The use of the patent system for federal research results, 4: Forman

We are looking slowly at FSA order 110-1, the policy that starts the administrative battle over how federal funding ought to affect company opportunities to profit on matters of public health. The FSA, having insisted that research results should be used in the best way to serve the public interest, then moves to explain what that way is:

It is believed that the public interest will in general be best served if inventive advances resulting therefrom are made freely available to the Government, to science, to industry, and to the general public.

Key words here: believed, in general, best served, freely available.

Passive voice to start–we don’t know who is doing the believing. God, maybe. Or a “reasonable” citizen, properly informed. And we get a return to “public interest,” as if public interest is a necessary administrative touch point, and now we get a specific stipulation, based on public interest without ever getting into what public interest concerns are in play. Public interest may as well be “the will of Zeus” or “political expediency” or “anything else is bound to fail as an argument.”

According to 110-1, the public interest is best served (as a matter of policy) when “inventive advances” are freely available. Perhaps here one has to play the pragmatist hand–as policy has to choose  between serving the interests of a few or the many, and so chooses the many, assuming that there are many who would want access, or who would want open access even if only a few took advantage of that access. In all this, the thought that an inventor, or a contractor, might obtain a patent on a research result and so deny the use of that result to other researchers, or to the federal government, competes with the idea that only by holding a patent might some inventors or contractors take an interest in using the results that they themselves have produced (which is just strange–think about it–what sort of mediocre results are those? and what is it that motivates researchers, especially those working in organizations that announce they have a public mission rather than, say, a profit-seeking mission (including the invisible hand that turns all institutional self-interest into happy best possible public interest).

“Freely available” is not a statement against the use of the patent system–it is a statement regarding how research results are handled by those that produce them. File a patent application if you want, but make the results freely available. Or don’t file a patent application, but don’t hold the results as a trade secret, don’t publish only partial results and hold back the research context–data, alternative analysis, access to a lab set up. We might think, too, that “freely available” here is not “without any charge” but much more “without any restrictions based on having obtained a patent.” Patent all you want–to establish priority, to gain a quasi-governmental endorsement that the thing ought to work, to publish broadly in a national literature, to control for first adopters, consistent quality, production to a standard, and truthful claims. But “freely.”

We can reduce the FSA policy statement to — “you must make the results of our funded research freely available.” And it is just here that the patent-to-profit-invisible-hand folks show up to argue that making things freely available all but ruins them. Here, for example, is Howard Forman, the godfather of “uniform” federal patent policy, testifying before a House subcommittee in 1976:

If the Government takes title to the inventions and presumably permits practically anyone to practice the inventions this conceivably would make for the widest possible availability of the inventions to the public at large.

There’s a version of the FSA’s “freely available.” Forman argues that availability without an “incentive to invest” in “development” of an invention is empty, or worse:

Will this increased availability, improve the chances that the inventions will accelerate scientific achievement, help the economy, benefit the consumer, promote competition, and give more work opportunities to everyone? Not very likely, for unless there is a strong incentive to invest in the development of the invention, merely to maximize the availability of the invention (as by granting everyone who asks a royalty-free license) rarely serves as such an incentive.

Forman argues that there must be a “strong incentive to invest in the development of the invention”–which assumes that each invention must require much, expensive “development” to be used at all. Forman does not consider the possibility that there might be other “incentives” in play besides the right to exclude all others. Without the patent right, Forman continues, inventions won’t be used:

If by and large the inventions are not used, then the policy of merely increasing their availability to greater numbers of people could hardly be considered in the public interest.

Forman then turns the “best” in serving the public interest into “increased utilization”–the mass production of product based on an invention as compared to, say, the local use of an invention by professionals building their own versions, or researchers taking up a research invention for their own further research:

It is increased utilization, then, and not just increased availability of the patented inventions which is in keeping with the public interest.

Forman focuses on “increased utilization” in the abstract, assumes that if there’s not an exclusionary patent right, no one will do any development, that all development is expensive to do and cheap to replicate, and therefore without the patent right the results of federally supported research are suppressed:

Isn’t it true, therefore, that any legislation which will tend towards the acquisition of patent rights by the Government, without at the same time providing for or facilitating their commercial exploitation, will amount to the suppression of patents by the Government.

