3. Chasing federally supported inventions
Federal agencies develop a variety of approaches to inventions made in contracted work. University research foundations make a pitch for management of federally supported inventions, but are resisted by Public Health Service policies. As a workaround, they develop Institutional Patent Agreements that permit university ownership of federally supported inventions. When the Department of Energy prevents Purdue Research Foundation from securing ownership of certain inventions, the Bayh-Dole Act is passed to normalize federal invention policy, giving universities access to a broad range of inventions made by their faculty.
Expanded federal contracting for faculty to lead government research projects added to the shift from equity review to ownership interest. Federal patent policy is directed by a series of executive orders that eventually direct federal agencies to be flexible in dealing with sponsored research. Flexibility leads to research practices that vary by federal agency. Some agencies, such as the Department of Defense and the National Science Foundation, allow inventors and their contractors to keep title to inventions made with agency support. Other agencies, notably the Public Health Service, require assignment of inventions as a condition of federal funding.
Since taking on medical innovation is the signature area of Vannevar Bush’s redirection of wartime innovation collaborations to peaceful purposes, the Public Health Service is in the think of Bush’s initiative. Attorneys at the PHS argue that patents should be held by the government to ensure access for all. Privately held patents were seen as monopolistic threats to public health and the advance of research. Even the research foundations were not immune from criticism regarding monopolies. WARF, in particular, was subject to antitrust litigation as a result of its management of patents.
Members of the university patent management community, however, sought the right to patent government-funded inventions. Within the PHS, not everyone agreed with agency policy. In particular, Norman Latker, a patent attorney in the National Institutes for Health, worked against the broad agency policy position on patents. The NIH worked out an Institutional Patent Agreement arrangement for a select few universities. These IPAs were developed as a way to allow universities–operating through Research Corporation or university-affiliated research foundations–to manage faculty inventions made with federal funds.
The idea behind the IPA was that the research foundations were better positioned than the US government to manage interfaces with industry and handle non-exclusive or even exclusive licensing arrangements. In the early 1960s, pharmaceutical companies began a boycott against the PHS patent policy. Why invest private money in government-owned inventions only to have the government license patent rights non-exclusively to the competition? There was some sense in the argument. But an even more motivating idea was that the universities could play the role of intermediary, to get newly invented compounds out of government control, hand these compounds to industry, and in exchange receive a share of any royalties earned from licensing patents. By contrast, inventions held by the government returned nothing.
One condition of the IPA was that the university must take ownership of each invention it claimed an interest in. To protect the public’s interest, however, IPAs also gave the federal agency the right to expect full accountability from the university (or its research foundation) for any exploitation of an invention managed under the IPA. HEW could simply step in and take control of an invention if the university or its research foundation did not meet agency expectations.
The Cottrell approach to inventions showed promise. Some notable achievements were the electrostatic precipatater, vitamin D synthesis, and warfarin. In the late 1970s to early 1980s, the emerging area of biotech develops new inventions, such as gene-splicing. There was interest in moving federally supported inventions into this developing university invention agent approach. But there was also an increasing claim of entitlement–that universities deserved a financial share of any invention made by faculty, and more than that, deserved the right to try to obtain that financial share directly if the faculty inventors were not interested in doing so (or even if the faculty inventors were strongly opposed to doing so). Sharing in the commercial success of faculty inventions when the university had expressly contributed support or when the faculty inventors arranged to provide a share to their universities was not sufficient.
Administrators began to see the situation differently: rather than sharing from time to time in upsides, these administrators wanted to take control of everything, and share from time to time with faculty inventors. If a doubly selective, voluntary approach to invention management led to a handful of lucrative patent licensing programs, surely a compulsory, systematic approach would lead to even more income. There seem to always be some administrators who think this way. These are the folk who think that making money from innovation is a matter of volume and expediency. These, too, are the people who usually destroy creative approaches with bureaucracy–policies, regulations, assertion of authority, disruption of personal choice.
In 1978, the Purdue Research Foundation runs into a problem with invention management with the Department of Energy and enlists Senator BirchBayh for help. Senators Bayh and Dole combine to propose a law that normalizes federal patent policy for non-profit and small business research. After series of changes, the Bayh-Dole Act gets passed in lame duck session in 1980. Described by Senator Long as “the worst bill I’ve ever seen,” Bayh-Dole requires federal agencies to adopt a uniform policy and authorizes a government agency to draft standard patent rights clauses to be used in non-profit and small business research agreements. Bayh-Dole relaxes the IPA requirement of university ownership, but guts federal oversight and private accountability for private exploitation of patents on federally supported inventions.