International Response to Bayh-Dole

You may have heard that Bayh-Dole is the most perfect law to stimulate technological innovation and translate publicly supported research into public benefit by passing inventions through the hands of speculative investors to be made into commercial products, using patents to exclude all others and attract the interest of the speculators, without whom no public benefit is possible. While you are astute enough to see this for the stinking pile of nonsense that it is, many of your colleagues apparently find it attractive and have rushed to adopt something similar.

But that’s not the version of Bayh-Dole they should be adopting.

Bayh-Dole applies to federal agencies. It allows federal agencies to grant exclusive licenses (i.e., authorize chosen companies to sue citizens and companies for infringement of patents on inventions made in work proposed in the public interest) and to use a default patent rights clause in all funding agreements for research or development unless they can justify an alternative clause. Federal contractors, if they acquire ownership of an invention made in such work and disclose that invention (and inform the government that they will keep the invention, and then file a patent application, and then prosecute the application to issuance, and then maintain and defend the validity of the patent), may keep title to that invention.

In practice, this means that a contractor, at the expense of paper-pushing, can do pretty much whatever it wants with an invention made in work otherwise funded by the government with the rationale that outcomes would be available for public use. There are public protections, but they don’t operate. Bayh-Dole keeps invention use reports secret, so the public cannot readily see what is going on (or not). And there’s no public right of appeal. Contractors don’t comply with the definition of inventions covered by Bayh-Dole, don’t comply with most of the public protections, and federal agencies don’t audit or enforce those protections.

Indeed, Bayh-Dole does not require federal agencies to enforce the patent rights clause–it just requires federal agencies to use the clause as a default and makes it bureaucratically difficult to introduce an alternative clause. Basically, then, nothing of substance operates in Bayh-Dole other than that contractors are able, by acquiring inventions, to preempt federal law that would require federal ownership of those inventions. Bayh-Dole also expressly authorizes federal agencies to grant exclusive licenses, so that if contractors don’t exclude all access in favor of commercial product speculation, then federal agencies can do so.

One area of public protection in Bayh-Dole is that of  “march-in.” If a contractor fails to achieve “practical application” of a given invention subject to Bayh-Dole’s patent rights clause, then the federal agency may (but does not have to) “march-in” and require the contractor (or assignee, or exclusive licensee) to grant licenses to the invention (35 USC 203(a)). Practical application is defined, with some qualifications (35 USC 201(f)), as use of an invention such that the benefits of that use are available to the public on reasonable terms. If any part of this definition is not met–no use, no benefits from use, benefits not available to the public, not available on reasonable terms–then the standard has not been met and a federal agency can march-in and require licensing on terms that are “reasonable under the circumstances” (35 USC 203(a)).

Bayh-Dole is treated as a US-specific law. And in some ways, it is. It is part of US patent law. It has a section set up as the most important part of the law that requires a preference for US manufacturing for exclusive licenses to use or sell in the US. It applies to US federal agencies. But Bayh-Dole is international in scope. The rights in inventions are worldwide rights. A contractor acquiring ownership of an invention made in federally supported work has the right to file patent applications worldwide, and if it doesn’t, the federal government can take ownership of those rights and file the applications itself (see 35 USC 202(c)(3)). And there are reservations against these rights to allow the US to comply with treaties and the like (see 35 USC 202(c)(4), for instance).

But there’s more to it, and this additional bit is what other countries should be acting on–regardless of the enticement of copying Bayh-Dole for their own purposes.

Consider march-in. If a contractor acquires an invention where Bayh-Dole applies, the contractor can file patent applications in foreign countries. A typical practice for a university is to file a PCT application to delay national phase applications while looking for a company to take an exclusive license and pay for the national phase work (and reimburse the university for all its prior patenting expenditures). While there’s been some hoo-haw in the US with regard to march-in, there’s never been any effort by foreign countries to seek march-in for nonuse or unreasonable use of their patent systems by US contractors or the companies that gain control of Bayh-Dole subject inventions. Many countries have working requirements in their patent laws that run in a similar direction as Bayh-Dole’s march-in, but even these requirements may be difficult to use. As a result, inventions made with US federal funding, and under the control of a federal contractor or passed by that contractor to a commercial speculator, may be patented in many countries but never achieve practical application in any of them. Bayh-Dole does not merely allow federal contractors and federal agencies to exclude Americans from access to federally supported research–it allows these folks to exclude the rest of the world, too, for a fee.

Now, what to do about this? Here’s the thing. Other governments should pass legislation to place Bayh-Dole march-in in their own patent laws. The provision would be specific to Bayh-Dole subject inventions–that is, not to the inventions subject to the country’s own version of Bayh-Dole (if it is unfortunate enough to have done such a thing), but to inventions made in US federally funded work. For these inventions, the non-US government should reserve the right to march-in and can make provisions for that march-in as clear and easy to use as possible and with a public right of appeal (unlike Bayh-Dole’s march-in procedures, which were designed not to operate and have no right of appeal).

