Misrepresentations of Bayh-Dole

The Bayh-Dole Act has been broadly misrepresented by organizations with a vested interest in acquiring inventions to manage, including universities, law firms, university-affiliated foundations, the Association of University Technology Managers, lobbying groups representing the pharma and biotech industries, and various “front” organizations representing universities, including AAU and APLU. These misrepresentations are repeated in university patent policies, in “guidance” for university inventors, in “infographics,” and in articles placed in the academic literature.

The misrepresentations include:

Bayh-Dole created a uniform federal patent policy

AUTM: “Enacted on December 12, 1980, the Bayh-Dole Act (P.L. 96-517, Patent and Trademark Act Amendments of 1980) created a uniform patent policy among the many federal agencies that fund research….”

University of Delaware: “When the U.S. Congress passed P. L. 96-517, the Patent and Trademark Law Amendments Act, more commonly known as the ‘Bayh-Dole Act,’ in 1980, a uniform federal patent policy was established…”

AAU: “In 1980 the BayhDole Act created a uniform patent policy among the many federal agencies that fund research…”

Woodell and Smith: “In 1980, the Bayh-Dole Act created a uniform patent policy among the many federal agencies that fund research, enabling universities, nonprofit research institutions, and small businesses to retain patent and licensing rights to inventions developed by their investigators and supported by federal research funding.”

Phrma: “The University and Small Business Patent Procedures Act of 1980 (commonly referred to as “Bayh-Dole”) created the uniform framework that facilitates orderly and efficient technology transfer from universities and other institutions receiving government research funding to the private sector.”

Misleading history. The Kennedy patent policy of 1963 in effect established a uniform policy. Much depends, however, with what one takes as the meaning of “uniform.”  Here’s President Kennedy’s statement, reaffirmed by President Nixon in 1971.

Nevertheless, there is need for greater consistency in agency practices in order to further the governmental and public interests in promoting the utilization of federally financed inventions and to avoid difficulties caused by different approaches by the agencies when dealing with the same class of organizations in comparable patent situations.

The Kennedy patent policy was clearly uniform–it required uniform treatment within each category of research or contracting relationship. But the folks drafting the Kennedy patent policy refer to it as “flexible”–in that it permitted federal agencies to adopt either the “title” approach (where the government took title and dedicated most inventions to the public) or the “license” approach (where the government obtained a license to use inventions created in federal work, but left patent rights with the contractors).

Bayh-Dole establishes an arbitrary default condition within that policy for contractors claiming ownership of inventions made with federal support and makes it difficult for federal agencies to vary from that default even in the public interest. Thus, while Bayh-Dole requires a “uniform” default position, it does not create a “uniform policy” any more than did the Kennedy policy. Instead, the distinguishing characteristic of Bayh-Dole is that it makes flexibility of government patent policy all the more difficult for federal agencies that aim to develop technology to the point of commercial use, or that are the primary funder or user of contracted technology development, or that seek to have technology developed to enable desired regulation–or, heaven help us all, desire to replenish or expand the public domain.

There’s more to suggest that Bayh-Dole is anything but uniform. Bayh-Dole’s standard patent rights clause is not uniformly enforced and at many points federal agencies may waive its requirements.

And as a point of contrast, the Presidents Kennedy and Nixon both argued that a single patent policy on ownership was not acceptable, based on the widely varying federal purposes for engaging in research contracting.

Kennedy (1963):

It is not feasible to have complete uniformity of practice throughout the Government in view of the differing missions and statutory responsibilities of the several departments and agencies engaged in research and development.

The Harbridge House report (1968) concluded the same thing, based in part on widely varying industry practices with regard to patents:

However, this does not mean that either a title or license policy will equally serve the government’s interests under all the above circumstances, since the policy selected may also affect industrial decisions to use contract inventions commercially. Here again, a balancing of government objects appears necessary to ensure that the net effect of the patent policy promotes the government’s overall goals.