Here Forman switches from suppression of inventions to suppression of patents, a significant switch. A lack of patent does not necessarily suppress an invention, nor does holding a patent necessarily promote the utilization of an invention. The FSA policy is just that–suppressing patents by the Government–on the premise that doing so will best promote the public interest, which is served by availability. The FSA policy implies that there are “incentives” to use research results other than the “incentive” of excluding all others, across a range of claims, in order to attempt to mass produce and profit from some one or two instances within that range of claims.

Forman sums up with a meditation on suppression of patents:

Such suppression of patents—i.e., suppression of the potential commercial utilization of patented inventions amounts to suppression or extinction of some of our limited reservoir of potential national assets. Such suppression is bound to have a seriously adverse impact on our Nation’s output of technological innovations and the transfer of that technology from the minds and laboratories of their originators to the industries and commerce of the country.

The FSA policy statement leaves some room for Forman’s later argument with its use of “in general”:

the public interest will in general be best served if inventive advances resulting therefrom are made freely available

In effect, the FSA policy establishes a default: in general, as a default, research results will be made freely available, though in some specific cases, research results can be restricted. Forman’s argument then focuses on a different default–contractors should get to own patents on federally funded results, and only when they don’t want exclusionary rights should the federal government step in and do what? Try to find someone who does want the exclusionary rights? Grant free access? Why should the government ever second-guess a federal contractor? So the FSA leaves open the possibility of restricted access, and in so doing creates a non-uniform policy.

So let’s look at the FSA policy treatment of the specific cases in which research results might be restricted:

On the other hand, in some cases it may be necessary to permit a utilization of the patent process in order to foster an adequate commercial development to make a new invention widely available. Moreover, it is recognized that inventions frequently arise in the course of research activities which also receive substantial support from other sources, as well as from the Federal grant. It would not be consistent with the cooperative nature of such activities to attribute a particular invention primarily to support received from any one source. In all these cases the Agency has a responsibility to see that the public use of the fruits of the research not be unduly restricted or denied.

Patents can be used, then, in specific cases. But how? Here’s the cascade of logic in the FSA policy. Either the agency head can make a determination on ownership, or that determination can be left to the contractor. If the contractor:

that the ownership and disposition of all domestic rights shall be left for determination by the grantee institution in accordance with the grantee’s established policies and procedures, with such modifications as may be agreed upon and specified in the grant, provided the head of the constituent unit finds that these are such as to assure that the invention will be made available without unreasonable restrictions or excessive royalties, and provided the Government shall receive a royalty-free license, with a right to issue sublicenses as provided in section 4 below, under any patent applied for or obtained upon the invention.

The grantee institution must have acceptable policies and procedures that provide assurance that the invention “will be made available without unreasonable restrictions or excessive royalties.” Even here, then, the FSA policy restricts how patents may be used by federal contractors. Two factors control–restrictions (not licensing, suppressing uses, demanding unreasonable conditions, even playing favorites rather than licensing on a non-discriminatory basis) and cost (assumes licensing by nonprofits–again, non-discrimination on royalties, but also not demands for payment that would exclude companies with capability but not the wealth to pay dearly for access). Both factors carry modifiers that don’t much help. “Unreasonable” restrictions are banned, as are “excessive” royalties. What makes a restriction “reasonable”? A royalty “not excessive”? You might think you know, but the purpose of such wording is to throw the determinations to the practitioners in the agency.

The standard of “reasonable” is itself a source of ambiguity. Is “reasonable” what a “disinterested person aware of all the pertinent conditions” might decide? Is “reasonable” what companies charge for comparable technology (even though the FSA contractors are mostly non-profits and the work they might own and license is new and therefore less likely to be comparable to anything if it is worth patenting)? Is “reasonable” what a company would consider reasonable in order to make a profit, so long as its board of directors and CEO are not raving mad? (In which case, raving madness might include making a beneficial health invention available to the public at cost, and reasonable might require charging a premium price because the invention is so much better than other remedies.) Is “reasonable” what the public ought to expect given the extent of federal funding to support the work in which an invention has been made? It’s difficult to say what use “reasonable” might be put to. But it is safe to say that by adding a “reasonable” standard, the FSA policy ensures that no one official could rely only on his or her own common sense and place specific requirements on any given contract without going through some administrative process to justify those requirements. Process, with further definitions and conditions, procedures, determinations, appeals, and the like, so that in practice imposing anything “reasonable” becomes next to impossible–you know, like how Howard Bremer shaped the implementing regulations for Bayh-Dole march-in.


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