Although the Bayh-Dole Act is placed in US patent law, it actually makes few changes to patent law, as the US Supreme Court made clear in the Stanford v. Roche decision. Bayh-Dole largely forces federal agencies to adopt a uniform approach to claims they can make on inventions made in federally sponsored projects. In doing so, Bayh-Dole replaced the previous approach, which was based on flexibility, but which in practice meant that agencies might putter and fuss around a decision whether to allow a private party to obtain a patent on a federally supported invention.
Some agencies, such as the NSF and the DoD, worked well with flexible arrangements, and others, such as the DOE and PHS, weren’t so sure that allowing private parties to create monopolies around energy and health inventions was all that great a thing. And the DOE and PHS may have had a good point there. After all, for many years, university faculty were deeply opposed to the idea of patenting health care inventions–university discoveries should be free to all. That’s still the de facto case with surgery techniques. Pity that almost everything else has been offered to be sold off to private monopoly-seeking organizations, merely by the government agreeing to fund research in an area of interest.
Bayh-Dole itself does not require monopoly licensing of federally supported inventions, but it was a cleverly drafted scheme to make it appear that exclusive licensing–monopoly creation–was the way to go. Now look at what happens as a federal agency such as the PHS spreads research around, so that many universities are involved in the study of some area of health. Bits and pieces of inventive work get done, and the rights to practice those inventions are fragmented across multiple institutions, each seeking to license its patents exclusively.
You can see, perhaps, how this situation is a recipe for gridlock, not innovation. Unlike outright patent ownership, an exclusive license typically carries a stipulation that prevents the licensee from dedicating the licensed patent to the public domain, licensing it under non-exclusive, royalty-free terms, or otherwise making the invention freely available for practice, such as for a standard or to ensure interoperability. Exclusive licensees of university patents generally are forbidden by contract to engage in such stuff. Further, exclusive licensees are also set up to enforce the patents, typically with a first option to bring a suit against infringers. That’s fine–it’s only an option, not a requirement. But the zinger is that if the licensee does not sue, and the university does, then the university keeps all the money from the settlement or judgment. That means that if a company doesn’t sue, then it’s out all the money that should have been paid as royalties for the infringing actions.
So much for the public argument that university IP management is about public use and benefit–in the contracts themselves, that’s not the case: no surprise, it’s all about the money. Universities claim that they have to do things this way because they owe the inventors a share of royalties and would get sued if they did otherwise. But with the other tip of their tongue, they make clear in their IP policies that they are not acting as agents of the inventors, but rather acting only in their institutional self-interest.
But even if it were about the money, it’s an incredibly short-sighted approach. While an exclusive license suggests royalties on sales of commercial product, it also much more likely may mean that nothing ever gets used or developed, even if other companies–not the one licensed–are ready to do so. In short, an exclusive license might offer the potential to result in substantial royalties, but always an exclusive license restricts public access to fragmentary research inventions that often require many other fragments to be pieced together before any commercial product can be developed. So the “income potential” associated with an exclusive license goes up, but the likelihood of anything happening by way of use or commercial development actually goes down by orders of magnitude more.
Universities kill the very thing they seek, and yet they persist in trying, with re-organizations and re-namings of their technology transfer offices, glossier brochures, and stiffer policy statements about how important their new approach is to economic vitality.
So sad.