Nixon (1971):

More specifically, the studies and experience over the past seven years have indicated that:

(a) A single presumption of ownership of patent rights to Government-sponsored inventions either in the Government or in its contractors is not a satisfactory basis for Government patent policy, and that a flexible, Government-wide policy best serves public interest.

Something must have happened between 1971 and 1979 to utterly overturn these findings adopted by two presidents. But there’s nothing but crickets. It might be better to describe Bayh-Dole as having introduced into a flexible patent policy an arbitrary, much less flexible exception that becomes effective only when a contractor obtains title to an invention made with federal support.

If Bayh-Dole did create a uniform patent policy, it did so only for inventions that a contractor obtained title to–not for all inventions made in research supported by federal funds, not for inventions made under funding agreements primarily with an educational purpose, and then only for nonprofits and small companies (President Regan in 1987 extended by executive order made Bayh-Dole apply as well to contracts with non-small companies).

There’s really little about Bayh-Dole that’s uniform, and whatever uniformity is there for universities was already present in the NIH and NSF institutional patent agreement programs. Nothing particularly uniform, somethings less flexible. No great change for universities. So take it how you will.

Contractors before Bayh-Dole could not own inventions made with federal support

AAU: “Before Bayh-Dole was enacted, the federal government retained ownership of federally funded discoveries”

Morrison and Foerester:  “Before 1980, the Federal Government’s consistent position was that the results of any research and development funded with taxpayer’s money should be in the public domain and freely available to the public.”

University of Iowa: “Prior to 1980, title (ownership) to any invention created using federal funding was owned by the U.S. government.”

Boston College: “The title (ownership) to any invention created using federal funding was owned by the U.S. Government”

COGR: “Prior to the Act the federal government retained ownership of all inventions developed with federal funds. Therefore, only the federal government had the authority to transfer or license these inventions to third parties to enable the development of products.”

Rice University:  “Prior to the Bayh-Dole Act, the U.S. government retained ownership of inventions created and developed with the aid of federal research funds.”

Fake history. The Kennedy patent policy permitted contractor ownership and some federal agencies, such as the Department of Defense, routinely allowed ownership; indeed, the NIH/NSF IPA programs that allowed nonprofits to own inventions were based on the Kennedy patent policy. The HEW IPA program began in 1953–almost as soon as the federal government was given the mandate to support basic and health research in the public interest using grants. Here’s a summary in Congressional testimony from 1979 (p. 207):

In general, HEW’s regulations provide discretion to the Assistant Secretary for Health to (1) Permit an organization (whether or not for profit) to retain rights to inventions identified during the performance of either HEW grants or contracts. (2) Enter into an Institutional Patent Agreement (IPA) with a nonprofit organization whose patent policies are consistent with HEW’s aims and the public’s interest. An IPA provides the organization first option to future inventions made under HEW grants

Even the DOE permitted contractor ownership (204)–but it determined that based on its statutory requirements it could not use an IPA program. Instead, it created expedited determinations:

As of December 31, 1978, DOE had received 422 petitions for waivers from about 5,600 invention disclosures made on more than 6,000 contracts. The Department granted 216, or 51 percent; denied 46, or 11 percent; and closed or had withdrawn 48, or 11 percent. The remaining 112, or 27 percent, were in process. These consisted of 54 petitions for advanced waivers and 58 for individual waivers.

Before Bayh-Dole, federally owned patents “sat on the shelf” or were “locked away”; often “28,000” patents is cited; the federal government did a terrible job at licensing

AAU: “but the government often neglected to license those discoveries to the private sector for further development.”

University of Pittsburgh: “The federal government’s inability to effectively commercialize technologies derived from federally funded research resulted in hundreds of valuable patents sitting around unused. At the time, the government was not willing to grant licenses to the private sector.”

Emory University: “Nevertheless, the title (ownership) of any invention created from federally funded research were retained by the government; cutting-edge research being funded by American tax dollars was languishing.”

AUTM: “Prior to its passage, it has been documented that nearly 30,000 technologies
were sitting on government shelves with no plan for development.”

