The Biddle Report’s Perfectly Fine Assumptions

From time to time, I revisit territory. I wrote about this issue almost two years ago, now. I provide here a different angle that gets at the same point.

Here’s Sean O’Connor proposing that a flawed assumption in the U.S. Attorney General’s 1947 report on government patent practices  led to the Stanford v Roche dispute and Supreme Court ruling (footnotes removed):

The Biddle Report not only framed the debates over government patent policy for both intramural and extramural R&D for decades to come, but it also introduced a crucial mistaken assumption that all government contractors were routinely securing patent assignments from their employees.

Almost all government work at the time involved for-profit contractors, primarily in the defense industry. It appears only a couple of handfuls of universities were involved in government contracting. The report’s assumption is reasonably accurate that all the government contractors that mattered in 1947 were securing patent assignments. Continue reading

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The National Patent Planning Commission argument for government-created private patent monopolies, 3

The National Patent Planning Commission quotes administration officials repeating this same argument. Here’s the Under Secretary of Agriculture (1941):

The commercial exploitation of new inventions requires, in many cases, the expenditure of large sums of money. In such a case, unless some protection or some advantage is given to enable a particular manufacturer to reap a reward as the result of the risk taken by him in investing capital in the new endeavor, he will usually refuse to enter a competitive field.

We can take apart this assertion as we have the others. Note the qualifications– “commercial exploitation,” “in many cases,” “some protection or some advantage,” “reap a reward as the result of the risk,” “usually refuse,” “competitive field.” Nothing here holds up. For some reason, the fixation is on mass production of product based on patentable inventions held by the government. If companies refuse to make product from these inventions, then, why, it must because the government hasn’t given them a monopoly, and the reason they must have a monopoly is because it’s not worth it otherwise. But if most anyone can use a given invention without having to wait for a commercial product version, then the purpose of the monopoly is to prevent all use that doesn’t involve the commercial product. The government-endorsed monopoly creates a “market” where there was no need for one. Is the motivation simply to make a big splash that justifies federal agencies having research programs to invent new products–you know, like mechanical tomato pickers to put field workers out of jobs and to create the need for a new, hardened, de-flavorized tomato? Continue reading

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The National Patent Planning Commission argument for government-created private patent monopolies, 2

We are looking at the National Patent Planning Commission argument that the government should be permitted to grant exclusive patent licenses on inventions that it acquires. The basic position is that it is a good thing that the government should make its inventions available to all. But now we reach a walk back of this initial position:

While it is the conviction of the Commission that the Government should continue to adhere to its traditional policy of not engaging in activities which can adequately be conducted by private enterprise, it nevertheless believes that in suitable cases the Government should have the authority and the power to depart from the general policy hitherto followed and, recommended above and take steps to insure the proper commercial development of an invention covered by any of its patents whenever this course is necessary and in the public interest.

So, an exception to policy–“in suitable cases” to “insure proper” “commercial development” “whenever necessary” and “in the public interest.” There are plenty of qualifiers here–suitable, proper, necessary, public interest. The assertion is similar to an argument for sole source purchase contracts–no bidding, no one else need apply. Here, the assertion is that sometimes it is in the public interest that a commercial product be developed from an invention, and that for this to happen it is necessary that the manufacturer have a monopoly or no one will justify the cost relative to the possible profit. Continue reading

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The National Patent Planning Commission argument for government-created private patent monopolies, 1

I have been working through reports from the mid 1940s on government ownership of patents. There are a number of arguments against government exploitation of patents, but these arguments clearly failed. What arguments won out? Here’s one, from the National Patent Planning Commission:

Since the Government can grant only revocable nonexclusive licenses under patents which it owns, it is for all practical purposes restricted to (a) publication, (b) the procurement of a patent which is in terms dedicated to the public and (c) the acquisition of a patent under which nonexclusive licenses may subsequently be granted. It often happens, however, particularly in new fields, that what is available for exploitation by everyone is undertaken by no one.

