University inventions that aren’t exactly worthless-3

To show the limits of policy rationalizations over the university use of patents to benefit the public, let’s consider only those university inventions that have “worth”–that aren’t (in the eyes of university administrators, at least) “worthless.” If we work this way, then we have these categories of inventions:

inventions that aren’t worthless

(A) could be used by the public without productization

(B) could be used in research without productization

(Uses in research–research conducted using the invention; research on the invention to determine how it operates; research to improve upon the invention for further research)

(C) could be used in industry without productization

(D) but for which the inventors are indifferent to their value and decline to help others use them and so cannot be used (or used readily) by those that would use them or productize them

(That is, the invention has worth, but the worth depends on what the inventors know–lines of development, technical problems in getting things to “work,” expertise in making key components, and the like)

(E) but only because could be held by speculators hoping that someday the right to exclude others will become valuable

(Worth–because someone is willing to pay for the chance to hold)

(F) but could have greater worth if made into commercial products but won’t because the cost of development is high unless a single company is recruited to invest with the prospect of excluding all others

(G) could have worth and be used only if made into commercial products but won’t because the cost of development is high unless a single company is recruited to invest with the prospect of excluding all others.

Categories (A) [public use], (B) [research use], and (C) [industry use] involve potential uses that do not require commercial products or commodification. Any “development” of the invention for use is within the capability of anyone who wants to use the invention. “Commercialization” or “productization” or even “commodification” is unrelated to such use–other than that if there are commercial products, then any given user can decide whether a local implementation is superior to a purchased implementation. There is no need in such cases to insist on a “scale up” an invention for mass production or validate its use for a generalized consumer, before allowing anyone access for local use. All that matters is that someone who wants to use the invention can expect to implement it without spending more time and money that it is worth to that someone.

Federal patent policy has, since at least the Kennedy patent policy through the Federal Procurement Regulation and on to Bayh-Dole, ignored the direct use of inventions–ones that could be used by the public directly, or used in research, or used in industry. It is strange that such categories are not merely ignored by federal policy but apparently actively suppressed in favor of commercialization and productization based on exclusive positions based primarily on patents.

Categories (D)[uncooperative inventors] and (E)(speculator/troll intervention] raise concerns, but it is difficult to see how one can go about creating a federal policy of requiring inventors to care about their inventions, or forcing inventors to use the patent system (or threatening to take their inventions away if they refuse to use the patent system). Similarly, it is odd to think that for such inventions, federal policy might use the threat of speculators acquiring these inventions and holding them out of the public domain in the hope that perhaps some company will one day stumble into making, using, or selling something that infringes. Not only might a public interest dislike indifferent inventors taking public funding but not caring about inventions that are otherwise not worthless, but also a public interest might dislike all the more inventors selling off such inventions to speculators interested in monetizing the patent right but not investing their own money to create a product to serve the public. Even if inventors generally might do just such a thing, why should the public provide funding for projects that investigators propose as being in the public interest and then have the investigators (and those they hire) sell off (license off) inventions to speculators? Screw that.

Categories (F)[worth more if productized] and (G)[useless unless productized] are where the action is. (F) involves the claim that an invention has “worth,” including as a commercial product, but the commercial product won’t be made unless a company has an exclusive right to the product it makes and all similar or functionally equivalent products that might be made. There are variations on the argument. In one, the commercial product requires the exclusion of anyone making and using the invention in a non-product implementation–for industrial research, say. The commercial product won’t be made, so this argument goes, unless no one is allowed to use the invention even as a non-product. In another variation, it is essential that a single company has exclusive rights because otherwise a group of companies (or companies and nonprofits) might collaborate to share the costs of development (as they might to create a standard or a common platform or to coordinate their various contributions to be interoperable) and that group activity would cause any company that did not choose to collaborate not to have an interest in developing a given invention. In a third variation, a single company must have an exclusive right to the invention, not just to a product it makes by exploiting the invention. That is, the company insists on the right to exclude all others from any use of any part of an invention, even parts the company itself declines to turn into commercial products.

This last variation is the problem of the “half-eaten invention.” In practice, it is often the problem of the “barely eaten invention.” Some chemistry-based inventions, as in biomedicine, may involve claims on hundreds to many thousands of compounds. The invention is a category of compounds, but any given product chooses, typically, one of these compounds to exploit. The claim variation in (F) then becomes that no company will develop any one of these compounds into a product if any other of these compounds could be chosen by another company for development. The claim becomes even stranger when one considers an invention for which only U.S. patent rights are available–under this (F) variant, if a compound in the claimed invention might be developed by a company outside the U.S., then no company will develop any compound in the claimed invention for use in the U.S. This variation then argues that unless the U.S. market for the potential commercial product is much greater than the market in the rest of the world, then not having the right to exclude practice of the invention throughout the world means that the invention will not be developed for use in the U.S.

