fact, a dismal failure, an awful mess of rotten policy statements, incompetent drafting, and thuggish bullying of inventors, all in the name of dealing monopoly patent rights to good buddy speculators willing to share a financial upside.

Repealing Bayh-Dole is an important step. But anyone considering doing so must understand that Bayh-Dole hasn’t been the driver for the inventor-loathing university administrators that are parasitic on research inventions. Those administrators have not complied with the standard patent rights clause in any of its substantive requirements–not the (f)(2) written agreement that makes inventors parties to federal funding agreements; not the prohibition on assigning inventions without federal approval; not the prohibition on the use of royalties or income earned with respect to subject inventions other than cost recovery for “scientific research or education”; not the requirement to prefer small business licensees; not the limitation on exclusive licenses; and certainly nothing in Bayh-Dole’s framing statement of policy with regard to free competition and enterprise. Repealing won’t change any of this, since university administrators were not complying with the standard patent rights clause anyway, and federal agencies for the most part–other than superficial bits of bureaucracy–have not bothered to make universities comply.

Bayh-Dole tore a hole in the tent and allowed a horde of inventor-loathing administrative parasites into university research, where they set about eating the brain of the university using its own preferred tools–uniform processes, institutional interests as public interests, administrative authority, personal conflict of interest, worries about liability, desire for new sources of revenue, fixation on following whatever trendy topic shows up–national competitiveness, economic development, innovation, entrepreneurship, green technology. Add to that some gibberish about the “true purpose” of the patent laws, mythical reasons why Bayh-Dole was passed, a fraudulent (but merrily political) history of what went before, and the repeated refrain that invention management is so complicated that only specialists can practice it (especially when the specialists turn out to be largely incompetent at it, but who would know because, hey, this stuff is so complicated). Fixing the hole in the tent does not get rid of the parasites. It’s not even clear whether being in the tent will ever be any fun again.

It’s also not clear that a “better” federal law with regard to research contracting at universities and non-profits will do anything but require the parasites to revise their operating procedures–which is another way of having them settle in for the long haul. “Hey, federal compliance is so complicated, only parasites, er, specialists….” The immediate, coarse reality is that the parasites have so damaged university research that it may not be worth attempting to “reconnect” that research with any other initiatives, whether based in companies or governments or foundations or–woohoo–outside of any institutional controls. It may be that the parasites have finished off Vannevar Bush’s vision of the free play of free intellects.

Certainly science policy pundits think freedom is vastly inferior to properly constituted research faculty subordination to institutionally approved demands for discovery following proper procedures. According to the policy pundits, authority and organization–scientific management, in the goriest Taylorism tradition–that’s apparently the key to discovery, invention, and everything good in society. The scientist planning the work is judged incompetent to plan that work–a pundit can do a better job, or a former military type, or a passionate activist, or an illustrious scientist who has made the jump to management. Thus, federal laws should champion management, on “scientific” principles of course, to be espoused by policy pundits, who get to select whatever beauty queen to lead an effort that they happen to like. Choose anyone but the scientists who have actually thought of something they aim to study.

If there’s to be federal regulations directed at agencies that pass public money to universities and non-profits for research that the agencies have determined to be in the public interest, then those regulations should start with a clearing of the tent of parasites, at least as far as federal projects are concerned. Think of it as a bill of rights to limit the sweaty thumbs of bureaucrats rather than as a further administrative burden riding on procurement contracting. If public money is offered as a subvention–not as procurement–then the investigators must be free of all institutional claims, all corporate claims, all government claims on their findings.

In a free, public interest federal subvention environment, investigators may agree among themselves, for a given project, how they are to handle ownership and publication of their findings, but they cannot pre-obligate their findings to any monopoly interest, no matter the statement of intention that rationalizes the monopoly. If they assign their interest in inventions they make, then the subvention requirements follow the assignment. Nor can an institution threaten them with personal conflict of interest for their ownership and exploitation of their findings. Nor can an institution claim a financial share of any income that they may gain as a result of their ownership and exploitation of their findings.

Here’s the bit of accountability: the investigators have to report what they do with their findings, and what they do must be considered in any subsequent funding that any of them receives from any federal agency. Did they do nothing? Did they merely publish results but hold back the backing data, including data that might undermine their claims? Did they publish but not bother to respond to inquiries and requests for assistance in implementing work based on the results? Did they make their research tools available for others to use? Did they establish patent positions on inventions? If so, did they use those patents to attract broad use (such as by controlling quality, contributing to a standard, keeping open a platform commons, or preferring domestic producers)? And what happened to any money arising from exploitation of results, or savings brought about by the results? Who benefited? Those are the questions for subsequent funding–after all, if such research is in the public interest, then who besides the investigators and their host institutions ought to benefit? Oh, low-grade monopolists trading on speculative patent rights! No, just kidding there.