More misleading history. For biomedical inventions, the government’s licensing rate was 23%. Here’s Rebecca Eisenberg:

For example, 325 of the 28,000 patents in the government’s portfolio were from HEW, and seventy-five (or twenty-three percent) of these HEW patents were licensed as of the end of fiscal year 1976.

The university-affiliated invention management rate for HEW-supported biomedical inventions was comparable:

In 1974 HEW surveyed individual petitioning institutions and institutions with IPAs which had obtained greater rights to inventions in the performance of HEW funded research since the GAO report. The institutions reported that 78 exclusive and 44 nonexclusive licenses had been negotiated under patents and applications filed on 329 inventions.

Howard Bremer recorded a 12% licensing rate for inventions under the NSF programs that permitted contractor ownership.

Keep in mind that licensing doesn’t have anything much to do with commercialization–a license does not mean a product will be forthcoming, and products can be produced without a license (infringing) or without the need for a license (public domain).

For biomedical inventions, the federal government did as well as the universities–as university officials admitted in testimony regarding the IPA program in the 1970s. Before Bayh-Dole, default federal policy was to dedicate federally owned inventions to the public–licensing only in the rare case. The government did not even bother to enforce (or license) most of the inventions that it patented. Government-owned inventions then were made broadly available, whether directly or by publication using the patent system. Before Bayh-Dole, most inventions owned by the federal government were available to all. Compare that with inventions claimed by universities after Bayh-Dole–most Bayh-Dole managed inventions are not available to all–either they are not licensed behind a patent paywall or they are licensed exclusively (or even assigned).

Given that the point of federal management of patents on inventions made with public support was to publish the inventions (as, in the patent literature) and otherwise make the inventions available to all (think, freeway rather than toll road), it is just silly to fuss that the federal government had no “plan for development” of each. Public access was the plan for development. One might not like that plan, but there it is.

Consider one more point on this silly fuss aspect. The fussers aver that without patents held for their monopoly value (not non-exclusively licensed, not dedicated to a standard), no one will use the claimed inventions. “What’s available to all will be developed by none.” In the same breath, the fussers aver that without patents on federally supported inventions, why awful free-riding foreign companies will develop the inventions ahead of American companies. Look at it–one can’t have both of these arguments. What is it about American companies that they won’t develop anything without a patent–even something invented oversees?–but foreign companies are a threat to do so? It doesn’t add up. It’s just silly fuss from folks determined to deceive, and the easiest folk for them to deceive are themselves.

Bayh-Dole vests title to federally supported invention in universities and other contractors, not inventors, or otherwise gives institutions a special right to take title 

Syracuse University: “As a result of this law, universities retain ownership to inventions made under federally funded research.”

Emory University: “The Bayh-Dole Act, passed by Congress in 1980 to stimulate investment in and commercialization of scientific inventions, allows universities to elect ownership of inventions made at their institutions using federal funding. If a university such as Emory chooses to take ownership of the invention….”

Penn State System: “Elect title to the invention within two years after disclosing the invention to the federal agency”

Duke University: “The Patent and Trademark Law Amendments Act, better known as the Bayh-Dole Act, allowed universities to lay claim to all new ideas made in labs and research centers backed by federal funding—taxpayers’ money.”

Catholic University of America: ” This Act gives grantee/contractor organizations first rights to title of a subject invention stemming from federally-funded research”

Michael Odza: “President Carter signed the Bayh-Dole Act (Public Law 96-517) in December 1980. Its main function was to standardize previously disjointed federal policy. It reaffirmed that ownership and control of patents derived from federally funded research belonged to the performing institution, not to the sponsoring federal agency.”

Robert J. Dole Institute of Politics: “Passage of the Bayh-Dole Act granted patent rights to the entity which developed it, which in many cases are federally supported colleges and universities.”

Cornell University: “Bayh-Dole was intended to increase trend–IP developed by a university using federal funding is owned by the university; if the university will try to commercialize.”