The sentence I have highlighted is a simple assertion. There are multiple claims. (1) If something is available to everyone, then no one will “exploit” it; (2) especially in “new fields”; and (3) this happens “often.” We have to get at, as well, the use of “exploitation” rather than “use” or “practice.”

There’s a fundamental problem with trying to evaluate this assertion, because every invention that’s never patented and never used, or patented and offered non-exclusively and never used might be offered as “evidence” of the truth of the statement. Yet, just because a given invention is freely available to all does not mean that this availability is the cause of no one using the invention. That’s just an assertion. Continue reading

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Optimism for a New Year

It’s a whole new year, rather than just December 32. In 2017, Research Enterprise published over 250 articles on various aspects of invention policy and innovation, with lots of attention on the Bayh-Dole Act and on universities that cannot seem to get their policy act together. We also chased down misinformation campaigns by APLU, BIO, AUTM, and others, with their faux history of Bayh-Dole and their goofball proxy statistics. We also got snarky and called Bayh-Dole the love monster of patent attorneys and pharma firms, and it is just that.

Every so often, I rebuild the Guide to Bayh-Dole. I’m in the process of doing that now. The simple version is that Bayh-Dole is the next effort by the pharma industry to capture federal research subsidies for private patent monopolies. Before that, it was the IPA program. Before that, there was the boycott. Before that, pharma offered its screening services in exchange for monopoly rights to any compound identified. The repeated theme is that no invention can benefit the public unless it is developed at great expense into mass produced commercial product. For that, inventions must be taken from their inventors and provided to entrepreneurs with the expertise and funding to develop those products. And entrepreneurs won’t participate unless they have patent monopolies. Bayh-Dole’s variation is that such monopolies are virtuous because nonprofits (and even the federal government) get a share of the monopoly pricing through exclusive licensing deals that function as assignments.

Too bad the idea doesn’t work in practice for 99% of all university inventive work.  Continue reading

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The loss of public information in Bayh-Dole’s allocation of principal rights, 2

The effort to deal with government favoritism in handing out patent monopolies in areas of public welfare of direct interest to government requires a socially acceptable rationale. That rationale takes the form of a public covenant that runs with the private management of the patent monopoly. While an ordinary patent may be used to troll industry, prevent all practice of the invention (such as in favor of another product), charge monopoly prices, or to create false scarcity to run up the price, these are practices that the government has sought to preclude, especially in areas of public welfare where the patent monopoly has been created in the service of the government.

The public covenant that was originally adopted insisted that a private monopoly, properly limited, could serve government interests if it had the characteristics outlined above, with regard to a request for a determination of greater rights:

(i) an invention would be developed for public benfit

(ii) faster than if the government allowed everyone to have access

(iii) and made available to everyone who wanted access

(iv) and on terms (including price) that were reasonable

(v) and after the company had recovered its investment, the invention would be made available to all, as the government originally intended.

None of these things, by the way, is featured in any account of the wild success of Bayh-Dole. Yes, rarely an invention is developed, but it’s a big jump from “developed for corporate benefit” or “developed for speculator benefit” to “developed for public benefit” unless the public benefit that’s desired is for corporations and speculators to benefit, and public subsidies for research and public policies to separate researchers from the practice of their inventions are crucial to that goal. It’s all pretty keen if one is a corporate “investor” needing public help to be “successful.”

This pattern is, essentially, the idea of the toll road applied to inventions. Continue reading

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The loss of public information in Bayh-Dole’s allocation of principal rights, 1

Under the Kennedy and then Nixon executive branch patent policies, contractors engaged in federally supported research or development–and which did not meet the ordinary conditions under which a contractor was allowed to retain ownership of inventions made with federal support–could request a determination of greater rights when they wanted to own patents on inventions made in that work. The request for determination of greater rights required a contractor to disclose a range of information regarding the use of, development of, and public access to inventions made with federal support.

