AUTM’s invitation to delude yourself, 1

Here’s AUTM’s “Talking Points” on Bayh-Dole. Let’s read the first paragraph together.

The Bayh-Dole Act: It’s Working

Actually, there’s no evidence that Bayh-Dole is working because (1) Bayh-Dole makes the evidence a federal secret; (2) universities don’t release the evidence if they even have it; (3) the available evidence indicates that the law is not working–including that universities would release positive evidence if they had positive evidence, so it’s really clear they don’t have positive evidence; (4) universities refuse to comply with the standard patent rights clause and federal agencies don’t have to enforce it or act on the rights reserved for the government–so whatever universities are doing, it’s not a matter of Bayh-Dole because they don’t comply; (5) universities have acquired over 120,000 patents in the Bayh-Dole era, over 50,000 of which cite federal funding–most are unlicensed, and of the few that are, most are licensed exclusively, and of those that are licensed exclusively, only a very few have resulted in a commercial product, and of those, most do not meet the Bayh-Dole standard for benefits available to the public on reasonable terms.

Further, there’s the collateral damage done, which university administrators also refuse to report. Most inventions are kept by universities from public use in the hope that someday they will be licensed exclusively. Only where universities are compelled, as in NSF consortia (which violate Bayh-Dole in a clever way), do they license non-exclusively. And if an invention is licensed exclusively, then it’s not generally available to anyone else. All those excluded have reason to work against the use of the invention–ignore it, undermine it, design around it (and therefore don’t use the benefit of federally supported research), or make it obsolete (exclude it from standards, do not make compatible product, create a different industry roadmap).

And we haven’t even started talking about the damage done by denying early adopters access to discoveries, of the lost opportunities for collaboration because university administrators insist on taking an ownership position and seeking an exclusive business “partner.” And we won’t mention (except here) the unmanageable institutional conflict of interest that arises when a university purports to look out after the public interest but instead decides to deal for profit in patent monopolies on that research. The collateral damage doesn’t exist, of course, if you accept that most federally supported research discoveries don’t matter anyway. 

In the United States, much of the research performed at universities is funded, in part, by U.S. government agencies.

About 60%, on average. For university funding, grants are awarded to projects proposed by faculty. The university receives the funds on behalf of the faculty investigator and is compensated for managing the funds. The university is a steward of the funds. The university does not assign research, does not control the research, does not choose the collaborators, does not approve results, does not control publication. The university is not the master; faculty investigators are not university servants. Faculty investigators, in fact, have to request a release from their university duties to undertake federally sponsored research.

Sometimes university research yields a discovery that has commercial potential or the potential to improve lives.

As if these are distinct things–either commercial potential or potential to improve lives. Actually, this is all nonsense. First, it’s not “university” research in the sense of “specified, owned, or funded” by the university. It’s “faculty-led research.” Already AUTM has adopted rhetoric that assumes that inventions made in faculty-led research are “university inventions.” Second, notice the use of “potential.” What does “potential” mean here? Dave Henderson, the former baseball outfielder, once quipped that “potential means you haven’t done anything yet.” But who decides what is “potential”? A university bureaucrat, even one with specialized training to navigate the complexities created by poorly conceived and drafted university patent policies, misrepresentation and bundling of Bayh-Dole, and often deeply flawed practice? Here’s my experience over twenty some years: if even a bureaucrat can see that something has value, then no bureaucrat is needed. If only a bureaucrat can see that something has value, then the bureaucrat is in the wrong job or you need a less delusional bureaucrat. In general, principal investigators have a pretty reliable sense of value–whether for research or for their careers or for the advance of technology or even for possible money-making. University bureaucrats, by contrast, patent pretty much everything and hope that the fact of the patent–protection–will create a value proposition.

The patent, however, often works to attract patent speculators rather than first users of a new discovery. Bureaucratically placed patents tend to displace early use in favor of a pie in the sky that never appears. This is what they mean by “potential”–this invention has the “potential” for causing a pie to appear in the sky, but only if we spend $20,000 on a patent application.

I once was asked to meet with a university software developer. The team had created some nice code and the patent licensing group had messed around with them, thinking to spend the $20,000 on patenting, but couldn’t see the potential for pie in the sky because the code wasn’t quite finished. Well, I’ve never met a university code that was finished in that sense, but I asked whether the team would rather have $20,000 to work on the code or to get a patent. Guess what they really wanted. Yeah, it wasn’t a patent for pie in the sky. (Hint, whatever programmers say, times it by pi–if they think they can do it for $20,000, it will be over $60,000; if they can do it in three months, call it nine months. Just sayin’.)

Here, AUTM restricts potential to two areas–“commercial” potential and “potential to improve lives.” There’s nothing about “potential” to improve our understanding of the world, or to improve research methods, or potential to contribute to a standard, or potential to improve professional practice. No–it’s potential for commerce and potential to feel good. Really, all this is code for AUTM’s two activities: dealing in patent monopolies (“commercial potential”) and dealing in feel good gestures (“better world through technology transfer; lower cost patent monopolies on drugs for “developing” countries).

