Illumina is suing Oxford Nanopore over nanopore technology for DNA sequencing.
Here’s what is interesting. Illumina licensed patents from the University of Washington and University of Alabama (joint owners). The underlying inventions were made with federal support. Oxford Nanopore licensed patents from the University of California and Harvard. And those underlying inventions also were made with federal support. So we are talking about an infringement dispute involving two separate sets of patents on subject inventions. Federal policy is suing itself. Neat–that must be a net positive for the public somehow.
Knowing how universities license patents, I expect that all the university licenses involved are exclusive, royalty-bearing deals that have no room for companies to settle disputes through cross-licensing. The dispute will be one big cock fight–patents may die, investors will surely lose out somewhere, prices will go up, technology will be delayed, and public benefits will also be delayed or blocked. It’s a collision of interests between various American universities fighting over a piece of a patent pie rather than licensing for broader public interest. (Not that the universities weren’t also fighting behind the scenes over who should get what share of royalties or if there might not be a way to cut other universities out of the money, ahem). Illumina and Oxford Nanopore are just another set of proxies in this fight, the cocks that get to cut and slash each other for the benefit of their university licensors.
This sort of dispute is a direct consequence of federal patent policy as set forth by Bayh-Dole. Perhaps there’s an argument that such disputes are a sign that the market is healthy and competition is fierce. I don’t see it that way. I see it as needless and wasteful–a game for wealth vying for future wealth, not an effort to improve public welfare. This dispute is also a direct consequence of university patent policies and licensing practices. Why license non-exclusively when one can license exclusively? Why go for public benefit (that is, be willing to forego royalties) when there’s a fight with other universities to be had?
If Illumina is suing using University of Washington/Alabama patents, then it’s likely that the patents have been assigned using the cover of an exclusive license agreements. Universities should consider a clause that prohibits infringement litigation involving subject inventions. Use = success. Practical application and all that. And given that university administrators won’t do such a thing unless forced, that’s something for federal policy to address.
35 USC 200–(among other things):
use the patent system
to promote the utilization of inventions arising from federally supported research and development…
to promote free competition and enterprise….
So how can patents on subject inventions be used to prevent utilization of inventions, to prevent free competition?
Obviously, one can ignore 35 USC 200 altogether or read it to mean, “Congress may have this policy, but it doesn’t mean anyone has any obligation to follow it in practice. It’s just there as a summary list to tell folk all the Good Things Congress intended. More like guidelines, or an overture, or puffy hopes, surplusage.”
Subject to the provisions of this title, patents shall have the attributes of personal property.
35 USC 200 are the policy and objective of federal patent law specific to subject inventions. If subject inventions are subject to anything at all in federal patent law, 35 USC 200 is the fundamental statement of that subjection.
So how does the owner of a patent on a subject invention have the statutory authority in patent law for suing to prevent the use of that invention, given there is no place in the policy statement for how patents on subject inventions may be used? That is, if 35 USC 200 is expressly part of federal patent law to identify how patents on subject inventions may be used, then 35 USC 271 has to be read to accommodate 35 USC 200. It cannot be that 35 USC 200 has no effect–otherwise, it should not be part of federal patent law. So there must be meaning in the phrase “Except as otherwise provided in this title” in 35 USC 271(a):
Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
35 USC 200 is in this title and provides otherwise. What authority does any owner of a patent on a subject invention have to sue for infringement? Does 35 USC 200 give an owner of a patent on a subject invention the authority not to authorize the use of subject inventions?
35 USC 271(d):
No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following…
Is the owner of a patent on a subject invention “entitled to relief” when someone practices some part of the claimed invention? Under what conditions? 35 USC 271(d) goes on…
(4) refused to license or use any rights to the patent;
Well, here’s a problem. If Bayh-Dole mandates the promotion of use, then how is it possible that a patent owner of a subject invention can refuse to license or use rights to the patent? It would not seem at all possible. Bayh-Dole expressly requires the promotion of use and expressly prescribes nonuse–that’s what the march-in procedures are there to make a show of. It would appear that the (nonprofit, at least) owner of a patent on a subject invention is not “otherwise entitled to relief” for infringement, having refused to license or use rights to such a patent.
