The Bayh-Dole Public Bargain, 2

Baked into Bayh-Dole is the policy expectation that a holder of a patent on a subject invention will offer products based on that invention as if there were competition, even if a patent is used to suppress that competition. In the case of medicines, this policy reduces to: offer products as if they were generics.

The logic becomes evident: if one doesn’t offer products as if they were generics, then the terms are “unreasonable” and the federal government is authorized–expected–to protect the public by requiring licensing to introduce “free competition.” It actually works. You just have to get over all the nonsense you hear from people who have a vested interest in making sure Bayh-Dole’s public bargain never operates. To timely achieve practical application then means to provide patented product or benefit from using a patented process to the public on terms, including price, as if what’s offered has competition from others also practicing the invention. It’s not just that there’s competition from other companies holding their own patents and charging what amounts to a patent monopoly price–their pain killer uses a different compound, but we both have patents to stifle competition for each of our compounds (and any analogues), so we both can charge monopoly prices. Bayh-Dole’s licensing remedy would not address such competition. No, the remedy of compulsory licensing works only if the patent holder (or ilk) is required to break up the patent monopoly and receive compensation for use by others, in competition with the patent holder and with each other (and with the federal government). Continue reading

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The Bayh-Dole Public Bargain, 1

Bayh-Dole is directed at federal agencies contracting for research or development with small businesses and nonprofits. The law requires agencies to use a default patent rights clause in every funding agreement unless an agency can justify a different clause. The heart of the public bargain is 35 USC 202(a):

Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to any subject invention . . .

The rights of the nonprofit organization or small business firm shall be subject to the provisions of paragraph (c) of this section and the other provisions of this chapter.

There are two parts to this bargain. Continue reading

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An Open Letter to Senator Warren Regarding Xtandi

Dear Senator Warren:

You have called repeatedly for the federal government to use regulatory tools available to it to address the high prices charged for drugs. Your attention to this matter is much appreciated!

I write with specific reference to the present situation involving the prostate cancer drug enzalutamide, which is sold under the brand name Xtandi. Xtandi’s price in the United States is more than ten times the price for which a generic drug manufacturer has offered to produce enzalutamide. The University of California first identified enzalutamide under federal grants from the NIH and the Department of Defense, which are cited in three patents (7,709,517, 8,183,724, and 9,126,941). UCLA exclusively licensed rights in these subject inventions to Medivation, which having developed the compound as a prescription medicine with its business partners, then merged with a subsidiary of Pfizer. At about the same time, UCLA sold its rights to future royalties to Royalty Pharma.

The Bayh-Dole Act sets out its policy and objectives at 35 USC 200. Among these are the use of the patent system “to promote free competition and enterprise.” Attention to free competition lies at the heart of Bayh-Dole’s requirements pertaining to exploitation of patent property rights in inventions within the scope of Bayh-Dole’s patent rights clauses. I will explain, and show you how there is a third regulatory tool in Bayh-Dole by which to achieve reasonable prices for medicines developed from inventions made in work receiving federal support. Continue reading

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Smells Like Bayh-Dole Spirit

Bayh-Dole has two main concerns: contractor patent rights (35 USC 202-204) and federal agency disposition of patents (35 USC 207-209). These two sets of provisions work together in odd but let’s say intended ways. For instance, 35 USC 207(a)(2) authorizes federal agencies to deal in exclusive licenses, take a money interest in licenses, and sue for infringement or do so by a commercial proxy. These are huge changes, repudiating the 1947 AG’s recommendations that had long been the basis for executive branch patent policy. So if a contractor, having obtained ownership of an invention made in federal work, decides not to continue owning it, or decides not to file a patent application, or not to continue prosecution of a filed application, and the like, then the federal agency has the right to request assignment of the invention. Once the government owns the invention, 207(a)(2) applies, and the federal agency can license the invention exclusively to whomever. Continue reading

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The Bluntly Essence of Bayh-Dole’s Contracting Provisions

Let’s be super bluntly. The essence of Bayh-Dole’s contracting provisions is:

Make new product available promptly, and at a competitive price.

That’s it. That’s what all the apparatus and fuss is about, and what federal agencies refuse to recognize or enforce. We can expand this requirement in various ways. Continue reading

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Cornboard, Part 2

Despite various announcements about possible products and manufacturing, Cornboard Manufacturing appears not to have manufactured much of anything by the time the Illinois patent expired in 2016. Although the company did not “disappear” like Illinois’s first exclusive licensee, it did manage to not make product for six years.

But other things were cooking. In 2015, Segerstrom filed a design patent application for a “Maintainable pallet.” A few months later, he files a provisional patent application for a utility patent version of the same pallet. Interesting–a shipping pallet design. Then, as the cornboard patent expired, Segerstrom converts the provisional application into a utility patent application–“Maintainable Pallet,” which issued in 2018 as US Patent 10,1118,732, to be followed by two continuations, issuing in 2018 and 2020. Another design patents–for a pallet “corner,” a continuation of the initial design patent application (issued 2019). In the ‘732 patent, we find claim 8 is:

8. The maintainable pallet of claim 1, wherein the at least two side supports, the central support, the plurality of top transverse supports, and the at least two bottom transverse supports all comprise composites made from biomass material embedded in a polymer matrix.

