I came across a paper in PLoS that discusses Global Access Licensing. The point of the paper is to lay out GAL Framework principles and appeal to university licensing offices to implement them. The authors point out that Bayh-Dole allows universities to license exclusively patent rights to medicines, and that as Bayh-Dole is copied throughout the world it often lacks safeguards that provide “public access to publicly supported medicines.” In other words, the monopoly default hammers public access.
It is worth pointing out that what is being copied around the world is not Bayh-Dole but rather the secret we-wish Bayh-Dole that some US university patent administrators would like Bayh-Dole to be. That’s the version that 70 universities went to the Supreme Court with and which got tossed by the court. Bayh-Dole is not a vesting statute, but a uniform pre-approved invention agent choice statute. To make Bayh-Dole live up to its promise, we have to be smart about how invention agents are chosen. In the simplistic we-wish version of Bayh-Dole, there is no agent choice–just university TLOs trying to make a buck offering exclusive rights to speculative investors in exchange for a share of the action. Sort of rushing the food bowl, if you will. Yes, I know that there are also non-exclusive licenses–but the non-exclusive licenses are not the default; they are not the desired direction.
Thus, to their great disadvantage, Denmark revised its laws in 2000, Germany in 2002, and Norway in 2003 to strip faculty of their ownership rights in inventions, apparently to harmonize with the secret we-wish version of Bayh-Dole. As for Denmark and Norway, I begged them not to do it, but to no avail. No doubt the United States will now be pressed to harmonize with Denmark, Norway, and Germany! What other countries’ policy makers have missed–with special help from snookering interests in the United States–is that Bayh-Dole was about uniform procurement standards for inventions made in sponsored research–it was not about shifting rights from faculty to university employers, nor shifting rights from federal agencies to universities. It was about reducing the overhead for federal agencies in dealing with requests to retain patent rights privately. That’s where the agent concept comes in. Faculty inventors may or may not have the motivation and capability to develop what they have invented to the point of practical application or commercial product. An agency will have a hard to pre-approving faculty inventor capabilities without a lot of information. Bayh-Dole’s standard patent rights clause, however, makes it easy to pre-approve agent choices when the agent is (a) the host university or (b) an agent that has as a primary function the management of inventions. If the inventors want to assign to any other organization, or wish to retain the rights and develop the invention themselves, then the agency has to specially review the proposed disposition of rights before making a decision.
If the inventors cannot identify a pre-approved agent, and the agency does not approve any other proposed disposition of the invention, then the agency has the right under the (f)(2) agreement that universities (and other contractors) are to require that their employees make on behalf of the government to request assignment of the invention to the government, or (perhaps) make the invention enter the public domain. This flow of control is not as simple as “federal law strips personal ownership from faculty inventors and hands it to gleeful university administrators.” The key, however, is to recognize the importance that the law gives to pre-approved agents acting on behalf of faculty inventors. That’s the genius of the law–and the premise to be proved or disproved in practice. Of course, given the concerted efforts by university administrators to *prevent* faculty from choosing any agent other than the university that hosts the federally funded work, there’s really no way of demonstrating the potential inherent in the Bayh-Dole approach to uniform agent pre-approval. Instead, we are expected to be bamboozled by arguments drawn from bureaucratic efficiency, loser faculty ineptitude, and vanity metrics–all of which is cover for administrators who want to be certain they have their thumbs in the pie of anything “successful” financially, and for that, so the model goes, there has to be enough administrators that they can have their fingers in every pie, and anything that could be a pie, just in case. The only thing that could improve efficiency in this scenario is administrators who are *all thumbs*.
One of the core arguments that has motivated the university interest in federally supported inventions has been that universities (meaning, agents chosen by faculty inventors) can offer exclusive licenses, whereas federal agencies were not ready to do so. As the quip goes, “a non-exclusive license is just a tax” (see this paper draft by Martin Kenny for a discussion based on this premise: “since non-exclusive licensing is a ‘tax,’ and shifts the invention rents from one actor to another . . . ” (p. 43) )–which is untrue in many ways, and also makes the unnecessary assumption that a license has to carry a payment requirement. Oddly, however, TLOs in the United States have not come to terms with this argument. Rather than boldly championing their exclusive licensing programs, they argue that they really *do* grant non-exclusive licenses, too. AUTM reports on the order of 5o – 60% of university licenses are exclusive (see, for instance, in the context of Mark Lemley’s paper on universities as possible patent trolls, p 617). But their statistic is deliberately biased to obscure actual practice by reporting only totals of *licenses* not totals of *inventions licensed in a particular way*. A few inventions licensed non-exclusively to a few score companies run up the non-exclusive license count compared to those licensed exclusively. Worse, when the non-exclusive licenses are often not even for patent rights. Worser, no one wants to report the inventions under management that aren’t licensed and worst of all are licensed exclusively and the patents are not being worked.
