The Thornton Bill’s “purposes” and Bayh-Dole’s “policy and objectives”

Bayh-Dole states its policy and objectives at 35 USC 200. Here there are, with a more readable layout:

It is the policy and objective of the Congress to use the patent system

to promote the utilization of inventions arising from federally supported research or development;

to encourage maximum participation of small business firms in federally supported research and development efforts;

to promote collaboration between commercial concerns and nonprofit organizations, including universities;

to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery;

to promote the commercialization and public availability of inventions made in the United States by United States industry and labor;

to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions;

and to minimize the costs of administering policies in this area.

These statements are presented as “policy” and not merely as a rationale for the law. The clear intent is that these statements, and the law that follows, replaces executive branch patent policy for the areas covered by Bayh-Dole–invention disposition in contracting, once a contractor has acquired rights, and the licensing of federally owned inventions. These policy statements may look bland, but they are anything but. Them is fighting words. But to see the fight, you have to go back in time, Mr. Peabody style. Sherman, set the Wayback Machine for 1977 and the Thornton bill that tried to do what Bayh-Dole eventually did.

The Thornton bill has a statement of “purposes” at section 102. Let’s work through the Thornton “purpose,” compare with Bayh-Dole, and see the outlines of the fight that was, and ought to be, and will be again.

Here’s Thornton, with my comments in brackets.

It is the purpose of this Act to–

[Thornton uses “purpose.” Bayh-Dole uses “policy and objective”–Bayh-Dole takes precedence over executive branch patent policy within its scope, but does not repeal that policy.]

(1) establish a uniform Federal system for the management and use of the results of federally sponsored scientific and technological research and development;

[This is a bureaucratic goal. Different agencies had different missions, different uses for new technology, different contracting environments, different fields of technology, and different mixes of contractors. The 1968 Harbridge House report argued that a single invention ownership policy for federal contracting was unworkable. Different federal agencies had different missions and purposes in contracting for research or development and the patent rights provisions should reflect those differences. Thornton clearly aims to win by legislation what it would be much more difficult to do by reasoning.

There appear to be two bureaucratic drivers. Federal agencies had differing practices with regard to contractor-owned inventions made under contract. Norman Latker at the NIH had implement an Institutional Patent Agreement program as an end-run to DHEW patent policy. Fighting a guerrilla battle with DHEW on inventions, Latker aimed to make the IPA program government-wide. He got the NSF and Department of Commerce to create IPA programs, but his effort was blocked by a Congressional oversight committee and the IPA programs shut down in 1978 as ineffective and contrary to public policy. The policy agenda though comes through: if other agencies adopt the IPA, and it is made government-wide, then offering contractors the right to own and exploit patents on inventions made in federally supported work is taken out of the hands of the DHEW director. The strategy then is to generalize inventions so there’s no scrutiny of the NIH’s health-directed inventions, which become lost in the muddle of all inventions, inventions taken abstractly. A uniform policy for all inventions means that pharmaceutical inventions cannot be singled out for special public treatment.

The second driver was university patent administrators and research contract officers. These folks complained that differing federal requirements for inventions among agencies meant that if a university received funding from multiple federal agencies, it had to manage the various funds differently with respect to inventions. This, they argued, was exhausting work, though they did not mention that every company they dealt with had its own requirements, specific to each research contract. But there was more to it, complained the university folks. If researchers mixed funding from federal agencies with differing invention requirements, then what was a poor administrator to do? Which agency rules controlled the mixing of funding? There’s an obvious contract management answer: don’t mix incompatible funding. But this answer was not put on the table. Instead, there was a further concern: what if the funding was mixed between a federal agency and a company sponsor. That could be even worse, as the company might then find that all inventions have gone to the government and been released open access, when the company may have expected to get an exclusive license to, if not ownership of, any inventions that might arise under its funding agreement. Worser–what if the federal funding goes to a company, and the company in effect sponsors similar work, so that its employees mix the federal funds and the company funds–same problem of invention rights.

The mixing of research funds with differing invention requirements is a bureaucratic problem, not an innovation or public protection problem. It arises because organizations aim to control research, and because these organizations cannot say no to more funding once they have got some. If any given university could hold only compatible federal funding agreements–NIH and NSF only, say, and then no funding from any other agency that had conflicting requirements–then there would be less likelihood of mixing incompatible funding and the problem would not rise to the level of a government-wide statute.