Before officious folks step in to reduce such accountability to a set of guidelines, keep in mind Jane Jacobs’s notion of “drift.” Despite the institutional impulse to create rules in the name of “fairness,” it would be much better to decide further funding based on judgment–a subjective standard for what’s been done, not a pseudo-objective one. The evaluation of what people have done with their results–and for whose benefit–might have to be evaluated outside of institutional controls, including the government itself.

Yes, this is what Vannevar Bush imagined was possible, and it may still be possible. Bush’s problem was how to create an institution-like operation that wasn’t embedded in the federal government and yet was accountable to government; that wasn’t itself dictating science but rather was identifying science at the frontiers and providing resources to that science so there would be new tools available for later work, often in very different contexts, that might take up those new tools.  For inventions and discoveries–and ownership positions taken on those inventions and discoveries–the assessment that must happen is exactly who has benefited from those ownership positions. Intention doesn’t count. Actions do. And it is exactly this assessment that Bayh-Dole attempts to prevent by making it appear that reports of invention use are excluded from FOIA discovery.

Unraveling the entire corrupt enterprise behind Bayh-Dole starts with making reporting of the use of federally supported inventions a matter of public record. How has the patent system been used to promote use of inventions, free competition and enterprise, collaboration, new research? Who were proposed to benefit in the statement of the federal project for which funding was provided? Who has in fact benefited? Lay that out. If it can’t stand the light of day, it shouldn’t exist. If the parasites in the tent can’t create a program of invention management that withstands public reporting, then they should be escorted out of the tent. Enough of the culture of deception and untruths, the incompetence and bullshit about funding gaps and valleys of death, the inventor-loathing and the institutional bullying. Don’t bother repealing Bayh-Dole. Amend 35 USC 202(c)(5):

(5) The right of the Federal agency to require periodic reporting on the utilization or efforts at obtaining utilization that are being made by the contractor or his licensees or assignees:

Provided, That any such information as well as any information on utilization or efforts at obtaining utilization obtained as part of a proceeding under section 203 of this chapter shall be treated by the Federal agency as commercial and financial information obtained from a person and privileged and confidential and not subject to disclosure under section 552 of title 5

This provision fails the public in two ways. First, though it insists that a standard patent rights clause must include the “right” of a federal agency to require reporting, it does not require any federal agency to exercise that right. But reporting on use of inventions made with subvention funding is fundamental to the legitimacy of subvention funding. Second, any reporting that an agency does require is to be treated as if it is excluded by FOIA, even if it is not excluded by FOIA.

The first part of (c)(5) must require reporting, and that reporting must go as well to a federal agency that does not provide subvention funding for research.

The second part of (c)(5) cannot bury reporting on use and benefit by means of FOIA, especially with an improper use of FOIA. The standard in Bayh-Dole is “practical application” and the definition requires public accountability (35 USC 201(f)):

the term “practical application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system;

and, in each case, under such conditions as to establish [1] that the invention is being utilized and [2] that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

I’ve added some numbering and emphasis. How can one establish that benefits are available to the public and not report public information? How can the “terms” be kept secret when those are the “terms” on which the public may obtain the benefit? No, it cannot be. 35 USC 202(c)(5) must go. It is the rat in the pickle barrel. The only thing that might be kept confidential for a limited time (consistent with the confidentiality article in Bayh-Dole–35 USC 205) is business information pertaining to plans–budget for product development, timeline for product development and launch. But whether an invention has been licensed (and whether the license is also an assignment, or just exclusive, or sole, or non-exclusive), and whether it is under active development–that information must be public within a year.

Bayh-Dole is full of rottenness anyway–from the end-run of public policy to feed monopolies on chemical compounds to the pharma industry, to the pitiful idea that private patent monopolies are the key to public benefit from federal funding, to the wretched drafting and the bankrupt regulatory implementation, to the clever but nasty attempts to make the law appear to read differently than it is written (so Congress could believe it means one thing, but patent brokers could plausibly say it means something very different)–but the most rotten part of all is this bit in 35 USC 202(c)(5). Clear that out–at least for nonprofits–and we will hear a shudder, as if millions of patent-exploiting, inventor-loathing, darkness-craving administrative parasites cried out in terror and were suddenly silenced.

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