To get at the rhetorical workings of the monopoly meme, we are working our way through Howard Bremer’s testimony before a Senate subcommittee discussing S. 1215, an alternative bill to Bayh-Dole that was being considered after S. 414 had failed to pass.
To summarize: Bayh-Dole does not allocate or vest ownership of inventions–the Supreme Court was clear on that–but rather Bayh-Dole stipulates that obtaining ownership of such an invention is sufficient to render moot all other public purposes. The owner of a subject invention has the freedom to decide what to do, how to use the patent system–federal agencies, inventors, and the general public have no say in the matter. The monopoly meme does not show up in Bayh-Dole. Rather, the monopoly meme co-opts Bayh-Dole as a means to enable monopoly meme practices.
Even the public interest apparatus in Bayh-Dole appears to require practices that run against the monopoly meme. Sure, it’s clear that the patent system (patent monopoly) might be used to promote “utilization”–that’s just what the monopoly meme argues. According to the monopoly meme, there won’t be any use of an invention without first obtaining a patent monopoly to “protect” the invention–that is, to “protect” in the future a company’s investment in developing the invention for commercial use or as a commercial product. Without a substantial post-invention development cost, the monopoly meme falls apart. It’s in the interest of the monopoly meme, then, to find situations in which development costs are great compared to research costs or invention-making costs and then make these situations stand for the general case. It does not much matter whether development (to the extent that’s even needed) might take place for very little expense, or very little expense if done some other way–what matters is that those selected to consider development swear to the gods that development is, in general, really expensive. These are the folks the monopoly meme trots out to the public.
But what then do you make of Bayh-Dole’s policy requirements concerning using the patent system to promote free competition and enterprise? Or to maximize the participation of small businesses in federally supported development? Or how about that if a company hasn’t taken effective steps to achieve utilization of a given invention, the federal government could march-in and require the patent owner to grant non-exclusive licenses–wouldn’t those licenses absolutely destroy any chance that the invention would ever be used or developed? Wouldn’t the mere fact that one other company still had the right to use and develop the invention destroy the interest of any other company to take a non-exclusive license? Oh, wait, maybe a foreign company that has already developed the invention for use outside the United States might be willing to take a non-exclusive license to sell in the U.S. But then Bayh-Dole’s policy claim to bolster American global technology leadership has failed.
The owner of a subject invention is formally subject to the public interest apparatus of Bayh-Dole. And that apparatus appears to require some break up of any patent monopoly on a subject invention. But that apparatus does not operate. No one complies. No one enforces. Waivers and walkbacks and narrowings and fussy procedures abound. That apparatus did not operate in the IPA program. That apparatus did not operate in the Kennedy executive branch patent policy. That apparatus has never operated. Get over it. In effect, the public interest apparatus in Bayh-Dole serves to enable the monopoly meme by giving the impression that the monopoly meme operates only rarely, only when absolutely necessary, with all sorts of protections against abuse.
Well, you say again, the owner of a subject invention could license non-exclusively or dedicate the invention to the public, even after patenting it. But if that’s the case, the monopoly meme again fails. Bayh-Dole has no purpose if its primary role is to induce patent owners to dedicate subject inventions to the public more effectively than might happen if the federal government owns and dedicates those same inventions to the public. Bayh-Dole is reduced to a law claiming that university bureaucrats will do a better job licensing at no cost to the public what the public would not even bother going through the formalities of licensing from the federal government–not because the public needs licenses and cannot get them, but because no one bothers with licensing, generally, when the cost of the license is free and there are no strings attached. At best Bayh-Dole would then propose that university bureaucrats attaching strings to no-cost licenses will result in greater invention utilization than federal bureaucrats not attaching any strings. Okay. There’s no doubt an obscure public policy argument that people value more what they have to struggle to obtain, so it is necessary to encourage the adoption and use of useful things to prevent somewhat their adoption and use, and for this purpose university bureaucrats are more effective than federal bureaucrats. Perhaps.
