Only Bayh-Dole and University Research Enterprise, 1

Let’s talk only Bayh-Dole and university research. Companies didn’t need Bayh-Dole for the most part, since executive branch patent policy allowed federal agencies to permit company contractors to keep inventions made under federal contracts when they acquired those inventions. There were exceptions–such as for space technologies and nuclear weapons and propulsion–but in these cases there wasn’t any private market to speak of, and in any case, if an invention were seriously worrisome, the federal government could slap a secrecy order on the patent application and no patent would issue for private exploitation. As the Harbridge House report in 1968 pointed out, many companies had little use for the patent system. Only companies in a few industries considered patenting inventions to be a critical practice. Companies didn’t much need Bayh-Dole–they already had a decent deal.

Similarly, contract research organizations did not need Bayh-Dole. Their business model included giving up inventions made under contract to the commissioning party. CROs exist to do research, not to mess around trying to commercialize results under a patent monopoly, especially one withheld from the organizations that contract with them for work. For a CRO, Bayh-Dole’s offer to let them keep what they try to hold back as a deliverable is an empty gesture. A CRO exists to do research for others, not to go into business for itself in competition with research sponsors, and certainly not to deal in patent monopolies. There’s no better way for a CRO to destroy its business than to license a patent exclusively in a field of its research expertise. Every other potential research client will walk away. CROs–for-profit or nonprofit–did not need Bayh-Dole. To the extent that universities step into the CRO model, they also sour their industry collaborations by attempting to deal in patent monopolies. To the extent that Bayh-Dole encourages them to deal in patent monopolies anyway, Bayh-Dole sours university-industry collaborations.

As for federal agencies such as the Department of Agriculture or Department of Transportation or Department of the Interior that aimed to develop new products and then release them for general manufacturing and use, companies did not care about holding patent rights as one player among many in the development activity–they would each get access to the inventions developed by everyone in the form of a completed product ready for production, use, and improvement. Everyone could feed on the competitive value of improvements while minimizing their own financial contribution to the overall effort. Seems really peachy when you think about it. They also didn’t need Bayh-Dole.

Companies in these areas of federal research and development did not need Bayh-Dole. For them, Bayh-Dole invites companies involved in shared research and development efforts to fragment ownership of the shared platform and defect on the collaboration by exploiting their patent monopolies. From their considered perspective, only assholes get patents. If an invention is made to advance a collective effort that might involve multiple inventions made by other organizations, then the “practical application” of that invention relies on the availability of all the inventions together. To use the patent system to hold an invention back and then seek to “develop” the invention at private expense in competition with the rest–and forcing the federal agency and other companies to design around the patent monopoly–runs against the whole purpose of the collective effort. Bayh-Dole is not merely unwanted here; Bayh-Dole destroys a whole class of federal development opportunities.

Yes, of course Bayh-Dole has a procedure for “exceptional circumstances.” Federal agencies could make the attempt to rebuild collective development programs, but generally they don’t. As one NIH official put it, a declaration of exceptional circumstances is “difficult to obtain.” It’s not that Bayh-Dole establishes an arbitrary default patent rights clause–it’s that Bayh-Dole makes it next to impossible for a federal agency to carry forward any public purpose other than through that arbitrary clause. Private patent monopolies are to take priority over public purposes–even when the companies participating in the public purpose prefer common access rather than private patent monopolies. Funny that.

We are left with university administrators, faculty investigators, and inventors doing research that’s funded by the federal government as a subvention, as a grant-in-aid, for work that is judged to be in the public interest to get done. These are the persons that Bayh-Dole was aimed to affect. No one else wanted or needed Bayh-Dole. Even here, before Bayh-Dole, there was the Institutional Patent Agreement program. Both the NIH and the NSF operated IPA programs which permitted nonprofits to acquire inventions made with federal support and deal in patent monopolies. The NIH proposed to make the IPA program government-wide, but Congress intercepted the effort, reviewed the IPA programs, and then shut them down as ineffective. Bayh-Dole shows up as a bill in the Senate the very next year to do pretty much what the IPA had been doing, or had not been doing, as it turns out.

Bayh-Dole restored the semblance of the IPA program and made it nonprofit wide. Under the IPA program, a nonprofit had to present evidence that it had a workable patent policy and a capable technology transfer program. That in itself was problematic, as the federal agency could then use the IPA program to dictate to universities what their patent policy should be. The IPA program also was structured as a master research contract without any substance other than the patent administration part. As such, the IPA cut out any faculty involvement in the deal. For all other research contracts, the faculty propose the research and therefore have a role in determining the invention management policy that applies. At the University of Wisconsin, the first NIH IPA partner in 1968 under the revived IPA program, faculty were responsible for negotiating the IP provisions of their sponsored research contracts.

