Reflections on Bayh-Dole by “industry leaders”–who are, apparently, mostly shills out shilling for (and to) the pharmaceutical industry.
Good shilling earns shillings, so it is a viable career choice. We use these shills reflecting on Bayh-Dole to also reflect on Bayh-Dole, though our reflections won’t earn us any big bucks.
Korn noted that the Act has had dramatic effects on promoting innovation in the biopharmaceutical industry. He noted that the Act has allowed researchers and universities to seek out partners like pharmaceutical companies.
True! Bayh-Dole enables universities to do exclusive deals on inventions made in federally funded work with pharmaceutical companies, and do those deals without public oversight or right of appeal. Even inventors don’t have a right of appeal. By “promoting innovation” Korn means, apparently, suppressing industry access to an invention in favor of granting access to a single company, who then effectively becomes the new owner of the invention. If no company comes forward to take the deal, then “promoting innovation” means “denying access to everyone until someone infringes, and then suing them.” The value in such deals, however, derives from denying open access (someone pays to prevent others from having), from the prospect of monopoly pricing if a product is ever produced (others pay more because there are no alternatives), and from suing for compensation for having been denied the value of denying open access and a financial share of monopoly pricing (that is, by others practicing an invention, even if the invention owner is not itself practicing the invention). There’s even value in speculating on the future value of any of these positions–in the future, someone might be willing to pay to block all others, or pay to create an opportunity for monopoly pricing, or pay to for the opportunity to troll or infringement if anyone does start using the invention. There’s money to be had everywhere in matters of patenting improvements to public health, and apparently it is a public good for university administrators to be in there grubbing for their share of that money along with the best of the grubbers. ‘
We are informed, implicitly, by these “experts” that we truly want our health to be speculated upon and price gouged upon. And if there can’t be a prospect of speculation or price gouging, then, we are expertly told, we don’t want anything to do with it.
How such dealings “promote innovation” must be left to the imagination because there’s not much logic to follow. The implication is that companies in the pharma industry will refuse to use anything that they cannot have and exploit exclusively. To offer exclusive licenses, then, according to the “experts,” promotes innovation in the sense that without new stuff with exclusive rights available from universities, pharma companies would have nothing new to develop and market. That’s a strange position. If that is the case, then we might expect pharma companies also not to use federally funded research results generally, if not patented and available for exclusive license. Whether a thing is patented or not would not be the criterion. What would matter would be the exclusive rights, and published information would necessarily lack such exclusivity. But no, it appears pharma company scientists do read publications and do attend conferences, even when they cannot acquire exclusive rights. So the “promote innovation” by means of exclusive licenses must have some other secret meaning for Dr. Korn–or maybe he doesn’t much care what he means and he is just bullshitting us with nice-sounding words.
Despite Korn’s reflections–and Korn of all people would be in a position to know–Bayh-Dole has little to do with whether pharma companies will “partner” with universities. Pharma companies sponsor research and clinical trials all the time with universities. They use their own money. They negotiate rights to anything that comes of their sponsored work. Without Bayh-Dole, and the NIH and NSF IPA programs that came before, pharma companies would have open access to any inventions made in federally supported work. They wouldn’t need a license–there would be technology could transfer without patent bureaucrats’ involvement. It happens all the time, even now.
What then about “contamination”? It’s still there, imbedded in the “first actual reduction to practice” prong of the scope of federal interest in inventions made in work supported by the federal government. First actual reduction to practice means, for pharmaceuticals, testing to demonstrate efficacy and safety in use by humans. If a pharmaceutical company does that testing on its own, then it is free and clear of federal claims. If, however, the company becomes a party to a federal funding agreement, then whatever it invents in any “development” work on the compound, when it acquires all substantial rights, also becomes a subject invention–subject to the controls of the standard patent rights clause authorized by Bayh-Dole. A company may become a party to a funding agreement by assignment, substitution of parties, or subcontract. If, for instance, a university licenses exclusively all substantial rights in an invention–to make, use, and sell–then the license operates as an assignment. Bayh-Dole requires (35 USC 202(c)(7)(A)) that any assignment of a subject invention by a nonprofit must require that the assignee accept the nonprofit’s patent rights clause. The company must, for whatever development work it then does, operate under Bayh-Dole as a nonprofit. It sounds like a poison pill! And it would be if anything having to do with public protections operated in Bayh-Dole. But Bayh-Dole has been corrupt from day one, and federal agencies don’t enforce the public protections, and therefore anything goes, and there’s no “contamination” in practice, although there would be if the law were, well, an actual law and not a sham.
If everything a university held as an invention was available open access, then pharma would partner for access to talent and what that talent might do in the future rather than to lock out talent with exclusive control.
Silverthorn and Allen explained that the Act allows the government to “march-in” and require universities to license the technology to others if there is not a good faith effort to commercialize the technology.
Silverthorn and Allen made this part up. The standard for 203(a)(1) march-in is failure to take effective steps to achieve practical application–to make benefits of use available to the public on reasonable terms. Nothing about “good faith” efforts. Do it effectively or lose control of exclusivity.
if a company cannot meet the needs of a national emergency
Nothing in Bayh-Dole march-in is directed to national emergency. 203(a)(2) march-in is for “health or safety needs.” For anyone who is ill–that is the “emergency.” Where is the federal government for the sick, not marching in? If we talk public good, one would think that we would do well to start with what would help the sick, and not skip ahead to what is convenient for university patent administrators or what gets a patent speculator to sit up and take notice at the prospect of monopoly pricing.
if a company has falsified a pledge to make the product in the United States
Silliness. 203(a)(4) march-in breaks an exclusive license to use or sell in the U.S. There’s nothing there about a company pledging to make product. Just source the product from U.S. companies. That provision anticipates that nonprofits granting licenses will grant less than all substantial rights–they will grant an exclusive right to sell, for instance, but not also the exclusive rights to make and to use. But that’s not university licensing practice. A university exclusive license routinely grants all substantial rights and includes an express endorsement that the licensee may enforce the licensed patent(s). That’s an assignment. As it is, this march-in provision has never been used. NIH routinely waives the requirement, so it is unlikely that the NIH would ever bother with such march-in.
