The beginning:
Research deliverables
Bayh-Bole, as it turns out, will be a statute that limits the scope of patent property rights in federally supported inventions, but in such an obtuse way that in effect it creates mostly administrative burdens (despite its gestures otherwise). Because Bayh-Dole is largely unenforced, with no provisions to protect inventors or third parties, or to provide the public with accounting or procedures by which to object to the private disposition of patents, it stands as not only a repudiation of the overreach of the PHS but also of public oversight of inventions made with federal support or related to that support. Federal research funding becomes, under Bayh-Dole–that is, unenforced Bayh-Dole–a subsidy for private patent monopoly exploitation. And university administrators have adopted that approach whole hog, as the expression goes.
What should the scope of claim by any sponsor of subvention research be in the disposition of results? For procurement, the matter is easier–start with the sponsor enjoying the freedom to practice what has been specified as deliverables. Anything else that’s made or invented or discovered along the way is irrelevant, so long as it does not interfere with what has been ordered. Of course, research is weird this way, as even in procurement, one can specify research services “to explore,” so that anything that’s found in exploring is the deliverable. The problem then is to specify what’s exploration on contract and what’s exploration in one’s spare time. How does one set limits on exploration, so that exploring in one’s spare time, in the same area that one is to explore “on the clock,” does not result in the production of yet more deliverables for the all-consuming sponsor?
Perhaps the very idea of deliverables from “research” is unworkable because it lacks a definable scope. One might procure the solution to a problem, but not the research that goes into finding the solution and proving it out. One might get the benefit of something that works, and not demand also all that someone has learned or thought about or created along the way to deliver that something in working condition. The PHS claim to anything “which might possibly be construed in any manner” to be PHS supported or related amounts to a requirement not to use the patent system for such work, unless approved to do so by the PHS–and then with conditions running on top of the patent system and antitrust laws.
Private patents on public health
The argument that’s latent in the PHS requirements is the same one in the Space Act–there should not be a proprietary “market” for advances in the area of new technology that might alleviate suffering and disease. Or, at least the federal government has no mandate to subsidize such markets. A surgeon should not prevent other surgeons from saving lives with a new technique or tool. Nor should a university claiming to own what a surgeon has invented. A company should not prevent doctors from using a new compound to treat disease or prevent other companies from supplying that compound or variations of the compound or different formulations involving that compound or different methods of delivering that compound. The “market” in alleviating suffering and disease ought to be the expert provision of responsive services, without limiting the services (or products) that others may also provide. That, at least, appears to be the determination at the heart of both the PHS and the NASA approach to patents in their respective areas of research support.
In such a “market,” especially one created or stimulated or entered by government research funding, the idea goes that patents serve no good purpose. The government, one might say, need not consider granting patents when there is or should be no domestic “market” in which goods should be proprietary. It’s like “patents in space”: who is going to worry whether some use of a technology on board a space craft infringes a patent.
“The only way to save the crew is for them to use their lithium crystals as a radiation shield.”
“But that would infringe Bobblespace’s patents!”
“The crew will have to take that risk.”
Think of health care on its own frontier of science and technology, and the idea of patents fades as beyond useless–immoral. Wagon train folks who can’t fix the wheel on their cart because the process of fixing wheels has been patented. People in a drought-stricken region cannot drill for water because the drilling process and tools they would use are patented.
What is and what should never be
Put it this way: there are some areas that form markets and others that do not and should not. Patents are not appropriate in areas that don’t and shouldn’t form markets for patent monopolies. The government should not issue patents in these areas. Thus, for a long time, space or nuclear power did not form markets–all there was, for the most part, was government funding for procurement or research. The government got all the reports and decided what to hold and what to publish. It did not need the patent system to give people an incentive to publish what would otherwise have remained trade secrets. There was no purpose to patents–all patents would do is to prevent companies from bidding for more work from NASA. That is, patents would quickly make a hash of competitive bidding or open use by one contractor of what had been supplied to the government by another contractor.
In a similar way, from the PHS perspective, if the government was to be involved in meeting the public health needs of the country, then those people working with the government to discover useful things that might serve to alleviate suffering and disease should adopt service without the need (or “incentive”) to exclude others from using what has been put forward.
In both of these developments, we are dealing with the provision of services–commercial or university-hosted–that do not require the production of “products.” While “products” may be produced once an “intervention” has been developed, the “market” in the meantime is “exclusion-free.” Once a product has been defined, then companies may compete, may create proprietary positions in improvements and add-ons and methods that improve efficiency of production and the like. One might recognize in this account the use of a commons to form a “platform” that establishes a standard, for which there are “essential” rights (ones that all should have access to) and “non-essential” rights (those that may be proprietary and for which one may have a competitive advantage).
The digital computer and the internet both followed this approach. In the early history of the U.S. aircraft industry, the government had to intercede and get competing companies to create a common standard–otherwise their various claims created patent gridlock and stalled domestic development while other countries moved ahead with aircraft development. A similar thing has happened with nanotech in the U.S., led by universities filing patents on every tiny (so to speak) detail of such things as carbon nanotubes–essentially stalling out development rather than promoting it.
Imagine if you will getting mining rights that apply only to the top foot of earth, and to dig at any depth, one must acquire mining rights from fifty or a hundred other rights holders, who have filed claims beneath your own. These other claimants, of course, have the same problem–they need permission from you and a hundred others to get to their foot of earth.