University of California: “Pursuant to federal statute, known as the Bayh–Dole Act, UC is entitled to take title to inventions arising from federally funded research; however, it must grant non-exclusive use rights to the Government.”

UC San Francisco: “The Bayh-Dole Act of 1980 determined that the University retains title to IP created using Federal funding.”

BIO: “Empowers universities, small businesses and non-profit institutions to take ownership of inventions made during federally-funded research, so they can license these basic inventions for further applied research and development and broader public use.”

Pennsylvania State System of Higher Education: “Federally-funded sponsored research grants, contracts or sponsorship agreements are subject to the Bayh-Dole Act and restrict faculty members’ claim of ownership and interest in intellectual property…. However, all inventions developed as part of, or a continuation of, federally-funded research will be owned by the University, with or without “Substantial Use” by faculty of University resources/support/facilities, in accordance with the Bayh-Dole Act.

False, misleading. The Supreme Court in Stanford v Roche (2011) made clear–Bayh-Dole applies only to subject inventions–inventions made with federal support that have been acquired by a institutional contractor:

But because the Bayh-Dole Act, including §210(a), applies only to “subject inventions”—“inventions of the contractor”—it does not displace an inventor’s antecedent title to his invention.

. . .

With an effective assignment, those inventions—if federally funded—become “subject inventions” under the Act, and the statute as a practical matter works pretty much the way Stanford says it should. The only significant difference is that it does so without violence to the basic principle of patent law that
inventors own their inventions.

A contractor may elect to retain title to an invention the contractor has otherwise acquired, but nothing in Bayh-Dole gives a contractor the right to take ownership of inventions or somehow to already have that title–not even the new NIST requirement that contractors require inventors to promise to assign subject inventions–those would be inventions that the contractor already owns. The use of “retain” is misleading in many representations of Bayh-Dole. Lawyers representing over 50 universities signed on to amicus briefs to the Supreme Court arguing that “retain” implied that Bayh-Dole vested ownership of inventions with the universities. The Supreme Court rejected their argument. But anyone reading these statements will be misled, because the universities do not make clear that they must acquire inventions through a conventional method, outside of Bayh-Dole.

Bayh-Dole requires commercialization

Emory University: “The Bayh-Dole Act, passed by Congress in 1980 to stimulate investment in and commercialization of scientific inventions, allows universities to elect ownership of inventions made at their institutions using federal funding.”

Penn State: “The U.S. Bayh-Dole Act of 1980 allows universities and other non-profit institutions to have ownership rights to discoveries resulting from federally funded research, provided certain obligations are met. These obligations include making efforts to protect (when appropriate) and commercialize the discoveries…”

University of Pittsburgh: “The University must attempt to develop and commercialize the invention.”

Phrma: “To ensure timely and effective commercialization of federally funded research, Congress built in safeguards…”

Northwestern: The patent and invention policy at Northwestern University largely stems from the Bayh-Dole Act, also known as the Government Patent Policy Act of 1980, which was enacted largely to stimulate economic and entrepreneurial activity by promoting the commercialization of inventions stemming from federally funded research.

University of Texas: “The Bayh-Dole Act requires the university to protect and commercialize the discoveries, submit progress reports to the funding agency, give preference to small businesses that demonstrate sufficient capability, and share any resulting revenues with the inventors. If the university does not choose to commercialize the invention, the government can patent the invention.”

Cornell University: “Bayh-Dole Requirements 1. Must try to commercialize

Not true. Bayh-Dole’s stated objectives include utilization, collaboration, free competition and enterprise, and use of United States industry and labor for commercialization and public availability. For federally owned inventions, Bayh-Dole’s implementing regulations reduce these objectives to utilization. Bayh-Dole’s policy is that the standard for march-in is practical application–utilization with benefits available to the public on reasonable terms; it is clear that non-exclusive licensing on reasonable terms satisfies the practical application standard, regardless of whether an invention has been “commercialized.” There is, despite an an academic article’s title to the contrary, no duty to “commercialize” subject inventions.

