What hath Bayh-Dole wrought? Or, more pointedly, what have university invention administrators done with the opportunity presented by Bayh-Dole?
Over the past 30 years, university administrators have successfully:
- Changed a clustered federal system of patent accumulation for open release into a fragmented university system of patent accumulation held behind paywalls;
- Changed a overwhelming federal preference for non-exclusive licensing with substantial public accountability to a university preference for exclusive licensing without public accountability, and without appropriate reservation of rights to allow research uses, maximum participation of small companies, and free competition;
- Created a system in which access to research inventions must be paid for by an exclusive licensee before anyone can test, practice, or develop them;
- Used indiscriminate early claims on inventions to fragment emerging areas of new technology, disrupting institutional collaboration, and delaying or preventing rapid uptake by the practice community and by industry;
- Undermined the value of scholarly publication through patenting and refusal to announce upfront intentions for licensing, effectively transforming key articles into notices of capability rather than open dissemination of how to use new technology;
- Undermined faculty investigator and inventor leadership roles by seeking institutional control and financial gain, arguing for faculty greed and corruption while advancing administrative self-interest and advancement as public goods;
- Undermined the fundamentals of academic technology transfer by separating inventions from the expertise that created them; by invoking ownership of inventions and associated works of authorship and data, and thus changing the emphasis from public instruction in new technology to payment to obtain licensed rights; by writing policy that expressly excludes investigators and inventors from negotiating with administrators over appropriate handling of inventions, and further excludes investigators and inventors from negotiating with sponsors or licensees with regard to the disposition of intellectual property made or to be made by these same investigators and inventors;
- Depicted university-hosted invention as a form of potential personal corruption, to be remedied by institutional control of all opportunities, without regard for the consequences of creating significant, unmanaged institutional conflicts of interest;
- Introduced disincentives for anyone–even faculty at other universities–to use the results of federally supported research by making the creation of commercial products under monopoly license the first if not only goal of institutional ownership; by elevating money-making from licensing to a virtue more important than practical application; and where commercial product development is not possible, attempting to make money from the empty value of using patent rights to prevent local practice.
- Built a massive institutional bureaucracy of technology licensing that suppresses private investment in technology delivery networks; represses competitive approaches to intellectual property management, such as open innovation and standards formation; fragments national research investments into unmanageable fragments of petty institutional self-interest–and all at a significant cost including diversion of resources from instruction and the fundamental transactions by which technology is transferred.
These are just a few of the administrative “successes” in implementing Bayh-Dole. If you see the picture, you see that applying patent rights early, often, and indiscriminately for the purpose of institution-led money-seeking by “commercialization” creates many of the failings and disputes evident in the American university implementation of Bayh-Dole. Compulsory ownership claims disenfranchise faculty investigators. Compulsory institutional ownership also undermines faculty independence, makes for less effective and robust transfer, and adds massive overhead in the form of needless delays, outrageous terms, and contracting artifacts. Compulsory ownership reduces the public domain, fragments research findings, and makes both formal acquisition and informal uptake next to impossible except for wealthy monopoly-minded speculators.
Compulsory institutional ownership creates bureaucracy-induced risks and complications, such as those involving background rights and improvements, that would not exist, or would exist in much more manageable forms, if the university administrators were not involved. The fixation on “commercialization” creates a faulty rhetoric about “funding gaps” when what is indicated is a gross misunderstanding of the role of intellectual property in the dissemination of university research. It stands to reason that there are indeed too few wealthy, gullible, monopolistic speculators willing to waste money on administrative pipe dreams about wealth by taking patent licenses on basic research.
Worse, the fixation on making money from such licensing has been turned by university administrators, all the way to the top, into a seemingly virtuous attempt to change “academic culture” to one eager for personal wealth rather than committed to public benefit. As a president of one major public university recently quipped–“It doesn’t hurt to have a few extra Porsches in the faculty parking lot. I don’t deny that for a moment.”
Call it creative destruction if you want. What is being destroyed is a culture of training, discovery, and public service that has been fostered by faculty at universities for a hundred years. What is being destroyed is the form of university that Bayh-Dole was meant to engage.