Other than under the NIH (and later, NSF) Institutional Patent Agreement program, nonprofit “contractors” also had to request a determination of greater rights. Why? Because under the Kennedy/Nixon executive branch policy, such contractors lacked the standing to expect to receive “principal rights.” Here is the full paragraph (c):

In other situations, where the purpose of the contract is to build upon existing knowledge or technology to develop information, products, processes, or methods for use by the government, and the work called for by the contract is in a field of technology in which the contractor has acquired technical competence (demonstrated by such factors such as know-how, experience, and patent position) directly related to an area in which the contractor has an established non-governmental commercial position, the contractor shall normally acquire the principal or exclusive rights throughout the world in and to any resulting inventions, subject to the government acquiring at least an irrevocable non-exclusive royalty free license throughout the world for governmental purposes.

Let’s break it down: contractors get principal rights when

(1) the purpose the contract is to build on existing things to develop new things for use by the government and

(2) the contractor has technical competence directly related to the work and

(3) the contractor has an established non-governmental commercial position.

Universities and especially their research foundations will fail this test. They might get past (1) and (2), but they won’t have much chance with (3). Continue reading

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Bayh-Dole and Clauses for domestic contracts, 1-9.107-6

Here’s Bayh-Dole’s definition of “subject invention”:

The term “subject invention” means any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement: Provided, That in the case of a variety of plant, the date of determination (as defined in section 41(d) [1] of the Plant Variety Protection Act (7 U.S.C. 2401(d))) must also occur during the period of contract performance.

This is from 35 USC 201(e). That is, this is a definition of patent law. The patent property right in subject inventions is restricted by a statement of policy, also in federal patent law, at 35 USC 200. That statement requires the patent system to be used to promote the use of inventions arising in federally supported research. Subject inventions are clearly within the scope of that policy. A patent on a subject invention cannot be used to troll industry–if the policy on the patent property right is that the use of the patent must promote use, then the patent cannot be used, barely, to prevent use.

Further, the policy statement requires the patent system to be used to promote free competition and enterprise with regard to such inventions. The requirement for use is a working requirement. The requirement for free competition and enterprise requires a patent owner to break up the patent monopoly. Breaking up a patent monopoly might involve limiting the term of exclusivity, licensing non-exclusively on reasonable terms, or restricting exclusivity to sale of product while allowing non-exclusive making and use of the invention.

Bayh-Dole makes the definition of subject invention part of patent law. Continue reading

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Merry Christmas!

Jane Jacobs observed that the purpose of economic life is us. Perhaps that goes as well for holidays–set aside for a moment the organized religion element, if you would–the purpose of Christmas, in a large sense, is us. The purpose of debating innovation policy, too, in its strange little way, is also us.

So here in a large sense is a “Merry Christmas” to everyone who cares enough about research enterprise to discuss it–for all our differences, our concern, through it all, is us. That’s a good starting point.

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Ten Points Regarding Bayh-Dole and Its Fantasizers

Here’s some things to consider about Bayh-Dole and university patent administration:

1. Bayh-Dole is part of federal patent law. Bayh-Dole defines a new category of patentable invention, the subject invention. Bayh-Dole defines a public covenant for subject inventions that runs with patent ownership, including a working requirement, restrictions on exclusive licensing, and the possibility for compulsory licensing. The patent property rights for a subject invention are unlike those of an ordinary patent. (See 35 USC 200; 35 USC 201(e))

2. Under Bayh-Dole, the government has a broad, unrestricted non-exclusive license to make, use, and sell any subject invention, and authorize others to do so to, for any government purpose. (35 USC 202(c)(4))

3. Bayh-Dole applies to federal agencies, not universities. Bayh-Dole requires federal agencies to use a standard patent rights clause in funding agreements. It is the patent rights clause that universities agree to comply with. The standard patent rights clause contains provisions not in Bayh-Dole. (35 USC 202(c); 35 USC 206; 37 CFR 401; e.g., 37 CFR 401.14(a)(e), (f), (g)).
Continue reading

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