Once such legislation is in place, the non-US government then has a right to march-in on Bayh-Dole subject inventions patented in the non-US jurisdiction and require licensing on terms the government determines are reasonable under the circumstances. In the original march-in provisions under the Kennedy patent policy (1963), a contractor had three years from patent issuance to achieve practical application or grant non-exclusive licenses on reasonable (if not royalty-free) terms. That’s the sort of march-in standard a non-US government might adopt.

Skip the wishy-washiness of Bayh-Dole march-in’s “has not taken, or is not expected to take within a reasonable time, effective steps.” Require timeliness–either work the invention by making it available or by granting non-discriminatory licenses on fair and reasonable terms, such as royalty-free if there’s been no use of the invention whatsoever. And if the terms of public availability of benefits aren’t reasonable–as might be determined by asking the public about those terms, such as price–then require licensing to companies that are willing to meet the public expectation, such as a reasonable profit, not an outlandish, speculator-desired profit.

Here’s the typical thing. A US university takes ownership of a biomedical invention made in federally funded work, files a US patent application and then a PCT application (or, even, a PCT application first, naming the US for later national phase treatment), and if a big company is not an immediate taker, licenses the whole bundle to a startup company that may be nothing more than a shell company put together with a researcher and a local entrepreneur. Nothing gets done to work the invention in, say, France, but while there’s the prospect of a patent issuing in France, everyone in France is warned to avoid the invention with the risk of being accused of infringement. But if France had its own Bayh-Dole march-in, it would not depend on the US government and Bayh-Dole’s dull-witted, never-used march-in procedures. France could march-in quickly and decisively and require licensing for practice of the invention in France, even royalty-free licensing if the company has done little to develop the invention (which is typical). Keep in mind that an invention in the popular imagination takes the form of a thing–like a light bulb–while a claimed invention in any given patent application is nearly always a set or category of many things–and in biotech, that could be hundreds of thousands of combinations of compounds and applications of those compounds and variations on the delivery of those compounds.

Even if a US company diligently develops one compound for two or three medical applications, there are still hundreds to thousands to hundreds of thousands of variations on the invention that have not been developed, worked, or made available for public use. Sure, it may be US government policy that it is wonderful that all those variations are kept from the US public in favor of giving speculators free reign, but why should that be the policy of France or Columbia or Japan? Why should other countries wait two decades to gain access to inventions made in work determined to be in the public interest, simply because the US government cedes control of those inventions for private speculation in the US?

The Bayh-Dole definition of practical application is not specific to the US. Nonuse or unreasonable use of a Bayh-Dole subject invention anywhere in the world where a contractor has sought patent rights should trigger march-in. Since Bayh-Dole anticipates such foreign patenting, it is up to foreign governments to implement public protections on Bayh-Dole practices in their countries. That way, any such government can look out for its public for all those inventions that Bayh-Dole encourages patenting under the laws of that country.

A government should be ready to march-in early and often. One of the purposes of US march-in was to stimulate faster development and release of inventions than would take place with ordinary commercial development and speculation. Three years from patent issue is typically six years from patent filing and maybe seven or eight years from invention. If folks cannot get something done in that time frame, then they should be made to release the invention. And even if they get some little bit done in that time frame, they should be made to release *all the other claims on that invention.* They get first pick to do something, and then everyone gets access to all the stuff that was claimed but not picked or picked and not developed, or developed and not made available to the country’s public on reasonable terms for that public.

Unlike the US version of Bayh-Dole march-in, any foreign version should be designed to operate all the time, and with public reporting. A country might consider then march-in to be a default–at three years from the US patent issuing, march-in happens in the non-US country unless the holder of the US patent provides a report documenting practical application or FRAND licensing in that country. And unlike Bayh-Dole, require those reports of practical application or FRAND licensing to also be public reports, not secret. After all, if benefits are available to the public, then those benefits necessarily must be public. So, too, the terms of availability must be public. And if any licensing is FRAND, then those terms, also, are necessarily public.

For that matter, a country could implement all of the Bayh-Dole public interest protections with regard to any Bayh-Dole subject invention for which patent protection is sought in that country. Require product to be substantially manufactured in that country if there’s any exclusive license granted to use or sell in that country, require any Bayh-Dole invention first acquired by a nonprofit to be made available preferentially to small business firms in the country, and require that the government be granted a royalty-free, non-exclusive license to practice and have practiced the invention in that country by or on behalf of the government. If these things are good for the US–even if ignored by the US government–they ought to be just as good in other countries, especially if not ignored.

There you have it. Really, this implementation of march-in (and other public protections) for Bayh-Dole is not optional. Other countries must create their own public protections for Bayh-Dole subject inventions when these show up as patent applications in their countries under their patent laws. Otherwise, these other governments tacitly adopt the US government position that US speculators and big companies should have exclusive access to inventions made in work proposed in the public interest, and that somehow denying access to everyone else is a great thing. It’s not. And although the US government now apparently finds such a thing great, there’s no reason that any other country should help to enable such nonsense.





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