And that’s our old friend, the cornboard invention, now showing up as a dependent claim on an actual inventive product, a “maintainable” pallet. Continue reading

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Cornboard, Part 1

The Bayh-Dole Coalition, an evidence-free lobbying organization in support of not enforcing Bayh-Dole’s public protections, tweeted today a “success” story:

Success Story! @UofIllinois 3 Researchers developed a product known as “CornBoard”, a way to make composite materials from corn to build items, such as skateboards. It was ultimately commercialized under the #BayhDole framework! Read more @AUTM:

The link provided is to a story in AUTM’s “Better World Project” publication from 2011, “From Tamales to Skateboards: A Green Idea Harvested from the Corn Belt.”

There’s a lot going on in this simple tweet. Let’s contest a few things:

*the invention did not come from “research”

*the invention wasn’t Bayh-Dole

*the invention has not been “commercialized”

But still, there may be a success here somewhere, even (especially) if Bayh-Dole is not involved.

Here’s a synopsis of what has happened. Continue reading

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A little expansion on varieties of exclusive license in university tech transfer

I expanded a discussion of the odd wording of Bayh-Dole’s 35 USC 204, which restricts the US manufacturing requirement to exclusive licenses “to use or to sell” in the United States. If the holder of patent rights on a subject invention does not license at all–a small company makes and sells product that practices the subject invention, say–then there is no US manufacturing requirement. Similarly, if the holder of patent rights on a subject invention grants non-exclusive licenses, still no US manufacturing requirement. If the holder of rights exclusively grants all substantial rights (make, use, sell), then the transaction is in effect an assignment and a different part of Bayh-Dole controls–35 USC 201(b), having to do with what happens when a contractor makes an assignment, and 35 USC 202(c)(7)(A) when that contractor is a nonprofit. This stuff may sound hairy, but really it isn’t, except that a whole lot of people who should know better (and worse, some do) have mucked everything up by chronically misrepresenting Bayh-Dole so that in addition to following things clearly, anyone who has happened to listen to these folks has to also unlearn what they thought they knew. Like finding out your elementary teachers really didn’t know squat about science or literature and you had the misfortune to be their really good student.

Anyway, here’s the expansion, given its very own post.

As a point of practice, there are multiple ways for a university to set a company up with exclusive commercial rights to practice an invention. One can expressly assign the invention and patent rights (and patents) and be rid of it all. The company runs with it, and provides whatever compensation has been agreed to. Another term for this sort of transaction is “sale.” Or, one can grant an exclusive license to all substantial rights–to make, to use, to sell–and in effect transfer ownership of the invention to the company, even if title to any patent does not formally change. Such a deal still assigns ownership of the invention. Continue reading

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University of Illinois Guidance on Bayh-Dole, c. 2006 and 2022

Here is a representation of the Bayh-Dole Act, from a University of Illinois OTM brochure from 2006:

The Bayh-Dole Act of 1980 determined that the University retains title to intellectual property created using Federal funding. With this ownership comes the responsibility for patenting and pursuing opportunities to bring innovations into the public arena.

We are still five years from Stanford v Roche, which ruled that under Bayh-Dole, a university could “retain” title to a subject invention only after the university had acquired title to the invention. There’s nothing in Bayh-Dole that vests ownership of inventions in universities merely because they receive federal money to support work proposed by faculty investigators, or for that matter gives universities any special privilege, mandate, or duty to acquire inventions made in federally funded work. But this is how faculty (and the public) would have been told about Bayh-Dole. Continue reading

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University of Cincinnati’s Top Ten Technologies for 2023

The University of Cincinnati has published a list of its “top ten” technologies for 2023. There’s some pretty interesting work on the list, and 5 of the 10 technologies have already found a licensee (exclusive, of course). That’s impressive.

But I wanted to have a look to see how many of these top 10 technologies involved a patent citing federal funding. A Patent Public Search indicates that since 2018, UC has received 126 US patents, 52 of which have a government interest statement. In the top 10 list, however, only one technology appears to be based on a patent citing government interest. And we are talking about at least 15 patents in play. For three technologies, I found only patent applications–none of which cited federal funding. There may, of course, be additional patent applications in the works that have not yet been published.

But on the face of it, only one of UC’s top ten for 2023 involves an invention made in work receiving federal funding–#5 on the list, “treatment for skin conditions.”

There it is. 41% of UC patents 2018 and later cite federal funding, but only one of these makes it into the top ten for 2023. For what it’s worth, this result is consistent with my experience–that inventions with no Bayh-Dole restrictions are easier to license. Other universities may have an entirely different experience. If you work at a university licensing office, it would be interesting to see a report of the licensing of inventions you’ve done in the past five years–how many of those licensed techs involve patents that cite federal funds?


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