The March-In That Ain’t

I came across an interesting commentary by John Conley on the NIH’s refusal to exercise march-in rights under Bayh-Dole. The post is from January 2011 and has to do with the problems Genzyme has had producing an enzyme that helps patients with Fabry disease, which is caused by a genetic mutation that creates an enzyme deficiency. Genzyme has an exclusive license under NYU patents. Some Fabry patients appealed to the NIH to march-in and grant licenses to other manufacturers to produce the enzyme, but NIH has refused, making it appear that the agency as a matter of policy simply won’t ever march in.

By creating the march-in right, Congress expressed concern about the dark side of granting proprietary rights in publicly-funded technology. Does the NIH’s track record amount to a rejection of that concern?

Check out the insightful comment to Conley’s discussion by Robert Cook-Deegan, as well. Perhaps, as another commenter notes, the NIH is simply afraid of disrupting university exclusive licensing by marching in.  That may be, but it means that march-in is another portion of the Bayh-Dole Act that has never been implemented.  Of the four enumerated conditions on which march-in might be undertaken–meaning, that the government has the right to grant licenses despite contractor patent ownership–the one that would appear to matter is the first one–“The patentee and its licensees have not taken effective steps to achieve practical application and are not expected to do so within a reasonable time.”

Think about it. Perhaps 80% of all subject inventions claimed by universities have not achieved practical application and are not expected to, ever. Of course, we can’t know the exact number because universities do not report first commercial sale and use, or if they do, that report is exempted from public disclosure by Bayh-Dole (one of the less complicated things gone wrong in Bayh-Dole that has to be changed as soon as possible). The federal agencies should be marching in all the time! They should march in on all moribund patent rights, identify publicly the patents for which march-in has taken place, and invite companies to take licenses. If no companies come forward, then, really, universities should stop paying the maintenance fees on these patents and let them go.

Rather than having march-in happen rarely, march-in should happen all the time, as a matter of course. Perhaps agencies take a longer look at stuff that’s exclusively licensed, but really the apparatus should be well oiled and operating all the time. One of the objectives of Bayh-Dole is for the government to obtain sufficient rights to protect the public from nonuse of subject inventions. It should not take a company to have to beg for a license from a university holding out for an exclusive deal with a peachy royalty rate before the government marches in. All it takes is that there is a lack of “effective steps” and no expectation there will be any “within a reasonable time.” I would say that a reasonable time is 60 months from the date a patent issues. No licensees and no practical application reported by the owner/assignee/exclusive licensee in that time, then march-in as standard practice unless there is a clear showing of diligence in development.

Not only would march-in open up university patent portfolios, which now have come to resemble the federal agency portfolios of the 1970s, but doing so would also save universities a ton of money that otherwise will be spent paying patent maintenance fees.

The NIH objects to march-in in the Fabrazyme case because no company has requested it. But that’s a tough standard, especially when people who rely on the compound for their health have requested it. March-in should be a common method by which federal agencies protect the public against the inability of university licensing offices from constructing deals that provide assurance of access to patent rights. We have seen this before, in the exclusive licenses for disease assays, for which the products offered for sale practice only limited portions of the claims of the licensed patents–not necessarily the portions that doctors would choose to practice if their lab medicine departments could practice freely.   While university licensing offices may resist any effort to challenge their franchise, common march-in practices would be a tremendous stimulus to American research innovation by restoring some portion of the academic research commons that university administrators, in seeking to exploit their institutional advantage under the Bayh-Dole Act, have largely destroyed.

I know–march-in is not going to happen.  But at least the government should start requesting annual reports of utilization, as provided by Bayh-Dole, and at least publishing metrics that show how each university is doing for each of the subject inventions for which it has obtained ownership.

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