If we work through these issues, it is apparent that it is a very special case where an invention cannot be used unless it is first productized, and that such productization will not be undertaken by the federal government, or a nonprofit, or a consortium of companies working to establish a standard, and that the cost of productization is sufficiently great that no one individual or company, other than one having ready access to great wealth, is willing to take on the work, and even then, the resulting products are not of such public or social value that an individual or company would do the work in the public interest (i.e., to release the product for all to make, use, and sell) or even in the public interest after recovery of development costs (or plus a reasonable profit for having taken the risk and expense)–but rather only if the individual or company is free to make as much profit as it can over the life of the patent.
Again, productization here means, loosely, “defining a product based on or incorporating an invention that meets expectations for profit, and developing production, supply and distribution resources to make and sell the product on a national if not global scale.” No kidding there is “risk” in such undertakings, and that they are “high risk, high return” endeavors. It’s just that for nearly all research inventions, there is absolutely no need for such ventures. Most inventive stuff can be used immediately without excluding anyone. Of the stuff that’s left, if it is compellingly in the public interest, it can be used with development costs shared among governments, non-profits, and collaborating companies. Any product version can come later, if public needs are not met by local, custom, craft, just-in-time production.
In the previous article, we identified a number of categories of not worthless inventions. Three categories involved inventions that could be used without first being made into products. Two categories dealt with indifferent inventors and grasping speculators. That leaves two remaining categories. Category (G)[useless unless productized] is a very special case. It is easily conflated with category (F)[worth more if productized]–and category (F) in turn is easily broadened to include “worth more to university administrators, speculators, and other intermediaries if the attempt is made to productize and this attempt is facilitated by excluding all other uses.” From there, it is easy to see how the public benefit we are led to imagine arising from productization (in the form of money for university administrators, for research, and to reward investors so that they will come back for more) readily overshadows public benefit arising from ready, immediate access without encumbrances for making, and using, and selling–even though most university-hosted inventions are of this latter variety.
In federal and university policy both, all inventions must be handled as if they must be productized by a single, private investor who will not participate unless it has exclusive control over the invention and the opportunity to maximize its profits however it may choose. An extraordinary circumstance made to the be arbitrary default.
It is an open question whether there are any inventions in this category. It may be that this is just an imagined possibility. Even in one’s imagination, we can ask, are these the inventions that policy must be drafted to serve? Should an imagined possibility be the basis for an arbitrary, government-wide federal patent policy? If the argument veers toward medical therapeutics, then we can consider whether it is acceptable to support the exploitation of illness and injury for maximal profit as a matter of federal research policy. Past executive branch policy–until Bayh-Dole except for the NIH and NSF circumvention by means of the IPA program–was that it was not appropriate to subsidize with public funds such profit exploitation. Similarly, Congress passed a number of statutes outside of matters of public health that also aimed to restrict the use of patents to exclude others–space research, nuclear energy, water treatment. It was these statutes that university administrators complained hampered their access to patentable inventions (oh, the confusions! the delays! the difficulties!)–which they sought to exploit by means of patents for just such special, special cases–inventions in health care that otherwise would never be used if not productized; that were not sufficiently important so that the federal government, nonprofits, and the universities involved declined to productize; and that companies and investors alike would not support unless a single company or investor were given full control over patents on such inventions.
This special special case is the basis for the arbitrary federal research invention policy we have. It is the result of Bayh-Dole combined with university non-compliant practice, federal agency non-enforcement of the standard patent rights clause, and federal failure to use the rights reserved for federal agencies by Bayh-Dole.
Rather than monitoring faculty inventors for the outcomes of their activities involving their inventions, Bayh-Dole is used to disenfranchise faculty from their research. At least under the prior policy regime, faculty inventors (and everyone else) were assured of access to such inventions in nearly all cases, through federal indifference to profit-seeking and litigation against citizens and US companies for practicing what had been supported by public funding. For instance, one might imagine a policy in which, if inventors working in federally supported projects take an ownership interest in inventions, then any future requests for federal funding by the inventors and anyone they assign or license their inventions to must also consider the outcomes of that activity. Nothing licensed? No further federal funding. Licensing so that the inventors or universities might make money, but with the scope of license broadened to deny research and industry uses, and no successful productization that supplies that need? No further federal funding.
Under this policy framework, universities would get out of the patent ownership business unless they could show a clear, meaningful outcome from their management–otherwise, they would jeopardize their federal funding eligibility. Stuff would then move back to workarounds–affiliated “research foundations” and independent patent management organizations. Inventors would be directed to use these services if inventors wanted to pursue ownership positions, but the onus then would be on them to see that something happened so they could request more federal funding.
