Bayh-Dole disruptions of research and innovation

Bayh-Dole allows nonprofits and small businesses to retain title to inventions made in federally funded work. That is, the nonprofit or small business must first obtain title on their own.

For businesses, this is straightforward as businesses routinely assign employees to work on research tasks and require patent agreements that promise to assign any inventions to the employer. That’s not the case with universities.

Universities do not generally assign faculty or students to research tasks, do not direct or supervise or approve their research and do not dictate when, where, and what they publish. Bayh-Dole does not vest invention ownership with universities, does not require that they take ownership, does not give them any special advantage or privilege to get ownership. They have a right to keep inventions that are assigned to them. But the basis for that assignment has nothing to do with Bayh-Dole.

What has happened, then, at universities? University patent administrators, led by the Association of University Technology Managers (AUTM), misrepresented Bayh-Dole as an invention vesting law–universities had a right to “elect” title. By pointing at an invention made in federally work and saying “the university chooses to own that one,” so AUTM would have it, Bayh-Dole vested title to that invention with the university. University patent administrators then demanded that universities change their policies “to comply” with Bayh-Dole, which universities dutifully did. Continue reading

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Four things not to know about Bayh-Dole

PhRMA, a pharma front group, published a discussion of Bayh-Dole, “IP Explained: Four things to know about the Bayh-Dole Act.

Short form. This is nonsense. I’ll show you briefly.

Thanks in large part to strong intellectual property protections – including policies that incentivize public and private investments in research and development (R&D) – the United States is the global leader in biopharmaceutical innovation.

The link is to a claim from PhRMA that the U.S. pharma industry has been the leader for “over thirty years.” That would mean that it became the leader before a single Bayh-Dole pharma invention could have made it to the market.

we are going to take a closer look at the Bayh-Dole Act and how it laid the foundation for effective technology transfer that modernized the U.S. economy, set a global precedent and is helping patients today.

Bayh-Dole was based on the NIH IPA program, that did much the same thing. University patenting was growing before both the IPA program and Bayh-Dole. Problem was that university transfer of technology under the IPA program was 1/5th as effective as university transfer of non-federal inventions. The Harbridge House report of 1968 all but predicted that the method used by the IPA program would be the worst possible approach. Bayh-Dole has been as bad or worse than the IPA program. Continue reading

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Enforce Bayh-Dole while working on repeal

While we work on repeal of Bayh-Dole, a dismal failure of a law, and work out how to repair the damage–the lost non-commercial development community that exists only in a few areas such as open source software and ought to be robust in medicine but is not; the disconnect between university-hosted science and professional and industrial use of that science; the disinterest by federal agencies in funding development of work deemed important enough to fund as research but not important enough to fund as discovery–what can be done?

Here’s one thing: enforce Bayh-Dole.

Almost nothing in Bayh-Dole having to do with public interest is enforced. Not the law, not the default patent rights clause, not the government license. Stuff is ignored, waived, not acted upon, kept secret.

Enforcement,compared to repeal, is fast. Enforcement does not require Congress to act. Enforcement can be done by executive order and by action by the Department of Justice. Enforcement can be done through audits, with demands for reporting under oath.

What should be enforced?

Start with federal agencies in their compliance with Bayh-Dole and move then to federal agencies enforcing on contractors the standard patent rights clause Bayh-Dole requires them to use as a default when they can’t bear to use a better clause.

Continue reading

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Repeal of Bayh-Dole

There are lots of calls to repeal Bayh-Dole. That would be a good thing to do. Bayh-Dole has been a failure, just like the NIH’s IPA program on which it was based, which was shut down in 1978 as ineffective (it was) and contrary to public policy (also was). Bayh-Dole has been even worse than the IPA program. It has been so bad that universities and federal agencies and “advocates” for the law won’t even report metrics relevant to the law. Instead they report fake metrics, such as unvalidated economic model output treated as fact. And while they are at it, they take the upper end of the range estimated by the model, and treat that as fact. Instead they bundle in all university licensing rather than just the licensing specific to Bayh-Dole (less than half the activity, though federal funding is more than half of university research funding–funny that).

