Bayh-Dole Up Your Counsel, 2

This is UpCounsel’s 11 minute Q & A on the Bayh-Dole Act. We are working through it, Mystery Science Fiction Theatre 3000 style. Are you Joel? Am I Tom Servo? And who is the mad Dr. Forrester who keeps making us deal with these Bayh-Dole fakographic/FAQ/Q&A “summaries”?

What Does the Bayh-Dole Act Do?

The federal government funds countless projects in a given year. Some of them lead to innovations worthy of patents. Prior to this legislation, inventors of any such innovations had to sign over ownership to the United States.

“Countless” is hype. Inventions, not “innovations.” And what makes an invention “worthy” of a patent other than that it is new, non-obvious, and useful? Oh–perhaps it is whether a university administrator thinks the patent can be exploited to make money. In any event, this part is garble.

As for the second sentence, it simply isn’t true. The IPA program permitted over 50 universities and nonprofits to take ownership of inventions made with NIH and NSF funding–the primary funding sources for universities. For other inventions, the executive branch patent policy permitted agencies to allow nonprofits to retain ownership of inventions based on a case-by-case determination that such ownership would be in the public interest. The objection raised by Bayh-Dole advocates was that these determinations could take a long time, and federal agencies did not always agree that a private patent monopoly was in the public’s interest. Bayh-Dole precludes case-by-case determinations and arbitrarily requires federal agencies to allow nonprofits to retain ownership of inventions made in projects receiving federal support, regardless of any given nonprofit’s capability to manage inventions, its past performance, and the purposes of the federal funding.

With the introduction of this legislation, the federal government negated its claim on patents. As of 1980 [sic], inventors from small businesses working for the government could earn patents. Non-profits that receive federal funding can also gain patents.

Bayh-Dole limits how federal agencies can claim inventions arising in projects receiving federal support. Bayh-Dole allows federal agencies to determine there are exceptional circumstances and require assignment of inventions. It’s just that Bayh-Dole requires a convoluted, contestable process for that determination.

Bayh-Dole became effective July 1, 1981. So much for “as of 1980.” Under prior executive branch patent policy, the size of a for-profit contractor had nothing to do with whether the contractor could retain title to inventions that it acquired which were made in federally supported projects. What mattered was that the contractor had an established non-governmental commercial position and the technical capability to bring the invention to the point of practical application. Small/big didn’t matter.

As for nonprofits also “gaining” patents, they could before Bayh-Dole. Doing so involved acquiring inventions and filing patent applications. What changed with Bayh-Dole were the rules on federal agencies regarding how they could contract for inventions as deliverables. To do so, a federal agency is required to use the patent rights clause for naval nuclear propulsion systems and weapons or declare “exceptional circumstances” or wait for a contractor that obtains an invention to screw up or if a contractor does not obtain title, to use the statutory authority that still exists, that Bayh-Dole did not repeal but only preempted for subject inventions–inventions owned by a contractor, a party to a funding agreement. Nonprofits gain patents by filing patent applications. Nonprofits gain inventions by negotiating with inventors for them. Bayh-Dole makes it difficult for federal agencies to intervene when a nonprofit acquires an invention from inventors working in projects with federal support.

Most importantly, universities now have a greater incentive to innovate.

Rather scary. Let’s consider the claim that with Bayh-Dole, universities “have a greater incentive to innovate.” UpCounsel will make clear in a moment that this “greater incentive” is “making money.” But before we get there, we might ask, What “incentive” did “universities” have to innovate before Bayh-Dole? In terms of federal funding, many universities–almost anyone who mattered–had the IPA program from the NIH and later the NSF, which required administrators to require inventors to assign inventions to the university or its designee when administrators decided to file patent applications. Apparently that wasn’t incentive enough. For most other federal agencies (apart from when laws specific to situations, such as nuclear energy or space technology required special  handling), any nonprofit could request a determination that it was in the public interest for the nonprofit to attempt to exploit a patent position. But that also wasn’t incentive enough. So what could UpCounsel here intend by claiming that Bayh-Dole provided universities (administrators? faculty? students?) with a “greater incentive” to “innovate.”