When might a non-exclusive license matter? Perhaps when a licensor aims to enforce a standard or ensure quality in production or prevent false advertising–things that mattered, say, in dealing with patented drugs before successive waves of government regulation. Things, we might say, are in the public’s interest even if the patent owner loses some income potential for its efforts. If that were the case, then we would expect to see university administrators bragging about how much money they were *losing* in their technology licensing programs and how that loss was *worth it* in exchange for all the good being done on behalf of the public. That is, university technology licensing would be an act of subvention, not investment–a purposeful gift to the public, not an effort to make more money than one spends.
We come back, then, to the monopoly meme: the purpose of Bayh-Dole is to enable the efficient private exploitation of patent monopolies with the appearance of public oversight and right to intervene but in practice without either public oversight or intervention. In essence, advocates for Bayh-Dole claim that use of the patent system to advance profit-seeking through patent monopolies on nonprofit-hosted research is the public purpose, not only of the law but also of federal funding for nonprofit research, at least for those cases in which a federal contractor gains ownership of an invention made in work receiving federal funding.
Bremer’s third point:
Three, that the basic consideration in the disposition of intellectual property rights should not be whether the Government or the contractor should take title to such property when it is generated in whole or in part with Government funding, but, in whose hands will the vestiture of primary rights to an invention serve to transfer the inventive technology most quickly to the public for its use and benefit.
This is slight of hand. Inventors own their inventions. The basic consideration is on what public policy basis should inventors be dispossessed of what long-standing law–public policy–provides should be theirs? That is, why should inventors be dispossessed of their inventions merely because the federal government has reviewed their work and agreed to provide financial help? Why should either the federal government or university bureaucrats own that work? Why should they be fighting, even, over that ownership, as if flipping a coin for a dead man’s suit? In United States v Dubilier (1933), the Supreme Court sided with inventors over the federal government’s claims. Vannevar Bush, in Science the Endless Frontier (1945), argued that the government should be satisfied with a non-exclusive license to anything that was invented with funding provided for the “free play of free intellects” at universities from his proposed national research foundation. And that idea was backed by another meme–that what was invented by faculty at universities generally would be published–dedicated to the public, made available to industry (and not just to a single company in a given industry, and certainly not held back for years in the hopes that a single company will come forward eventually when the patent is sufficiently valuable and take an exclusive deal).
Bremer, however, wants to change the rhetorical frame. Look:
in whose hands will the vestiture of primary rights to an invention serve to transfer the inventive technology most quickly to the public for its use and benefit.
Bremer talks “vestiture”–and we know now that Bayh-Dole does not vest ownership of inventions in anyone. Thus, whatever it is that Bremer wanted by way of framing the debate, he did not get it in Bayh-Dole–though he and others went around the country insisting that Bayh-Dole did vest rights in institutional contractors, not in inventors. Sen. Bayh was adamant in 2010 in his amicus brief to the Supreme Court in Stanford v Roche that inventors were last in line for ownership–and the Supreme Court showed Sen. Bayh’s argument was wrong.
If we wanted to talk “vestiture” however, then we ought to look at the Harbridge House report from 1968, which looked at inventions made with federal support in 1959 and 1961. The best use of inventions–the fastest to practical application and the most frequently to practical application–was made by companies that owned the inventions and had experience in developing such inventions. By far the worst outcomes were in cases in which companies had to license in inventions and did not have experience developing them. If one wanted the worst of all possible circumstances, one would make university administrators lacking experience developing inventions attempting to license those inventions exclusively to some favored company.
If one wanted the best outcomes, per the Harbridge House findings, “vestiture” of inventions made with federal support ought to be in companies that had experience developing just such inventions. That “vestiture” then might involve more than just ownership of patent rights but also include taking over ownership of the lab, the research personnel, the data–as if those personnel worked for the company, and perhaps for a time did, like a company acquisition. Indeed, in the testimony around these laws–the expansion of the IPA program (which failed), Bayh-Dole (which failed originally), and the Schmitt bill, “vestiture” by companies was considered. The university position was that such vestiture would indeed be the most favorable, but that the public “was not ready” for such an outcome and introducing company vestiture into a bill would ensure that it would not get the votes to pass. Thus, university ownership was a dodge to snooker the public into company vestiture of inventions made with public support.
