Bayh-Dole 40, yet another lobbying front organization to push a fake account of Bayh-Dole, put out a tweet a few days ago:
Bayh-Dole’s impact extends beyond just biopharmaceutical innovations. Check out this new invention in the world of sports made possible thanks to #BayhDole.
The tweet includes a link to a TechLink announcement: “Department of the Air Force: Notice of Intent to Grant Exclusive License to STACC Hockey.”
This is all so strange. Let’s have a look. The invention to be licensed is a mechanical hockey puck shooter.
To be clear, Bayh-Dole did not have anything to do with making this invention “possible.” People invent stuff all the time. There’s no indication that people invent less often in publicly funded research if they think they won’t get a patent monopoly on their discoveries. And even if some researchers thought that way about things, someone should explain why those people would then would stop discovering only when they realized that they would own their inventions, not the organizations that hosted their work on behalf of the federal government. “Gosh, if university administrators don’t step in to take ownership of the results of this public research–and assert a patent monopoly to prevent anyone else from using these results without first paying up–then there’s just no incentive left here for me to discover anything!” No, that’s a nonsense position.
This hockey puck shooter machine is not even the result of contracted government research. The Air Force acquired this invention directly, without the use of any Bayh-Dole patent rights clause. In a small irony, Bayh-Dole advocates have spent forty years arguing that the federal government should not take ownership of inventions made with federal support. Their argument is that Bayh-Dole allows contractors to prevent such awful federal ownership by claiming ownership themselves. Contractor exploitation of patent monopolies, so the argument goes, is categorically better than federal agency exploitation of patent monopolies. But here we have an invention acquired by a federal agency. Somehow, Bayh-Dole has made it possible. Nonsense.
How, then, is Bayh-Dole involved? Prior to Bayh-Dole, some people in federal government argued that the federal government could not grant exclusive licenses to inventions without an act of Congress. An attorney general. Leaders of the Public Health Service. The Kennedy executive branch patent policy in 1963 expected government-acquired inventions to be “dedicated” to the public–regardless of whether the patent system was used (i.e., to publish the invention, to prevent importation that undermined US manufacture). The effort since–starting with the Nixon revisions in 1971–has been to create the expectation that the federal government may grant exclusive licenses whenever it wants. Bayh-Dole expressly authorizes federal agencies to grant exclusive licenses and sets the conditions on which they may do so and stipulates licensing provisions that must be included. Those conditions and stipulations then become administrative overhead to innovation. In turn, those conditions and stipulations are remarkably weak.
For conditions, 35 USC 209 puts things boldly:
(a)Authority.—A Federal agency may grant an exclusive or partially exclusive license on a federally owned invention under section 207(a)(2) only if—
(1) granting the license is a reasonable and necessary incentive to—
(A) call forth the investment capital and expenditures needed to bring the invention to practical application; or
That is, a federal agency may grant an exclusive license (i.e., allow a private party to suppress all other uses of an invention, with the backing of the federal government) only if the licensee is going to spend money to achieve “practical application” of the invention. Practical application is defined by Bayh-Dole to mean use of an invention with benefits available to the public on reasonable terms. 35 USC 201(f). Further, the condition stated here is not merely that the licensee agrees to spend money, but that
(i) money must be spent to bring the invention to practical application
(ii) no one will spend that money unless someone holds exclusive patent rights.
That’s bold, sort of. An exclusive licensee must commit not merely to using an invention, but to making the benefits of that use available to the public on reasonable terms. This stipulation amounts to a working requirement, something otherwise absent from US patent law. Thus, the requirement here starts with “No one will work this invention without a patent monopoly.” And then it continues with “The condition on getting a patent monopoly is that the invention is then worked.”
In a bizarre twist, however, Bayh-Dole places a broader requirement on all federal licenses (35 USC 209(f)):
No Federal agency shall grant any license under a patent or patent application on a federally owned invention unless the person requesting the license has supplied the agency with a plan for development or marketing of the invention,
What does “development” of an invention mean? Development does not mean “finish inventing to make the invention a truly inventive invention.” It means, roughly and generally, to create a product (see FAR 35.001, say) based on the invention. But creating a product does not mean the same thing as practical application. Creating a product does not require use of the invention, nor does any product so created have to be made available to the public, and certainly not on reasonable terms.
Look closer. The plan must involve either development or marketing. Not necessarily both. Marketing is, again roughly and generally, the planned introduction of something–here, the invention, not necessarily a product based on the invention–to a market. So, somehow, a candidate federal exclusive licensee could put forward a plan that involves marketing an invention without developing it. What could it mean to market an invention without developing it? Part of that meaning must be that the invention is made available non-exclusively. To market an invention cannot mean here merely to offer an exclusive sublicense, behaving as a factor between the government and the licensee that government really wanted to find but couldn’t and so licensed exclusively to a factor to do the finding. But if a licensee–here, not even necessarily an exclusive licensee–is free to make the invention available to the public (i.e., market it without development), then there’s nothing that makes it necessary to develop the invention into a product form first, and therefore no basis for the government to even consider an exclusive license.
