Patents in Space-2

Famiya Masood, a columnist for The Nation, an English-language Pakistani newspaper and law student at Northwestern University, has published an article that argues that Pakistan needs more patents from its government-funded research. Well, perhaps. But she gets Bayh-Dole wrong on the law and doesn’t consider the effects of the law in the United States. So let’s do some of that for her.

Masood argues that the Higher Education Commission funds university faculty research but that research “hardly ever translates into inventions that are eventually patented.” Is that true? I don’t know. But let’s say it is–that funded research does not result in inventions, and the inventions aren’t patented. Is either thing necessarily bad? There’s an argument that if basic scientific research results in patentable inventions, it isn’t basic enough. That argument misses the point that even basic scientific research relies on the development of new research tools–instrumentation and apparatus and sensors and methods of analysis that may well be inventive. Even so, what’s the point of seeking to exclude others in using new research tools? If a discovery is based on the use of such a tool, then won’t its independent evaluation by other scientists also require the use of that same tool? Or must evaluation by others wait two decades or until someone can design around the tool–making its patent worthless?

Ah, but then we hit “dual use” thinking. Even if an invention is made freely available for research work, folks should be patenting these inventions for non-research applications. There’s something to that argument. But what that something is depends on not whether there are patents but rather on what one does with the right to exclude all others from using the claimed inventions.

The purpose of government intervention, one would think, would be to promote use of new good things by Pakistani citizens and companies. Many things that are inventive, even patentable, are not necessarily good things. They may not work as claimed in the real world. They may not be any better than what is available already. They may be more expensive to make or less durable or harder to use or toxic or rely on proprietary rights no one can get permission to use. It’s not good public policy for a government to demand that citizens use inventions simply because inventions! patents! That way lies bureaucratic madness. Folks use stuff because they find their own reasons to use it. A patent does not create a legal requirement that people use the claimed invention. Quite the opposite, a patent creates a legal requirement that people cannot use the claimed invention, but for the permission of the holder of the patent on that invention. Massood clearly understands this much. Here’s her argument:

Getting a patent provides a negative right whereby it entitles the patent owner to exclude others i.e. it permits them to prevent the use of their inventions by third parties who have not paid for its use.

But preventing people from using is exactly the opposite of what the public policy would appear to put out as its objective. If the problem was that every time university researchers invented, people rushed in to use their inventions and the university researchers never got compensated for doing more research and the primary means for doing any more research was that compensation, then there would be a problem. But university researchers get compensated based on the new projects they propose. So no matter what they invent, and how it is used, their next bit of funding comes from their next proposed project. If an invention is popular, then perhaps their next proposed project will involve that invention. But if the Higher Education Commission doesn’t fund projects based on the popularity of the results of past projects, then there’s your policy disconnect. If the HEC focuses on “cutting-edge research,” then building on past results is so much cutting edge any more. A researcher, having invented, then is faced with moving on to find some other cutting-edge research to do, or giving up on HEC funding and following the past results, maybe by jumping to industry or becoming an entrepreneur or working for consulting fees. Maybe a nonprofit steps in to fund more work involving those past inventions.

But Masood imagines that patent monopolies in Pakistan are the needed incentive:

Using the right to exclude[,] the patentee can commercialize their invention in return for monetary benefits.

If no one is using the invention anyway, there’s no one to exclude and no need of a patent. If the patentee is the inventor, then perhaps the inventor gains some opportunity to work on the invention without anyone using it first. If the inventor works the invention, then presumably there is a public benefit–the invention produces something the public desires, or the invention is embedded in a product the public may purchase. Embedded in “commercialize” is this notion of working the patent. But if “commercialize” also includes “selling patent rights to speculators” or “trolling industry for fees after they have adopted,” then again things are headed down the wrong policy road.

Surely Masood’s argument is not that Pakistan lacks adequate speculation on the future value of its sponsored research outputs. It appears that Masood is concerned that publicly funded university research is not producing desired good things for the public. That is a worthy concern. But she mistakes the Bayh-Dole propaganda for fact, and thus argues that if university patent autocracy in the US results in massive innovation and public benefit (which is not Bayh-Dole and hasn’t happened, despite the political spin), then Pakistan should do something similar:

Where the researchers have the incentive to have a patent over the eventual product of their research, only then they would be able to reap the commercial benefits of their invention otherwise the incentive to innovate would continue to lack despite the funding.

In the US, an inventor owns the invention he or she makes unless and until the inventor bargains away rights. The patent system itself is the incentive an inventor must consider with regard to whether to use the patent system and if so, how to use the patent system, and even if the inventor chooses not to use the patent system, how next to act with regard to anything inventive. Inventors might reap commercial benefits of their inventions merely be not publishing them and getting paid as consultants to disclose them to companies willing to pay.

The patent system is set up to act as a balance on such dealing in trade secrets. By publishing an invention for all, the patent system breaks down trade secret activity. In exchange for publication, the patentee gets a limited time to exclude others, subject to a working requirement (but not so in the US, where there is no working requirement, except for Bayh-Dole subject inventions, but even there the working requirements are not enforced). But if that right to exclude others isn’t particularly useful, then a trade secret approach turns out to offer a greater incentive to inventors who are motivated to seek their compensation from commercial dealings.

