The Purpose of Bayh-Dole: Some History

Bayh-Dole re-establishes a patent monopoly pipeline from federal funding to the pharmaceutical industry.

The NIH first created this patent pipeline in 1968 when Norman Latker, patent counsel at the NIH, restarted the Institutional Patent Agreement program that had been allowed to lapse in the late 1950s. The IPA program ran from 1968 to 1978 when it was shut down as ineffective and contrary to public policy. Latker drafted Bayh-Dole and based it on the IPA program. Thus, Bayh-Dole restores a patent pipeline that the NIH had previously built.

In the early 1960s, the pharmaceutical industry boycotted inventions made in federally supported work. The problem was not that the federal government made inventions available non-exclusively, royalty-free. Rather, the problem was “contamination” of pharma inventive work. If a company brought in an invention carrying a federal interest, the Public Health Service might claim that anything the company subsequently developed that was related to that invention was subject to a federal claim–either a license or joint ownership. As a result, the pharmaceutical industry declined to participate in federal research funding initiatives.

These two issues, then–contamination and participation–were the problem, not open innovation vs patent monopoly. But these issues provided an opportunity for the NIH to undermine the federal government’s policy of open access for health-related inventions in which the federal government had an interest.

In 1968, the Harbridge House report on federal patent practices identified the problems between the PHS and the pharmaceutical industry. The report made clear that one approach to federal inventions would not serve all industries. Many industries placed a low value on the role of patents. According to the report, even in industries that valued patents, practices varied from company to company. In response to the report, Norman Latker, patent counsel at the NIH, re-established the PHS IPA program. Using an IPA master agreement, the NIH contracted with selected nonprofits to create a patent rights clause that would then apply to all NIH research grants with each nonprofit. The patent rights clause in turn circumvented requirements of the Kennedy executive branch patent policy by requiring contractors working in public health research to take ownership of inventions whenever they decided to seek a patent. And, in a bit of genius, because the IPA master agreement attached to later awarded NIH research agreements, universities could book the IPA master as a research agreement and use that to supersede their own patent policies, which often allowed faculty inventors to own their inventions unless a research agreement required otherwise. Thus, university patent administrators could co-opt faculty inventions made in work with federal support without having to bother to change university patent policies.

The Kennedy patent policy, by contrast, required federal ownership of inventions made in public health research, with the government releasing all such inventions for general access–open innovation. The policy allowed federal agencies to permit contractors to deal in patent monopolies only when doing so would better serve the public interest. A federal agency could make such a determination after an invention had been made (and a contractor requested patent exclusivity and could show that the public would benefit) or when an award was made (based on the capabilities of the awardee, the nature of the research, and the agency’s own objectives)–and where the IPA program operated.

The IPA master agreement makes a big deal over contractors considering non-exclusive licensing of patented inventions, and imposes various requirements on exclusive licenses, but there’s no requirement that the NIH enforce any of those provisions. In practice, contractors granted exclusive licenses. That was the point. Everything else was a distraction or a palliative measure to make it appear that exclusive licenses were a last resort to salvage an invention for public use at private cost and risk of development.

Norman Latker is a remarkable common thread. Lakter restarted the NIH IPA program. He got the NSF to adopt IPA practices, capturing for pharma licensing of public health inventions in two of the primary federal agencies sponsoring nonprofit research. Latker then worked on the codification of the Nixon revisions to the Kennedy patent policy, to create an opening to make the IPA program government wide. But when Latker the tried to expand the IPA program, it was shut down upon review as ineffective (it was) and contrary to public policy (it was). Latker then turned to drafting Bayh-Dole, which he later described as being based on the IPA program. Once Bayh-Dole was passed, Latker then left the NIH to guide the drafting of the implementing regulations for the new law.

This is a tremendous amount of work–and continued diligence–for a government worker to undertake, running against public policy, pushing a program that was demonstrably ineffective in transferring inventions for public benefit–all apparently for the purpose of turning public health inventions in federally supported work into patents and moving those patents exclusively to pharmaceutical companies for commercial exploitation. To do this work over the course of fifteen years requires, it would seem, patrons outside of government and protectors within government. An account of these supporters has yet to be written. We know one patron was Howard Bremer of the Wisconsin Alumni Research Foundation. Bremer negotiated the first IPA agreement with Latker and helped Latker make Bayh-Dole march-in procedures so ungainly they would never operate. But were their patrons at pharmaceutical companies? And who covered for Latker within the federal government, getting him into a position to shape executive branch patent policy, its codification, and the expansion of the IPA program to become government wide, first as a contracting protocol and when that failed as an amendment to federal patent law?

Bayh-Dole re-establishes the NIH IPA program and makes that program not only government-wide but also the government-wide default. Bayh-Dole also makes it difficult for federal agencies to vary from the default patent rights clause, makes it easy for federal agencies not to enforce that patent rights clause, and makes a government secret of any information reported by contractors about the inventions they claim.





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