AUTM’s invitation to delude yourself, 2

Watch this sleight of hand by AUTM, a world leader in cheating with Bayh-Dole. First, a total non sequitur:

The Bayh-Dole Act is good for our national economy and also good for state and local economies. The majority of startup companies born from university technologies are located in the university’s home state.

Many startups based on university “technologies” appear to be paper companies. They are given a corporate structure but lack operations but for university-supplied space, a university-assisted web site, a university license (in a sense, to itself if the university has an equity interest in the startup), and perhaps even university funding–directly, as “in-kind,” or through a university proxy such as a “seed fund” or using university-administrated research funding.

Aside from the paper company aspect, having a startup locate in one’s home state does nothing for a local economy–a company locating in Seattle does next to nothing for Pullman. And where in the US a startup starts is pretty indifferent to the national economy. And for that matter, what’s the problem of an OHSU startup locating in Vancouver, Washington rather than in Portland, Oregon? Isn’t Vancouver an integral part of the Portland local economy? So how does this work, other than it only sounds good if you don’t think about it at all? Bayh-Dole has nothing to say about state and local economies. For that matter, Bayh-Dole has nothing to say about startup companies.

But now here’s the sleight of hand. Do you see it?

Thanks to the research conducted at U.S. universities, and to technology transfer, over the past 30 years, 153 new FDA approved vaccines, drugs and/or new indications for existing drugs were discovered through research carried out in public sector research institutions, consisting of  93 small molecule drugs, 36 biologics, 15 vaccines, 8 in vivo diagnostics and 1 over-the-counter (OTC) drug.1 This would not have been possible without the Bayh-Dole Act.

It’s a trick question, actually, since there are at least four sleights of hand.

  • Switch from licensing subject inventions under Bayh-Dole to any technology transfer
  • Switch from licensing of inventions to “research conducted at U.S. universities”
  • Citation to outcomes as if they are Bayh-Dole when many are not
  • Final claim that this activity would not have been possible without Bayh-Dole.

These switches by a purported expert on Bayh-Dole are on their face evidence that the expert cheats. If Bayh-Dole really were a wild success, there would be no need to cheat on the evidence. Yet AUTM cheats on Bayh-Dole. You might call it political bluffing. Call it happy spin that everyone just knows is meant to be deliberately misleading. If we should not expect AUTM to be truthful, so the bluffing argument goes, we cannot accuse AUTM of lying (say). AUTM cheating?–why, don’t show your shocked face. The rhetorical position that AUTM’s cheating belies is that public policy on matters of invention management should be built on an exchange of political bluffery, in which the side that best bluffs while disparaging the other’s bluffery wins.

Instead, let’s work through AUTM’s bluffery. We were talking about Bayh-Dole. AUTM’s web page is about Bayh-Dole. Bayh-Dole concerns patentable inventions acquired by a university or other federal contractor and made in the performance of work under a federal contract. But AUTM switches to discuss “research conducted at U.S. universities” in general, not federally supported research. While about 60% of an average major research university’s research funding comes from federal sources, only about 40% of the patents issued to universities and related institutes and foundations cite federal funding. Thus, AUTM wants a reader to accept the total output, as best AUTM can present it, as coming via Bayh-Dole, and that’s just not the case.

AUTM includes a footnote in its text–see it–there after “(OTC) drug.1” The footnote references a 1998 GAO report on the Bayh-Dole Act and university technology transfer:

TECHNOLOGY TRANSFER Administration of the Bayh-Dole Act by Research Universities.”

It’s just that the data cited for new products “over the past 30 years” cannot possibly come from a GAO report from 1998–only 17 years after Bayh-Dole came into effect. In fact, the data presented isn’t in that GAO report. And the data that the GAO report does present comes from–yes!–AUTM reporting and ten research universities whose licensing professionals are members of AUTM. AUTM cites its own provision of data to the GAO as if the GAO report were independent of AUTM rather than representing AUTM-supplied information.

So what did the GAO report regarding Bayh-Dole and universities? Here’s what the report has to say about AUTM survey data (my emphasis):

While we believe the AUTM data are the best available showing universities’ licensing activities, important limitations restrict the use of the data in reaching any conclusions in our report. These are as follows:

• The AUTM data are based on a survey; therefore, the data available come from those who were willing to respond. There is no information on those who were not surveyed or those who did not respond.
• The AUTM data are not verified or validated, although AUTM does follow-up work in an attempt to improve the uniformity of the responses.
• The AUTM data include all research activities, not just those associated with federally funded inventions; thus, the inventions subject to the Bayh-Dole Act cannot be segregated.
• The universities report data according to their own fiscal years, which may differ from the fiscal year of other universities and the federal government.
• For some elements of the data, the definitions included in the survey were improved or changed over the years in which the survey has been administered in ways that might increase or decrease the reporting of the data.

Let me summarize. AUTM information is survey data–it’s not complete and it depends on whoever happens to respond. The survey information is not verified or validated. It’s just figures. AUTM information does not track Bayh-Dole work separately from other work. Bayh-Dole isn’t that important, apparently. The data is skewed by different fiscal years and different definitions, so making comparisons is difficult, as is basing conclusions on the appearance of trends. In short, the AUTM data is worthless for assessing Bayh-Dole. 

We might add that AUTM survey data includes duplicate reporting. Universities report jointly owned inventions and patents as their own. Same for licenses to jointly owned inventions, and for startups that take licenses from multiple universities. One cannot add the reported number of inventions from a bunch of universities and expect to have a reliable count of total inventions. Just on duplications, totals from AUTM survey data may be 10% high. Varying definitions of “invention” also affect totals. And AUTM defines a “commercial” license as any deal over $1,000–which may include many transactions that would otherwise be called a sale of biomaterials, software, and the like. Hardly the stuff of patents licensed for the development of commercial products, but great for puffing up licensing numbers for AUTM surveys and to allow people to form the opinion that there’s plenty of important activity going on.

Commerce officials noted that, as provided by law, the act is largely self-regulating in that the primary responsibility is placed upon the universities to comply voluntarily with the act

None of the agencies had made analyzed the impact of the act, although all were pleased with the way the act was working and said that it should be resulting in more federally supported inventions reaching the marketplace

Officials at each of the universities visited said that (1) the only
procedures for Bayh-Dole were the law itself and the regulations issued by Commerce, (2) the agencies generally do not make site visits to monitor compliance with the act, (3) a primary interest of the agencies is ensuring that they receive the confirmatory licenses, and (4) the agencies do not become involved in the licensing activities.

In other words, no one in 1998 was minding the law or the patent rights clauses. The consequence became clear in 2011 in the Stanford v Roche case, where scores of university lawyers went on record with an entirely wrong reading of Bayh-Dole. The lawyers insisted that Bayh-Dole vested ownership of inventions with their universities–and yet it was also clear they could not even read the law. The Supreme Court swept their crappy illogic and handwaving aside–thank goodness for that. Bayh-Dole has not been successful as a law through federal indifference with a belief that universities are doing a fine job of self-compliance. Instead, universities have made up their own restatement of the law, implemented that practice, and told everyone else that the law requires it.

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