Thus, the exclusive licensing stipulation in this part (A) is that an exclusive license is necessary for the development of a given invention into a commercial product.
You must get the mental image right here. While in folk talk an invention is a material, a widget, or technique, a claimed invention is almost always a wide swath of materials, applications, and methods. In the case of medicinal chemistry, a claimed invention may take in thousands of compounds, hundreds of applications, scores of methods. From that swath, the development of maybe one or two products might be attempted. The rest–thousands–are suppressed by the patent.
While it is questionable whether, in general, an invention will be used if there’s no patent on it (most inventions are not used, even with a patent), it is very much the case that once there is a patent on a given invention, it is much more likely that others will not use the invention (infringement!) or develop anything having to do with it (improvements, productization). First, these others have no assurance that they can obtain permission to use the invention. If the patent holder has obtained the invention with the claim is that a patent monopoly is essential for use, then (i) the patent holder will have no reason to license the invention non-exclusively; and (ii) without a license, any work done by a non-licensee is wasted; other than (iii) a non-licensee does work to invent improvements or applications with the intent to block the patent holder and prevent or limit the successful development of the invention or force a license (which according to (i) destroys the incentive for anyone to use the invention).
Whatever one may say in general with regard to any invention made new to the world, it’s very much the case that a patent monopoly on that invention, for everyone but the patent holder, by default acts to suppress the use of the invention, the development of the invention, and public access to the invention. Everyone else then aims to suppress the invention, disrupt its development, design around the invention, make the invention obsolete, exclude the invention from standards. That much is open knowledge.
If anyone wants to show a positive effect of acquiring a patent, they have to overcome this default–show that by excluding everyone else, something good happens *that would not have happened anyway if there had been no exclusion*. And that’s where Bayh-Dole fails. To show the positive effect of the default, inventions would have to be offered on a non-exclusive basis for a period of time–say, five years–and only if there was no use or development during that non-exclusive period would an exclusive license be offered, the non-exclusive licenses limited to make and use, and an effort made to attract investment that only will be made in exchange for a patent monopoly position, even one that requires resulting product to be made available to the public on reasonable terms, not monopoly terms.
To show that an exclusive license is necessary, then, the federal government must first show that no one cares about the invention and would not use it anyway, but for a company willing to spend money to make a commercial product from the invention only on the condition that it hold a patent monopoly. That is, a speculator that isn’t already in the business of working in the area of the invention. A special class of startup or investment company.
We might say, then, that Bayh-Dole authorizes federal agencies to grant exclusive licenses to patent speculators and patent trolls. Yes, strange. You might think the logic would be, if members of the public are unable or unwilling to use the invention as it is, and no legitimate companies are willing to use it for any purpose (research, internal uses, production, mass marketed commercial product), then federal agencies may grant exclusive licenses to speculators and trolls, but only on the condition that the speculator or troll licensee must then act as a legitimate company. No one can use. No company will use. Okay to license exclusively to a speculator.
But that’s not the logic here.
The logic here is that if members of the public or legitimate companies are not willing right now to accept an exclusive license to create mass marketed commercial product, then federal agencies may grant an exclusive license to a patent speculator to do so, suppressing all uses of the invention that would not involve a mass marketed commercial product or even would involve a mass marketed commercial product but one that does not depend on exclusivity (such as one that practices a standard, or gains its distinctive advantages from other features, not the inventive one on offer from the government).
Bayh-Dole, in other words, authorizes federal agencies to suppress the use and development of federally owned inventions by the public and legitimate companies in favor of patent speculators. Isn’t that something?
We are not done. There’s a second prong to Bayh-Dole’s bold authorization for federal agencies to grant exclusive licenses. They can do so when such a license is necessary to induce a patent speculator to spend money to develop a mass market commercial product or
(B) otherwise promote the invention’s utilization by the public;
This second prong throws out the “practical application” requirement. Wow! Either the exclusive license is necessary for the benefits of the invention’s use to be made available to the public on reasonable terms, or the exclusive license is necessary so that invention’s use may be promoted to the public, but with no restriction as to reasonable terms (such as price).
Put it all together: Bayh-Dole authorizes federal agencies to grant exclusive licenses to patent speculators (A) provided they make the benefits of invention use available to the public at a reasonable price, or (B) otherwise at an unreasonable price. There’s your Bayh-Dole. Consistently nasty law.
If one wanted to repeal just one goopy part of Bayh-Dole, why not start with the authorization for the federal government to grant exclusive licenses? Repeal 35 USC 209. Amend 35 USC 207(a)(2) to exclude exclusive and partially exclusive licensing, and to exclude any right by a federal agency to delegate to any other party the right to sue for infringement in the United States. The federal government should not issue patents to itself in order to give it the right to sue its own citizens for practicing an invention, either to extract payment or to suppress use.
If the government has the authority to extract payments (taxation) or to suppress use, then it should use that authority directly. If it does not have that authority, then it should not be able to gain that authority by issuing patents to itself. And even if the government does have the authority to demand payment or to suppress use, it should use the processes that attend that authority and not avoid those processes by using the patent system instead. All the worse–using the patent system to give a private party the authority to tax or suppress use, on behalf of the government.