The idea then, is not that patents are in general useless (that’s a different discussion), but rather that there’s a point at which the government might issue patents, and that point happens after there’s been research and testing and application. Competition based on exclusion of others based on government-issued patents happens later, not during government-supported research, not during work within the government’s domain of primary interest, working on behalf of a general good. The debate, then, is about when the government should start issuing patents in a given area of research that the government has chosen to support for a public purpose (rather than merely to procure goods and services that are generally available). The PHS answer is–later or never. And that, interestingly, was the answer that many university faculty members in schools of medicine gave as well, circa 1950. Here’s Harvard’s policy in 1962:
One might see, then, where the PHS was coming from in expecting that faculty at the University of Wisconsin, and using WARF’s services, would follow along. To exclude others in this area of research, at this point in the research, was immoral. Exclusion prevented other researchers from working on the same findings. Exclusion created institutional conflicts of interest. Exclusion pitted investigators against one another for funding. Exclusion created opportunities to exploit public suffering using government-created monopolies. Why would the government participate in such activity by issuing patents and leaving folks to create fragmented ownership, institutionally licensed new technology? One cannot get to platforms that way, nor to public availability.
Kennedy patent policy distinctions
Two distinctions were made about when patenting might take place based on government funding. These both show up in the Kennedy patent policy in 1963. The first is when a contractor has an established commercial position and capability. Then the contractor can be left with patent rights if the contractor wants them, so long as the government has free rights for its purposes. This distinction separates a private market for inventions from the government market for inventions. The government market is “exclusion free.” The private market can deal in exclusion for competitive reasons. One might see in this distinction the makings of the “dual use” idea in military research–that there might be a civilian, non-military use for technology originally developed for the military. Thus, sonar might result in a dual-use fish-finder for commercial and recreational fishermen. In this line of thinking, the Kennedy patent policy gave a contractor three years from the date of patent issue, or about five or six years overall, to get something developed commercially or explain why, again, the contractor should have a monopoly.
The second distinction has to do with “calling forth risk capital” when a contractor lacks a commercial position or capability. In this case, the government may permit private funding to do the work that otherwise would fall to the government to fund or would not be funded at all. In either case, however, the risk capital comes forth to do work in the public interest–to bring an invention to the point of “practical application” so that everyone has access and might benefit “on reasonable terms.” Once the risk capital has performed its public service, recovered its investment, and received a reasonable profit, the incentive of patent exclusion should end and everyone again should have access. To the extent that commercially viable products are now possible, the opportunity should be shared among all those that wish to pursue it. In effect, the private risk capital creates a platform, is allowed to exploit that platform for a time to recover costs, and then releases that platform for all to use. Just as with commercially positioned contractors, the risk capital supplier has five or six years of monopoly to get something done, make it available, and recover costs with some profit.
Again, from the government’s perspective, given that it is providing the funding, it can require inventions as deliverables and dedicate the inventions to the public–expanding the public domain, just as if the research had been done in another country, or we just realized naturally what it had taken some effort to reveal. The advantage in such cases is not in what one knows, but in what one does with that knowledge–commercial proprietary advantages then lie in the improvements to the platform, especially the “non-essential” improvements. Where the purpose, however, is to alleviate human suffering and disease, the government’s supply of monopoly powers in the form of patents still may require limits on the use of patents relative to patents in general. That’s the concern–that in matters of public health, if patents are go be used, then there must be a public covenant on that use that limits the patent.
In these two distinctions, then, we find a critique of the patent system when applied to research conducted to advance the frontiers of science or to address matters of health, supported by federal money. In these areas, the patent system on its own permits a term that’s too long and allows a patent owner to do things that run against expectations, such as preventing all use of an invention or charging exorbitant fees for use of an invention or delaying development and then suing all who use the invention anyway, in essence taxing them for doing what the patent owner chose not to do.
If the need is urgent, as is the case with public health where people are suffering and dying, then leaving a patent owner to fuss around for two decades doesn’t work. If the need involves things where there really shouldn’t be a “market” based on exclusion, such as medical care, then a patent fails to protect the public from exorbitant prices, meaning that only the rich gain the benefit of access, or the government (or insurers or charitable organizations) must pay the cost as if everyone was wealthy. This is a wonderful result for patent owners and speculators on the future value of such patents. Where people are dying, the price charged can be sky high, since you have got them, as it were, by the throat.
In this way, one might see the huge gulf between two superficially similar arguments. In one, private risk capital is called forth to accomplish a public purpose when it cannot be accomplished any other way–creating more useful forms of invented stuff and then making those useful forms broadly available for others to make and improve. In the other, a patent owner suppresses all other ways of making an invention available while attempting to call forth private risk capital. The patent owner insists on finding private risk capital willing to exploit a patent monopoly so that the patent owner obtains greater financial return from the investment in patenting. In the first instance, private risk capital comes forward to benefit the public when other approaches have failed or the private risk capital offers to do what the government would otherwise do. In the second instance, a patent owner insists on creating a product available only to those with ability to pay, and we are asked to construe this objective as in the public interest because a product might be developed and a company and a university split the enhanced income from holding a monopoly not only on the product but on the invention’s range of technology from which the particular product has been selected.
In the hands of university patent brokers, the Bayh-Dole Act is nothing but slight of hand in changing one argument for the other.
Here is the next article in the series: