[I really do have the outline for the other 8 chapters! I just need to get back to pulling the explanatory text together]
The Bayh-Dole Act is passed in 1980 on the premise that doing so will give federally supported inventions access to the emerging university approach to patent management. University administrators use Bayh-Dole to enfranchise provincial invention management schemes in place of Research Corporation’s national outlook, and this institutional self-interest then runs amok as Bayh-Dole is represented as mandating, requiring, or even outright vesting invention ownership with university administrations. Universities change their policies to “comply” with the law, and by the time the Supreme Court in 2011 gets a chance to throw the university claims out, it’s too late, the damage is done. Bayh-Dole has done its killing.
The infrastructure to help faculty with inventions developed along two parallel paths, both external to the university. On one path was the Research Foundation, with a national outlook and an interest in using its royalty income to fund research wherever there was a need. On the other path were the university-affiliated research foundations, led by WARF, Purdue, Kansas State, and others. Within universities, the infrastructure that developed was one of identifying inventions and referring their inventors along one path or another. The outliers in all this were MIT and the University of California, both of which aimed to do deals directly.
But most university policies kept invention ownership and patent management outside the university, away from the administration, away from matters of research and instruction. Economic development and public welfare, as these may arise from patents on research inventions, came about through the efforts of external agents to match up inventors and their inventions with opportunities in industry.
Not everything was unicorns and rainbows, however. There was competition between the organizations on the two paths. Should a faculty inventor at Wisconsin take an invention to Research Corporation or to WARF? Should a university administration use a research foundation at all, or try to do everything in-house, like MIT or UC? And what about inventions made with federal support–an increasingly large share of all research being done at universities? Some agencies, such as NSF and the Department of Defense, allowed university inventors to hold rights in their inventions. Others, notably the Department of Energy (with its history of nuclear power) and the Public Health Service (with its distrust of monopoly dealings by the pharmaceutical industry) did not. These areas of competition created the environment in which the Bayh-Dole Act was proposed and passed. And Bayh-Dole proved not to be so much an advance as a killer.
The impetus for the Bayh-Dole Act came from the Purdue Research Foundation, which was fussing with the Department of Energy over an invention that had been assigned to it but which had been developed with federal funds. Would the agency allow the foundation to manage it? The agency would not give a timely answer, and the foundation went political, appealing to Senator Bayh for help. I won’t go into the work of the “Three Amigos” here, but the result was the Bayh-Dole Act, which Senator Long called “the worst bill I’ve ever seen.” There is little in the drafting of Bayh-Dole to counter Senator Long’s observation. Bayh-Dole is an almost random collection of requirements placed on federal agencies to normalize their contracting for research with nonprofits. Small businesses were thrown into the mix as well, to support the development of the Small Business Administration and give legislators another group to support, if universities and their non-profit research foundations were not sufficient.
After series of changes–often not acknowledged in accounts of the bill–BD gets passed in lame duck session. Bayh-Dole requires federal agencies to adopt a uniform policy on inventions made with federal support. In doing so, the Act overturns years of presidential executive orders, most recently that of Kennedy, that promote the idea of flexibility in federal contracting. In place of flexibility, agencies are required to allow universities, non-profits, and small businesses to keep patent rights in federally supported inventions if these organizations are assigned those patent rights. The means to implement this requirement is through “standard patent rights clauses” to be developed by what is now the Department of Commerce and inserted into every federal contract with eligible organizations.
The stated aim of Bayh-Dole was to make federally supported inventions that would otherwise have been held by uncooperative federal agencies available to universities and especially to Research Corporation and to the university-affiliated research foundations. Now faculty inventors supported with federal funds could with confidence assign their inventions to an invention management organization, when they chose to pursue patents. Nothing in Bayh-Dole makes such assignment compulsory. Nothing in Bayh-Dole requires faculty to assign their federally supported inventions to their university, or to any external foundation. Nothing.
Bayh-Dole came dancing across the water, seeking the infrastructure that had developed to support faculty inventions, and became the killer of that infrastructure. This is something you may not have heard if you read the literature of the conquistadors. The vanquished rarely leave accounts.
Bayh-Dole overturned federal policy that encouraged flexibility. That killed the approach taken by the NSF–the agency that arose from Vannevar Bush’s proposal for a National Research Foundation, modeled in part on the university-affiliated research foundations and in part on Bush’s experience in pulling scientists, engineers, and gadgeteers from universities and industry to build stuff establishment leaders could not imagine nor bring themselves to support directly. To serve the research foundations’ access to biomedical inventions made with federal support, Bayh-Dole killed the NSF relationship and replaced it with a contract formality that enfranchised bureauacracy.
What about biomedical funding? There, Bayh-Dole killed the Institutional Patent Agreement. The IPA managed Public Health Service research contracting with selected universities on behalf of faculty researchers. Most faculty working on PHS projects accepted that their inventions would be held for public access by the sponsoring agency. This outcome was consistent with the policy expectations of a number of universities, which discouraged any patenting in medicine. The widespread university position was that a biomedical commons was much more productive than a patent goldrush or a patent gridlock. The refusal to commercialize biomedical research findings by means of monopoly positions was considered a virtue. Such a position still holds in the tiny bit of biomedical represented by surgery techniques, which cannot be patented. The rest Bayh-Dole destroyed.
Bayh-Dole gutted federal oversight of private claims on inventions made with federal support. A university or research foundation obtaining patent rights could do pretty much anything without federal intervention. Oh, yes, there were “march-in” rules, but these were made so cumbersome and impossible that in the 35+ years since Bayh-Dole was passed, there has never been a successful case of march-in. Only a handful of organizations have had the nerve to try. Oh, yes, also there were reporting requirements on the utilization of inventions claimed by private organizations. These requirements have never been implemented, the information never made public, since Bayh-Dole exempts the reporting from public disclosure. Universities do not report utilization. You won’t find the information. It has been killed and buried. In its place–a handful of “success” stories, like flowers over a mass grave of suffocated research inventions. And there are many, untold many (because never reported) suffocated university research inventions.
The IPA required universities to require assignment of inventions as a condition of work done with federal funds. Since faculty choose what projects they will work on (they are not assigned to those projects by university officials), and the faculty also choose who will support their work, under the IPA a faculty researcher could choose whether to bring a project within the IPA or not. Bayh-Dole killed this choice for nearly all faculty researchers and replaced it with a general requirement that all federal research at universities become managed through the standard patent rights clauses authorized by Bayh-Dole.
There was one industry group that welcomed Bayh-Dole: the pharma/biotech folks. For them, Bayh-Dole was an end-run around the Public Health Service patent policies that prevented companies from gaining monopoly control over compounds and other biomedical inventions created with public money. If pharma had to pay universities to be the middle men for the deal, fine. Bayh-Dole reduced the arrangements to a matter of money rather than public policy. And university administrators were more than pleased to play this role for the industry. Other industries, who never had the PHS patent policy problem to start with, got blindsided as universities implemented policies based on biomedical research and inventions. Administrators expected the same industry happiness to grease the bureaucratic palm that pharma was willing to do, and were shocked when companies in other industries objected, tried to negotiate, drifted away. As one university sponsored projects office director told me (and I paraphrase), “For all I care, industry sponsored research could just go away–it’s a waste of time.” Bayh-Dole killed the administrative will to collaborate with industry across a host of industries.
The invention management infrastructure that had developed, and to which advocates of Bayh-Dole pointed as being wildly successful compared to federal agency invention management, was built from voluntary double selectivity–faculty decided whether to pursue patents, decided who to work with, and those who might manage the patents also decided whether to take on any given project with the inventor. It was this voluntary double selectivity that was at the heart of the pre-Bayh-Dole university invention management infrastructure, what Bayh-Dole argued should be attractive for federally supported faculty inventions as well. It was this voluntary double selectivity that Bayh-Dole, dancing across the water, came to kill.
Once Bayh-Dole was passed, the advocates for the law turned to using Bayh-Dole to wreak havoc. The first to fall was Research Corporation. According to folks who were there, Research Corporation decided to remain neutral on the Bayh-Dole Act. Those looking to enfranchise the local model, whether in an affiliated research foundation or run by a university administration, saw Research Corporation as the competition. Every patent that Research Corporation got to manage was just so much potential revenue slipping away from the institution. Research Corporation had arrangements with scores of universities.
To push Research Corporation out of the way, advocates of Bayh-Dole first argued that the law mandated university ownership of federally supported inventions. The university administration, not inventors, then would get to decide who would manage each invention. Second, the advocates set about pushing universities to create their own licensing offices on the MIT/UC/Stanford model. The growth of these “technology licensing offices” was presented to the public as a measure of the success of Bayh-Dole. Yet those licensing offices represented the destruction of policy infrastructure that pushed invention management to external agents, left patenting as a voluntary faculty decision, and worked on a basis of equity of the situation rather than a demand for institutional ownership. For federally funded inventions, in which a university is reimbursed for both its direct and indirect costs to support the research, there never could be a university claim in equity (unless a faculty researcher accepted funds additional to what the federal government provided or was hired expressly to do the research that then was also supported by the government).