The non-exclusive licenses in the AUTM vanity metrics appear to be composed primarily 1) $1,000 minimum sale-like transactions for biomaterials and software; 2) licenses granted in the context of a sponsor of research, such as to members of a research consortium; 3) licenses granted as background rights and to non-patent assets such as know-how and technical information.
It may be a bit brash, but university TLOs have little appreciation for a non-exclusive-first approach, such as building a make-use commons or granting widespread development rights that brings multiple organizations together to share costs, rather than to exclude all others on the strength of an acquired monopoly position. The TLOs have a tough time with the Nine Points to Consider discussion of non-exclusive licenses:
For example, a university might license a genomics method exclusively for a company to optimize and sell licensed products for diagnostic use. The drafting of the exclusive grant could make it clear that the license is exclusive for the sale, but not use, of such products; in doing so, the university ensures that it is free to license non-exclusively to others the right (or may simply not assert its rights) to use the patented technology, which they may do either using products purchased from the exclusive licensee or those that they make in-house for their own use.
A few non-exclusive licensing projects–a piece of code, a mouse distribution–can swamp out the figures for exclusivity. Even then, we don’t have any idea whether universities are reserving make/use rights, limiting the duration of exclusivity, limiting the field of use or territory of exclusivity, requiring certain forms of sublicensing or grant backs (such as for improvements) and the like. All we get is a count of “exclusive” and “non-exclusive”. Perhaps it becomes clear how unhelpful the AUTM metrics are to policy makers.
The reality is that universities do not report what their TLOs are doing with federally supported inventions. It’s a trade secret. No one is allowed to know. No one reports for each subject invention (a) the disposition of ownership; (b) agent chosen (and how); (c) patent applications filed; (d) patents issued; (f) licensing status; and (g) date of first commercial application and/or sale. Bayh-Dole is no help in getting this information, because it is exempt from FOIA. But it shouldn’t be. Nothing in the list of (a) to (g) above requires revealing even the name of the invention, let alone anything about the terms of licensing deals or state of development. Dates would be helpful but aren’t essential. A useful report would be in the form of a list:
Invention Owner (how) Agent (how) App Date(s) Issued Status Date of Use/Sale
Univ-1000 U (req’d) U (policy) 3/4/2012 — Unlic —-
Univ-1001 Inv (law) Fdn (choice) 3/19/2012 — Excl —-
etc.
Status could be further developed to differentiate exclusive licenses that are for sale rights only, or that are limited in time, or field of use–but we may as well keep it simple to start.
With dates and agents, we would be able to start to see the structure of research IP portfolios as they develop for subject inventions, and that in turn would provide a grounding for discussions about what is working, how long it takes for things to “work” and what is not working. It appears that TLOs do not want the public or policy makers to have this sort of information. One wonders why that is, especially for such a “successful” system, as some are so fond of describing it.
The Universities Allied for Essential Medicines (UAEM) produced a Global Access List Framework that contains five principles having to do with the primacy of access to medicines in the context of licensing transactions. Point 5:
University licensing should be systematic in its approach, sufficiently transparent to verify its effectiveness, and based on explicit metrics that measure the success of technology transfer by its impact on access and continued innovation.
[In GALF v2.0, this statement is slightly varied and moved to Principle 6–see the discussion here]
This is the stuff of Point 9 of the Nine Points to Consider document.
Consider including provisions that address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world
But how to do this when the default expectation is exclusivity? When the business model that’s adopted is one in which all the rationalizations are for finding speculative investors motivated by monopoly interests? Where the dominant mindset is summed up by “What is available to everyone is of interest to no one” (cited here, p. 215). There is more to be done to recognize that this Point 9 isn’t a tail end of a monopoly feeding frenzy, but rather is the starting point, not just for essential medicines, but for the vast majority of university-developed inventions, with regard to any *university-based* licensing effort. Whatever other agents might decide to do, a university’s interest is in seeing that access to research and direct practice are not inhibited by patent rights.
