The primary thrust of Bayh-Dole, its big public splash, is that the patent system will be used to promote the use of inventions made with federal support, so there’s public benefit on reasonable terms.
35 USC 200
It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally supported research or development . . . .
35 USC 201(f)
(f) The term “practical application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.
This is the fundamental gesture of Bayh-Dole, the express reason the law exists at all. Everything else is apparatus to do the job–stuff about patent rights clauses, reporting, ownership, patenting, government rights notices, exclusive licenses, assignment, royalties, march-in, reporting, favoring small companies. That’s all apparatus to the primary effort, which is to get publicly supported inventions to the point of practical application. Cut through everything else, and Bayh-Dole should reduce to:
Use the patent system where indicated to promote the use of inventions made with federal support, so that it is clear that the public benefits from the use of the inventions and it is also clear that the terms of that benefit are reasonable.
Use + established + benefit + reasonable. The fundamental condition, then, for the success of Bayh-Dole is that there can be “established” both use of each subject invention and “established” that the use results in benefits to the public and “established” that the benefits are available on reasonable terms.
That this is not “file a bunch of patents, sit on them until someone stumbles across your claims and then sue them for damages” (Caltech’s reading of the law, apparently). Nor is it “use the patent system to use promote the use of patents to generate income for your university, and bribe faculty to play along with promises of a share of the wealth.” Nor is it merely “promote the use of inventions,” as if advertising inventions available for licensing was sufficient. Nor is it “license inventions”–and especially not “license inventions exclusively”–such things merely move rights around.
The focus is on use of inventions. Even the use of the patent system is apparatus. The use of the patent system is qualified, furthermore, in three ways that distinguish a patent on a subject invention from a patent on any ordinary invention. For subject inventions, patent management must promote use (not exclude it, not be indifferent); patent management must result in public benefits (from the use of inventions, not use of the patents); patent management must produce those public benefits with reasonable terms (terms of the benefit, not terms of any patent license, and not any possible, legal terms are reasonable terms). If use on any terms was all that was expected, then there would no need to add the qualifier “reasonable.”
To ignore these distinctions is to refuse to read the law–to jump from the law to one’s own preference or convenience or assertion about what was intended but somehow never put into words. One might say, to ignore these restrictions pertaining to patents on subject inventions is to defy the law.
Invention use with public benefit on reasonable terms is the goal of Bayh-Dole, and the patent system is the identified method. The heart and soul of demonstrating the success of the law, then, is bound up in the word “establish.” If use can’t be established, Bayh-Dole fails. If public benefit from that use can’t be established, Bayh-Dole fails some more. If the terms cannot be established to be reasonable (not just any terms, not what the market will bear, not reasonable to investors or patent attorneys but rather reasonable to the public), then Bayh-Dole fails once again. Not the number of inventions, patents, licenses, startups, investment in startups, royalties, number of licensing offices. Not even the number of products. Establish the use. Show that the use has public benefits (not just potential for benefit). Show that those benefits are available (not just in a demo). Show that the terms to obtain the benefit are reasonable. Without establishment of these things, Bayh-Dole fails as a law.
Since Bayh-Dole keeps reports of these things secret, nothing much has been established. AUTM reports unimportant statistics and represents them as if they are a legitimate substitute for the law’s requirements. PhRMA and COGR and Joe Allen go around citing proxy statistics about the number of patents and the like–none of it relevant without also knowing the extent of practical application. Economic hacks multiply university licensing income by some huge factor (like 50) to create a number that purports to be total sales, and then after more jiggly poo (involving impact multiples) divide an even bigger number by average personal income to create a phony assertion of the number of jobs created. These numbers then stand in for practical application, which is never reported for most subject inventions. If the real numbers are so ugly that no university cares about them or dares to report them, but the public claims are for wild success, surely we are dealing with a scam.
On the fundamental criterion for Bayh-Dole’s success, the law’s own standard of success, Bayh-Dole has failed because for nearly all subject inventions use cannot be established with public benefit on reasonable terms.