Fantasy depictions of technology transfer, 2

The standard accounts of the “technology transfer process” seem so clear and plausible that you may well believe they are generally accurate, even if there might be “technical details” that they gloss over. But these standard accounts are largely, almost entirely counterfactual. You might rationalize that they propose a golden world–how the policy ought to work, if everyone would just get on board and make the policy work. People should be forced if necessary to follow the process and then, surely, the process will work as claimed.

You might think perhaps that the standard accounts are more like aspirations, or prophecies–as some university officials testifying before Congressional committees in the 1970s implied–that while universities were not doing all that well with their patent licensing efforts, given time and money enough, they would improve and then the process would work as claimed. We are half a century into this time and money and things have gotten worse, not better. It’s just that to know things are worse, one has to work in the business because universities don’t publicly report the worse things and the federal government keeps the worse things secret.

But actually, the standard accounts of university technology transfer–the idea of using patent monopolies to attract speculative investment in the absence of any other investment and even when no investment whatsoever is required–is political bluffery, now placed in the hands of people full of sincerity. They don’t know anything else, cannot imagine anything else, or if they could imagine anything else they have no urge to try it.

These standard depictions of the technology transfer process make things appear

to start with invention, not with the public purpose of funding

to end with exclusive licenses or speculative investment, not with public benefit

to operate regularly when the depicted process operates only rarely

to have no technology context when things do have context

to matter only for the organization gaining ownership of an invention and not for researchers, or for a group of organizations, or for industry, or for the public

to be singular inventive “things” rather than broad classes of compounds, methods, and devices.

The typical university account of the “technology transfer process” is then normalized, stylized political bluffery that runs against what actually happens, supported by a fake account of what has happened. In the fake account, the federal government took ownership of all inventions made with federal support, the federal government refused to allow exclusive licensing of those inventions, the federal government did a terrible job managing its inventions, the federal government held 28,000 unused patents, and then Bayh-Dole came along and changed everything–universities started technology transfer programs, private investment rolled into develop federally supported inventions, new products were created left and right, the biomedical industries have prospered, and the public has 200 new medicines that would never have come about but for Bayh-Dole. It’s all fake, deceitful, incompetent, unsupported, disproven. In short, typical political bluffery.

I have been through much of the history of federal policy on research funding and inventions. As far as I can tell, the driver for the standard model of university technology transfer has been to create a patent monopoly pipeline from federal funding to companies in the pharmaceutical industry. Everything else is chaff and countermeasures, hidden by abstractions, distractions, private claims, proxy metrics, fake history, and success stories meant to stand in for hundreds of non-success stories.

Universities operate their technology transfer programs on a financial model in which one lucrative patent license every two decades is sufficient to justify subsidizing the program. One big hit deal every twenty years is enough to make a patent licensing program “successful.” The approach used is akin to developing an administrative process to purchase winning lottery tickets. As long as everyone everywhere follows the process, then when there is–anywhere–a lottery winner, the process can be credited with achieving this successful outcome, spurring everyone else to work harder to make the process work for them, too.

It is clear that some people do benefit from the standard technology transfer process. Law firms benefit. Technology transfer professionals get well paid, too. Organizations such as AUTM, which are funded by universities paying the dues and conference charges for AUTM members, thrive. And organizations dealing in seed investments–often funded by states seeking economic development from the standard process–make their money, too.

Biomedical companies that insist on owning inventions also benefit, though not in the ways that one might think. These companies gain their patent monopolies, and thus can not only maintain monopoly pricing for the very few inventions that they bring to market which were made with federal support, but also they can prevent anyone else from developing any other aspect of each invention covered by a patent claim–and there can be hundreds to thousands of variations and functional equivalents caught up in a single patent. Preventing use in research (including research in industry), in professional practice (such as physicians treating their patients), and as standards (available to all on fair, reasonable, and non-discriminatory terms) ensures that a company can pick and choose as it pleases from the inventions it has acquired from universities, without worry that it has chosen poorly, or that others may do a better job than it can do, or that it might fail to commercialize the parts of the invention it chooses to ignore.

If one looks only at patent transactions resulting in payment to a university licensing office, then the standard technology transfer process leaves out the practices of the biomedical companies obtaining exclusive control of publicly supported inventions. The process also leaves out the universities’ dominant licensing practices, which make it difficult for a company to sublicense an invention for all to use, or dedicate it to a standard, or cross-license it to gain access to technology or contribute to a commons. Even if a company receiving an exclusive license to a university invention wanted to manage that invention as it did other inventions in its portfolio, the terms of the university license generally does not allow it.

It is understandable that those running the current standard process of technology transfer want others to believe the process is successful, that there are no good alternatives, and that without the process the public will not receive benefits from federally supported research. They have no reason to be candid about the situation–other than that, perhaps, they owe a duty of candor to the public. But if their work is political–if as political operatives no one expects them to tell the truth–then it is difficult without committing gross naivety to claim that university officials must be candid about their technology transfer operations, or even truthful, or even not misleading, or even accountable for the performance of the model. If a technology transfer office is not making sufficient money, it is the personnel or the office that gets disciplined–directors are fired, offices are renamed or relocated. The model lives on, with new people brought in, people more willing to tell university officials what they want to hear, promising licensing revenue and good press–even if all they manage to accomplish is good press.

