Here’s an important–perhaps the pivotal–instance of the monopoly meme in the history of what will become the Bayh-Dole Act. Synopsis. Howard Forman introduces the meme of 28,000 unused federal patents in his legislative testimony in 1976. Senator Bayh repeats the claim introducing Bayh-Dole in 1979. Admiral Rickover dismantles the logic of both, but somehow the patent lobby prevails and we get the turd called Bayh-Dole, created out of fake history, unsubstantiated assertions, and fallacious reasoning. Cross the 28,000 patent claim with the monopoly meme, and Bayh-Dole results.
The point of working through Forman, Bayh, and Rickover is not just to point out the flaws of their arguments but to establish a framework for considering how federal research invention policy might be constructed–and in particular that bit of research invention policy directed at research on scientific frontiers and research addressing public health. At least, here, we might begin to see stuff we can rule out.
In 1976 Howard Forman testified before a Senate subcommittee on the need for a “uniform” government patent policy. Forman was a long-time patent attorney who helped shape both the Kennedy and Nixon executive branch patent policies. Norman Latker, R. Tenney Johnson, and Forman appear to be the government attorneys who lay the policy groundwork for Bayh-Dole’s great misadventure.
In his testimony in 1976, Forman introduces the 28,000 government patents meme into the discussion of federal patent policy. The 28,000 figure is actually a misstatement in his oral presentation. His written statement gives the figure 26,000.
By the time Senator Bayh introduces S. 414 in 1979, it’s 30,000. Mostly it has settled down to the life of a meme at 28,000, which is the figure that keeps getting repeated now in various fake-o-graphics about Bayh-Dole. Admiral Rickover, in rebutting Forman’s assertions, uses 25,000.
Before we work through Forman’s argument, keep in mind that in the Bayh-Dole era, universities have acquired more than 120,000 U.S. utility patents, over 50,000 of which are marked as having resulted from work on federally funded projects. Most of these patents have gone unlicensed, and many that have been licensed exclusively have never achieved practical application. That’s the reality of the big wide world.
If the purpose behind Bayh-Dole was to populate the world with more patents, then Bayh-Dole has been a rock-star hamster. If technology leadership means having more patents than anyone else, then Bayh-Dole again has been wildly successful in delivering patents. If, on the other hand, having hundreds of thousands of additional patents, especially ones owned by bureaucracies that have no clue whatsoever what to do with them, means only that research-connected ideas and insights are bottled up for two decades with companies given huge incentives to avoid and undermine university-connected work, then Bayh-Dole has been a total failure.
Whatever Forman claims about those 26,000 or 28,000 or 30,000 government-owned patents applies double to present university patent holdings. It’s a simple binary logic–if Forman was right to be critical of the federal government’s patents, then university patent administrators should feel the shame of his critique as well. If Forman was wrong–and surely he was–then there was no need for Bayh-Dole in the first place, at least not as a consequence of the size of anyone’s patent portfolio.
Bayh-Dole did not unleash those 26,000 federally owned patents. There’s been nothing about those patents suddenly hopping off dusty shelves to be used because companies lined up to beg for exclusive patent monopolies. Hasn’t happened. Would never have happened. Isn’t happening with the patents universities have acquired. Isn’t happening for the patents that federal agencies have acquired. Or, we might say, isn’t happening often enough for anyone to notice.
Let’s return to Forman’s patent attorney argument:
if you divide rights to a patent up equally, if you give free licenses to everybody, and the Government has 28,000 patents and gives free licenses to them all, nobody will get any better rights than anybody else.
So far, the logic involves a restatement–if everyone has equal rights, then everyone has rights that are no better than anyone else’s rights. You may find it difficult to resist this point. But it’s actually not a good point. “Better” is the problem. If everyone has equal right to an invention, then the value of that access depends on the capability and objectives of each person who has that equal access. It’s simply not, in general, true that no one will have “better” rights unless everyone is also exactly equal in all other respects. Fantasy land.
In practice, different people and different companies will see access, ahem, differently. For any given invention, then, we can imagine a “value” function that changes with each person that learns of the invention and which for that person may change over time. In Forman’s depiction, everyone has no interest in an invention until it is “developed” and then they all want to copy it. The key is what is buried in the abstraction of “development.” We will get to that soon enough.
The patent system secures to inventors for limited times exclusive rights to their inventions–to promote the progress of the useful arts. “Progress” here means “dissemination.” Making inventions available by national publication (using the patent system) and without monopoly claim promotes that dissemination.
The patent system does not require inventors to maintain a monopoly on their inventions. An inventor may allow anyone to use without enforcing the patent’s exclusive rights; an inventor may grant non-exclusive licenses, and let manufacturers and users and sales people compete among themselves; an inventor may dedicate a patent to a standard or may cross-license to gain access to related technology. When the government obtains title to an invention, there’s no obvious need for the government to exclude all others from practicing the invention.