If that’s the case, then we have identified a pathway by which 35 USC 200 really does operate here in 35 USC 271. It would seem that there is a legitimate problem with Bayh-Dole–making it appear that the property rights in patents on subject inventions are unlike those for ordinary patents, but in practice treating patents on subject inventions as ordinary patents with a compulsory government license, and an big hairy apparatus that gives the illusion of special conditions but in practice the apparatus doesn’t operate, doesn’t mean a thing.
Perhaps 35 USC 200 restricts an owner of a patent on a subject invention to infringement based on sale, offer for sale, and import, since these things aren’t directly involved in “utilization”–use. That would leave making and using (making is reasonably required to use!) free for all. Maybe that’s it. Maybe Bayh-Dole limits the patent right in subject inventions to the end result of commercialization–to infringement of the sell right. But then what do we make of the 35 USC 200 limitation that patents on subject inventions are to used to promote “free competition and enterprise”? Ah, it seems the sell right is involved in commercial competition. So just what narrow tiny jetty of patent right is there for the owner of a patent on a subject invention? Not much! Import, perhaps.
Perhaps a university owner of a patent on a subject invention should have to sue another university that has licensed a patent on different subject invention that has resulted in such an awful thing as beneficial use of one subject invention at the expense of another. Maybe those suits should be restricted to a share of whatever royalties earned by the licensee doing (accused of doing) the infringing are received by that university. Then it would be about the university money, mano a mano.
This discussion no doubt horrifying to many patent attorneys. It cannot be. Bayh-Dole can’t have done anything to patent law except strip title from inventors and hand that title to university administrators so they can file patent applications wildly and hand rights to monopoly players in industry–if not big companies, then startups backed by wealth, and if not that startups backed by state funds created with the impression that making money from startup equity is easy, and if not that, then nothing. Yeah, that. Everything else, according to the patent folk (as I know them), is just the same about patents on subject inventions.
Yet these same patent folk were–nearly all of them–totally absolutely completely wrong about how Bayh-Dole operates with regard to title to inventions. Ah, yeah, according to them, the Supreme Court got the decision wrong because, er, the justices read the law–no, no, because the justices let stand a lower court distinction between a promise to assign future rights and a present assignment of those future rights. Right. How many places can institutionally absorbed university attorneys be wrong about Bayh-Dole? I remember a few years ago sitting in a conference on university commercialization in the Bay Area (I was on a panel later in the day) and an IP attorney for a major university was making a presentation about getting present assignments from inventors in light of Stanford v Roche. What, I asked, is your take on 35 USC 261? (The part about conflicting assignments). The attorney did not even know what 35 USC 261 was. And these folks are the experts at the big schools. Sigh. I wish it were better.
The beatings will continue regardless. Bayh-Dole may as well be:
Patents on subject inventions may be exploited at the contractor’s discretion; Provided, however, the federal government receives a non-exclusive, royalty-fee, paid-up license in subject inventions for government purposes.
Or, to put in terms any patent broker can understand:
Do WTF you want, provided you don’t screw the feds.
Hey–that’s what Vannevar Bush proposed for what became the National Science Foundation. Except Vannevar Bush didn’t expect universities to be such pigs about screwing everyone else. Back in the day, university administrators cared more about public welfare than they did about aggrandizing their own budgets with patent revenues. There might be patent revenue every decade or two. It was a windfall, not the result of an administrative system. For that matter, most patent income is still a windfall. The difference is that administrators attribute the windfall to their system, which they have put in place believing Bayh-Dole mandates it. Their losses on other inventions were investments. Full on bozonet.
If there is nothing to Bayh-Dole, then get rid of all the administrative apparatus about electing title and filing patent applications and issuing licenses to the government and putting federal funding statements in patents and worrying about small business preferences or U.S. manufacture for exclusive U.S. licenses. Get rid of the fake apparatus that appears to protect the public interest. The useless march-in procedures. The useless small business preference review procedures. The useless U.S. manufacture procedures. The useless reporting on utilization procedures. The useless exclusive licensing provisions–oh, wait, those have been gotten rid of already. The useless restrictions on assignment, on cost recoveries from royalties, on the use of profits from licensing. None of these things are enforced. Bayh-Dole means happy looting time for patent brokers and for university administrators with (as Vannevar Bush put it) “hardened consciences.”
And, yeah, eight years ago I was involved in negotiating a patent deal with Oxford Nanopore (the deal closed after I left UC Santa Cruz). And, yes, we were required to use the standard UC-counsel approved exclusive license patent template–the one that says “Exclusive License” but really is more like an assignment.