Bayh-Dole killed all this. It took a couple of decades, but now that policy environment is gone, buried, forgotten. In its place is a compulsory, comprehensive system of ownership demands. The concept of equity is gone, replaced with the policy claim that if the administration happens to make money from licensing, it will share some portion with the inventors. That’s not a negotiated deal. That’s just a policy assertion, treated as a perk, or an incentive to “disclose” inventions, as if the faculty motivation for inventing was to gain the approval of the university administration.
Faculty suddenly owed the university all their inventions as a condition of employment, or as a condition of using any university resources, even ones that the federal government had reimbursed the university for. For public universities, the new policy regime amounted to eminent domain, but few could see this because the advocates for Bayh-Dole claimed that the law required this outcome. Bayh-Dole did not, as the Supreme Court made clear in 2011. But by that time, Bayh-Dole had been used to kill off university policy–the effective university policy–on invention and replace it with a system that was just as bureaucratic as the worst of the federal agencies, and just as ineffective as the worst of those agencies, but without public oversight, with a penchant for doing monopoly deals, and increasingly with a penchant for suing industry as a better way to make money than working with industry.
University administrations took the opportunity to claim not only federally supported inventions, but all inventions as well as copyrights for software and other materials deemed not to be “traditional” forms of scholarship. The administrators also took “know-how”–what faculty knew how to do–if they thought that know-how had “commercial potential” or “commercial value.” In essence, the universities used grossly (and often ineptly) expanded definitions of invention to impose non-compete and confidentiality obligations on faculty. Bayh-Dole did not kill academic freedom, but it was used to destroy one of the centerpieces of it in the form of administrative control over most of the significant outcomes of faculty research.
BD become the killer of a 70 years of university faculty innovation in invention management, including independent external agents, faculty choice in management, agent choice in management, a university policy structure that respected faculty choice, public oversight, industry collaboration, and personal initiative. In the place of these things came compulsion, a demand for everything, compliance, threats (against inventors, industry), and bickering with industry. Worse, Bayh-Dole killed opportunity for maybe 500,000 and likely more discrete research findings judged under the new university policies to be “inventions” whether or not patentable. [Do the math yourself–one “invention” for every $2 million of research funding. Right now federal funding for universities is about $60 billion a year, so that’s about 30,000 inventions just last year, just on the federal side. Now what’s the cumulative expenditure since 1981 on university research under the post-Bayh-Dole policy regimes as these were implemented? Since only a tiny slice–less than 1% perhaps (Who knows? The universities refuse to report the figure. A regents report at UC put the figure at 0.5% of inventions claimed by the university ever became products. It’s got to be a huge number of killed inventions.]
Steven Covey writes of the P/PC balance—productivity requires production capability, without which, the source of good things dries up. As universities moved to force all research results through their new licensing offices, they also forced industry collaborations to become formalized and held results hostage for royalty payments. There was better money in invention hostage-taking than in getting more research money from industry. Threaten to offer the results of research supported by a company to the company’s competitors, or to patent trolls ready to shakedown everyone. And so university administrations destroyed as well their collaborations with industry. Not entirely, but enough to ruin the productivity of such research. No company in its right mind would propose to support research at an American university and have to negotiate to gain the right to use any results from that research. Oh, well, pharmaceutical companies might, but really, I used “in their right mind” and for clinical trials, pharma has worked a separate deal, leaving most everyone else to grapple with the devastation of Bayh-Dole.
University administrative efforts to control all faculty inventions have been bolstered by the Tax Reform Act of 1986 and various Revenue Procedures, which limit private (such as industry) access to inventions made in facilities supported by tax-free bonds—as many university research buildings are. Universities have also battled open source distribution of software, preferring to seek royalty deals under exclusive licenses.
There have been a few notable licensing successes under Bayh-Dole, but these have come often despite university administrative involvement rather than because of it. Worse, these successes have come at the expense of the destruction of the infrastructure–policy and personal–that justified the passage of Bayh-Dole in the first place. Over time, bureaucratic greed and demand for process has killed the flexible, opportunistic, and public-spirited infrastructure that made the idea of Bayh-Dole at all attractive.
Bayh-Dole, Bayh-Dole. Bayh-Dole, what a killer.
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