Why dealing in patent monopolies is bad for university research

[updated to add some comments among the elements of the list]

Bayh-Dole recovers and expands the opportunity for universities to deal in patent monopolies on inventions made in federally supported work. Bayh-Dole does not require such behavior, does not give any special privilege for such behavior, and indeed does not force inventors to use the federal patent system. University administrators choose to deal in patent monopolies all on their ownsome. But they should not do it. It’s bad for their research health, bad for technology transfer, bad for the reputation of their universities, and bad for the public–and the public is starting to figure it all out, albeit via the usual path involving pitchforks and the like.

There are a number of reasons why universities should not deal in patent monopolies, even though Bayh-Dole holds out this offer. Indeed, there’s nothing in Bayh-Dole that matters except for this offer. There’s no point to Bayh-Dole but bureaucratic paperwork if a university ignores Bayh-Dole’s offer to deal in patent monopolies and instead licenses non-exclusively. There’s even the shadow of an idea that university administrators adopt dealing in patent monopolies–first taking inventions from their faculty and students, and then holding back those inventions in the (mostly vain) hope of finding an exclusive licensee (i.e., assignee) willing to pay big bucks–so that they don’t appear ungrateful for Bayh-Dole’s offer to go off the rails and license exclusively.

Just to underscore: patent monopoly practice does not in general make money for universities, does not transfer technology better than other approaches, does not result in more products available to the public–especially not products available on reasonable terms. Patent monopoly practice does create more opportunities for speculators, does concentrate into a licensing arrangement how a university might benefit financially from its research activities, and from time to time–once every twenty to thirty years drawing from a few thousand inventions, a lucky administrator might hit it big on royalties.

Oddly, the really lucrative patents in university licensing history have been dealt non-exclusively, including the Cohen-Boyer (Stanford, UC) and Axel (Columbia) patents–and those weren’t under Bayh-Dole. It’s almost like Bayh-Dole’s drafting was intended to disrupt university non-exclusive licensing practice with the offer of exclusivity without public oversight or right of appeal, and with no enforcement of public protections on how universities and their “private development partners” might exploit patent positions.

In its way, Bayh-Dole explores the implications of the Tale of Gyges, the shepherd who finds a magic ring that makes him invisible when he wears it and so goes on a reign of terror because, well, he can and life is short. With Bayh-Dole, university administrators are offered the opportunity to exploit patent monopolies and keep what they do a secret–they don’t have to report to the public what they do with Bayh-Dole inventions, don’t have to reveal the deal terms of exclusive licenses, and don’t have to comply with anything in Bayh-Dole or its patent rights clauses that would restrict their practices. Other than the paperwork, pretty much all university administrators have to do under Bayh-Dole is file patent applications at their own expense–which means, then, that they have to find a way to pay for doing so, at $15K or more a pop, and much, much more if they file foreign patent applications as well.

There are, in contrast, compelling reasons for universities not to deal in patent monopolies. Here is a list. Stuff is pretty self-explanatory.

Let’s start with the basics. University patent monopoly licensing:

doesn’t work

hasn’t worked historically

is inefficient when it does work

Before Bayh-Dole, the NIH ran an IPA program that worked much the same way. It was shut down as ineffective. Its licensing rate was one fourth that of universities’ claimed rate for non-federal inventions, and one fourth the federal government’s claimed rate for its own biomedical inventions. Bayh-Dole is as bad or worse. You won’t see Bayh-Dole metrics. Bayh-Dole makes use reports secret and does not even require federal agencies to collect them. Universities don’t report their Bayh-Dole activity. They bury it in random metrics that mix patentable and unpatented stuff, federal and not federal. It’s like they are ashamed or something.

creates needless barriers to access

creates waste by routing inventions through risk-averse nonprofit licensing

results, when it does (rarely) “work,” in 10x to 100x monopoly pricing over reasonable prices

A patent gives the right to exclude. By its mere existence it creates an obstacle that then must be reduced, somehow, for anyone to use what has been discovered. All the worse if what’s been discovered has been published without notice that there’s a patent application pending.