When this happens, highly specialized university employees known as technology transfer professionals, begin a complex process to protect that discovery and turn it into a product or service.

I was one of these for almost two decades. While some of these employees are really bright and dedicated, a whole lot of them stink. The process is “complex” because they bungle practice. Sad, but true. Sorry, many of my former colleagues. Your game is low. You should up it. But more than that, AUTM stamps what happens when a faculty-led research effort makes a discovery–we aren’t talking about inventions at all yet–discovery–university employees are tasked with a “process” of “protecting” the discovery. This is all assbackwards. First, only bureaucrats could imagine that there’s a single process by which research discoveries are to be managed. Second, it’s hare-brained to depict faculty discoveries as standing in need of protection. Third, notice how the faculty investigator has dropped out of the picture. AUTM offs them. But the “protection” of a discovery that’s inventive is up to the faculty discoverer. That’s patent law 101. But here AUTM makes it appear that university employees decide what to “protect”–not the faculty investigators, and for that matter not even company representatives. University administrators step in and “protect” things using a “process.”

In non-coded words, university administrators assert ownership of inventions, whether patentable or not, and do everything they can to keep anyone from using the invention without paying the university for the right to do so–and agreeing to create a commercial product or service. A company seeking a non-exclusive license will  be laughed away. A company seeking a royalty-free non-exclusive license will be laughed away even harder.

At this point, note also that AUTM drops the happy talk about improving people’s lives as a separate end point. The specialized university employees step in to protect discoveries only for commercial products and services. They would be at a loss for what to do to improve people’s lives directly. No–the idea that’s sitting here is that only commercial products will improve people’s lives. Nothing good in the world, but that it comes first in product form. That’s the implicit claim.

Sometimes this is done by licensing the discovery to an existing company.

Notice that AUTM assumes a single company–exclusive licensing. But in practice, universities grant exclusive patent licenses while assigning the underlying invention. The company then has the right to enforce the patent–for whatever reasons it may have. The university abdicates its role in determining when to enforce the patent. Deeper do-do: universities routinely license the entire patent claim set exclusively, even when a company might choose to develop a single aspect of the invention. Thus, with medicinal chemistry inventions, a patent may claim thousands of compounds, and a university will convey rights to all of these compounds to a single company, which then may pick them over and choose one to work on. The rest, however, are not released for everyone else to work with–they stay behind the patent monopoly, off-limits. You see, part of the value returned to the university is for this right to suppress competitive use of the parts of a claimed invention that the exclusive licensee declines to develop into a commercial product or service.

The word “sometimes” rings almost true. At Stanford, “sometimes” is about 20% of the time. At less productive licensing offices, “sometimes” can be mean “rarely.” But AUTM uses its “sometimes” in parallel, to make it appear that licensing happens all the time, and it’s really a matter of whether the university licenses to a single company at arm’s length or to a single company that it has created for a sweetheart deal:

Sometimes, a university will create a new company—or “startup”—to produce the new product.

As if we don’t know what a “startup” company is. But notice the “university will create” wording. Generally, when a university creates a company, it is a paper company, a shell. This is what both the University of Utah and University of Washington did for years, announcing each year 20 or so startups–in reality, they were fake companies, in name only, with no operations, with an address at the university’s licensing office or its “incubator” or even a home address, with the university supplying a web site. “To produce the new product” makes it sound like it’s a given that a new product will be produced. Most often, nothing happens. Sometimes the company is sold for its technology or team before any product is produced. Then the university makes money but there’s still no product and usually after such a sale there never will be, or if there is one, it won’t be based on the university-licensed invention. But you’d never know that from AUTM’s talking points because AUTM’s aim is to deceive you–or more accurately, their aim is to allow you to deceive yourself, because if you deceive yourself into thinking the way AUTM approves of, then it’s all good and virtuous isn’t it?

University research is incredibly important not only for advancing science, but also for helping the United States maintain its competitive edge.

The Talking Points takes a strange turn. There’s been nothing so far about university research “advancing science.” We were just talking about commercial products, having abandoned improved lives. Now we are introduced to advancing science (which, by the way, does not appear to be driven by discoveries that are protected by bureaucrats with a largely unrequited mania for commercial products), only to immediately abandon that goal for “helping” the country “maintain” its “competitive” “edge.” If you read that out slowly, you can see it makes no sense whatsoever. We might think that advancing science would help the country maintain its competitive edge, but that’s not the talking point here. The talking point distinguishes advancing science from maintaining a competitive edge.

