We have worked through the claim that Bayh-Dole created a “uniform” federal policy with regard to inventions made in federally supported research or development. Bayh-Dole creates an arbitrary default for federal policy that applies only when a contractor acquires ownership of an invention made in federally supported research or development. Bayh-Dole permits the default to be changed if a federal agency can justify a different invention policy in any given circumstance, but Bayh-Dole also makes it difficult for an agency to justify any movement from the default.
You might say that Bayh-Dole makes it difficult for federal agencies to manage inventions in a purposeful way directed at a public benefit. No public domain, no research commons, no open tools, no standards formation, no development of industry-ready technology that combines the work of multiple projects at multiple institutions. Regardless of what a federal agency may have as objectives, by default any public benefit–when a contractor gains ownership of an invention–must come through private exploitation of monopoly patent rights without public oversight or accountability. Bayh-Dole makes reports of invention use government secrets, and Bayh-Dole allows federal agencies to waive or ignore pretty much every substantial requirement for public benefit.
Before Bayh-Dole, the federal government operated with a policy that was flexible in the general case with a number of statutes directing invention practice for specific funding situations, such as those having to do with space technologies or nuclear energy. No one had problems with the federal approach but for
(1) university patent brokers, who were bothered by delays in federal agencies trying to decide if it was really good for the public that a university patent broker gained the right to deal in a patent monopoly on a given invention, and
(2) university research administrators, who chimed in that it was just impossible for them to know what to do when faculty mixed funds from two different federal agencies which operate with different invention management requirements, and
(3) pharmaceutical companies, which had staged a boycott of federally funded inventions in the area of medicinal chemistry because they objected to working with compounds–screening, synthesizing–that were to be made available to all.
Let’s look at each of these objections to a flexible and public-purpose centered approach to inventions made in federal government grants to universities on behalf of faculty for research or development. Exclude federal procurement contracts, exclude company contractors. Focus on federal subvention grants–grants made to faculty-proposed projects judged by federal agencies to be in the public interest.
(1) University patent brokers. The brokers had a point–there were delays in federal agencies determining whether to permit a broker to deal in a patent monopoly based on federally supported faculty-led research. But those delays were not with the NIH and NSF, the top two funders of faculty-led research, but rather with NASA and DOE, where statutes prevented those agencies from using the NIH-developed Institutional Patent Agreement program. The IPA program gave the university patent brokers a free hand to take assignment of federally supported inventions and deal in patent monopolies, subject to a public protection apparatus that was, as it turns out, never used. Thus, the patent brokers’ fuss was over invention management issues outside the mainstream of federal subvention funding provided on behalf of university faculty research proposals. As for the DOE, where the Purdue Research Foundation patent brokers had the hissy fit that brought Senator Bayh into the legislative discussion, the agency had implemented procedures to expedite review of inventions for private dealing in patent monopolies.
Why was Bayh-Dole even needed? Well, Congress had blocked an attempt by the NIH to expand the IPA program to become government-wide. For that to happen, certain public-purpose specific statutes would have to be changed or re-interpreted or ignored. Congress reviewed the IPA program and shut it down as ineffective and doing sweetheart deals with pharma that were judged to be against the public good. The university patent brokers were working a scheme, wanted access to even more inventions to feed the scheme, and resented that anyone would argue that their mostly ineffectual efforts to package public-interest research as patents to be dealt in exclusive deals to favorite pharmaceutical companies might not be in the public’s best interest.
We might pause here to point out the nasty truth behind the Bayh-Dole advocates’ claim that no invention made at a university and taken away by the federal government ever became a commercialized drug. As near as I can tell, the federal government did not ever take such inventions away from universities–the universities that received federal support operated under the IPA program. They had the choice what to patent. The government didn’t take away NIH or NSF funded inventions. Thus, the nasty truth is that no such inventions were taken away by the government, and thus it is only an empty, deceptive claim that no such inventions–all none of them–ever became commercialized drugs. We might go one more step, though there’s no need, to point out as well that doctors might use therapeutic interventions without it being necessary for a commercial version to be made first. That is, the Bayh-Dole advocates don’t bother to check to see whether inventions that came under government control (for whatever reason) and were made generally available also came into use and provided benefits to the public.
The Bayh-Dole advocates aren’t lying. They are bluffing you into self-delusion. Why would we need to delay the use of an invention by all so that a patent broker could get a 1% royalty on sales of a commercial version of the invention–with all the more income if all other use of the invention can be legally suppressed? Thus, there were virtually no situations in which the federal government took ownership of inventions in medicinal chemistry from universities, so it would make sense that there would also be no commercial products. Second, there could be beneficial uses of those inventions that did not involve commercial products as a precondition, and the advocates of Bayh-Dole don’t bother to point that out, either. The Bayh-Dole advocates “inform” you to keep you what they think you are–too stupid to figure out their scheme.