Bayh-Dole has led to a great increase in university patenting and licensing

APLU: “Bayh-Dole has enabled a remarkable expansion of technology commercialization over the past few decades. This law is critical to encouraging faculty and students to generate new start-up companies and it should be preserved.”

AAU: “Bayh-Dole sparked technology transfer by creating an incentive for universities to secure patent protection for inventions resulting from federally funded research”

Phrma: “Prior to Bayh-Dole, commercialization rates of federally-funded research
were estimated to be less than 5%. Since the passage of the law, however,
commercialization of federally-funded research has increased dramatically
between 1980 and 2002 alone, U.S. universities generated a tenfold increase
in patents.”

COGR: “The Act and its amendments provided the basis for the formation of university technology transfer programs.”

University of Minnesota: “Since the act was passed in 1980, the number of technologies patented, licensed, and commercialized through university technology transfer offices has grown rapidly.”

Unsubstantiated. University technology transfer was growing throughout the 1970s–there’s no indication of a “Bayh-Dole” effect in university (and related foundation) patenting activity in the years following Bayh-Dole. While there is clearly an increase in university patenting, there’s nothing to indicate that Bayh-Dole was the cause or even a significant contributing factor. Universities under the NIH and NSF IPA programs already had had “incentives” for to deal in patents on federally supported inventions.

Consider Elizabeth Popp Berman:

The number of patents issued to universities each year rose from about 100 in 1968, to about 350 in 1980, to about 1400 in 1992. Thus we can see that patenting increased almost as rapidly in the 12 years leading up to Bayh-Dole (by about 250%) as it did in the 12 years following the Act (by about 300%). Patents issued per research dollar spent also increased substantially in the years leading up to as well as the years following Bayh-Dole (Henderson et al., 1998: 120; Mowery et al., 2004: 48). Such an observation leads us to ask what else besides the Bayh-Dole Act caused university patenting to increase, particularly prior to 1980.

For all that, patenting has next to nothing to do with commercialization. See the discussion by Mowery, et al. in Ivory Tower and Industrial Innovation.

Before Bayh-Dole, no federally supported drugs or vaccines became commercial products

Gene Quinn: “Prior to the enactment of Bayh-Dole in 1980, it was virtually impossible to license University technology. In fact, a grand total of zero… that is 0… drugs developed with university funding from the federal government had been commercialized.”

Joseph Allen: “Before Bayh-Dole not a single new drug was developed when the government took patents away from the inventing organizations, making them available through non exclusive licenses while destroying the intended incentives of patent ownership.”

AUTM and Senator Bayh: “We found 28,000 government-funded inventions gathering dust on agency shelves with not a single drug commercialized when the government owned the patent.”

Not true and misleading. See Eisenberg’s figures above–the government licensing rate was comparable to the university licensing rate, and depending on what figures one has, even much better than the university licensing rate for biomedical inventions with federal funding. Universities did okay with the inventions they obtained without federal funding; the federal government did okay with the inventions they obtained with federal funding; and universities did comparatively cruddy with the inventions they obtained with federal funding. Now, outside of some obvious lust for politics, what do you make of it? Yup.

Drugs were also commercialized under the IPA program, if you hope for that sort of thing–Cisplatin, for instance; and federal support contributed to the Salk polio vaccine and to drugs to treat cancer. The point of the Salk vaccine, though, was that there was no owner of the invention.  Drugs might not be “commercialized” when the government owned, but these folks don’t bother with the drugs that were commercialized without any ownership position at all. Yes, no shocked faces. It’s bluffing–misrepresentation that we should all expect because we expect politicians to lie and therefore it cannot be wrong. Or some screwed up idea like that.

The misleading claim has also been modified to be no inventions that the government claimed from contractors ever became commercial drugs–but that’s an empty claim because the IPA program generally permitted nonprofits to own those inventions, and so the only inventions that the government might receive from nonprofits were ones that the nonprofits had decided weren’t worth patenting. More bluff, bluster, deception. Fake.

