On advocative fakery of Bayh-Dole

Advocates of Bayh-Dole tell a fake history. They say that before Bayh-Dole, the federal government owned all inventions made with federal support. They say that Bayh-Dole gave universities the right to take ownership of inventions made with federal support. They say that Bayh-Dole prompted university technology transfer. They say that university technology transfer has been wildly successful, and is successful because of Bayh-Dole. None of this is true. It’s made up. It’s political spin made to appear to be fact. Only fools reason from political spin as if it is fact. Advocates of Bayh-Dole apparently cannot help that there are so many fools around, and so exploit their advantage.

Advocates for Bayh-Dole have told this fake history so many times they believe it, and their professional reputations ride on that fake history being accepted as true. They need folks to play the fool. Don’t expect them to start retracting their assertions, their Congressional testimony, their articles, their AUTM workshops.

Before Bayh-Dole the federal government did not own all inventions made with federal support. The claim the government did own all such inventions is simply not true. The Department of Defense, for instance, was adamant that contractors should have the right to own inventions made in defense contracted research. The NIH and NSF IPA programs permitted–no, required–each participating nonprofit to take ownership of each invention made with federal support when the nonprofit decided to file a patent application on the invention. More generally, the Kennedy patent policy of 1963 made it express that federal agencies could allow contractors to own inventions made with federal support, even for research contracts that otherwise were required by federal statute to start with a claim of federal ownership. Agencies could allow such ownership upfront, contract by contract, or could allow such ownership after an invention had been made and reported, if doing so was in the public interest.

For nonprofits, then–especially those doing the bulk of federally sponsored research, and that from the NIH and NSF–the IPA program meant that the nonprofits, not the federal government, could step in and own any invention made with NIH or NSF funding whenever they wanted–or at least whenever they chose to file a patent application. The IPA program ran from the early 1950s to 1978, when it was shut down for good as ineffective. At best, there was a two-year gap between the end of the IPA program and Bayh-Dole. Even so, the implementing procedures for the Nixon revision of the Kennedy executive branch patent policy for those two years still allowed federal agencies to allow contractors to own, contract by contract or invention by invention. If a federal agency chose not to do so, it was because the agency determined it was not in the public interest not to permit contractor ownership, not because some statute or executive branch policy required federal ownership.

Federal ownership of inventions, too, was very different than for private owners of inventions. When a federal agency asserted ownership of an invention, it generally dedicated the invention to public use.

The Bayh-Dole Act does not permit universities to take ownership of inventions made in federally supported inventions. Bayh-Dole operates only after a contractor has obtained ownership. Thus, Bayh-Dole permits a contractor to retain an acquired ownership where otherwise federal law or executive branch regulations would have asserted federal ownership–and therefore asserted public access.

University technology transfer was already a trend by the 1950s, with many universities creating affiliated nonprofit “research foundations” to manage faculty inventions. Many of these foundations in turn partnered with Research Corporation or other national invention management organizations. There was so much of this partnering that in the 1970s Research Corporation encouraged universities to set up “technology transfer” offices–campus-based personnel who would help faculty inventors prepare invention reports for review by Research Corporation. The slope of the lines for university issued patents before and after Bayh-Dole are pretty much the same. Bayh-Dole took advantage of what was already happening, but it was no cause.

And as for Bayh-Dole’s wild success–there just isn’t any support for the claim. First, universities don’t report their Bayh-Dole activity. Their Bayh-Dole work appears to be about 40% of their total patenting activity, even though federal funding constitutes, on average, 60% of their research funding. They also don’t report publicly the key Bayh-Dole metrics–date of first commercial sale or use for each invention, or use with benefits available to the public on reasonable terms. No, for universities, lots of issued patents and lots of licenses is sufficient. No need to match up either patents or licenses with federally supported inventions nor with actual commercial use or benefit available to the public on reasonable terms. The federal government also does not report this activity–and may not even ask for it. Bayh-Dole purports to make such information a government secret if it is provided to the government. The few metrics that have trickled out from universities indicate that Bayh-Dole activity is running 10x below the claimed federal licensing activity that Bayh-Dole advocates assert was under performing. That is, Bayh-Dole appears to be operating at least 10x worse than the federal policies that it displaced. Bayh-Dole has not been successful, has not been enforced, has not been what its advocates say it is.

All this fake history is used as a political bluff to accomplish a purpose–and that purpose is to serve up the monopoly meme–and the purpose of the monopoly meme is to make it appear reasonable that contractors, not federal agencies, should decide how to exploit inventions made in projects worthy of public support, and the justification for contractors to have the right to preempt public purposes is so that biomedical inventions made with public support can be conveyed as patent monopolies to whatever companies the contractors (or the federal agencies) happen to favor.

The fuss used to prompt Bayh-Dole was that the DOE was taking too long to respond to Purdue Research Foundation’s request to retain ownership of an invention that otherwise by law was to be assigned to the DOE unless the DOE decided otherwise. That is, the problem was DOE’s delay in deciding otherwise because the research foundation had not made a compelling case for patent monopoly ownership. In other words, the monopoly meme was not self-evident as a reason why a nonprofit should own an invention made in a project receiving public funding.