The administrative metrics of success–the number of patents issued, the number of licenses, the royalty income–are measures of the extent to which this administrative view of university innovation has displaced the technology transfer activities that Bayh-Dole was designed so artfully to advance. What the administrators don’t report–the cost of their licensing offices, the number of unlicensed inventions, the number of failed negotiations, and the number of disputes with faculty over ownership, diligence, licensing, and money–would show the real effect of Bayh-Dole. No one reports the date of first commercial sale for each invention under institutional management. I wonder why. [Actually, I know why–that information would show how awful university Bayh-Dole performance is.]
This “creative destruction” of university research culture is also, unfortunately, an effect of Bayh-Dole. Few faculty investigators would choose these people to manage their research results; yet these administrators have appointed themselves to change academic culture to wealth-seeking by working institutional patents for profit, which they do generally quite badly, with few profits, lots of wasted resource, empty rhetoric about “innovation,” misleading metrics, and much disruption of the business of technology change. This scheme has been developing for 30 years, under the guise of claiming that Bayh-Dole required institutional ownership of federally supported inventions. That claim has been shown to be unfounded.
Bayh-Dole has now been reduced to a fundamental proposition for university inventors: “You must assign your inventions to the university and help the university administration get rich–whether through licensing, litigation, or startup investment–in return, we will share some of that wealth with you–and we are so generous that even if you don’t help, we will still share with you. We also believe that even if we don’t make anything for having taken your personal property, we still insist that you should consider us to be fair, if not generous, for making this offer.” The role for Bayh-Dole in this proposition is that the federal agencies are allowing this behavior to dominate their research funding and the dissemination of results.
I am persuaded that university administrations do have a powerful and positive role in managing academic inventive and commercial activity. There is certainly a role for patenting and university technology transfer offices, just as there is for university presses, libraries, and web servers. There is a role, too, for startups, for commercialization, for licensing. But these activities do not prosper nor achieve their purpose under compulsory ownership policies. And compulsory regimes damage other parts of university research enterprise that should be valued much more highly than the creation of patentable inventions that can be licensed to monopolistic speculators for profit.
I am also persuaded that Bayh-Dole is a reasonable, astute effort to navigate federal agency requirements and private diversity of ways to promote the use of federally supported inventions. [Not now, though, in June 2020.] It’s just that Bayh-Dole isn’t working, and hasn’t worked for decades [Because both federal agencies and universities refuse to comply, ignore requirements, and misrepresent the law.] Rather it has sponsored the overthrow of faculty research and innovation leadership by administrative and money culture. I don’t think there is any going back now, because the damage has been done and it’s extensive. We will have to do something new.
The first step is to end compulsory university ownership of federally supported inventions by strengthening the (f)(2) provision in the standard patent rights clause as the fundamental starting point for invention ownership and management. To do that, we must make clear that for nonprofit organizations, no compulsory agreement for the assignment of title to subject inventions shall operate over the requirements of (f)(2). For this, add to paragraph (k):
(5) Contractor agrees that it will not obtain any interest in an inventor’s subject inventions except on a voluntary basis unless required by the operation of federal law or a patent rights clause suitably modified as provided by §401.3.
That’s all that’s needed to bring universities into compliance with the (f)(2) obligation and return attention to the development of the invention agent model mapped out by Bayh-Dole. It does not even require an act of Congress–it is just an administrative change in the standard patent rights clause under the authority that the Department of Commerce already has been delegated by Bayh-Dole. It’s time for Commerce to step up and provide oversight for what is happening on its watch. Stanford v Roche provides a critical opportunity to establish Bayh-Dole the way it was intended.
We might say, then, that Bayh-Dole has yet to operate as was intended. We must deal with the failure of Bayh-Dole to anticipate or to stand up to what university administrators hath rot. If we can’t do that, then it’s time for new administrators or it’s time for a new law to replace Bayh-Dole. We may not be able to get things perfect, but we can do much, much better than we have.