Instead they switch to talking about products based on “public-private partnerships” rather than on investments in developing inventions made in work supported by federal funds, that would not have been made but for the availability of a patent monopoly. And they never talk about the inventions that have been suppressed, never licensed, or licensed to speculators for schemes that never worked out, or licensed and turned into products but sold at monopoly–gouging–prices, in which those universities involved are complicit because, hey, they have signed up for a share of the income (even though that share is often less than 2%). Continue reading

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Bayh-Dole and Pandemic

Here is one of many commentators on the Dr. Judy Mikovits interview in “Pandemic.” At about the 4 minute mark, Dr. Robert Carter has this to say about Bayh-Dole:

What to make of Carter’s rebuttal to Mikovits with regard to Bayh-Dole? Let’s work through a transcript.

So about eight minutes in, after all this stuff that really means nothing, they finally talk about the Bayh-Dole Act and the fact that universities are now cranking out lots of patents. But I get to ask the question, why is that bad? I have a patent. USPTO number 7291711. 7291711. You can look it up.

Let’s do that.  Carter has two patents, both derived from the same application. 7291711 (issued 2007) and 7413874 (issued 2008). Carter is a co-inventor, with two others. Both involve identification of fluorescent proteins from “aquatic species”–from corals. Bioluminescence imaging is used to study physiology and infectious diseases. Both patents carry a federal funding notice, so they are represented as Bayh-Dole subject inventions. It appears these patents arise from inventions made while Carter was a graduate student. I can find no indication whether the patents have been licensed and if so to whom and on what terms. The cloned proteins show up in public databases, so it would appear that someone is making them.

But none of this has to do with the question Carter raises about universities cranking out patents. Why is that bad? Patents are like handguns. It’s the people that control them that are the problem. Continue reading

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IP Watchdog Misses the Mark on March-In Rights

IPWatchdog, a blog site, published on April 22, 2020 an article by Joseph Allen arguing that the Washington Post got Bayh-Dole’s march-in provision all wrong. But Allen has got it wrong.

Let’s be clear, then, about Bayh-Dole and march-in. Even fair. Here is Allen:

Bayh-Dole allows universities and companies to own inventions made with federal support.

No. Bayh-Dole allows nonprofits and small businesses to retain ownership of inventions they go out of their way to acquire and which were made in work that receives federal support, on specified conditions that don’t apply to ordinary patentable inventions under federal patent law. The inventions don’t have to be made with federal support–they are just made in work–a project– that at some point also receives federal support.

In exchange, the government can “march in” to force additional licensing under four circumstances.

There is no such “exchange” in Bayh-Dole. The right of nonprofits and small businesses to elect to retain title to subject inventions (patentable inventions or plant varieties made under a funding agreement and acquired by nonprofit or small business) is made subject to all the requirements of Bayh-Dole. It is not an exchange. It is the imposition of limitations on the patent property rights in subject inventions acquired by the nonprofit or small business. Continue reading

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Audit Items for Nonprofit Bayh-Dole Subject Invention Assignment Compliance

Bayh-Dole makes a default public bargain for nonprofit contractors conducting research or development work that receives federal support. Nonprofit contractors may retain ownership of inventions made in such work that they acquire, but if they assign any such invention, the assignee must accept the nonprofit’s patent rights clause.

Work that through slowly.

When a nonprofit assigns a subject invention, the assignee becomes a party to the funding agreement–a federal contractor (35 USC 201(c)). Everywhere in Bayh-Dole and the standard patent rights clause has “contractor” now also includes “assignee.”

Any exclusive license to all substantial rights in an invention assigns the invention. Doesn’t matter that the document is called “exclusive license.” Doesn’t matter if it claims that title to patents is not transferred. Courts have consistently held that exclusive conveyance of all substantial rights in an invention (make, use, sell) conveys ownership–assigns the invention. Continue reading

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Price controls in Bayh-Dole

Here’s the primary price control in Bayh-Dole:

If an organization has the right to enforce patent rights on a subject invention obtained from a nonprofit, then any income earned with respect to the subject invention, after payment of expenses incidental to the administration of subject inventions, must be used for the support of scientific research or education.