Bayh-Dole has been a wild success

APLU: “Before 1980, fewer than 250 patents were issued to U.S. universities annually; discoveries were rarely commercialized for the public’s benefit. By contrast, according to a recent survey by the Association of University Technology Managers (AUTM), in 2015 alone, U.S. universities garnered 6,164 U.S. patents, led to the formation of 950 new startup companies, and generated more than 700 new commercial products.”

AAU: “The system of public-private technology transfer that was established under the Bayh-Dole Act has been extraordinarily successful in moving university discoveries from research laboratories to the marketplace. Technology transfer has provided a rich return on public funding for basic research in the form of countless innovative products that benefit consumers, create jobs, and contribute to U.S. economic competitiveness and technological leadership internationally.”

Joint statement of BIO, AAU, ACE, APLU, AUTM, and COGR: “By all accounts, the U.S. system of public-private technology transfer that was established under the 1980 Bayh-Dole Act has been extraordinarily successful in moving university discoveries from experimental laboratories to the marketplace through collaborations with private industry. This system has provided a rich return on public funding for basic research, in the form of countless innovative products that today benefit consumers, create jobs, and contribute to U.S. technological leadership internationally.”

IPWatchdog: “The facts are overwhelmingly on the side of those who know and understand that Bayh-Dole has been a thorough and profound success. Indeed, if you actually look at the facts no one could ever objectively question whether Bayh-Dole is succeeding or has been good.”

Presented without support. You never see a link to those 700 commercial products, for instance. And think about it, the 700 commercial products (if true, and no reason to think it’s true) cannot possibly be from inventions made in 2015 or patents issued in 2015–that has to be the cumulative total of commercial products claimed over the 50,000 patents. But no–it’s not even that. AUTM surveys don’t report subject invention activity. Universities have obtained nearly 124,000 utility patents since 1981. That’s a 0.5% commercialization rate–even if you think AUTM is being truthful. That hugely sucks. That’s 10x lower than the typical commercialization rate for any old US patent.

Bayh-Dole is a dismal failure. Misrepresented, malpracticed, unenforced, undocumented. The result is 50,000 university and foundation patents on inventions made with federal support, most of which are behind institutional paywalls unlicensed or if licensed, licensed exclusively and not developed into commercial products. We are talking maybe 95% of all those inventions never get close to commercial development–but all are withheld from public access, research use, industry use, and professional use. Universities sue to prevent such use.

Bayh-Dole purports to exclude from FOIA disclosure contractors’ reports of the use of the federally supported inventions they have retained, so there is no public accounting. Universities substitute proxy metrics for those indicated by Bayh-Dole, reporting the total number of inventions reported, patents issued, and licenses granted without breaking out which of these involve federally supported inventions. And they never report specifically the federally supported inventions that have and have not achieved practical application–use with benefits available to the public on reasonable terms.

Universities use Bayh-Dole to justify withholding inventions from public access in the hope of obtaining an exclusive license–that is, practicing the patent monopoly pipeline rather than promoting free competition and enterprise. Bayh-Dole was not the cause of university technology transfer–that effort had been underway since at least 1912 with the formation of Research Corporation, with great expansion from the 1940s to the 1970s. The growth of university patenting before Bayh-Dole is about the same as after. Here, look:

Let’s add a blue graph of university utility patents citing federal funding. An even flatter growth curve. And recently it’s clear that university patenting of non-federally supported inventions is growing faster than the patenting of federally supported inventions. We might think that Bayh-Dole is having an adverse effect on university patenting.

We are talking 16 years after Bayh-Dole for an uptick and even then there’s nothing to indicate that Bayh-Dole has anything to do with it. Or we might consider that a count of patents all by its lonesome has no meaning (other than for political deception) with regard to either “commercial development” or “practical application.” Or, we might observe that patenting without an account of outcomes of patenting (and not patenting) means only that university bureaucrats have kept a whole lot of inventions from public access by institutions, until they prove it otherwise.

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