Reflections on Shill Reflections on Bayh-Dole, 6: Fragmentation, lockup, and babble talk

We are still reflecting on reflections on Bayh-Dole. It’s a hall of mirrors, with reflections all the way down to the insubstantial substance of the operation of the statute itself. We continue with a reflection on a reflection of what Bayh-Dole has done.

Bayh-Dole (the article here quotes Joseph Allen)

“decentralized technology management from Washington D.C. to the universities and small businesses that make inventions with government support, so they had the incentive and the ability to own and license” their inventions.

Let’s unravel this mess. The federal government funds *individuals* at universities based on proposals the individuals draft and submit to federal agencies via their universities. The universities receive the funds on behalf of these individuals, and provide facilities and administrative management for which they are compensated by the federal grants in the form of “Facilities & Administration” overhead–often one third of the total grant award. Inventions that result are the inventors’ or the public’s. But not the nonprofit hosts’–unless the host institution makes some agreement on the side about that, not tied to the federal funding.

The incentives to work at a university include freedoms of research and publication. Bayh-Dole has been used to undermine both, misrepresenting the law to make it appear that the university owns or should own inventions “to comply” or “to make the law work.” Inventions are not the university’s. Not their inventions.

Allen quoted the Economists Technology Quarterly in stating the Act was the “most inspired piece of legislation to be enacted to America over the past century”

Allen misquotes. Here’s the proper text:

**Possibly** the most inspired piece of legislation to be enacted in America over the past **half-**century was the Bayh-Dole act of 1980.

And possibly not. Allen ignores the Economist’s walk back on Bayh-Dole published years later. The “opinion” piece that Allen misquotes goes on to claim that Bayh-Dole and its amendments

unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money.

Which was a nonsense claim. Those inventions were not “locked up” in laboratories–they were openly accessible except where NIH or NST IPA programs had allowed nonprofits to “lock up” inventions, or federal agencies had otherwise allowed nonprofits to do so. Bayh-Dole was based (so Latker claimed) on the IPA programs. Bayh-Dole created a default that allowed administrators to lock things up–both contractor administrators and federal administrators. Bayh-Dole–the thing claimed to unlock things–locked them.

Allen noted that the Act led to many benefits including more jobs and benefits to American taxpayers.

There’s supporting evidence for this claim. No one tracks jobs created (and lost) from university exclusive patent licensing, let alone that licensing tied to inventions made in federally funded work. The primary public benefit appears to be paying monopoly prices for the few commercial products that survive the layers of patent bureaucracy.

Gottwald . . . provided reasons why the Act was very forward thinking when it was enacted, including:

Bayh-Dole was based on the IPA programs, which were shut down in 1978 as ineffective.

1.) it provided clarity and predictability through government oversight in a way that rewards innovation

The government oversight in Bayh-Dole has never operated. Is the total lack of oversight or public right of appeal the inspired bit that “rewards innovation”? Or is the lack of oversight, reporting, accountability, and public right of appeal an incentive for nonprofits to deal with patent speculators parasitic on public research results rather than advancing them? Just asking here.

2.) it gives clear guidance, structure and a fall back option (march-in rights),

Bayh-Dole is anything but clear. Even NIST cannot make sense of the most basic parts of it. March-in was designed not to operate, per Howard Bremer. That part has been successful!

and 3.) it decentralizes technology transfer to “unleash cooperation, innovation, and entrepreneurship.”

Bayh-Dole does not “decentralize technology transfer.” Open access decentralizes technology transfer. Bayh-Dole enables the fragmented ownership of inventive research findings across institutions participating in federal research programs. The ownership is decentralized, after a fashion, but access is fragmented. Federal agencies fund multiple projects in related areas hosted by any number of nonprofits. Each nonprofit then stakes out patents and insists on exclusive licensing their bits of what otherwise is a common–collaborative and competitive–research undertaking. No one can put together all the rights that are needed to do anything commercial (or otherwise) with most any area of federal research.

Look at carbon nanotubes. University patent fragmentation has delayed uptake for twenty years. I once worked with a company that had spent years acquiring rights to nanotechnology patents from twenty universities. That was, they said, their competitive advantage. No other company would have the moxie and the time to do the same trek of acquisition to license all the rights they would need to compete. The overhead of getting licenses to a fragmented technology was acted as the competitive advantage. Imagine that.

To make this messed up approach work, universities would have to all license exclusively to one company or all would have to go open. Same for the federal government. If it took in all rights (say, universities declined to retain title to inventions, having gone to the bother to obtain title), then it would have to consolidate all that work with an exclusive license to a single company, playing favorites (there goes free competition) or has to go open for the whole lot, or fragments rights into bits of exclusivity that serve to block anyone getting ready access to all the rights they need–exactly where the patent speculators and trolls thrive. Fragmentation serves speculators and trolls. Federal invention policy as implemented by Bayh-Dole acts to subsidize the business interests of patent speculators and trolls. That’s who get “unleashed” by Bayh-Dole.

From this perspective, Bayh-Dole looks very different. If the universities go open, Bayh-Dole is meaningless and adds bureaucracy. May as well revert to the federal policy of open access. If the universities all license exclusively to the same one company, they concentrate economic power–ignoring Bayh-Dole’s objective to promote free competition. If they license exclusively their fragments of patent rights in a common technology platform, they cater to patent speculators or they don’t license and become patent trolls themselves.

Either one company gets everything or universities break research into swaths of patent fragments and no one can use all of what they need access to for twenty years. What must companies then do? They design around the federally funded parts that the universities have patented. That’s what all those citations in the patent literature to federally funded studies suggest–the more citations, the more companies are concerned with designing around, obsolescing, not using the federally funded results.

This is just like bureaucrats. They create a law that creates incentives for companies not to use federally funded research results, claim the law is wildly successful at doing just the opposite, and then spend years in meetings trying to figure out how to “unleash innovation” by adding more bureaucratic adjustments to the law because though it is perfect it could be, ahem, more perfect, but only if bureaucrats control the changes and no one keeps metrics or enforces the law however which way it is written.

How does adding bureaucracy, fragmenting related inventions, or suppressing free competition “unleash cooperation” or “innovation” or “entrepreneurship”? This is just random bureaucrat babble talk.

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