Open: The proper (and effective) role for public institutions in invention management

There are many things we could do, but choose not to do. Some of those things, people could make money doing, but we refuse. We could sell body parts, or eat them, or we could make people slaves–good money in all of that, apparently, but we reject these practices. Start with this idea.

Here’s a proposition. The proper purpose in a public institution taking an interest in any patent is to distribute that right, not to hold it to exclude all others or to take a financial interest in someone establishing a monopoly based on that property right. Whether a federal agency, state government, or university, the institutional purpose–the public mission–is to serve everyone. That necessarily means breaking apart patent rights. It does not mean to choose favorites or pick winners and losers or to exclude all others. It does not mean, also that to serve “everyone” public institutions should withhold access to a discovery or invention or work of authorship in the hope of making money (or a product covered by an exclusionary right) with the claim that such money then can serve “everyone” or that even the attempt to make money this way is somehow virtuous and deserving of public approval, if not gratitude and acclaim.

Set aside for the moment the obvious–and almost always wrong–claim that without “strong” intellectual property protections, university research won’t get used or developed into products. Start instead with the idea that we choose not to do some things, even if doing them appears to lead to money and products. Reminder–we don’t experiment on people against their will. We can choose not to allow our public institutions to monopolize discoveries, inventions, and works of authorship when they acquire rights to these sorts of things. We can choose. The institutions themselves represent past choices–to create such things as institutions to serve public needs. We choose then not to tax the income from these institutions, in recognition of their public character. And we expect that these institutions will serve a public purpose and not be bought out, or offer themselves for sale to any particular private interest. We don’t want our judges to be on the take, or on the hunt–and we expect them to still be informed, diligent, competent. Same for our public institutions, for federal agencies, for universities hosting scientific and medical research.

For many years, the university rationale for ownership of patents was to prevent the use of patents to create monopolies that denied the public access to the use of new knowledge. Universities might obtain patents but only rarely, and only then to reduce the opportunities for others to obtain patents that blocked research or access to improvements. Here’s the Harvard patent policy statement on the matter:

That policy, dating from 1934, was in effect at Harvard as late as 1962, when Archie Palmer documented it.

The Kennedy executive branch patent policy of 1963 placed a similar requirement on federal agencies acquiring inventions made with federal support. Here:

And when the federal government had to march-in on a contractor failing to bring an invention to the point of practical application in a timely manner, or otherwise make the invention available non-exclusively on reasonable terms, or if not that make a persuasive case that the contractor should continue to hold exclusive rights,

The “dedication or licensing” meant either not patenting any given invention or patenting it and making it available royalty-free and non-exclusively. That is–the government should not take a financial interest in any such invention–access and use are the public benefits–and the government should not play favorites or threaten to sue its citizens to protect the interests of any such favorites.

The point here is simply that institutions have, in the past, made it formal policy not to exploit patents for the value of the right to exclude all others. They do not act as brokers, representing the financial interest of inventors. They do not act as factors, taking ownership to get a share of transactions while using their own assets to expedite those transactions on behalf of either an owner of an invention or an acquirer of exclusive rights in that invention.

These institutions represent instead a “public” interest. This public interest is not a matter of state control–not socialism, if you will, not appropriating everything to prevent the use of the patent system–but rather a limit on exploiting the exclusionary right offered by the patent system, on behalf of the public. We might call it “open innovation” now, if we wanted to be trendy about it.

There are a range of methods available to public institutions adopting open methods. They can accept ownership of inventions (and works of authorship) in order to release those assets without asserting exclusionary rights. Embiggen the public domain.

For inventions, that choice then is a matter of whether the public receives a greater benefit from publication in the patent literature than not. Same thing for registration of copyright. The purpose is not to obtain an exclusionary right to be exercised against the public in favor of a single exploiter of the asset. Rather, the purpose is to make the asset broadly accessible, using the patent system or copyright registration where doing so promotes “progress”–i.e., dissemination–of science and useful arts.