As for category (G)[useless unless productized], the argument is that the invention simply cannot be used without added development (more inventing, prototype building, design for mass production, testing and certifications), and that development can be done only by a single developer, and that developer refuses to participate unless it has an exclusive position on the invention itself. In this argument (G), the invention has to meet a need that is not particularly important to the government (if the need was of high importance, then the government would fund the development itself–as it does routinely for military-related items), and the need is also not particularly important to a given industry (or it would organize to coordinate the development of what it needs, as it does with industry roadmaps and standards.

These inventions in category (G) then turn out to be a special kind of specially mediocre invention–not worthless, not possible to practice except in “commercialized” form, expensive to “commercialize,” not worth it to industry to coordinate on the commodification, and with a market not sufficiently large to support multiple manufacturers, and with buyers who are not concerned with reliance on a sole source for the product and are willing to pay most any price to acquire.

The strange thing about federal research invention policy is that Bayh-Dole enables category (G) inventions as the arbitrary default for invention–all inventions are to be treated as if they are category (G) inventions.

Now our government patent policy does one more strange thing. Not only does it create an implied threat with regard to industry use of federally supported inventions (“if you don’t use, we will permit an exclusive license that excludes your use until you buy from our exclusive licensee at whatever price that licensee charges, short of antitrust–it’s your fault because you didn’t try to make product and instead only used or didn’t even do that”).

The federal policy, rather than pulling out those inventions that might require substantial capital investment to use at all but not to create a common standard and not of particular importance to government or industry and treating these as a very special case for which exclusive licensing might be allowed, instead seeks to force federally supported inventions to be developed into commercial products, and in the shortest possible time. The idea is not to create conditions under which federally supported inventions are not suppressed by bureaucracy of the federal government or federal contractors but rather to construct a fantasy process by which inventions are turned into commercial products using patent positions as inducements.

Obviously, if inventions would be turned into commercial products without patents, then patents (in this argument) serve no purpose. But rather than accepting the proposition that patents are often unnecessary (as, say, in the case of Cohen-Boyer gene splicing, or CRISPR), the federal policy turns to how to reward those companies that follow the fantasy process laid out in policy. Even then, the analysis that would matter would be whether the invention became a commercial product in the shortest possible time rather than whether the invention was used in the shortest possible time or whether the public realized the benefit of the invention in the shortest possible time–and all this analysis would not consider then things such as price, availability from multiple sources, and variations tailored for differing circumstances and uses. One begins to see how useless “shortest possible time” is for inventions generally and how damaging it can be for a federal policy.

It may well be, as far as fantasy processes go, that for any given invention, the fastest development imaginable is that a capable company with expertise throws its own vast resources at the work without delays caused by raising money or recruiting collaborators or developing by committee, and, knowing exactly what must be done, sets about doing just that, no technical hiccups, no market changes, no company changes of direction, no personnel changes. When such a company finishes its work, it will be the shortest time possible, and for that effort should be rewarded with whatever income it can extract from the “market,” using its patent position however it may. This is what the federal policy fantasizes. The moment anything slips, the fantasy fails. Here’s the prospect: the fantasy never happens in life. If it could happen, there would be absolutely no need for patent positions or exclusive rights to any one company. Any competent company could do the required development. The government could directly contract for such work without contractor ownership of inventions. Most any company could do it. And if the government paid the costs of development, then where’s the argument that the company deserves anything it can get by way of profits by exclusively exploiting the finished product?

The collateral damage in this fantasy is that it this fantasy is true for any given invention, so that if no capable, resourced company will take on whatever development is necessary (if any), then such a company must be recruited or created, and nonprofits that have hosted federally supported research (so the fantasy goes–this was Latker’s argument) will do a better job of doing any of this than will federal agencies. If companies still cannot be found to take even sweetheart exclusive licenses, it is not because the process is a bureaucratic fantasy but rather because “technology transfer is really difficult” and more money must be provided to invention management offices for more patents (just in case–the sales “funnel” and all that) and more marketing and licensing staff and staff to create companies to license to).

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