But if university inventors are researchers who have chosen a university career, and they get compensated for their service via salary and government grants, then they may well have no interest in getting more compensation from commercializing in any form, whether with patents or trade secret or otherwise. Even if it were true, generally, that getting patents meant commercialization and that in turn meant getting paid significant money, we might find that university researchers would not necessarily think that getting paid that significant money was a worthy goal. All the more so, these researchers may find that chasing commercial dollars is a distraction, or even compromises their research, or creates conflicts of interests such that they come to distrust the motives and publications of other researchers, who they might suspect of hype or holding back key information or standing ready to steal and cheat and distort research working, all for extra dollars.

And if university researchers go about doing any examination of patent commercialization from universities in the US–say, by sending email to their research colleagues–they will find that mostly the idea of invention-patent-exclusive license-commercial product-significant money is a fantasy. It happens once a decade at elite and lucky universities, one invention in 1,000 maybe, and even then the big money does not necessarily flow in because a patent was obtained. The money may come from an equity position in a startup that was successful with something else, not within the claims of the patent on the licensed invention. Or the same money would have come in based on copyrights or rights in data or access to a distinctive expertise. Not necessarily a patent or an invention or exclusive control. With such information, a heads-up researcher based in Pakistan might well conclude that spending time on patents and excluding others and recruiting a company to take an exclusive license just isn’t worth it. Hundreds to thousands of hours will be wasted chasing money that won’t happen.

If the researchers have to pay for the patent work personally, then that’s all the more reason to ignore the patent business. If the condition that a university pays for the patent work is that it must own and control the invention, then the researcher gives up personal access–not just control–of the invention in exchange for essentially nothing–for the idea that the university might, if it got its act together, or got unusually lucky, license the invention for money and share some portion of that money at some time down the road–likely years down the road, and unlikely to be much money. Why would anyone in their right mind make that deal? We might find, even, that if a university or government offered university inventors the full net present value of their invention upfront–that is, paid inventors at the time they assigned their share of what the university or government expected the invention was worth in commercial hands later, even then we might find university inventors rejecting the deal–either to publish the invention and preclude money grubbing or to deal the invention themselves rather than settle for a small portion of a big amount handled by university administrators who may or may not be bunglers.

We can put it this way. A patent might provide cover for investment in creating commercial product. But it also can prevent research use and prevent use by professionals and companies where the investment required for personal or internal company use is minimal. The cost to scale up mass production, to make a product with all the compromises of use, safety, durability, shelf-life, competitive price, features, compatibility, and the like are often much greater than the costs of personal or internal use. The cost to create a disease diagnostic kit as a commercial product is often much greater than the cost to a laboratory medicine clinic to implement the same diagnostic test based on a published account of the test. A patent used exclusively might enable the prospect of future effort toward commercialization but also block immediate use. That’s a strange trade-off for public policy to want.

We must distinguish, then, making and using an invention from mass production sales. If the public policy goal is beneficial use, then this distinction is all the more important. There is nothing to argue, in the general case, that making and using an invention must be prevented if there is ever to be mass production. There are many cases in which mass production follows from local making and using. Local making and using–whether in research or for professional purposes or within companies but not for sale–is often a good sign that something is ripe for mass production. One moves through local use to establish the rationale for mass production. To prevent such local use raises the perceived risk of creating a mass market product, and that in turn selects for dealing with speculators willing to take the greater risk (or at least mouth words supporting greater risk environments, music to university administrators’ ears). The risk of success increases as a direct response to the action to use a patent to exclude all immediate making and using. So much for “high risk, high reward” talk. That “high risk” is not a function of the invention but of the administrative behavior that uses patents to exclude early adoption and use without regard for mass production.

If the problem was that Pakistan-based university researchers were producing lots of inventions that were getting used by Pakistani researchers, professionals, and companies, but everyone had to make their own, as a craft industry, and no one was bothering to standardize or mass produce to lower cost and broaden availability to those who could not make their own, then we would see a very different public policy issue. It would not be inventing or public use, but something about destroying craft industry in favor of mass manufacturing. Or at least pushing craft industry to the top end, where it is with fashion, architecture, and high tech prototyping. That’s a different–worthwhile–public policy discussion, but no one will get to it by treating patents and licenses and commercialization as abstractions without structure.

If the public policy goal is strictly the movement of research results directly into the hands of people dedicated to mass production, even if that means the research community is denied further access and no one is permitted to use the invention, even if they easily could, so that speculators might perceive a better market to exploit than otherwise, then we have the government using its power to create a tyranny of patent speculators.

Perhaps even a tyranny of patent speculators looks good to a country that believes it lacks a desired manufacturing base. Certainly patent speculators might welcome a move to use laws to force research results toward their hands–as has been the case in the US. While a government might reason that even patent speculators might be a means to develop more domestic industry, it should not for a moment think that doing so is plausible because they mistake US propaganda about patent speculation as fact. They will have to do their own thinking, based on the evidence they are willing to give credence.

This entry was posted in Bayh-Dole, Policy and tagged , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.