(2) The university administrators fussed as well about the horrible problems of dealing with mixed funding from federal agencies. This agency would let us own inventions and deal in monopolies, and this other agency won’t–but faculty, cats that they are, will talk with each other and therefore will mix research funding and we won’t know how to comply. It’s nonsense, of course. If one agency says you can own and deal in monopolies and another agency, for its share of an invention, requires assignment with the purpose of dedicating the invention to the public, then there’s no compliance issue–inventors make the required assignment. One agency waiving its right to require delivery of an invention does not mean that a university breaches a federal contract if it does not obtain ownership of that invention.
The university research administrators also worried about mixed federal and industry research funding. This in fact was where there was a real problem–at least in the area of medicinal chemistry, which is where the big patent gold rush was at the time. If the federal government funded research that uncovered a class of compounds with therapeutic potential, then what happens if a pharmaceutical company shows up willing to screen and synthesize candidate compounds in this new class and for its involvement requires ownership or exclusive license to any inventions–and to any patents on the entire class of compounds? This was the problem raised by fluorouracil, which WARF patented in 1959 and 1961 and licensed exclusively to Hoffmann-LaRoche, which had done the synthesis work. The PHS objected to the exclusive license, based on PHS funding for the research that led to the invention(s) and eventually WARF was made to settle the dispute by granting the federal government a co-ownership interest in the invention. The PHS then made its share of the invention publicly available, in effect breaking up the monopoly created by WARF’s exclusive license to Hoffman-LaRoche.
It was this sort of thing that pissed off university administrators happy with patent royalty income. They blamed the problem on one of “mixed” funding. If the federal government funds basic research and then a company offers to help develop that research by screening compounds or making new compounds in an invented class of compounds, then why should the federal government’s requirements on inventions continue to apply? Why shouldn’t, once a company is involved, all the policy ideas about public benefit be set aside in favor of a public benefit arising exclusively from the availability of a commercial product–regardless of how that product is priced, marketed, configured, or further developed? The fluorouracil fiasco was packaged up with like situations and generalized as a problem: companies would not work with universities if they could not get a monopoly position on the inventions involved. That problem itself was true but sketchy, and in the general case was simply not true. Companies all the time collaborated with universities without a patent monopoly position. The Cohen-Boyer gene splicing patents are the classic case–non-exclusive access is often fine.
Bayh-Dole carries with it specific wording that comes from WARF’s experience with fluorouracil. Here’s 35 USC 200, part of Bayh-Dole’s statement of policy and objectives:
to promote collaboration between commercial concerns and nonprofit organizations, including universities
Taken on its own, it sounds unobjectionably fluffy–collaboration? who could not want that? But this objective is, without the fluffy wrapper, a specific response to the fluorouracil situation and the subsequent pharmaceutical industry boycott of PHS-supported research based on the PHS pushing guidance to make clear that any invention in any way related to federal support was within the scope of PHS interest:
An Annual Invention Statement must be provided as part of the request for renewal of each type of Public Health Service grant and award. This statement must be submitted even if’ no invention has occurred during the current period of grant support for which renewal is being requested, and even if an invention to be reported was only partially supported by Public Health Service funds. The statement should include all inventions which might possibly be construed in any manner to be Public Health Service grant supported or related.
Pharmaceutical companies were required to sign off on the PHS conditions before getting involved in such research, which they refused to do. The Harbridge House report (1968) laid out the dispute. The Kennedy patent policy provided that inventions made in federally supported research directed at public health should be owned by the federal government and dedicated to the public unless an agency determined that the public would be better served in some other way.
Where . . . a principal purpose of the contract is for exploration into fields which directly concern the public health or public welfare . . . the government shall normally acquire or reserve the right to acquire the principal or exclusive rights throughout the world in and to any inventions made in the course of or under the contract.
That is, the Kennedy policy argued that the federal government was not going to fund research concerning public health only to see the inventive results handled as private commercial monopolies. That’s a public policy position worth some discussion. But instead, advocates for Bayh-Dole, rather than take up the merits of the specific issue disguised the issue in a generality about “nonprofit” “collaboration” with “industry.” What they intended was to enable “university patent brokers” “to do monopoly deals” with “pharmaceutical companies.” But that’s not what was drafted–by NIH’s patent counsel–to become Bayh-Dole.
