We have been discussing GeekWire’s account of the UW FAST start one-size-fits-all template agreement for startups. We showed that UW’s figures for startups were incorrect and there was little need for such a template. We then turned to H. Holden Thorp’s recent editorial in Science magazine that provides insight into the administrative thinking behind the desire for a startup template patent license. We are in the middle of Thorp’s argument that there ought to be a public alternative to universities’ pushing all their research inventions toward profit-seeking ventures.
I’m all in on this point, but disagree that universities need anything from the White House to motivate them to change their practices. Claiming that Bayh-Dole has been successful (when it hasn’t) makes it all the more difficult for university administrators to make changes. If a program is held to be successful, then the only changes allowed must take the form of improvements, of progress. The bureaucratic approach to getting rid of a bad program is to try to improve it–i.e., mitigate its badness.
Thorp argues that “Bayh-Dole has produced much economic success and progress on important fronts” but now argues that somehow this success and progress involves “short-sightedness” in “industry collaboration” and that success that’s “market-driven” is somehow not beneficial to the public. The idea, then, must be that there are other successes for public benefit to be had that the “market” won’t address–a “market failure” as it were to benefit the public not by what the market does but by what it doesn’t do.
Here’s Dr. Thorp’s take:
Thus, the current system does not address what to do when there is insufficient financial interest to attract solutions to problems like antibiotic resistance or unrealized pandemics.
The current system does not address a whole lot of things. But the set is pretty much empty of “really valuable, important things that everyone needs but are super expensive and no one otherwise dedicated is willing to fund so we have to appeal to wealthy speculative investors who will only come in–we are desperate here–if they get exclusive control of otherwise public technology and are then free to sell anything they do develop at exorbitant prices but have no downside if they don’t do anything at all other than losing the money they have thrown at the deal.” Most research inventions that have value get used for that value. Adding a demand that a university gets paid for any use and that in order to use any given invention, one has to reimburse the university its ten grand or more in patenting costs, and commit to creating commercial product takes something out of the opportunity to use a research invention. Toss in indemnification, insurance, reporting, potential termination of the license and the pain of negotiating with an institution and the opportunity is all but stifled. The bureaucratic problem then is, having stifled opportunity with a ton of conditions, how to make the arrangement look like it’s all normal and not the university’s fault.
The two examples Thorp gives of cases of profit-seeking failure to invest in university patents–antibiotic resistance and unrealized pandemics–don’t make much sense here. I don’t know what an unrealized pandemic is. Even if what Dr. Thorp meant was “unanticipated” pandemic, everything in our recent experience indicates that many companies were ready and willing to invest in pretty much everything that might address the pandemic. There has been plenty of market to go around, if not from fearful public then from federal agencies paying for development and then making massive purchases. Maybe Dr. Thorp has some other pandemic in mind and in time will explain what he means.
As for antibiotic resistance, a bacterium develops a resistance to a given antibiotic, then there’s surely a “market” for finding replacements. Thorp’s argument appears to be that companies and speculative investors cannot be bothered to manufacture new antibiotics even though new antibiotics appear to be needed. Why is that? Is it because they are busy making money manufacturing other things, and it is not enough to offer them exclusive patent positions and assure them that public protections provided by Bayh-Dole won’t be enforced so they can charge outrageous prices. Perhaps. But here’s a recent article “Researchers present insights in the search for new antibiotics” that features a collaboration between university-based researchers and researchers at Merck. Here’s another article “Research advances search for new antibiotics” that reports work at Indiana University licensed exclusively to ThermoFisher. Seems the market here is happily active. Here’s an article (“Scientists use AI in search for new antibiotics”) about a new antibiotic designed with AI algorithms at MIT, and licensed, apparently, to the inventor’s company.
Maybe there’s a good example to help Dr. Thorp’s argument of a really important thing the public needs but since there’s no short-term profit in it, it will never be developed for public benefit. Implicit in this concept of “market failure” is the idea that there are no alternatives to handing university inventions over to speculative investors, and if there are no investors, then slumping away sad that the public will never benefit. And behind that implicit idea is the assumption that the default for university licensing must be to hold out for years waiting for the short-sighted profit-seeking “market” to come around and finally take the university’s offer of an exclusive patent license. If there are public alternatives to this “market” model, they are generally destroyed by a university’s delay in releasing inventions for open access.
The sort of invention, however, that fits the concern for investment market failure is the mediocre invention. Mediocre inventions are ones cost more to develop than anyone presently is willing to pay to have the use of it, or will take longer to develop than the term of a patent, or requires so many other inventions controlled by others that no one in their right mind is willing to work on it until all those patents expire. While researchers pursuing their curiosity might ignore such mediocre inventions in search of something better to discover, it would appear that university administrators insist that all such mediocre inventions must be owned by the university, too, and patents obtained, and companies sought out to take exclusive licenses. It’s all rather bizarre, then, that universities make a big deal about patenting more and more inventions without regard for which ones are mediocre, and call all that uncritical, non-selective patenting “innovation,” when anyone looking at it can see it’s nothing of the sort.