Using the patent system also raises the bar to future patenting by contributing well documented “art” to the system. Any subsequent invention must then be “non-obvious” over what has been disclosed to the patent system. If raising the standard for future patents is in the public interest, then that’s a good reason to use the patent system, without feeling compelled to exploit exclusive rights for financial gain or to choose favorites.

Holding a patent or copyright also supports the development of commons–for research and also for professional use. A commons differs from the public domain in that a commons uses property rights to establish norms appropriate to the commons. Such norms can work to protect an area of activity from “tragedy”–predatory or ruinous exploitation of a commons that ruins the commons as a resource for everyone else. Thus, a commons might use a patent right to suppress the use of patent rights in improvements and applications against commons participants by those participating in the commons (and thus gaining access to the benefits of the commons). Go sue non-commons folk, but not those who work with commons assets (and may well have contributed to the commons).

In these various approaches to open innovation, public institutions play a governance role–holding inventions and works of authorship, when they do choose to accept such things, to broaden public access rather than to suppress that access.

Again, this is a thing we may choose–and a thing that at one time, mostly, we had chosen. But in the past 50 years, we have let those choices falter. First with the NIH and NSF Institutional Patent Agreement program and then when the IPA program showed itself to be demonstrably ineffectual, the Bayh-Dole Act to replace it. The consequence has been to rot out the reasons to have these public institutions, especially those dedicated to research “in the public interest” such as federal agencies and universities. It’s one thing to see activity crumble. It’s another to see the reasons that motivated the creation of the activity crumble, leaving no justification for the activity other than an expensive habit of spending money. Obviously, those on whom the money is spent then are the ones with the greatest interest in supplying new reasons for the expenditure where the original reasons have crumbled to nothing.

Another, related proposition: we should restore to our public institutions the role of accepting ownership of inventions and works of authorship (and patents and copyrights) only for open innovation practice–public domain; fair, reasonable, non-discriminatory non-exclusive licensing; commons formation; standards formation; development of cumulative technology platforms.

Even Bayh-Dole–which provides only that federal contractors may acquire rights to inventions (against most any other federal claim) and that federal agencies that hold rights to inventions may license such inventions exclusively or assign rights in those inventions–does not require either contractors or federal agencies to exploit patent exclusivity, to take any financial interest in patent exclusivity, to play favorites, to threaten users and developers of inventions with infringement suits, or to suppress inventions in the wan hope of finding a favorite and do all these things–play favorites, take a financial interest in the affairs of the favorite and in its exploitation of a monopoly position in the market for something new that was made in work supported by the public, threaten to sue all others. Even Bayh-Dole does not require such things. Public institutions are not compelled by law to exploit patents and copyrights for their power to exclude all others. These institutions choose all on their own.

It is not even clear that choosing to exploit patents and copyrights “for the money” is even an effective money-making strategy for public institutions. It never has been the case for federal agencies. Their track record in exclusive licensing is so bad that they don’t bother to report it. Universities operating under the NIH IPA program did even worse than the federal government was doing. Universities exploiting the opportunities offered by Bayh-Dole have done even worse, especially where they have insisted on exclusive positions. Some of the great university money-making inventions of the past were deployed non-exclusively–for instance, warfarin, gene-splicing, cotransformation of cells, and expression of proteins in yeast cells (and all pre-Bayh-Dole, if that matters).

We allow public institutions to choose. And we ought to have a say in their choices, have proper reports of their choices, and the right to appeal their choices and if necessary to repeal their choices. It’s just that if there are too many barriers to public oversight and no mechanisms to report what is happening and the forums no longer function where we might debate how best to work, then practice can become aloof from public debate, and become captured by private interests for their own benefit. The public rationale then becomes that the public most benefits from research discoveries and inventions when public institutions attempt to assist private interests in enriching themselves by exploiting patent and copyright monopolies.