To be clear–if a company has an exclusive license to make, use, and sell, then it has assignment of the invention. It is an assignee and the 35 USC 204 US manufacturing preference does not apply. The 35 USC 202(c)(7)(A) nonprofit assignment clause does. But like everything else in Bayh-Dole having to do with public interest, it’s not enforced.
Korn added that march-in rights are “intended to counter the danger that a company might license a technology and then freeze its development in favor of a competing technology”
This is a fantasy rationalization, not the law. 203(a)(1) march-in is, expressly, for failure to timely achieve practical application. Nonuse, no public benefits, benefits not available to the public on reasonable terms. 203(a)(1) march-in has nothing to do with whether an invention has been licensed or some university is trying to license or as a matter of frozen policy insists that it must be deemed to be attempting to license each and every invention it has patented. A company can sit. A nonprofit can sit. Trolls can sit. Sitting freezes development, and doesn’t have to favor any other technology.
No, the counter to the danger that a company might take an exclusive license to develop a given invention and make it and sell it, is to construct a contract so that if the company fails to do so, then the license can be terminated or made non-exclusive. One does not need march-in for that. It’s just standard licensing practice–unless one is mind-numbingly incompetent. Wait. Don’t go there yet. To license in something exclusively, and commit best efforts to develop and market it, but choosing to not do that at all and hold the exclusive license to keep the invention from others–that’s bad faith in a contract, and grounds for a claim of breach, if not also termination.
March-in has nothing to do with such a “danger.” March-in has to do with exactly what 35 USC 203 says it has to do with–compelling licensing for failure to achieve practical application, for failure to meet health and safety needs, for failure to meet regulatory needs, for failure to meet U.S. manufacturing requirements. If a company having taken a license does not develop a subject invention, then the first action is for the university to demand compliance with the contract and if that doesn’t happen, to sue for breach of contract and terminate. The university does not need the federal government stepping in to require licensing unless the company contests termination of the agreement or termination of its exclusive rights. Then the university would request federal march-in. The federal agency would then identify another licensee, and require the university to grant the license and to receive the reasonable consideration paid by the new licensee. Sweet. But no one imagines this scenario. Perhaps Bayh-Dole industry leaders have an imagination deficit.
There is one common scenario, however, where licensees routinely don’t use or develop what they have licensed from a university. This scenario involves startups. The university patents an invention and grants a startup an exclusive license (=assignment but with bureaucratic overhead of a license rather than the good sense of a sale). In return, the startup pays the university in equity–stock, warrants, options, or a financial interest in the cash equivalent of stock at some later date or event. The startup then raises investment money and uses the money to develop whatever it is that meets the investors’ expectations. Often, that has nothing to do with the licensed invention–and involves exactly what Korn identifies as the central danger–designing around, outside of, the licensed invention to produce a product that does something similar. But this new product won’t be within the scope of the licensed patent. In effect, the development of the invention has been frozen in favor of a competing technology–one that the company has produced. But because the university has taken an equity interest in the company rather than depend solely on earned royalties from the sale of licensed subject matter, the university is happy so long as that equity becomes valuable. In effect, the university accepts payment not to insist on the development of the stuff originally licensed. By taking an equity interest, the university tacitly agrees that nonuse of the licensed stuff is acceptable, so long as the company itself becomes valuable.
if march-in rights were ever misused it could “poison the successful public-private partnerships, collaborations and other initiatives that make up the U.S. biomedical research ecosystem.”
This statement is made as if the “ecosystem” depends on no government oversight and any march-in is misuse.
NIST performed several stakeholder outreach efforts beginning in 2018.
A bait and switch. NIST asked for comment on how to improve technology transfer from federal labs (i.e., Bayh-Dole 35 USC 207, 209) and then switched to amending regulations having to do with contractor–not federal laboratory–regulations (35 USC 202-204).
Silverthorn noted that many responses . . . addressed how terms, processes and other implementation aspects may be clarified to improve collaboration with industry.
Funny bureaucrat–a law that is clear and has unleashed collaboration needs work, apparently, on its clarity and collaboration bits. Doublespeak.
Sauer noted that proposed conditions to limit the Bayh-Dole Act would be problematic because they would introduce uncertainty into licensing transactions.
For “uncertainty” read “government oversight to protect the public.” Bayh-Dole apparently works only if the public is not protected. In other words, Bayh-Dole should be only half the law Bayh-Dole actually is. This is a fine thing for a shill to reflect upon. Otherwise, one might wake up one night and feel a deep tugging regret at being a shill.
Bayh-Dole shills work tirelessly to prevent the public from gaining access to public research inventions so nonprofits can speculate on patents in the hope of a financial return derived from denying access, suppressing competition, and supporting monopoly pricing. They make up the law, fake the history and metrics, wallow in fallacies, and spin a fantasy about how medical innovation depends on exclusive institutional exploitation without oversight of work nonprofits petitioned as appropriate for public funding. They are political bluffers. It’s a pity they appear to have a central position in policy discussions on the efficacy of federal invention policy.