I’m at a loss for what is meant. There are too many qualifiers. “Helping”–that’s pretty loose. I can “help” my team “win” by cheering. But, really, the Giants can win the game regardless of what I do on the other side of the TV screen. “Maintain” means to keep on with whatever already is. So the “helping” is to “maintain” something–preserve whatever is the case, not change it in any material way. “Competitive” is strange here. With whom is the country competing for which research is “incredibly important”? Are we talking weapons systems? Space technology? Or are we just talking about stuff to sell as exports? “Edge” suggests some advantage, perhaps at knife point. To have a “competitive edge” means to be better in some way through something other than one’s own ability. A better designed sailboat, a better knowledge of the local weather, more money to spend. Fine–but how does faculty-led research that’s bottled up behind patent monopolies in the hope of companies offering to make products to sell actually “help”?

You aren’t supposed to understand this talking point. You are supposed to admire it and not speak against it. Anything that would interfere with a university administrator demanding faculty inventions in order to deal in patent monopolies must then be preventing university research from helping to maintain what the country already has. Grief.

Technology transfer is vitally important for maximizing the benefits of research.

Instead of an explanation of how patents on faculty-led research made with public money dealt as monopolies to favored companies works to keep the country’s competitive edge internationally, the talking points turns to yet another claim, that this activity is “vitally important” for “maximizing the benefits of research.” This, too, is difficult to comprehend. If “technology transfer” means “teaching others to do what you have done,” perhaps one might make the case that if others can’t do what you have done, then there’s less “benefit” to the research than otherwise. But if we go with AUTM’s description of the “complex process” of patenting discoveries to search out exclusive private company licensees–or better, create the licensee oneself and exclude all existing companies–then it’s not clear at all how this AUTM activity does anything for the benefits of research, unless by “benefits” AUTM means (but won’t say) “benefits to private speculators trading on the future value of patent monopolies on faculty discoveries made in research proposed in the public interest.”

Why is there even a concern about “maximizing” benefits? Is it that there are benefits of research anyway, but to really go over the top with benefits, there has to be trade in patent monopolies that faculty inventors (and students, and staff, and visitors, and volunteers) are forced to agree to? Nothing in AUTM’s talking points shows any instance in which an AUTM institution patents and exclusively licenses an invention made with federal support and thereby maximizes the public benefits of the invention. Sure, speculators might make money, and speculators pay off the university with a bit of that money when they do, and the university pays inventors a some of the university’s money when they do. But for 95% of all faculty discoveries that are forced into AUTM’s happy regime, nothing happens except that the invention is removed from practice. How does this patent monopoly trade maximize the benefit of the research that was involved in making those inventions? If a few inventions survive our awful bureaucracy, then the bureaucracy is a roaring success? Yes, of course.

Technology transfer is good for our economy—helping to create new jobs, products and companies.

No doubt. But that’s not the point. The point is whether university administrators co-opting faculty led research funding by the federal government in the public interest and striking up a trade in patent monopolies by forestalling the market for the exchange of discoveries, inventions, tools, and data is good for our economy. Even grandiose AUTM estimates of economic impact using unaudited, often faked or duplicative data and coarse assumptions end up being within the margin of rounding errors on the United States economy–whether on impact, jobs, or new companies. Technology transfer may be good. University dealing in patent monopolies is something else nearly entirely. It’s as if the Sirius Cybernetics Corporation decided to deal in inventions. AUTM plays the role of the Nutrimatic Drinks Dispenser. And if I lost you there for a moment, it’s okay.

Technology transfer is possible in the United States, through legislation called the Bayh-Dole Act.

Stark raving nonsense. Technology transfer is a matter of teaching and providing enabling materials so that others can practice a technology. The Bayh-Dole Act has next to nothing to do with technology transfer. Even if we take AUTM’s use of “technology transfer” to be “what specialized university employees do when the co-opt faculty and student inventions and work up a trade in patent monopolies that largely goes nowhere but once ever decade or so there’s a big financial hit and so all the other rottenness must be overlooked”–even then this assertion is stark raving nonsense. Bayh-Dole did not enable technology transfer for universities.

Universities built up their technology licensing practices via Research Corporation and other university-affiliated nonprofit foundations, from the 1910s to the 1970s. As early as 1953, the Public Health Service created the Institutional Patent Agreement to allow universities and their foundations to deal in patents on faculty-led federally supported research inventions. The IPA program lapsed for a few years and was restarted in 1968 by the NIH, joined a few years later by the NSF–the two agencies providing most of the funds to university faculty for research. Bayh-Dole restored and revamped the IPA program after it was shut down in 1978 as ineffective. The Harbridge House report of 1968 on federal patent policy found inventions licensed to companies without experience with commercial products to be the least effective approach–yes, universities licensing to their own new fake startups–that’s the worst approach. If Bayh-Dole made that possible–enabled universities to deploy the least effective approach to patent-based technology transfer involving federally supported inventions–and that’s the biggest thing Bayh-Dole does, then just wow!

These people are loopy with delusion, and they want you to delude yourself and join them.

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