One more point–it’s rare that an invention can stand alone. Most advances in technology depend on other inventions already made and other inventions yet to be made. If the pace of technology advance is sped up–say through massive government financing–then inventions already made may well also be covered by patents. If each new invention in an invention-rich field is held as a separate monopoly, an emerging technology is necessarily fragmented among multiple owners, each potentially holding out for control or financial benefit against the others. If the government adopts a policy that every contractor can preempt any federal purpose in providing funding for research, the government then allows contractors to block development. By making the inventions it funds for purposes of basic research available to all, the government declines to block the use of these inventions, declines to play favorites with the various companies that comprise an industry, declines to threaten to sue its citizens for practicing what those citizens financed.
More from Forman’s testimony:
The result will be that we all will wait until somebody else decides to spend the money and capital and efforts to promote the inventions.
Here is good fallacy. Historically, it has not been the case that if something new and useful becomes available, no one will make the effort to use it or develop it, to “promote” it. In many cases, the moment something useful shows up, there are plenty of people ready to spend their money to make it or use it or sell it. The point of the exclusive rights bit in patent law is precisely to address this point–what is useful to many will be exploited by many, and a patent serves to give the patent owner the right to prevent that exploitation.
You see what the senators couldn’t see at the time–Forman here has his logic on inside out. He is arguing that people won’t use something unless they have a patent on it, when the patent system is set up on the presumption that one may want a patent to prevent people from using something or spending their own money and capital and efforts in competition with the inventor. So Forman has it wrong, and no doubt knew it at the time. But this is politics, and bluffing is part of the game. No shocked faces, please.
In most cases nobody will do it.
Forman backs off to “in most cases.” But even that qualification can’t save his argument. It appears that it is more like that in nearly all cases, someone does spend money on something useful drawn from the public domain or licensed without charge or part of a standard–if that something is indeed useful to them. The “useful” in patent law bears only a faint relationship with “useful” out in the big wide world. “Useful” in patent law is an abstraction, almost a legal fiction; “useful” in the big wide world is what someone says when they find they have a use for something. When a bunch of someones say the same thing, we call the something “generally useful” or “broadly useful” or “popular.” No one looks at something and says “I think patent attorneys would agree that this is useful, so I will call it useful, too.”
On a plane trip I once flew in the seat next to a research director for a major technology company. We got to talking and he made an important point (I paraphrase): “I really don’t care whether you have a patent or not, or what price you might be asking–what matters is that I have a technology at hand to do what I need to get done. I don’t have time to go read every academic article and work my way through thousands of patents. If you show up at the right time with the right technology, we will talk.”
Merely holding a patent means nothing. Merely advertising that you have it means nothing. Trying to get some speculator to take control of it is usually worth less than nothing. One has to do a whole lot better than any of this to beat the odds and have something useful at just the right time that someone who could use it wants it. In the startup world, Steven Blank calls these people “earlyvangelists”–people who know they have a problem, have been working to deal with the problem, and when they see what you have, they want it before you turn it into a product–they will take it as-is and spend the effort to make it work for them.
Now Forman reasons from his own unsupported premise. If everyone has equal rights to inventions, then in most cases no one will ever develop any invention, and hence:
There will be no progress of the arts and sciences,
To hammer home Forman’s tautology, if no one will use something new and useful because it has been published and is available to everyone, then of course there can be no “progress.” But you have to buy into the premise that if something is freely available, no one will use it and no one will develop it and no one will improve on it. No one will spend their own money, ever.
The United States patent system is founded on the premise that patents promote the progress of the useful arts. But the United States patent system does not make the claim that the only way to promote the progress of the useful arts is by means of patent monopolies. But this is just what Forman is arguing. Without patent monopolies, no one will invest in doing anything useful because everyone will wait for someone else to do all the expensive work and then just copy it. It is true–people do copy successful things. Patents make it harder to copy. But patents also make it harder to invent independently and have the freedom to act on what one has invented.
Forman’s premise is political bluffery, and so is the conclusion he draws from it. People invest in things that are available to everyone all the time. They even do so when it takes them a lot of work and money and what they do is readily copied. They even find, at times, that people copying their work creates an even stronger likelihood that their work will become broadly accepted. As Geoffrey Moore has argued in works such as Crossing the Chasm, risk-averse corporate technology purchasing officers don’t like sole source suppliers–they would rather see competition and choose the strongest of the competitors. Having someone copy an invention might be the key to its widespread adoption.
When Apple builds a smart watch, so does Samsung. Why? It’s not because Samsung has a monopoly on smart watches. Just the opposite–Samsung can do it because Apple doesn’t have a monopoly on smart watches. And heck, Apple built its smart watch knowing that it did not have a monopoly–even if it had patents to push Samsung’s technology a different way. Even here, there’s a certain amount of self-interest involved in allowing some materials involved in a smart watch to not be involved in a monopoly–multiple customers means economies of scale for production, and multiple suppliers means that there’s both competition and a fallback position if one supplier fails.