The IPA essentially preempted the Wisconsin policy. The Wisconsin research administration excepted themselves from compliance with their own policy by contracting with the NIH to permit Wisconsin administrators to ignore Wisconsin policy. Follow that? Wisconsin, like many universities, had a policy that the terms of research contracts take precedence over formal research and patent policies. Rather than modify policy, administrators instead contracted with the NIH in breach of policy–but no matter, once they had done so, the contract authorized the breach! Bayh-Dole merely formalized this clever scheme for all universities, and made it appear that federal law required the breach. Add in that Bayh-Dole does not require a review of each university’s patent policy or technology transfer program–a university doesn’t need to have any policy or technology transfer program, and one can start to see the outline of the scheme that Bayh-Dole advocates never talk about. Bayh-Dole:

  • disenfranchises faculty investigators from federal research contracting
  • removes public oversight for university patent policies and practices
  • makes it appear that federal provisions require changes to university policies.

There’s a way that Bayh-Dole doesn’t do these things, but for that to happen, universities would have to comply with Bayh-Dole’s patent rights clause and federal agencies would have to enforce the patent rights clause and act on the rights reserved by Bayh-Dole for federal agencies. None of this happens, however.

In faux Bayh-Dole accounts, universities are granted the right to own inventions made by faculty investigators in projects receiving federal support, inventors are required to assign ownership in these inventions to their university hosts, and faculty investigators have no say in the arrangement between the university and the government. If one wanted to revise Bayh-Dole to make it favorable to university faculty–given that the ground zero of Bayh-Dole is faculty-proposed research in the public interest–then faculty would be given the opportunity to declare “exceptional circumstances” and assert alternative invention management practice for any given federal grant. Think about that one for a minute.

These faux accounts deeply misrepresent Bayh-Dole, but let’s run with them since that’s what most everyone feels the need to do. The faux assertion goes that Bayh-Dole made federal invention policy “uniform” and this was somehow a very good thing. But consider: under Bayh-Dole, every federal agency must use the same default patent rights clause in its research funding agreements unless it can justify an exception. The default clause is an arbitrary starting point–it is not uniform. Bayh-Dole allows federal agencies to vary from the default clause for various reasons; to “tailor” the default clause including by adding optional requirements such as invention utilization reporting; to waive compliance with the default clause at almost all key points; to ignore noncompliance; to choose not to act on federal government rights; to interpret the law and default patent rights clause in non-uniform ways. In form, Bayh-Dole is anything but uniform.

For that matter, Bayh-Dole only applies when a federal contractor has acquired ownership of an invention made under a funding agreement. If an invention made under a funding agreement is not acquired by a contractor, then it is not within the scope of Bayh-Dole and the prior framework of statutes and regulations still applies. Bayh-Dole did not repeal any of those statutes and regulations–it “merely” preempted them when a contractor gained ownership of an invention within the scope of a federal funding agreement for research or development. How is that uniform? No, it’s not.

The only way that federal invention practice becomes uniform is if federal agencies and university administrators all decide to do things the same way–federal agencies will ignore compliance and university administrators will go out of their way to demand ownership of all inventions. That’s pretty much the practice we have now. But that practice is not a result of Bayh-Dole. It is a result of ignoring Bayh-Dole, of acting on an impetus that is not in Bayh-Dole. Bayh-Dole does not force inventors to use the patent system or provide any special privilege for contractors to obtain inventions made under federal funding agreements.

Thus, from the outset Bayh-Dole defined an arbitrary default “safe harbor” for contractors who acquired inventions made under funding agreements. If a contractor doesn’t acquire, Bayh-Dole doesn’t apply. There are necessarily then two contracting regimes in play. The Bayh-Dole arbitrary default and the background flexible and purpose-specific framework. Bayh-Dole is “uniform” only with in the narrow sense that it serves the convenience of federal contractors who otherwise would not have the benefit of an arbitrary default that if they gain ownership of an invention made with public funding, they can keep that ownership and exploit patents based on that ownership without any review for public interest.

Well, yes, Bayh-Dole does set out a number of provisions that would restrict the patent property rights of an owner of a subject invention, but these provisions generally are ignored, don’t operate, are waived, or are not enforced. These provisions have the purpose of assuring the public that everything is fine, no matter what actually happens. If the public protections are never used, so the political rhetoric goes, then the public can be assured that those protections have never been needed because everyone is voluntarily complying with the law and it is all succeeding wildly. The innovation logic is batshit crazy but the social logic is genius: use university reputations as cover for piping patent monopolies created with public money and on a premise of public benefit to favored companies for maximum profit speculation, with only mostly useless paperwork requirements.

There’s your setup of the situation. Bayh-Dole defines an arbitrary safe-harbor in existing statutes and regulations, but in federal agency invention management practice is anything but uniform. That’s the half of it. The “uniformity” has to do only with the convenience of institutional ownership of inventions made under federal funding agreements and especially subvention grants. “If you get ownership, you can keep ownership, no questions asked and with no public accountability, but only if you go through the motions of completing bothersome paperwork.”

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