I ran a Twitter thread on this topic. Here’s more of the same.
The Bayh-Dole Coalition describes Bayh-Dole as part of a “delicate balance of the university techtransfer system.” My experience differs. There is no “delicate balance.” Bayh-Dole is a botched, inept statute made of the body parts of failed regulations and patent management schemes. Bayh-Dole is a Latkerstein’s monster. University practice gives lip service to Bayh-Dole, but Bayh-Dole mostly adds bureaucracy. Well, and ruins opportunities. And takes credit for what manages to survive its requirements. Oh drat. Let me come in again.
When Norman Latker, long-time patent counsel at the NIH and former patent examiner, drafted Bayh-Dole, he claimed that he was “reversing the presumption of title” to inventions made in federally supported work under executive branch patent policy. But even his claim of what he was doing was nonsense. Executive branch patent policy did not presume title. It authorized federal agencies to contract to obtain title in certain situations–when the contractor had no capability or presence in a non-governmental market, when supervising the work of others, when the principal user or funder of the technology was the federal government and non-federal control would mess up competitive bidding, and when the research involved public health or safety. In all other situations, policy presumed that contractors could keep title to inventions that they acquired from inventors doing work involving federal funding. Even then, it was not so much a presumption as it was a recognition of the fact that inventors owned their inventions when they made them, and it was up to an employer to work out arrangements to acquire the inventions that it wanted.
The point of executive branch patent policy was not to interfere in the dealings between inventor-employees and contractor-employers. The Federal Procurement Regulation, put in place in 1975 to implement the Nixon modifications to the Kennedy patent policy, stipulated in its standard patent rights clause that contractors must make agreements with research inventors so that the government would get the rights in inventions for which it bargained in providing research support–namely, that the government would receive title upon request unless it decided otherwise, and if otherwise, the government would receive at least a non-exclusive license to make, use, and sell the invention, and authorize others to do so, for any governmental purpose. Inventors did not have to assign to their employer; their employer did not have to take title to comply with the FPR. All that was needed was an agreement that if the inventor did not assign to the contractor, then the inventor would assign to the federal government upon request.
And if the federal government did get title, then the inventor and contractor both were assured of access to the invention, since the government by policy did not deal in patent monopolies. If the government chose not to seek a patent, then the invention went to the public domain–and the inventor and contractor and anyone else could practice the invention. The inventor, of course, might have an advantage since the inventor, after all, did the inventing and might have ideas regarding how the invention might be applied, or improved, or designed around, or not all that great.
The presumption, then, in executive branch patent policy did not concern title at all. The presumption was that federal agencies would comply with the policy and require contractors and research employees at nonprofits and contract research organizations to convey title to the government unless they could show that their exploitation of a patent monopoly would better serve the public than open access. The presumption, then, was that federal open access would better serve the public than would private exclusionary control of an invention made in public-interested work. Latker reversed *this* presumption, replacing it with a presumption that private exclusionary control of inventions made in public-funded work by research employees at nonprofits and contract research organizations would better serve the public than would open access, with or without patents.
Now, this issue about private patent monopoly exploitation versus federal open access is worth a serious discussion. So, too, in the particular case in which universities, nonprofits, and contract research organizations with no non-governmental market presence or capability take ownership of such inventions and seek patents with the presumption that they will not break up the patent monopoly but rather preserve it on behalf of a future company licensee. If it were more than one company, of course, then the argument for a patent monopoly breaks down and becomes a form of patent trolling or institutional favoritism, done to extract money from the situation. Universities extracting patent rents from lots of companies and entrepreneurs for each of their inventions might be construed as a public service, but it doesn’t appear to be much of an argument with regard to the provision of access to an invention made in publicly funded work.
No, the pathway of the argument lies in the direction of nonprofits taking out patents and holding them on behalf of companies, each company taking an exclusive license and paying a royalty to the nonprofit for being so thoughtful as to reserve the patent monopoly on its behalf and not on behalf of any other company, and allowing this one company, then, to come between the invention and the public, so that the invention may be worked only in the manner dictated by the company, or not at all, as it served the company’s interests.
There is another variation, interesting in its way. This argument goes, universities can do a better job promoting the use of an invention than can a federal agency because the university administrator is closer to the inventor at that university than is the federal agency officials that funded the work. But a university won’t do such a thing in the public interest, as a part of its mission, say, unless it can profit from doing so, and thus should have a patent right as the means of profiting. In this variation of the argument, inventions made in federally funded work always require “marketing” to be adopted, and universities can outmarket federal agencies if only because they can charge royalties and threaten infringers, which federal agencies won’t, by policy, do. This argument, however, blows up when you discover that Bayh-Dole also authorizes federal agencies to deal in patent monopolies and to charge royalties. So it’s not a matter merely of nonprofits with a profit motive in charging for access doing a better job at transfer than federal agencies which now also have been given such a profit motive.
t stake, then, is the idea that one gets better outcomes with “technology transfer” when an institutional representative is closer, geographically, to an inventor. That’s the abstraction. I can’t think of a situation in which it is generally true. One might think that a well connected entrepreneur or technology mentor might be more effective, working with an inventor, without regard for geographical proximity, than would any given university administrator, even one so close that the inventor has the opportunity to guess what he or she had for lunch. Even Frederick Cottrell, based at the University of California in Berkeley, set up the nonprofit foundation Research Corporation (through an act of Congress, no less) to handle his patent rights in New York, close to the companies that would take an interest in his electrostatic precipitator. One might think proximity to the user community would be more likely to effect a transfer than proximity to a university administrator. Don’t you think?