The UpCounsel assertion stands for the idea that Bayh-Dole has been good, and has motivated whoever was previously not so motivated with an important new incentive. The implication, of course, is that faculty investigators didn’t really want to cure cancer or understand the weak nuclear force or find a way to predict earthquakes. They were just lounging around on the federal dime. But with Bayh-Dole, something clicked and they became motivated because… Bayh-Dole led university administrators to strip faculty inventors of their inventions? That’s incentive for faculty inventors? Faculty investigator: “I should invent more now that university administrators are prepared to strip me of ownership of my inventions. No matter that the administrators don’t know crap about what I have done, don’t have the resources or expertise to do what ought to be done next, and even where they do know something and are capable, they are overworked or tied down by stupid institutional policies.” That’s like “I should carry more cash in my wallet now that it looks like I will be robbed by arrogant fools every time I leave my house.”

Ah… perhaps the greater incentive is for university administrators, not for inventors. That would be a strange greater incentive, given that university administrators generally don’t do any research or inventing. But they should have a federally provided incentive to “innovate.” Are they in competition, then, with faculty investigators and inventors over who can innovate better? Why then do university administrators need to take the faculty inventors’ work to innovate? Why can’t the administrators innovate on their own? Oh, Bayh-Dole gave university administrators an incentive to take faculty inventions so the administrators could innovate. Ah, so federal policy is that university administrators will do a better job with innovating than will faculty researchers and inventors, but because faculty researchers and inventors don’t necessarily agree, and university administrators lacked the motivation to have a fight with the faculty over the matter (or didn’t believe it themselves), federal law had to be written to give administrators the incentive to rise up and take faculty work and attempt to innovate.

You see how the logic must work, if we were to attempt to find logic. But UpCounsel just means by “greater incentive” that “universities” now had the incentive of making money from patent monopolies instead of pathetic incentives such as commitment to the public good, or service to all sectors of industry rather than choosing favorites, or keeping science and scholarship independent of coarse political or commercial biases. These incentives, apparently, are not nearly so compelling as making money.

The Bayh-Dole Act encourages the process of technology transfer. This action occurs when a university employee with a patent makes the technology available to a larger body of people and/or groups.

Technology transfer takes place when a technology is taught to a receiving party and the receiving party is enabled to practice what it has learned. Patents may as easily interfere in technology transfer as assist it. UpCounsel describes technology transfer as “this action” that “makes technology available to a larger body of people and/or groups.” Yes, certainly. But the whole point  of the advocates of Bayh-Dole was that inventions made available to all would be used by none. That point isn’t supportable, but the purpose behind Bayh-Dole was to create a pathway by which federally supported inventions could be assigned to single companies to be exploited as monopoly patent positions. That’s not making “technology available to a larger body of people”–it’s making technology available to a single entity that can then pick over what might be made into a mass market commercial product while suppressing all other possible uses (for research, for internal company use, for professional use), precluding competition, and charging monopoly prices.

Yes, mass market products do make “technology available to a larger body of people,” but mostly the *effort* to create patent monopolies to make mass market products largely fails in its purpose. Yes, the effort might be described as “high risk, high return”–but we have to point out that for many research-based inventions made with federal support, there is absolutely no reason why the only effort attempted is a mass market product. There are research uses (research to evaluate claims, research using, research on) and in-house uses–none of which requires a mass market product and none of which benefits from patent exclusions in favor of speculation on the possibility (but low probability) of a mass market product.

The belief is that the Bayh-Dole Act, combined with further amendments in 1984 and 1986, helped reverse the decline of American industrial innovation.

Belief? The Belief, standing on its own in the abstract? Who is it who believes. UpCounsel is not telling, but the usage here indicates that it’s not UpCounsel’s belief, but is some disembodied The Belief held by others. Why should an assessment of Bayh-Dole be based on belief? Why not on the evidence? Oh, that’s because there is no evidence–just audacious belief in the absence of data. Warm feelings by some identified but apparently important–even policy-approving–somebodies. The use of “helped” in “helped reverse the decline” makes the assertion technically true, no matter the actual extent of the “help.” If the claim is that Bayh-Dole “reversed the decline” or that Bayh-Dole “was the primary cause that reversed the decline,” then we might look to evidence for how Bayh-Dole had done so.

We might look, then, at non-biomedical inventions made with federal support in areas such as energy, where Bayh-Dole preempted federal laws and agency research contracting policies. Biomedical inventions and basic science inventions funded by the NIH and NSF were generally within the IPA program, which was sufficiently Bayh-Dole like that nothing much there changed. Indeed, if the lack of access to patent monopolies in federally funded research was a key contributor to the purported “decline of American industrial innovation,” then the IPA program directed at biomedical and basic science and engineering research at nonprofits must have been *contributing to that decline* for over a decade. 