Think of it another way. There would be no need for Bayh-Dole if a contractor merely took ownership of an invention for the purpose of allowing open access–that’s what the federal government was already doing. If contractors were dedicated to open access, then given that Bayh-Dole expressly authorizes federal agencies to grant exclusive licenses, the primary rationale for an open access contractor to acquire ownership of an invention would be to prevent the federal government from granting any such exclusive license. “No, no–we will own the invention and grant royalty-free non-exclusive licenses to prevent the federal government from taking ownership and conveying the invention exclusively to a favorite company, damaging us all.” Imagine a world in which that statement could be made with a straight face.

Open access makes for remarkably direct administration. One does not need the services of patent attorneys; one does not need to “market” the invention to speculators or companies hoping to be chosen as the favorite monopolist. There is no bother in attempting to value an invention or to extract that value from an erstwhile “commercialization partner”; no need to set up terms of the license contract so that if one’s partner were to fail, the partner might be sued for infringement in federal court on top of all the claims one might make in state court. And no bother with infringement worries at all–for open access, infringement means success, for infringement means utilization of the invention.

Yet university administrators with straight faces repeat regularly versions of the monopoly meme as justification for their policies and practices of the dual monopoly system–monopolize ownership of inventions and attempt to monopolize the market for the use of these inventions. They say, “Companies will not license our inventions unless we grant exclusive licenses. Startups cannot get venture funding unless they have exclusive licenses.” These are assertions, not truths, but these assertions they have come to believe. And there are companies who will not take a license unless it is exclusive. Such companies do exist. It’s just that these companies are not the only companies that exist, and they are not in the majority of companies. The administrator’s defect is in holding as a general truth what is actually a narrow, piddling sometimes truth.

We can refine the administrators’ assertions to show their limitations. Companies that insist on exclusive licenses won’t take non-exclusive licenses–that much is self-evident, but that has nothing to say about companies that would take non-exclusive licenses, especially non-exclusive, royalty-free licenses or FRAND (“fair, reasonable, and non-discriminatory”) licenses, such as ones connected to a standard.

University administrators may say that a patent monopoly is necessary because development costs so much more than research. This is a non sequitur–again, nonsense. Even if it were true that development in general costs more than research, it does not follow that any prospective user of an invention must have a monopoly position, or that any given invention that must be “developed” might not be developed collaboratively, with many companies sharing the cost and the risk involved–as is done with standards, with cross-licensing, with  consortia. And just as some inventions might be expensive to develop, so others may be used immediately, without the need for “development,” nor for even a commercial product version.

It makes no sense to compare research cost to development cost. It would not make any difference, even, if the research cost was always much more than the development cost. The commercial issue is not the cost, but the recovery of that cost–or, even, if one considers the public interest only, that the cost, whatever it is, is worth the benefit and the risk of making the attempt. For nonprofits that might take in donations to seek out a cure, to develop a cure, for a disease, there is not even a question of the recovery of the cost–the matter is only one of finding that cure and making it available. But to do so, according to the monopoly meme, is foolhardy, as no company would dare to make a product for a cure that has already been developed and is made available to all. The Salk polio vaccine never existed, according to the monopoly meme. Nor does the digital computer nor the internet.

Consider, too, the development of inventive methods and research tools. Most of the “development” work for such “inventions” has already been done–the method or tool is typically already being used. Whatever development that might be required to create a commercial product version–a mass-marketed version, a version in which a manufacturer takes on liability–is  unrelated to the primary development and the primary uses of an invention in research or industry.

The rhetoric, then, of the monopoly meme is to present something as a general fact without presenting mitigating information that would require admitting that what is made to appear as a general fact simply isn’t a general fact, but rather the opposite–a rare exception to the general fact. Bayh-Dole advocates do something similar. Bayh-Dole establishes as an arbitrary right that federal contractors may choose to retain ownership of the inventions that they acquire and which have been made in federally supported work. The monopoly meme argues that contractors should have this right to do what they will with the patent monopoly. The exploitation of a patent monopoly by a private party–by a company–without regard to the purposes by which the inventive research was proposed or funded, then, according to Bayh-Dole, becomes the public purpose.

Federal research funding, once there is an invention owned by a university, becomes merely a subsidy for a private interest. If we were to think that good public policy on research was to ensure that any significant result ought to be held by bureaucrats hoping to take a share of the exploitation of a monopoly, then what we have with Bayh-Dole would surely be a wonderful thing. No public benefit without first exploiting the public. The idea is especially full of hazard (or attractive, if one is of that sort of university administrator) when the members of the public to be exploited are those suffering from disease or injury.

The fake history surrounding Bayh-Dole is so ubiquitous, so magisterial, so passionate that it takes a rough and ready courage to accept that one has been lied to, abused, bluffed, enfooled. The challenge is that some, even when they admit that the Bayh-Dole history is fake, still insist that Bayh-Dole is a really good thing. So much for reason and evidence.

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