Uniformity in the treatment of inventions made under contract has next to nothing to do with anything associated with fulfilling a federal agency’s mission–other than perhaps to interfere with such missions. There’s also a more cutting purpose for uniformity. Under the Kennedy patent policy, in keeping with the idea of a “war on disease” as the next objective of federally supported research, inventions made in public health research supported by the government were singled out for federally mediated open access. To require “uniform” treatment means, in coarse practical terms, to eliminate this special treatment for public health inventions–without being so open about it as to make a direct argument. It’s absolutely clear that the target in Thornton was pharmaceutical product development using federal funds–in the march-in time extensions, there’s a call out for “premarket clearance,” something we encounter pretty much only with health-related commercial products. The purpose of Thornton was to undo the public protection conditions on patents for public funding of health-related research.]

(2) provide for uniform implementation of the provisions of this Act, and to make a continuing effort to monitor such implementation;

[Agencies must use procedures. That buries judgment under process and adds delays. Certainly procedures are necessary and come with the territory once the government starts handing out millions–then billions–in cash. Procedures bloom where’s there administrative volume, where no one has the time to adapt a research award to both its purpose and to the circumstances of those doing the work. To paraphrase The Hunt for Red October, administrators won’t take a dump without a procedure. The “continuing effort to monitor such implementation” doesn’t make it into Bayh-Dole.

The problem for uniform implementation is that once one federal agency starts doing something as a matter of practice or interpretation, uniform implementation means other agencies must follow along, even if their purposes or experience differs. There’s no room for agency variation, then. So much for petitions by interested persons once any one agency starts denying those petitions.]

(3) allocate rights to inventions by contractors which result from federally sponsored research and development so as to–

[inventions “by contractors” already mischaracterizes federal patent law. Contractors–companies, universities, organizations” do not invent. Individuals do, and rights to their inventions vest with them. That’s a fundamental of federal patent law. Thornton is already messing with the law.]

(A) encourage the participation of the most qualified and competent contractors,

[This is a pitch for big company participation. Again, think pharma companies boycotting federally supported inventions because of “contamination” to their related on-going project inventions turned by Latker into a need for patent exclusivity. Thornton will end the boycott by creating a patent pipeline from federal funding to pharma. In Bayh-Dole this bit is turned into a pitch for “maximum participation” by small companies, and ignored, but for a waivable nonprofit preference for licensing to small companies in a very narrow situation where there are competing licensees with the same offer, one big and one small. Never happens.]

(B) foster competition,

[This runs against exclusive licensing. It shows up in Bayh-Dole 35 USC 200 as “free competition and enterprise without unduly encumbering future research and discovery.” A very strange contrast that–what has free competition to do with encumbering future research? Wouldn’t it be the opposite, that free competition and unencumbered future research go hand in hand? So very strange to think about what Bayh-Dole is doing here.]

(C) reduce the administrative burdens, both for Federal agencies and its contractors, and

[The bureaucrat’s fantasy. Bayh-Dole recites something similar while creating massive amounts of new bureaucracy.]

(D) protect the public investment in research and development by promoting the widespread utilization of inventions;

[Equates “public investment” with “widespread utilization.” That’s nice, but it is strangely limiting and invasive. There is no “investment” in research that a federal agency contracts for its own mission. That’s just purchasing the services and goods that the agency needs. Under the Kennedy patent policy, all the government needed was a license to invention deliverables. There’s no particular need for the agency to have any agenda for what a contractor does with its rights outside of its deliverables to the federal agency (though the Kennedy policy wanted open access three years after patent issue if there had not been practical application).

By contrast, research funded under the Vannevar Bush mandate to “expand the frontiers of science” functions as a subvention–an award, a gift of sorts–again, not an “investment.” The public return is the expansion of the frontiers of science and there’s no reason that a contractor hosting research to expand the frontiers of science should somehow also be responsible for “promoting the widespread utilization of inventions”–promoting the dissemination of information regarding inventions would be plenty. You know, publishing, or disclosing stuff to the federal agency so that the agency can disseminate. The “investment” language is out of line, as is the notion of “protection.”]

(4) allocate rights to Federal employee inventions in equitable manner;

[There was no purpose to this objective. Truman’s Executive Order 10096 covered this ground–even declares itself to be a “uniform” policy, subsequently codified at 37 CFR 501. The implications of it showing up here in the Thornton bill are (i) EO 10096 wasn’t equitable; (ii) folks wanted to put federal claims to employee inventions beyond the reach of presidential EOs; and/or (iii) a bureaucratic delight in having everything “uniform” packed into one statute. As it turned out, Bayh-Dole omits this part and leaves EO 10096 and its amendments alone.]