Similarly, merely releasing inventions without using the patent system would not necessarily constitute a great outcome if inventors were so busy with their other research that they refused to assist those seeking to use or develop the inventions, especially in areas of significant public need. Further federal funding cannot be left by policy to become a more important purpose than the development for use of inventions made under prior federal funding. (This appears to be what has happened to the SBIR program–companies who rely on SBIR funding find it is easier to get more SBIR funding than to break the habit and get real funding–typically they need 10x more than SBIR will ever provide–to develop actual product.)
In this policy regime, companies would insist on non-exclusive licenses. Any exclusivity would cover only what each company actually developed as a product and leave the rest of any given invention for others to use however they pleased. Inventors who wanted more federal funding would not take ownership positions in inventions unless they were confident of their outcomes–non-exclusive licensing, say–or had funding from other sources until they were successful with development or if unsuccessful had released the invention for broad access.
It’s one thing for companies that have products to contract with the government to develop those products in directions specified by federal agencies. Federal policy has left those companies alone to exploit whatever inventions they come up with in that work, so long as they don’t interfere with government use or bidding for additional federal work that might also involve those inventions. It’s quite another for nonprofits who propose work based on its public importance to receive federal subvention grants and then, when there are inventions, take ownership positions, exclude all access, and then fail to promptly meet the need created by that exclusion by granting licenses on reasonable terms and/or seeing that product is made and distributed on reasonable terms.
Most university accounts of “technology transfer” end at licensing, not public access or benefit on reasonable terms. If universities were held accountable–in terms of further federal funding–for public access and public benefit on reasonable terms–then university “technology transfer” offices would have to be committed to actual transfer of technology and not merely the offering to license that technology on terms to be negotiated later, out of the public eye, and mostly with those hoping to speculate on the “worth” of exclusive rights in those inventions made with funds justified by the prospect of public benefit.
This policy change would not be difficult to implement. Federal agencies could add it to the criteria for eligibility for federal grants (as distinct from contracts). Any proposal for research would then identify inventions made with federal support for which the inventor or nonprofit has retained ownership and provide an account of outcomes–not activity intended to make it appear there would be outcomes, but actual outcomes. 24 companies have obtained the invention. Or the invention has been made available as a reference standard and adopted by a standards organization. Or the invention has resulted in the following commercial products. Or 120 researchers throughout the world have acquired the invention for use in their research. Whatever. Accounts of actual access and use. Otherwise, don’t take that ownership position. Publish. Make the backing data available. Provide reasonable assistance for those that inquire–seeking to replicate, seeking to use. That’s your credential for being rated for further federal assistance. It cannot be that federal assistance is (in university lingo) an “industry”–getting money for research without any accountability for the disposition of results.
The challenge is establishing sufficient reporting of results that we can choose who to fund. For that, Bayh-Dole makes all reporting a government secret. But if subject invention utilization information is a precondition for further federal funding, then investigators and their institutions (and any assignees and exclusive licensees) will have to own up to the outcomes of their interventions to own and exclude all others. Federal policy could then require nonprofit institutions to publish annually a list of all subject inventions they have acquired and for each identify the outcome. Not activity toward an outcome, but actually what has been accomplished by way of use by others, development to practical application, even commercialization. Number of patents doesn’t matter. Number of licenses doesn’t matter. Money made or investment attracted doesn’t matter. Outcomes. Access or benefits on reasonable terms. Account publicly for outcomes or don’t take ownership positions.
In the federal invention licensing guidelines that Bayh-Dole overwrote, federal agencies that owned inventions could grant exclusive licenses only if they made inventions available for six months for non-exclusive licenses and had got no licensees or those licensees hadn’t made an effort to use the inventions. Bayh-Dole drops this requirement–but federal agencies could still adopt the practice, or a presidential executive order could stipulate it. It would do federal agencies good as well to be required to report to the public the outcomes for the inventions that these agencies have acquired–regardless of whether they have obtained patents. It’s one thing to set aside worthless inventions–stuff that won’t work, that is impossible to “develop,” that isn’t of interest to the public or to government or to industry. It is quite another to encourage the patenting of worthless inventions, or to make inventions worthless to most people by encouraging patenting without accountability. And it is yet another thing to take ownership of inventions and then not use the patent system when the patent system ought to be used, if only to publish nationally a full specification of a given invention, even without the motive to sue users of the invention or to seek a profit.