Ever seen an attorney for a nonprofit negotiate IP terms? Risk terms? There may be four or five provisions to shift the risk and blame and financial liability to a licensee- indemnification, insurance for indemnification, documentation that the insurance is current, governing law and jurisdiction with the nonprofit’s location, and on and on. The technical legal prose runs to 30 or 40 pages. Just try to navigate it. By contrast, an assignment of an invention makes a clean sweep of it–but nonprofits refuse to assign (but they do, just they require the use of an exclusive license conveying all substantial rights in an invention to do it).

suppresses competition

disrupts cumulative technology

suppresses participation in standards and commons

dissuades early adoption by technologists and visionaries

suppresses dissemination, use, and adaptation of research tools

encourages delays in publication and withholding of data

fragments rights in distributed research

interferes with collaborations

gives companies reasons to avoid university research, undermine or block university inventions, and work outside if not against university research directions

Oddly, most of these effects go undocumented in the academic literature. Some work on how publications and data might be delayed. But folks don’t seem to recognize that even a few weeks delay can make a huge difference in how anyone goes about examining let alone adopting a new discovery.

suppresses–for decades–both developed and undeveloped claimed uses and applications

This is a necessary consequence: if a patented invention is not used and not licensed in a way that results in use, the patent necessarily suppresses use. That is its legal nature. Same goes within a claimed invention, even when some aspect does get used. A pharmaceutical patent may claim hundreds or thousands of compounds, multiple methods of making and use, scores of applications–and only one tiny bit gets used. The rest are suppressed. Again, that’s the nature of an exclusive patent position.

attracts speculators and trolls rather than promoting co-development and use before development

If one holds out for exclusive licenses or grants an exclusive license to the first company that shows up–and that’s what everyone comes to expect from a university–then people who would just use the invention, such as researchers and industry professionals, don’t even bother showing up. Instead, one attracts patent entrepreneurs, investors looking for a patent-based something to develop, and folks who might mess around but figure if they burn through their investors’ money they can always “monetize” the patent by suing everyone out there who might be using the invention anyway.

suppresses university values in research and public service

creates unmanageable institutional conflicts of interest

invites favoritism and appearance of favoritism

creates nonprofit financial interest in monopoly pricing and suppression of access

encourages nonprofits to threaten litigation against users of inventions

diverts funds from instruction and public services to make money requiring more diversion

These sorts of things university officials easily dismiss these days as old-hat and not relevant. A new culture that boldly embraces institutional conflicts of interest is what is needed for “innovation.” But start the list over. The patent monopoly approach does not work, has not worked. It is not a general solution to institutional system building. It is the worst possible approach, but it sure looks manageable if one ignores the ethics stuff.

creates an unneeded competing financial interest for university researchers

creates discord and distrust between university researchers and university-recognized inventors

creates bitterness in research teams over allocation of royalties, even if there never are royalties

denies researchers access outside of university employment to their inventions and futher work

breaks up researcher responsibility and accountability for the disposition of their publicly funded work

stifles freedom of research, publication, and collaboration

Stuff one sees in research teams that no one wants to talk about. Not going to show up on academic surveys of research happiness. But it’s there, like kids keeping score in T-ball games that the adults insist has no score.

Despite all this, university administrators persist in attempting to deal in patent monopolies or any other exclusive positions they can support–regardless of whether there’s federal funding or patentable inventions or anything ownable at all.


Heck if I know. Desire institutional money–blindly thinking that exclusivity is the only/best/first way to get there? Thinking that speculative investment is the only/best/first way to encourage uses that result in public benefit? Imagine that it’s virtuous–imagining a moral compass that somehow indicates that the public should feel grateful that they have been denied access to discoveries, along with inventors, companies, professionals, most anyone? It all seems so, well, stupid. But there we are.

It is not entirely Bayh-Dole’s fault. But the folks behind Bayh-Dole clearly wanted things just this way, and are all-in on claiming that they have succeeded. So it is, in its way, Bayh-Dole’s fault, blame, and shame. That’s where we are. Repealing Bayh-Dole does not get at those who want what Bayh-Dole enables. There are other workarounds. There’s still the damage caused. It’s still an awful mess, Bayh-Dole or no. Much to do. Sad. Hope. Fight back, fight for the future. Choose to be visible.

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