See 35 USC 202(c)(7):

(A) requires the nonprofit patent rights clause to follow any assignment of a subject invention.

(B) requires royalties (but not other income) to be shared with inventors. 37 CFR 401.14(k)(3) construes this sharing as an administrative expense incidental to the administration of subject inventions.

(C) requires income after administrative expenses specific to subject inventions to support scientific research or education. Continue reading

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You can do anything you want at Bayh-Dole’s restaurant, 2

We are dealing with the practice reality that under the Bayh-Dole Act: anyone can do pretty much anything they want. Federal agencies can do anything they want, provided they follow Bayh-Dole’s procedures (or work around them). Contractors can do antyhing they want (other than thumbing their noses at the most obvious paperwork requirements). And inventors can do anything they want (if they are constrained, it is the result of demands placed on them by contractors and federal agencies, outside of Bayh-Dole).

There are two reasons for this great freedom. First, Bayh-Dole does not dictate specific forms of practice. Bayh-Dole does not dictate invention ownership. Does not require licensing or commercialization. Does not require exclusive licensing. Does not require contractors to try to make money. Bayh-Dole establishes a default for patent rights clauses included in federal funding agreements for research or development work, but federal agencies may change that default or decline to enforce it or decline to act on the rights provided to them by the default. Bayh-Dole establishes that federal agencies may grant exclusive licenses–even to the point of assigning the invention involved–but does not require federal agencies to seek patents or to license inventions or license exclusively.

Nothing substantive in Bayh-Dole or in the patent rights clauses is specifies is enforced, acted upon, even attended to. Paper requirements–yes. Invention disclosures. Reports of inventions at grant close out. Government rights notice in issued patents on subject inventions. Paper version of government license. Reports of utilization. None of this has a speck to do with promoting the use of subject inventions. It’s waste energy. The government does nothing with this information. Bayh-Dole makes reports a government secret. Federal agencies decline to march-in even when reports show no timely practical application. Federal agencies decline to act on their government license to make, use, and sell and authorize others to do so for any governmental purpose. The entire public interest apparatus that rides on top of Bayh-Dole does not operate. Continue reading

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How can a startup protect their intellectual property without filing for a patent? 

I was asked to respond to another Quora question

How can a startup protect their intellectual property without filing for a patent?

Tim Berry provides a really excellent answer at Quora. But I thought it would be worth it to elaborate and come at things somewhat differently.

What I refrained from suggesting–and what Tim also didn’t get at–is that a time-honored approach involves what would be considered now to be criminal elements: the threat of force, or even the slightest intimation of danger should one cross a line. If you can get a copy of the movie Comfort and Joy (the one directed by Bill Forsyth and music by Mark Knopfler) with rival ice cream truck operators engaged in a turf battle, you get the idea without going all Godfather on it. But just because you decline to consider any such thing–and that’s good, really–does not mean that everyone else out there with a startup idea is also not going to cheat, threaten, steal, ruin, interfere, lie, or hurt to get their way. Intellectual property–including patents–appears rather like a civilized way of leaving the state of perpetual war and vigilante action and adopting Locke’s arguments for the value of government intervention to decide the justice of one’s claims. Anyway, obviously, holding a patent offers absolutely *no* “protection” from that sort of “protection” arrayed against you.

I also didn’t mention that university patent practice all but forces university-affiliated startups to deal with patents. The university forces inventors to file patent applications, having assigned the inventions to the university. The university then forces the startup to take an exclusive license and commit to paying the university’s patenting costs as well as “commercializing” the licensed invention. Talk about tying a startup down and encumbering whatever financial resources it may have. It’s all the worse if the startup does not need a patent and if there were not a patent the startup would also not need a license. Stuff happens despite university bureaucratic intrusions. It’s just that many university administrators refuse to consider such things and assert that “success” stories are the result of their work rather than that the “success” would have been even greater had they kept their thumbs out of the pie.

Anyway, here’s my Quora answer. Continue reading

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