Utilization and commercialization in Bayh-Dole

Bayh-Dole’s stated policy and objective is utilization of inventions arising in federally supported research or development–not specifically commercialization:

. . . use the patent system to promote the utilization of inventions arising from federally supported research or development . . .

In the implementation of the federal licensing side of Bayh-Dole (37 CFR 404), this is the only statement of policy that is repeated as the policy control for management of inventions owned by the federal government. One may indeed “commercialize” an invention. That certainly is one form of utilization. However, it is not the only form of utilization, not necessarily the best form of utilization, not necessarily the first form of utilization, and nothing in Bayh-Dole gives a mandate that commercialization is the desired outcome. Utilization is the general standard. Practical application–utilization with benefits available to the public on reasonable terms–is the standard set out in the march-in procedures.

Furthermore, the term commercialization is itself utterly ambiguous. It could mean the production and sale of products incorporating or based on patented inventions. But commercialization also is used to mean the attempt to get someone to produce and sell products–a “process” so to speak, rather than a result. University technology transfer diagrams of the commercialization process typically end at licensing, not a the production and sale of a product. Perhaps that’s because production and sale of a product under a university patent license is so rare that even the blandly dishonest PR folks in universities hesitate to claim it. And commercialization as a process can mean merely handing–offering to hand, hoping to offer to hand, having a policy that makes it possible to hope to offer to hand–patents to speculators who then would be given the mandate to make the attempt to produce or sell products–or at least generating a “revenue stream” (i.e., make money) by exploiting the patent rights in some way (even suing companies that are utilizing a patented invention, if that’s what it takes).

When AUTM reports licensing income, AUTM does not distinguish between earned royalties from product sales and income from speculation on the future value of patents. AUTM does not even distinguish between federally supported inventions and others. That’s because AUTM does not actually care about the differences. AUTM cares about reporting a big number and attributing that bigness to Bayh-Dole. It’s much easier if all university invention activity is attributed to Bayh-Dole, when only about 41% of university patents recite federal funding.

Attempting to commercialize and failing to do so is neither commercialization nor utilization. One does not successfully use an invention by failing to commercialize it. To give the appearance of trying to commercialize and failing to do anything at all is also not utilization. Just to be clear: sincere promotional spin does not turn hope into fact.

Bayh-Dole goes further than bare utilization. Bayh-Dole’s standard for the use of the patent system is not merely to promote any old utilization of inventions. Bayh-Dole’s standard is practical application: utilization of inventions with benefits available to the public on reasonable terms.

Commercialization in the abstract does not satisfy Bayh-Dole’s standard of practical application. Benefits of an invention’s use must be available to the public and available on reasonable terms. There would be no need for Bayh-Dole to include “reasonable terms” if any terms that a patent owner asserted were therefore reasonable. There would be no need for a requirement of “reasonable terms” if the only unreasonable terms were those forbidden by antitrust law. Reasonable terms must be something else, some constraint on the use of the patent system in promoting utilization of inventions, something that restricts the terms that otherwise would be legally possible.

Practical application can fail, even with utilization. The benefits of utilization must be public–that is, there has to be general access to the benefits, non-discriminatory access, public access. And the benefits must be available on reasonable terms, as judged by or on behalf of the public.

If an owner of a subject invention fails to achieve practical application, then the federal government can “march-in” and compel licensing of the invention. This has never happened–despite rampant nonuse and failure of practical application of most subject inventions stuck behind institutional patent paywalls, even when these inventions have been (rarely) licensed exclusively for “commercialization.” Even though Bayh-Dole requires federal agencies to use a standard patent rights clause in each funding agreement, Bayh-Dole does not require federal agencies to enforce that patent rights clause or to act on the rights that clause reserves for the federal government.

Commercialization as a result rarely–really rarely–happens. Mostly what happens is a show of the commercialization “process”–licenses are granted, capital is raised, people get rich dithering, and then–oh, a squirrel! It’s such a success! Repeat.

Under this version of Bayh-Dole–a faux version–university administrators get jobs. Patent attorneys get work. Licensing folk get jobs–and better paying jobs the more complicated they make their work. Conference and symposium organizers get jobs arranging the messaging and training for the challenges of research innovation and economic development. And of course patent speculators get the opportunity to separate investors (especially state-supported seed funds) from their money, all to pump up the metrics of the commercialization process–patents, licenses, startups, money raised–we must be on the verge of a renaissance of innovation driven by research enterprise, just keep the money flowing to research and to technology transfer. The more public money, the more potential for this renaissance. You aren’t against renaissances are you? Good, so more money, please, to show that you are in favor of renaissances.

In this way, so their version of public policy goes, bureaucrats and speculators will spend their way to our best interests. How could it get any better than this? Bayh-Dole has been so very good to us.


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