University administrators claim that the Bayh-Dole Act endorses, if not mandates, the standard technology transfer process. Bayh-Dole does nothing of the sort, as the Supreme Court made clear in Stanford v Roche. But the law has been co-opted to appear to provide the mandates administrators claim. They claim Bayh-Dole requires them to own inventions made with federal support–so they demand ownership and change university policies to demand ownership, and they expand their claim of ownership to all inventions and all non-inventions that they might think to “commercialize,” just to “be safe” with regard to federal compliance and just to “be fair” to all the authors, inventors, collectors, and developers who would otherwise feel mistreated if university bureaucrats did not take ownership of their work, too.

The university administrators claim Bayh-Dole requires them to commercialize inventions. Bayh-Dole does nothing of the sort. The law’s primary policy objective is utilization, not commercialization. There’s a huge difference–an invention may be broadly used without ever becoming packaged as a commercial product. An invention may be practiced directly by professionals, as surgeons or computer scientists may do in implementing a new method. An invention may be practiced as a standard or as part of a common technology base, as many engineered devices require, especially ones that must interact with other devices–such as internet servers or cell phones. If there is a critical limitation on the exploitation of federally supported inventions, it is that any commercialization of an invention must come outside of the utilization of an invention.

Under Bayh-Dole’s policy, the patent system must be used to promote the use of inventions, not the suppression of the use of inventions. Any patent-licensed product version of an invention–a commercialization of the invention–must then compete with people also making and using the invention, and even selling products based on the invention. Commercialization might bring scale, cost-effective production, access for the non-technical, and a consistent level of quality (if not necessarily top quality). But nothing in Bayh-Dole stipulates that all other use must be suppressed so that commercialization might come about, or that speculative investors should have the first right to gain control (and dictate the use) of federally supported inventions.

If people would use a given invention without any assertion of a patent right, then under Bayh-Dole there is no need to use the patent system to promote that use. If one wants to “commercialize” the invention anyway, then the commercialization activity cannot involve the suppression by patent of the use that people would make of the invention without any patent at all. There it is. But that’s not what you get from most university officials.

University administrators also claim that Bayh-Dole mandates exclusive licensing. It does not. Bayh-Dole anticipates that there will be exclusive licensing, but sets policy bounds on the use of patent rights to exploit exclusive positions. It’s just that university administrators ignore Bayh-Dole’s policy boundaries and Bayh-Dole does not require federal agencies to enforce the law or the patent rights clauses authorized by Bayh-Dole.

The university administrators argue that if Bayh-Dole insisted on non-exclusive licensing, then there would be no need for Bayh-Dole. As one university patent licensing officer once told another (in my presence), “If I was told that I had to license an invention non-exclusively, I would refuse to manage it.” His statement was no doubt true–but that choice does not come from Bayh-Dole. There are reasons for patents and non-exclusive licensing, and reasons for universities to play the point in such non-exclusive licensing, but for the most part university administrators do not know these reasons and do not alter their practice, or depiction of practice, to take advantage of non-exclusive licensing practice.

Bayh-Dole mandates none of this–not compulsory university ownership of everything that might be of interest to speculative investors (“potentially commercializable”), not commercialization, not exclusive licensing, not revenue from licensing. There is not even an “unfunded mandate” in Bayh-Dole that obligates universities to take ownership of inventions or use the patent system or attempt to license. There is no implication in Bayh-Dole, even, that a university must attempt to recover its expenses. A university can decline to take ownership of inventions–and then Bayh-Dole’s inventor patent rights clause applies (no one talks about this, and NIST claims not to understand it at all). If a university takes ownership, it can make the invention available royalty free and non-exclusively–that takes out lots of the complications in “marketing” and “licensing.”

It is only that certain biomedical companies–in pharmaceuticals and startups, especially ones directed at developing pharmaceuticals–insist on exclusive licenses to all the claims made under a given patent or set of patents as a condition of their “investment.” It is a strange discovery or invention that is so mediocre that no one will use it but for there being a patent that suppresses all other use, so mediocre that no one will improve on it because there will be no inventions in that improvement to provide an exclusive position (if one must have exclusivity).

About all we have in that line are patent claims in compounds and methods that might be used in medicines, vaccines, and the like. The public policy before Bayh-Dole was that when the federal government got involved in research directed at public health, the results were to be made available to the public–non-exclusively, royalty-free. Only in rare cases might an exclusive franchise be granted to a company for a time–to speed development in the face of an epidemic, say, or to produce and deliver at scale to address an immediate need. There was none of this idea of speculators picking and choosing without accountability among the bits and pieces of federally supported discovery for the bits and pieces that might be valuable in matters of public health if everyone else’s use was suppressed.

The university depictions of the technology transfer process are social fantasy in place to obscure the patent pipeline from public funding (not just federal) to companies in the “life sciences” industry and to speculators–universities, speculators, entrepreneurs–hoping to have what they control acquired by those companies. There is good money in their effort. But it is rotten public policy. It puts making money by exploiting public health ahead of the benefit people should obtain by the use of publicly supported research and development. “Use the patent system so that there can be no public benefit without a bureaucrat and a speculator benefiting more.” Thus, the depiction of the standard technology transfer model starts at invention and ends at revenue, not from public purpose to public benefit.

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