What’s not discussed among university administrators is whether those companies involved in accepting university exclusive patent licenses on offer would stop being involved if they could not get exclusive rights to university-held patents on new antibiotic compounds or whatever else. That is no one discusses whether the only thing motivating these–and any–companies to get involved with university-based findings is the offer of exclusive patent positions. Put it in practice terms: if a university insists on offering exclusive rights, then every company that does not want exclusive rights or does not get exclusive rights or knows that it won’t get exclusive rights has a big incentive to design around or away from that university claimed invention, to undermine the patents and to exclude the research from consideration, or to find ways to file blocking patents to force a cross-license to gain access to the university’s inventions in exchange for allowing anyone else to practice improvements or applications that make those inventions worth pursing as commercial properties. The university patent practice creates its own industry-wide rejection of the research.
We are not here talking about market failure. We are talking about a failure by universities to identify and participate in a market. University administrators mistake their role to be that of the patent enforcer and distributor of favor when the “market” is in services that run alongside anything inventive. Make the rights available openly and offer responsive services to assist others in understanding the invention and adapting it to their uses. That’s a different role for universities, but it is strongly aligned with a university’s mission and practices. Such technology transfer services are a form of instruction, of professional training, of “educational outreach,” of “technology extension.” Think of technology transfer as an opportunity to create a classroom of laboratory scientists or a classroom of industry product developers–or, these days, a Zoom meeting. No wait. Let’s stick with classroom as the more general metonymy.
It’s not that the “public-private model” that Dr. Thorp points to is not active, but since university patent practice suppresses all other approaches, then it will be darned hard for anyone to demonstrate that other approaches are also viable. It is not that universities try other approaches–expertly and persistently–and find they don’t work. My experience–fifteen years in university licensing–is that non-exclusive works better than exclusive across the board. Faster transactions, less complexity, better working relationships with companies and with university researchers, no need to puff up to sue anyone, more income, less cost, better public access. But do university administrators listen? No. They are fixated on exclusive patent positions–and for no good reason, just fantasy served up by a professional class of university administrators.
Does Dr. Thorp worry that if universities do not take ownership of research inventions, then the researchers involved in inventing will have personal conflicts of interest and won’t publish honestly? Would students not be able to practice inventions because faculty inventors used their patent rights to suppress practice or worse refused to patent or otherwise publish results at all? These are bureaucratic worries. Researchers have a financial interest in their patents whether the university takes ownership of them or not because Bayh-Dole requires federal agencies to require universities to share royalties with inventors. The researcher conflict of interest is not managed simply because the university forces all financials to run through a license deal (if one ever happens, which is rare) and takes a share of any licensing income.
Indeed, universities following this practice complain that inventors then have even more personal conflicts of interest, as outlined in their policies on consulting and disclosure of inventions and advocacy for how research inventions ought to be used. We are told by these policies that researchers who publish their inventive results without disclosure to the university are unethical, denying the university the chance to attempt to profit from patent positions. We are told that researchers who make things available open access are operating outside their authority and do so to attempt to profit from consulting while cutting the university out of its share of what otherwise would be (in some fictive universe) the licensing income. We are told that researchers cannot consult with industry in areas of their professional expertise and expect to assign any inventions made in such work to the companies they consult for. No, even if those inventions don’t use university resources or research funding, the expertise involved surely must have and so it is a conflict of interest for faculty to invent outside the scope of university claims when they should be using their expertise solely for the benefit of the university’s patent licensing program. It’s rather ghastly. Public universities insist that researchers cannot even attempt to influence how university officials deploy patent rights–because they have a financial interest in the outcomes. Researchers cannot even argue for royalty-free non-exclusive licensing–that would set them up for consulting without the university getting its share and so would be an attempt to influence state contracting for private gain. And that’s even if those involved have no interest in consulting like that.
Dr. Thorp goes on with more of the “system is working great but there are problems with it” (which means the system is not working great and no one has bothered to call. it out):
Universities set up ways to monitor and correct such conflicts, and though there have been problems, the system has held up well and contributed to important innovation
Universities were required by NIH and NSF to have personal conflict of interest management in place. But everyone has ignored the organizational conflicts of interest created when universities demand ownership of the personal research assets (inventions with their patent rights, works of authorship, data, know-how, software, ideas, improvements, whatevers) and then set about, as a default, trying to deal in patent monopolies in the form of exclusive licenses that assign inventions to companies. If universities are in it for a share of the commercial action, how are they in a position to monitor publications and research for integrity. They are in into financial conflicts of interest deeper than any researcher–they cannot evaluate what’s going on because they can never admit they have been wrong or have compromised their oversight. They cannot monitor what’s done with inventions under their exclusive licenses because they have a financial interest in companies’ maximizing their sales income. They cannot push for widespread access because they have entered into exclusive deals that are premised on their good faith suppression of that access. Universities doing exclusive patent licenses are fundamentally compromised with regard to the public trust. At best, they are left arguing that anything they do is in the public interest, by definition, because that’s what they intend. It takes a certain degree of neurotic discipline to maintain that position in the face of contrary evidence, but it clearly can be done.