We have gone down a road that permits public institutions to deal in exclusive patent rights now for more than fifty years. The results are not good–even if we wanted to justify such practices based on financial returns. We don’t accept a financial argument for slavery or for human experimentation or for sale of human organs–we might wonder if there are indeed some things that money should not buy, and rights to inventions made in public projects might be one of them.

The argument that we meet, then, is one that asserts that without exclusive control, private investment in discoveries and inventions won’t be made, and without that investment, no products will be produced, and without those products, the research funding itself is wasted. “What is available to all will be used by none.” Here’s the National Patent Planning Commission (1945):

It often happens, however, particularly in new fields, that what is available for exploitation by everyone is undertaken by no one.

I will warn you, the proposition in general is not true–but it is not only highly seductive but also it has won over public institutions for half a century. It is not “often”; “new fields” don’t require patent monopolies–just the opposite; if a use is compelling, the uptake is rapid and there’s no need to attach a bureaucrat holding patents, and governments, nonprofit foundations, and even companies undertake development of “whats” that are available to all–for the public benefit of doing so, for the creation of pre-competitive platforms, for standards formation. Indeed, in standards, participants may insist that the “whats” specified in the standard are available for exploitation by everyone.

Researchers do not need patents to take up and use research methods and tools and materials created by others. They use to check the work of others. They use to study how these tools operate. They use to improve and adapt these tools for other work. Professionals, especially early adopters, do not need patents to take up and use discoveries and inventions. They mess with things because they are new, not because there’s a patent that excludes all others. They don’t necessarily mess with things to create a mass-market commercial product, but rather to take new things through their paces, to use those new things for their own personal purposes or in their professional work. Anything that a person or company can adapt for its own use is fair game. No patent needed. No product needed.

There are only a very few things that cannot be used at all by anyone for any reason unless somehow taken from the stage of being an invention to the stage of being a mass-market commercial product, and still fewer for which the cost to do such “development” is significant–out of the range of individuals and most companies–and that such “development” is so uncompelling that no government or nonprofit foundation is willing to undertake the work so that the only ones left to consider doing so are wealthy speculators and only then if they can extract monopoly pricing from the result to pay themselves back for having taken the “risk.”

Here is where we are: public institutions may choose how they deal with patents and copyrights. Laws don’t require them to deal in exclusivities, play favorites, take a financial interest in monopolies, threaten to sue everyone that isn’t a favorite. Even the money in that approach is lousy. Most inventions that fall into such practice are suppressed. The few that are licensed (20% or lower) mostly move into speculator schemes to sell them to later speculators, perhaps wrapped up in a shell company to have a better appearance. Patent attorneys make money. University patent administrators make their salaries. Companies here and there that prize exclusivity get their exclusive licenses. Fortunes are made–maybe once every two or three decades, per lucky university, while public institutions use patents to make hundreds of thousands of inventions–millions of invention claims–unavailable to the public.

If, for any given invention, the public will be best served by an assertion of exclusive rights, then public institutions should not become involved as owners, agents, brokers, factors, or conflict-of-interest compromised administrators. They should have no ownership interest, no financial interest, no “special relationship” side deals for inaction or action. Public institutions might require employee inventors to use an invention management agent if they wish to stay in their public service jobs, or might require those inventors when they direct research or participate in public policy to disclaim personal financial interest in their inventions, but that’s a different set of concerns. The primary one is that if a public institution does accept ownership of an invention, it is to keep that invention open, using institutional resources. If open won’t serve, then the invention must be managed some other way.

That might sound a bit idealistic. It is. But it is also hard-core practical realism. Public institutions have an awful track record trying to be patent barons, patent agents, patent factors. They are crappy at it, though for five decades they have made a diligent, expensive, bungling effort to deal in patent monopolies. By contrast, when public institutions have used open innovation practices, they have aligned patent practices with their public service, and made valuable contributions to science, technology, and products.

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