Reflections on Shill Reflections on Bayh-Dole, 1: Intent and utilization

Rebecca Tapscott has posted an article at IP Watchdog, “Industry Leaders Reflect on Bayh-Dole at 40.” There are lots of problems with this article–and with the “leaders'” “reflections” when it comes to Bayh-Dole. But hey, folks are entitled to mis-remember and to create fantasies that make them feel like experts. It’s just that the rest of us don’t have to be taken in. To put these reflections to good use, let’s reflect on them, and use that reflection to inspire us also to reflect on Bayh-Dole. We will all reflect together, like a thousand points of light. Or something.

Let’s start out by reflecting that the folks quoted in the article aren’t “industry” leaders. With the exception of Courtney Silverthorn from NIST–who works for what amounts to a lobbying arm of NIST–the rest all work for industry lobbying organizations. That is not likely to be what you think of when you think of “industry.” So we start with a fantasy headline. Lobbyists are the new industry leaders. Iron rings in cows’ noses give milk. A fine reflection. Okay, then.

Now for the substance of these lobbyist leaders’ fantasies about Bayh-Dole. Pretty much everything about Bayh-Dole in the article is nonsense. We will quote and reflect.

Its intent was to facilitate the commercialization of inventions made from federally funded research.

Bayh-Dole states its policy and objectives at 35 USC 200. “Facilitating commercialization of inventions” is not among them. The first objective is to use the patent system to promote the utilization of inventions arising from federally supported research or development. Throw in maximum participation by small businesses, nonprofit-industry collaboration, free competition and enterprise, and use of American labor and industry, and sufficient government rights to protect the public from nonuse and unreasonable use. No objective in Bayh-Dole pertains to facilitating “commercialization.”

The primary objective of Bayh-Dole is “utilization.” The federal-side implementing regulations for Bayh-Dole, governing federal agency licensing of inventions owned by the federal government, strips Bayh-Dole’s objectives down to just “utilization.” Here’s 37 CFR 404.2:

It is the policy and objective of this subpart to use the patent system to promote the utilization of inventions arising from federally supported research or development.

The implementing regulations for Bayh-Dole, on the federal agency side, wipe out all those other objectives of the law and claim to implement only the objective for utilization. Nothing about free competition, or maximum participation by small businesses, or American labor. Rather than stating the policy and objective of Bayh-Dole, we get the “policy and objective of this subpart.” The folks doing this stuff were ineptocrats from the get-go.

Furthermore, when a law states its policy and objectives–its intent–then there’s no purpose served in constructing an extra-statutory statement of intent and substituting it that for the law. Bayh-Dole says it is objective is utilization and some other things. So what is the point in asserting that Bayh-Dole is instead about commercialization? Utilization and commercialization are significantly different. Using an invention does not require commercialization, and one can commercialize patent rights without ever making, or using, or selling product covered by those patent rights. Inventions may be used in research without any commercial product as an intermediate step. Inventions may be used by professionals who can adapt inventions without the overhead and bother of first creating a commercial product made of compromises for a broad audience and manufacturing, storage, and product liability. Inventions can be taken up and used in industry without a mass market product version. Inventions can form the basis, say, of standards and the standards in turn inform product design. Those standards-directed inventions are used, but they are not commercialized. Think of TCP/IP, the protocols at the basis of the internet.

As for commercialization without use, there’s a whole industry in patent speculation–patent investment pyramid schemes, patent aggregation, patent trolling, using patents to fluff a company to increase its acquisition price–and any actual use by others of some covered invention is more an opportunity to sue for damages than it is the primary goal to promote use. Substituting commercialization for utilization is a reflection on what Bayh-Dole isn’t.

People have stated premises for the law–Senator Bayh said the law was needed because the U.S. had lost its technology leadership and that was a result, apparently, of publishing stuff openly instead of patenting inventions, and companies in other countries had become better at using that published stuff than American companies were using it. Bayh argued that allowing nonprofit organizations to exploit exclusive patent rights in invention arising from federally support work would somehow change this situation. As a political strategy, it was a clever move by Sen. Bayh.

But as far as reasoning goes, Bayh’s proposition was silly. Why should the tiny bit of inventions made at nonprofits in federally supported research be somehow more likely to be taken up by American industry–assuming those inventions matter much at all to industry–if the nonprofits hold the patents rather than the federal government, especially with the government’s default of open access? And why would that uptake be any more rapid or broad if those nonprofits were to insist on licensing exclusively, to just one company per patent family or not at all, rather than making inventions available to an entire industry?

The transfer that’s necessary in Sen. Bayh’s scenario is to show U.S. industry–lots of companies–how to do some inventive something that a university lab has imagined or done. It’s not a matter of exploiting exclusive patent rights to secure money from people who will invest only if they have a patent monopoly on the entire invention, not just the bit of it that they exploit, if they ever exploit any of it. Apparently Sen. Bayh thought that lots of American companies would come to use an invention if nonprofits excluded the whole lot of them from the get-go and tried to find a single patent speculator for each invention that would attempt to profit by being the only legal source for whatever invention was so important that American industry ought to have it before those foreign companies get a hold of it and outcompete Americans on performance. It was a brilliant strategy, but it is a silly argument, which I suppose makes carrying it off even all the more brilliant.

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