Bayh-Dole’s implementing regulations take up this same theme in a strange way, at 37 CFR 401.1. The same person who drafted Bayh-Dole, Norman Latker, moved from the NIH to work on the implementing regulations. The opening issue for the implementation is that of scope, and that scope discussion in turn addresses “mixing” of funds between the federal government and a company. If different sources of funding are used on the same project, then the government’s interest in any inventions is still in play. But if there are two parallel, related projects, that’s different:
To the extent that a non-government sponsor established a project which, although closely related, falls outside the planned and committed activities of a government-funded project and does not diminish or distract from the performance of such activities, inventions made in performance of the non-government sponsored project would not be subject to the conditions of these regulations.
The scope of federal interest is only to the extent work is “planned and committed.” If one studies cancer-fighting compounds, fine. But unless the federally funded work plans and commits to turn those compounds into “usable” drugs, that work is not within scope of Bayh-Dole. This does not end up meaning what you might think it means–or even what the drafters of this text thought that it meant–but you can see how WARF wanted to make sure that the fluorouracil situation would not arise again. An example:
An example of such related but separate projects would be a government sponsored project having research objectives to expand scientific understanding in a field and a closely related industry sponsored project having as its objectives the application of such new knowledge to develop usable new technology.
If the NIH funds university research to identify possible cancer-fighting compounds, and a pharmaceutical company funds research to apply those findings to synthesize a possible drug, why, the company work is out of scope of Bayh-Dole’s requirements. Once you know the fluorouracil situation, and know that WARF’s patent counsel Howard Bremer worked closely with NIH’s patent counsel Norman Latker to draft Bayh-Dole and the implementing regulations, then the driver for the collaboration and scope language snaps into focus.
Now, here’s an interesting part of Bayh-Dole’s scope requirements. Bayh-Dole does not repeal the statutes that were in place or the executive branch patent policy–it preempts federal law (but for Stevenson-Wydler) only when a contractor comes to own a patentable invention (or plant variety) made (conceived or first actually reduced to practice) under a federal funding agreement. If a contractor doesn’t own an invention, then it cannot be a subject invention and cannot be subject to Bayh-Dole. Any such invention falls out of Bayh-Dole and back into the fabric of federal law that operates unless preempted by Bayh-Dole. Stuff can be outside Bayh-Dole and not outside federal statute or executive branch patent policy. All Bayh-Dole does (other than obfuscate and create dismal outcomes) is to preempt that body of federal law when a contractor comes to own an invention.
Put it simply. Okay. Bayh-Dole’s policy position is this.
No matter what a federal agency’s public purpose in funding university research may be, if a contractor comes to own any invention made with that federal support, the agency’s purposes are preempted in favor of an institutional exploitation of a patent monopoly on the invention.
Put it another way. Okay.
No matter what a federal agency may determine to be in the public interest with regard to its research funding, if university administrators gain ownership of inventions on behalf of their institutions, then they through their exploitation of patent monopolies determine the public policy that will control that outcomes of that research.
Another way? Yes, of course.
University administrators should control the key outcomes of publicly supported research and should use monopolies on those outcomes to attempt to make money from licensing patents exclusively (and assigning the underlying inventions) to speculators and companies to exploit however they choose.
Done yet? No, of course not.
Inventors have no rights in their inventions if supported with federal funds. They must be forced to use the patent system. Any patents that issue should be sold to speculators, especially those seeking to profit from human suffering. This is the best possible way to justify the use of public money in faculty-proposed research in the public interest.
The “collaboration” that’s desired in Bayh-Dole is not research collaboration–it’s the “collaboration” of exclusively licensing patents based on faculty research in matters of public health–research funded by the federal government on the premise that the research should be in the public interest (not a private interest) and the form of support is subvention–a grant in aid to support worthy work proposed by a faculty investigator.
That’s the core of the policy debate. Whether the federal government should routinely subsidize commercial interests and speculators on the future value of patent monopolies in matters of public health. Or put bluntly–should the federal government allow universities to use patent monopolies to attempt to profit from products addressing human suffering? Instead of having that discussion, Bayh-Dole advocates ran from it, hid it in generalities and abstractions, used political bluffery to make it appear that nothing could possibly happen unless companies had patent monopolies on any new classes of compounds that might have some therapeutic effect. To make it all work they constructed an apparatus of public protections–all of which were deliberately weakened and designed not to operate. The only purpose these protections was to offer a “public assurance”–an appearance of oversight–to permit Bayh-Dole to be passed by Congress.