It is an open question whether there is a “solution” to the diffusion of inventions made in federally supported work that meets the criteria of federal or university administrators. Administrators like process, like consistency, don’t like outliers and special conditions, like everyone to be well behaved, like power, don’t like accountability. Is there going to be a policy and practice under which something new to the world made in work to benefit the public will flourish under such administrative management? Is it just a matter of writing the right policy document? Following a stipulated procedure? Would anyone expect to have better chances winning a lottery this way? Will administrators know better what to do, in the abstract, because they are administrators, or closer than other administrators?
As it happened, Latker confused presumption of title for presumption that federal open access was better than private patent monopolies held by organizations that didn’t have market activity or capability. But even in his confused world, Latker couldn’t see that “reversing the presumption of title” necessarily also voided a federal agency’s right to acquire title from an inventor-employee when a contractor didn’t bother to take title in the first place.
I pointed out a long time ago in a national technology transfer forum that Bayh-Dole had no provision requiring assignment of an invention made in federal work to the federal government as a general condition of the contract with a nonprofit or small company. Federal agencies could request title only when title had been acquired by a contractor and the contractor did not disclose the invention or didn’t want the invention, or wouldn’t file a patent application on the invention, or otherwise maintain and defend any patent that issued. COGR folks took notice and traded emails, going gosh he’s right there isn’t a requirement for inventors to assign to anyone in Bayh-Dole. And there isn’t. It’s just not there. In reversing the fantasy presumption of title, Latker removed the general claim to title made by federal agencies when dealing with nonprofits, contract research organizations, and any contractor doing government-supported research in public health.
Under Bayh-Dole, inventors have no obligation to assign inventions made in federal work to either the contractor or to the federal agency. The U.S. Supreme Court in Stanford v Roche was clear–Bayh-Dole does not vest title with the contractor, does not give a contractor a special right to take title. The law does not force contractors to take title and does not authorize federal agencies to force contractors to take title from their employee-inventors. And in not doing so, Bayh-Dole preempts federal agencies from doing so. That’s the whole point of substituting a Congressional patent policy for the executive branch for a patent policy created by the executive branch. The express authorization controls. Otherwise, federal agencies could make up whatever they wanted, and the law wouldn’t matter at all. Actually, that’s what has happened, but for the superficial, meaningless administrative paperwork–the only thing that universities and federal agencies appear to care about in all these billions of dollars of federally supported research. But if we are tracing how the law works, we ought to expect that where Congress goes out of its way to displace an executive branch policy with its own, as a matter of statute, then the executive branch is not at liberty to make up its own policy on the matter anyway. Inventors have no obligation to assign inventions to anyone under Bayh-Dole.
In Stanford v Roche, the Supreme Court hinted that if their interpretation of Bayh-Dole did not hold up, then the law was “deeply troubling.” Like, you know, unconstitutional. The Constitution gives Congress the right to reserve exclusive rights to inventors, not to federal contractors, for openers. Some academic lawyers couldn’t wrap their minds around this and talked about how Congress must have somehow assumed wrongly that contractors always took ownership of inventions made by their employees. Gawsh. Fantasy rationalization. ‘
Latker drafted Bayh-Dole. He knew that universities routinely did not take ownership of inventions, and when the few that did, did, it was mostly voluntary. Latker was involved in the drafting of the Federal Procurement Regulation. And before that, Latker used his IPA program to circumvent university patent policies that did not require that faculty assign their inventions to the university (but for, say MIT) by exploiting university research policies that said IP provisions in research contracts take precedence over patent policy. So university-affiliated patent administrators could petition to join the IPA program with the idea that the IPA master agreement would form a research-like contract between the NIH and the university that no faculty member had the chance to negotiate, in which the university agreed to take title to any invention made in its NIH-funded work. The university administrators changed their patent policies by contracting the change with a federal agency and then selling the change back to the faculty as required by the federal contract. Very clever. But wholly unethical.
Latker’s IPA master agreement required nonprofits to take ownership of any invention that they chose to try to patent. That is, nonprofits begged the NIH to require them to take ownership of any invention they wanted to try to patent. Latker saw the IPA program as a way to undermine both the Kennedy patent policy and HEW policy implementing it. Through the IPA program, the NIH could funnel inventions made with federal support to companies under exclusive deals that the NIH itself was prevented by executive branch policy from doing itself. The idea must have been that by showing the crazy success that university-affiliated patenting organization were having with inventions made with federal support–exclusively licensing them to preferred companies, and each exclusive licensee, motivated by a vision of massive profits arising from exclusive control over an important advance in public health for 17 years, would spend vast sums to make a product and be the sole source and sole designer, that federal agencies would be freed up to do the same sorts of exclusive licensing deals themselves. But it didn’t work out that way. The IPA program was a bust. University patenting organizations tried–nearly all their licenses were exclusive–but their licensing rate was well below their rates for non-federal inventions, and the outputs were unimpressive.
In one case just prior to Latker’s IPA program, cisplatin, a platinum-based rather toxic treatment for cancer, funded first by platinum companies and then funded by the National Cancer Institute, including clinical trials , the exclusivity granted by Research Corporation to Bristol-Myers appears to have also delayed the development of alternative, less toxic, more effective implementations, and so foisted a basically ugly but profitable remedy on desperate cancer patients. A “life-saving” medicine, but at some hazard to the patients treated with it. Cisplatin, however, appears to have set the standard for what was possible–but no one could say whether a one-off with lots of interesting details (read here, and here, and here)–could be repeated if turned into a process. It’s like bureaucracies to try.