It may even be worth revisiting such company vestiture–for every federal grant, attach as a precondition of any possible disposition of inventions using the patent system a company willing to file patent applications, pay the patenting costs, develop the invention as its own, and do so timely and on reasonable terms to the public. If there’s no such company, then no patent applications will be filed. If there are multiple companies signed up, then they share the costs and co-own the inventions and compete or collaborate as they wish. In such an approach, however, there would be no transfer. There would be no “licensing”; there would be no crazy randomness of what university administrators might do or not do.
Bremer buries all of this with a frame about who best could *transfer* technology for public benefit.
to transfer the inventive technology most quickly to the public for its use and benefit.
If quickliness is the objective, then publication is the answer. If commercial development is necessary, then perhaps vesting ownership in companies with experience is the answer. If the inventive technology is methods, then open ad hoc standards are the answer. But if we put on our monopoly meme colored glasses, we see that Bremer means by “transfer” not just teaching others how something new works with sufficient clarity that they can use it for themselves but rather the exclusive licensing of a patent right so that a company that otherwise would not be bothered is instead motivated by the monopoly to develop a commercial product to be sold to the public. That’s the purpose. The “basic consideration” that Bremer wants people to fixate on is “what approach to dealing in patent monopolies will best induce companies who act only when they can secure a monopoly to undertake development of commercial products?” We might say–what approach to dealing in patent monopolies on inventions in medicinal chemistry will best induce pharmaceutical companies that otherwise refuse to develop such inventions–to which anyone otherwise would have access–to develop commercial products? There, the answer is obvious–anyone willing to deliver to the companies a patent monopoly.
Bremer argues that university patent brokers are better than the federal government in delivering patent monopolies. In that, he was flat out wrong and probably knew it. His own data showed that universities licensed biomedical inventions made with federal support at a rate of about 5% in the NIH IPA program–4 of 96 inventions were claimed to have become commercial products. The federal licensing rate was 23% for biomedical inventions. University officials admitted in congressional testimony that universities had not done all the good a job with licensing federally supported inventions–but they could “get better” as it were. There’s nothing like optimism that disregards the evidence as a basis for public policy concerning a trillion dollars in future research.
Bremer and others didn’t compare biomedical licensing of federally supported inventions with university IPA biomedical licensing. They compared non-federal university licensing rates–claimed to be 25% to 30%–with the licensing rates for all federally owned patents, even when most of those patents were military-related and the companies involved in making the inventions had passed on taking ownership of them, and the inventions were made available non-exclusively and royalty free, so no one bothered with the formalities of licensing or even tracking actual use. Folks at AUTM and other university front groups still use this deceptive comparison–and folks still self-delude that it is a meaningful comparison, a political bluff that keeps on giving–and screwing generations of inventors, investigators, and the public that expects something from publicly funded research.
Look, if patent brokers at the time were all that good at doing things–Research Corporation, say–then the federal government could simply contract with them to manage specific inventions owned by the federal government. There would be no reason whatsoever for the federal government to cede ownership of inventions to university administrations on the arbitrary rule that if a university could get ownership, it could keep ownership and do whatever it wanted, so long as it filed a patent application. Why would some random university on the coast of California do a better job licensing anything invented there than would a federal agency, or a federal agency contracting with Stanford or Columbia to do the licensing? The federal government could take ownership of inventions as provided by the Kennedy patent policy and rather than fussing with after-the-invention “determinations” simply contract out for invention management services when it was decided that a given invention or class of inventions might be better made available to industry through a focused licensing program. Use the best licensing office for the invention, not some random office that gets its hands on an invention as an accident of federal funding.
Without the monopoly meme, Bremer’s argument becomes: universities without credible technology transfer programs will do better licensing of inventions than the federal government because the federal government has no particular need to license inventions it makes freely available. If that were so, then the even better argument would be that the federal government could do a better job than any random university by contracting with companies and law firms that specialized in conveying patent rights to specific industries, working across classes of inventions obtained by the federal government rather than fragmenting the results of research spread among scores of universities into the hands of scores of university technology licensing offices, each seeking to do exclusive patent licenses as rapidly as possible–and ending up like stooges trying to get through the same door not doing any licenses at all.