In this, if there were a reason why a faculty inventor might desire to have his or her invention rights move through a university ownership step, it would be this: so that the university could reserve broad access rights in the invention before passing rights on to an agent focused on product development licensing. Of course, faculty inventors could reserve such rights directly, and pass those rights on to a university-based service to notify the public of available access rights, and build relationships based on those rights. Of course, this is not the prevailing reasoning, which is that the faculty inventor should pass invention rights to the agent that will make the most money. Whether or not that is the university TLO or some other agent would seem to be rather off-topic. Yet that’s where we are–if a faculty inventor is to have a choice of agents, so the reasoning goes, it must be so that the faculty inventor can make more money, and at the expense of the university making money, or at least having a big slurpy piece of thumb pie. If, however, a university operated a licensing office on a default of broad access and other than recovering costs of administration and transfer-related expenses in the originating lab or project disclaimed any “profit” from that activity, then we’d have a pretty interesting technology access program, focused on access and use, emphasizing shared development (even if competitive), and taking advantage of economies of scale and network externalities–where if it is not available to all, it’s of little interest to most everyone.
The premise of monopoly licensing is that of false scarcity driving up apparent value and profits. There is a rationale for it where there is a vast investment that otherwise would not be made, followed by relatively easy imitation by commercial concerns that sit on the sidelines until all the hard work has been done. As long as the monopoly model of investment dominates, there will be an impetus to push back against free-riders that don’t put anything in, cut in on the hard work. There are other approaches, other mindsets, other purposes that do not go through administrative thumb pie, that do not default to speculative investment by sharing-minded monopolists.
The idea behind freedom to innovate is not to leave university-based inventors on their own to sort out patenting and business models, but rather is to build a robust agent environment, in which the university role is that of steward rather than a self-interested party suffering from food bowl aggression. The deals that bring significant licensing money to a university happen about once a decade or more, happen because there is a combination of good fortune and good will, and happen because those involved want the university to share in the financial proceeds. Compulsory policies on ownership and choice of agent do little to improve the odds that such big deals will come about–and often do a lot of damage to opportunities that otherwise might be the ground work for something distinctive. In the meantime, “success = use” should be the mantra of any university TLO. If a faculty inventor believes “success = money” then there ought to be an agent for that. The university does not have to take on that role. An affiliated research foundation makes a good alternative. Allowing other agents to get involved provides for competitive choice, specialization, and expanded carrying capacity.
Are there challenges with freedom to innovate? Of course there are. But they are good challenges, starting with creative culture rather than administrative culture. They are the challenges that come from valuing independence, which is at the heart of what we expect of faculty involved in research.
If faculty inventors own their inventions, one might ask, then how can UAEM Principle 5 be applied to them? There are plenty of ways. One would require faculty inventors to use an agent that complied with Principle 5. Another would be to stipulate that in extramural projects involving essential medicines, the university won’t accept funding for the project unless the research contract reflects Principle 5, regardless of who ends up owning inventions made in the research. In other words, the application of conditions on the disposition of faculty inventions made with public funds does not have entail a claim of ownership. Further, faculty investigators (before any inventing) and faculty inventors should have a say in how their inventions are deployed (such as requiring Principle 5 compliance) even where there is no federal (or other sponsor) funding involved–regardless of the agent chosen (and even if a university requires assignment).
Until the mandate to provide access to research is the starting point for university management of inventions, and IP tools are adopted that encourage adoption and development of research findings, without regard for the “big hit” patent license, we will continue to have food bowl aggression in university technology licensing. Moving to an agent choice model is a good first step. Configuring university IP services to support access and non-exclusive licensing as a primary default is a second step. Using specialized agents to deal with exclusive transactions, with broad reservations of rights for the research and practice communities is a third. The universities that go this route will be the ones that emerge as the most creative, attracting opportunity, and productive in providing the feedstock for future opportunity–whether commercial or social or imaginative. And I expect they will be the ones finding the resources to support their programs of research and instruction.