You see the point, of course. The place where Bayh-Dole should have had an effect is not where the advocates for Bayh-Dole ever point. They talk about new drugs, not new fertilizers or new cars or new refrigerators. Bayh-Dole is about a patent monopoly pipeline of biomedical inventions made with federal support, laundered through nonprofits who are given a monetary incentive to provide cover to the pipeline. The rest is bullshit political rhetoric to make the pipeline sound like it “reversed” a decline. Or, “helped” in some way, even minor, “to reverse the decline.” Or, didn’t do anything of the sort, but UpCounsel can make any assertion it wants because no one bothers to ask for the underlying evidence.

It encouraged university research in a new way. Universities, professors, and students now have a financial incentive to make new discoveries.

UpCounsel now makes the claim that not only did Bayh-Dole’s greater incentive change universities’ desire to “innovate.” Bayh-Dole also changed research. Again, university faculty and the like have had access to invention management services since the formation of Research Corporation in 1912. They have had available closely affiliated research foundations based on the WARF model since the 1920s. They have had “technology transfer offices” to liaison with invention management agents since the 1970s. For federal funding, they have had the benefit (if one stoops to call it that) of the IPA programs at the NIH and NSF. If a university inventor wanted to exploit a patent position on a research invention, they had resources available to assist them at every step. Bayh-Dole did not invent financial incentives to exploit patent positions. Bayh-Dole replaced the NIH and NSF IPA programs (shut down the previous year for sweetheart exclusive patent deals and general ineffectiveness) with a government-wide arbitrary policy that allowed institutions to take inventions made in projects with federal support even outside the NIH and NSF nonprofit research programs. If there was a “new way” of research prompted by Bayh-Dole, it had to be outside of the federal funding programs most directed at universities–not NIH and NSF.

Somehow this new incentive that was not really anything new to make money inspired faculty and others to try harder to discover, or to discover more those things that would be lucrative for them personally. Go ahead, try to find clear evidence that university faculty in response to Bayh-Dole underwent a sea-change in their approach to research so that they began to discover more and better things. Really, it’s nonsense and you won’t bother wasting your time because nothing of the sort happened. It’s not that Bayh-Dole has had no effect on university research–surely it has had an effect–it’s just that the effect has not been that faculty now conduct their research with the hope of making money from patents where they had not before. What little bit has changed–I speak from direct experience–is that some faculty researchers who previously would have had to get out and try to make money from their work on their own could sit back and bitch and moan about how the university was supposed to make that money for them if all they did was report their inventions. That is, the bitch and moan folks did get a new chance to feel slighted. The motivated folks, by contrast, found fifty ways to avoid Bayh-Dole, university administrators, and even patent monopolies in order to get their stuff into use, to advance their research objectives, and even to make piles and piles of money. Everyone else pretty much treats Bayh-Dole as a horrible paperwork nuisance.

In the previous era when all inventions became the property of the federal government, these parties had less personal interest in making discoveries.

As we have seen, this previous era is an UpCounsel fantasy. Faculty inventors had plenty of resources to deal in patents for money if they wished. In the UpCounsel fantasy, researchers apparently did not even have a publicly spirited interest in making money through patent licensing for their institutions. But we know, for instance, that the University of California faculty agreed to create a patent licensing office to generate money for university research, but only on the condition that faculty participation was voluntary. That’s a bit of actual history.

Put it another way, in the “previous era” faculty had *more personal interest* in making money from their discoveries–they were not constrained to assign all their inventions to their universities, for instance, and they did not have to propose research supported by the federal government if they anticipated making inventions that they wanted to pursue under monopoly patent protection. They had more personal interest in their work because that work was not arbitrarily taken from them. And in the case of their personal interest in their own work, university faculty generally declined to use financial gain from patent licensing as a meaningful motivator for their work. It’s not that they were full of Merton’s list of academic mores, but rather that they were highly selective of what inventions might prove to be ones worth their time (and careers) to follow out of the research environment in a quest to seek money from patent positions.

Put this way, we might propose that the effect of Bayh-Dole has been to make faculty less selective about what they identify as inventive, and to remove from faculty a personal interest in their research–replacing this interest with the idea that the university will somehow–rarely–make money from exploiting patent positions, and must share some percentage of that money with the inventors (but not other participants in their research). University administrators, for their part, waffle over whether the university has any obligation to try to make money from patent positions. Some university policies formally disclaim the idea, while others set it up as a worthy objective. I don’t know of a single American university, however, that sets itself up to act as an agent working for its inventors.

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