Forman completes his assertion about the patent system–there will be no progress at all if the government does not ensure that each federally supported invention is placed with a company acting in reliance on a patent monopoly:
as is supposed to take place under the incentives provided by our patent system.
Forman’s premise is that no one will use or develop anything without the incentive of a monopoly. He then asserts that if there aren’t any monopolies, then there will be no progress. We had plenty of progress in technology before patents came into widespread use, and still have progress in technology in industries that tend to ignore patents. And we have progress in technology in industries where patenting is active despite the patents. Think of 3d printing.
Forman takes his argument one step further and argues that by failing to pick favorite companies to hold patent monopolies, the federal government has suppressed the use of publicly supported inventions:
Now, if this is true, I hold that the U.S. Government, by acquiring 28,000 patents and not seeing to their utilization for the public good, is also guilty of suppression of patents.
This is sophisticated nonsense. The “if this is true” belies the bluff. If it is not true, then everything that follows is bluster. And even if what Forman asserted was true, what he argues here doesn’t follow.
utilization for the public good
is not
utilization by the public.
If the federal government owns patents on inventions and makes the inventions freely available and no one uses them, it may well be that the inventions are not worth using, or the time to use them is not yet, or that people are using them without taking licenses, or that people are using those inventions because they developed them independently. But Forman substitutes “utilization for the public good” as if there could be a sort of utilization that is not for the public good, and somehow a patent monopoly assures utilization for the public good and anything else does not. It’s logical craziness resulting in practice craziness.
Let’s work it another way. The government funds research resulting in ideas, insights, discoveries, collections, data, tools, experimental protocols, documentation, and inventions. Of these, the government somehow must give preference to patentable inventions, and must insist that these inventions are used by the public. But that sounds silly. Why should the federal government force the public to use inventions just because those inventions are patentable and other inventions–and many other research assets–are not? If the public does not immediately use any given invention, then, if we follow Forman’s argument, the government must do something to entice the public to use the invention. Why?
And why, even if one agrees that the government ought to do something to push the public to use inventions, why would handing out patent monopolies be that way–the primary way, the “uniform” way? And why would handing out those patent monopolies to universities that happen to host federally supported research be even better–allowing university administrators to decide which favorite company to grant the patent monopoly to? Why should the patent system’s rights reserved for inventors be co-opted by the federal government to ensure that inventors never hold those rights–but that the rights are passed to university officials, who in turn attempt to pass those rights to favorite companies as monopolies. Why would anyone think that this is the system that is necessary if the federal government is determined to force inventions from research on the public?
Think about that. Furthermore, Forman’s
suppression of patents
is not
suppression of inventions
Forman is right, in a sense. When the federal government issues patents to itself, and then makes the invention freely available, it is in a sense suppressing the patent monopoly. And furthermore, by placing an invention in the patent literature, the federal government raises the bar for future patenting in the area of the invention, improving the quality, as it were, of future patents privately obtained. But suppressing a patent right does not suppress the invention any more than publishing an invention without patenting suppresses the invention. Forman argues that open publication suppresses inventions. It’s nonsense in the general case. In the special case that publication suppresses interest in inventions by speculators requiring patent monopoly positions in inventions, we see that this is only a special case that patent lobbyists and monopolistic speculators could want.
Now Forman argues up is down with his concept of “negative suppression”:
It amounts to the same thing as the charge made against corporations that acquire many patents and don’t use them. When the Government says it will license anybody who wants it and nobody comes and takes a license, that is negative suppression. It is suppression just as much as if they refused to grant a license, or refused to exploit the patented invention.
There’s nothing the same about these two situations. When a company acquires many patents and doesn’t use them–and no one else dare–the company actively prevents use by others while indifferent to its own use. The patent system permits a patent owner to do just this. We can call it the glory of private property or a failure of the US patent system to have an express working requirement. When the federal government issues patents to itself, it has no mandate in the patent system to prevent the use of the inventions by its citizens, and one might argue that the federal government has an inherent obligation to permit its citizens to use such inventions.
The court in Vitamin D Technologists made just such an argument in reference to the State of Wisconsin’s right of control over patents used to prevent the ready introduction of Vitamin D into margarine. The State cannot act like a usual patent owner. Ownership of a patent by a government does not authorize the government to abandon its other public responsibilities and behave like a private speculator against the public interest and granting franchises to favorites.
Legislators ate up Forman’s argument, digested it, and emitted, eventually, the Bayh-Dole Act after trying and failing with at least two other bills, and trying again with a fourth bill after Bayh-Dole had already been, ahem, passed.