Back for more of when Bayh-Dole does not apply, I see. Well, let’s get serious about this.
Let’s look at the Bayh-Dole definitional cascade for subject invention. We worked through “invention”–strange, broad, both patentable and not demonstrably not patentable, except for plant varieties, which are demonstrably not patentable. But Bayh-Dole’s definition of “invention” is not what matters. What matters are the restrictions placed on invention in the definition of subject invention. Bayh-Dole’s general policy statement at 35 USC 200 concerns inventions “arising in federally supported research or development” and Bayh-Dole’s confidentiality provision at 35 USC 205 authorizes federal agencies to withhold from the public information disclosing any “invention in which the Federal Government owns or may own a right, title, or interest (including a nonexclusive license).” Bayh-Dole’s federal licensing requirements at 35 USC 207 concern “inventions in which the Federal Government owns a right, title, or interest.” 35 USC 208 authorizes the Secretary of Commerce to create regulations concerning the licensing of “federally owned” inventions, and 35 USC 209 specifies the management of such licensing.
Bayh-Dole takes some pains to distinguish subject inventions from other “inventions made in the performance of funding agreements” (35 USC 210(b)) and “inventions made in the performance of work under funding agreements” (35 USC 210(c)). Subject inventions are a carve out of not just the general category of inventions but also of inventions made in the performance of work under a funding agreement. Bayh-Dole’s contracting provisions–35 USC 202, 203, and 204–apply only to subject inventions. It is subject inventions that a contractor may continue to own if the contractor obtains ownership. It is subject inventions that must be disclosed. It is subject inventions for which a nonprofit or small company contractor must file a patent application.
If an invention is not a subject invention, then the portion of Bayh-Dole applying to federal contracting does not apply. So it is essential to understand what a subject invention is–because everything else is not. The definition of subject invention in turn involves a number of other definitions– invention/funding agreement/contractor/made. It’s not pretty. Let’s say that this ugliness is intended rather than is a defect. That’s how most features show up in statutory hell.
Keep in mind Bayh-Dole’s framing elements.
Bayh-Dole arises from the NIH IPA program. Norman Latker, who drafted Bayh-Dole as a franken hybrid of the IPA program and the Federal Procurement Regulation (and he was involved in both of those things, too), publicly stated as much. The purpose of the IPA program was to allow the NIH to deal in exclusive patent rights to federally funded inventions–against the requirements of the Kennedy and then Nixon executive branch patent policies as well as against the policies of the Public Health Service. The scheme worked by farming out biomedical research work to compliant nonprofits–mostly universities–so that these nonprofits could then harvest the patent rights and convey them to pharmaceutical companies, collecting a handling fee in the process labeled a patent royalty. When Latker tried to extend the IPA scheme government-wide (he had already got buy-in from the NSF and Department of Commerce), Congressional oversight caused the IPA program to be shut down in 1978 as ineffective and contrary to public policy. Latker had Bayh-Dole drafted the next year to try again, this time as federal statute rather than as executive branch regulation.
Think what you will about the IPA/Bayh-Dole scheme. If you buy into the monopoly meme, then Latker, Bremer, and others are heroes for defying executive branch and PHS policies and creating a pathway from federal funding to pharmaceutical company-controlled patent monopolies. If you think that the federal government’s policies of open access to publicly supported research “weren’t working” (and you against all evidence think nonprofit technology transfer based on patent monopolies is working), then you will see in the IPA scheme something hopeful to beat back bureaucratic inefficiencies. And maybe it is all just half-wit bureaucrats and patent attorneys mucking about trying to find new targets for patents as weapons of corporate competitiveness. Fine. Be that way.
I see the scheme as parasitic on public research, antagonistic to all sorts of research enterprise, and something of a federal swamp scheme to profiteer from the public justification for federal support of biomedical research. The scheme uses patent controls to turn the federal money from grants-in-aid for independent researchers pursuing medical and basic science hosted by universities to a bureaucrat-controlled subsidy for speculators–with a small payoff for the nonprofit enablers of this new betting pool running under the cover of public health. Nonprofit enablers, it appears, are satisfied with (i) a tiny share of the hundreds of billions of dollars in play and (ii) an oversized satisfaction at being a part of this scheme to run up the “value”–i.e., the costs–of health care.