(5) provide for a domestic and foreign protection and licensing program to obtain commercial utilization of federally owned inventions, with the objective of strengthening the Nation’s economy and expanding its domestic and foreign markets; and

[It is important here to recognize that federal practice was open access. Licensing was not necessary if an invention was dedicated to the public or, if the government issued a patent to itself, it chose not to enforce the rights that it had secured for itself. Thornton here asserts the need for a licensing program, and restricts access to “commercial utilization” of federally owned inventions. “Commercial utilization” is broader than “commercialization” or “product development”–companies might use an invention without bothering to create a product version to sell. But the objective limits the focus–if not the licensing authority–of federal agencies to this “commercial utilization” objective. The trailing clause citing an objective within an objective is empty. We would not expect a weakening of the economy or contraction of markets–but beyond this, there’s nothing actionable about the connection of federal licensing to economy or markets. This objective is more like a covering rationalization, added because it sounds good–almost as if the idea of federal licensing requires a justification because it is not obvious at first impression.

More so: the only thing that matters in a federal licensing program is the matter of exclusive licensing, including the use of exclusive licensing to assign federally owned inventions. The Attorney General’s 1947 report works through the issues of government exclusive licensing–picking favorites, policing the exclusive licensee, suing citizens for infringement on behalf of those favorites or putting those favorites up to suing citizens. Here:

3. The issuance of exclusive licenses under Government-owned inventions presents the difficulties of selecting one out of numerous applicants (for which purpose competitive bidding is undesirable and unsuited),policing the licensee’s operations, and detecting and prosecuting infringers. The outright sale of an invention would deprive the Government of control over its use, and would permit its suppression or the exaction of an unreasonable charge for its use by the public. Moreover, the price received by the Government for the invention is apt to be far less than the ultimate cost to the public of using it.

4. As a general rule, the licensing of Government inventions on a royalty basis is objectionable because it may be difficult to fix a royalty which will be fair to all; it will necessitate detecting and prosecuting infringers; and it involves the imposition upon the public of a charge for the use of technology paid for with public funds. The financing of research by general taxation appears to be a simpler and more equitable method. (114)

Thornton, then, ignores the AG report’s objections and instead makes government licensing–and here it must intend exclusive licensing–an express objective of the law. Bayh-Dole does not include any objective at 35 USC 200 regarding federal licensing–35 USC 200 is drafted to be general, and so “inventions arising from federally supported research or development” includes inventions made by federal employees. 35 USC 200 repeats “federally supported inventions” again in referring to the government’s rights in such inventions. The stated objectives with regard to government rights are “to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions.” Nothing there about a federal licensing program, especially not a licensing program set up to pick commercial favorites and sue citizens for infringement. But that’s just what Bayh-Dole does at 35 USC 207(a)(2):

Each Federal agency is authorized to—

(2) grant nonexclusive, exclusive, or partially exclusive licenses under federally owned inventions, royalty-free or for royalties or other consideration, and on such terms and conditions, including the grant to the licensee of the right of enforcement pursuant to the provisions of chapter 29 as determined appropriate in the public interest;

[The grant of the right of enforcement has the effect of transferring ownership of the licensed invention. 207(a)(2) buries the issue of assignment in a patent practice technicality that most people would miss. Bayh-Dole authorizes federal agencies to assign inventions that the agencies have acquired, but only covertly, as exclusive licenses with the necessary added provision on enforcement. Nothing in Bayh-Dole’s policy and objectives supports federal assignment of inventions. It is slipped in.]

Now, back to Thornton. One final objective:

(6) amend or repeal other Acts and Executive orders regarding the allocation of rights to inventions which result from federally sponsored research and development and the licensing of federally owned patents.

[The mechanism here is amend or repeal. Bayh-Dole includes a similar provision, with much the same list of statutes, but does not amend or repeal them. Instead, it claims precedence. Where Bayh-Dole creates a conflict with any other law (but for Stevenson-Wydler–which deals with federal laboratory contracting and invention rights in cooperative research), Bayh-Dole asserts precedence. The problem then is that if one reads any law that has been so superseded, there’s no notation to that effect. Bayh-Dole, the silent killer.]

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