No one but pharma front groups and affiliates enraptured by profiting from biomedical–BIO, PhRMA, AUTM, AAU, APLU–advocate for Bayh-Dole. Notice how the info tech sector and the automobile industry and the aerospace industry and textile industry and defense-related firms–you name it–are not open and visible and chronic advocates for Bayh-Dole.
Bayh-Dole’s primary target is to use nonprofits to funnel public health research inventions to pharma. It concerns (a) nonprofits (the small business stuff was a political throw-in because there was a move to start the SBIR program and saw an opportunity to capture small company biomedical inventions) (b) dealing in patent exclusivity (there was no need for non-exclusive dealing, since the federal government had a mandate to do that and Bayh-Dole like the IPA program exists to circumvent default non-exclusive dealing); and to close the federal licensing mandate to license non-exclusively, (c) expressly authorizing federal agencies to deal in patent exclusivity.
In essence, Bayh-Dole says to federal agencies–you can deal directly in patent exclusivity or you can push research to nonprofit contractors to deal in patent exclusivity. Either way, success means that publicly supported research inventions get to pharmaceutical (and biotech and biomedical) companies (and speculators in such companies) or are kept from general public access.
You may see Bayh-Dole as some great success. If you do, it is likely because you’ve heard that from others. The evidence that Bayh-Dole is a success is not to be had. AUTM doesn’t report Bayh-Dole information, and Bayh-Dole itself makes subject invention use reports a government secret. No matter how you look at it, Bayh-Dole is a dismal failure, as was the IPA program–Except if the standard of success is the creation of institutional infrastructure to normalize a pathway of exclusive rights in publicly supported biomedical research that takes possession of subject inventions and withholds them from public access and public development in favor of allowing investors and pharmaceutical companies to pick and choose ones for speculative development. There, Bayh-Dole has been a tremendous success. So, in a very real way, if an invention becomes a subject invention, then that invention is made available to this institutional infrastructure. Otherwise, the invention is outside of Bayh-Dole. Bayh-Dole then does not apply. Other federal statutes and regulations might apply, but not Bayh-Dole.
Now, for your homework, here’s the question:
who is it that actually wants Bayh-Dole to apply to any given invention?
If you were an inventor and had a choice, would you want Bayh-Dole to apply? Senator Bayh claimed that Bayh-Dole put inventors last in line to have rights in their inventions–that nonprofit administrators would have first dibs, and then federal administrators. The idea was that of the three–nonprofits, federal agencies, and inventors–nonprofits would do better exclusive licensing deals than would federal agencies and either would do better than careless, foolish, selfish, penniless inventors. It’s beautiful politics but crappy reality. Bayh-Dole co-opted an infrastructure largely cultivated by Research Corporation to facilitate inventors submitting their inventions to Research Corporation for possible investment and development. In that infrastructure, “technology transfer” meant a transfer from inventors to Research Corporation for transfer for commercial development.
With Bayh-Dole–and following the IPA program–“technology transfer” meant the confiscation of inventions by university administrators (invoking the requirements of the IPA program, and later–and wrongly–Bayh-Dole). Look at how university administrators changed their patent policies in the 1980s and 90s, claiming that compliance with Bayh-Dole required them to do so. Which was nonsense. This change in infrastructure was and is represented as a process, as if each invention moves through each stage from disclosure to exclusive license (and royalty profits). In practice, only a handful of inventions in a sea of inventions follow such a process. Maybe one in twenty years per institution results in meaningful income from commercial sales–and even then, it’s not at all clear that the patent was essential or that the public is served by a product priced 100x higher than it would had open innovation not been suppressed.
Lost in the transformation was the faculty inventor considering how best to advance any interest whatsoever in research findings–whether by publishing, disseminating, instruction, consultation, starting a company, handing off to a company, or consulting Research Corporation or any of the scores of research foundations that were established in the wake of Research Corporation and WARF.
Again, who then actually wants inventions to be subject inventions?