Undermining Bayh-Dole by relying on it? 4

Niels Reimers, having moved through a series of fallacies and fantasies about Bayh-Dole in his op/ed published in the Mercury News last April, turns to his worry of the day–state attorney generals want the government to march-in and open up access to covid treatments. “This would be an enormous mistake.” Maybe, truly, it would have been an enormous mistake–given how terrible the mRNA “vaccines” have turned out to be–don’t stop infection, don’t stop transmission, and have huge, even life-threatening side effects and unknown long-term issues. Oh, please. Just look at the data.

But Reimers goes on:

The march-in provision allows the government limited authority to license additional developers, but only if current licensees are failing to commercialize a patent.

Reimers is wrong. At least he’s consistent! March-in allows a federal agency to compel the patent holder (contractor, assignee) to grant licenses if the patent holder (i)  has not timely achieved practical application; or (ii) and (iii) has failed to reasonably satisfy a public health or regulatory need; or (iv) has failed to require US manufacture in cases of exclusive licenses in the US to use or to sell product based on a Bayh-Dole invention.

Bayh-Dole does not give a company a free pass if it has “commercialized” a “patent.” The standard for march-in (i) is “practical application.” Bayh-Dole defines practical application at 35 USC 201(f)–basically, that an invention is being utilized and the benefits of that utilization are available to the public on reasonable terms. It’s not then that there’s commercialization, but that there’s “utilization” and the terms on offer to the public are reasonable–including, obviously, reasonable pricing. As for march-in (ii), it’s not sufficient that a company is selling product–there has to be enough product to meet the public need. Again, mere commercialization doesn’t matter to Bayh-Dole. Reimers wants you to believe it does, but he is wrong about the law. Utilization matters. Free competition matters. Commercialization is just one route to utilization and free competition. On its own, in Bayh-Dole, commercialization doesn’t much matter.

No start-up will pay for the right to utilize a scientific, university insight, then invest in developing it further, if the government can dismiss intellectual property protections at will.

Of course, Bayh-Dole doesn’t authorize the government to “dismiss” intellectual property “protections” “at will.” For march-in, there’s a whole lot of due process to be followed. For the government license, none at all, but then the government license is an essential part of the public bargain and so comes upfront, and is not subject to government will or whimsy.

Why should a company have to “pay for the right” to use an invention made in university research, especially research that’s been pitched to the federal government as in the public interest? More close to home, why should inventors have to pay a university for the right to develop their inventions in their own startups?

Reimers has the wrong question. A way better question is why universities and federal agencies don’t fund development of research findings if those inventions directed to public health are so gosh darned innovative? If a startup “invests” to “develop” an invention, then its proprietary interest lies in the developments. Unless it it populated by strange beings indeed, any company forced to take a license will be on the lookout for ways to design around the licensed stuff and so be rid of the burden of license compliance, license reports, license audits, license payments, and license liability.

A startup doesn’t much need to own with exclusive control all the things on which the developments are based–but that startup most assuredly would prefer that those foundational things aren’t owned by others, ready to lock them out or make them pay. At least if other companies own rights, a startup might be able to cross-license and so get on with things. But if a university owns the rights, then it is money or nothing, and if money, then it pretty much has to be an exclusive license with a poison pill terms to prevent cross-licensing or dedication to a standard or sublicensing.

In the last 40 years, the ingenuity of American companies has transformed almost every aspect of our lives. The Bayh-Dole Act made this possible. Undermining it could bring our technological renaissance to an end.

The first sentence is suspect. Many non-American companies have played a role. Lots of aspects of our lives have not been transformed, or have been transformed by other than companies. But the second sentence is more nonsense. Bayh-Dole did not make whatever transformations there have been “possible.” At best, Bayh-Dole has allowed contractors to hold patent monopolies and sit on them, without having to make a case that sitting on a patent monopoly better serves the public interest than open access. At best Bayh-Dole has allowed university patent administrators to gain a happy livelihood misrepresenting the law and making unsubstantiated claims for its wild success. Sure, Reimers can have whatever opinion he wants to about Bayh-Dole. Maybe the tooth fairy has made it all possible, too. There’s no evidence for either position, but maybe it feels right.

Reimers calls using Bayh-Dole march-in “undermining” the law. How very strange! Given the pressing public need, and the failure of companies holding exclusive rights to meet that need, why wouldn’t federal agencies (and the public) turn to Bayh-Dole’s public protections to address that need? That would not be “undermining” Bayh-Dole. Not using Bayh-Dole’s public protections is “undermining” Bayh-Dole. Reimers’s argument boils down to “universities won’t be able to make as much money dealing in exclusive licenses in the future if the public allows Bayh-Dole to be used to address an immediate public health crisis.” It is a petty, sniffling argument. It’s the same argument that the NIH used in 2002 in Public Citizen to prevent public disclosure of its exclusive licensing terms. “Oh, please, Court, prevent disclosure of the terms we negotiated, because if we are forced to reveal these terms, then we won’t be able to do more exclusive licenses like this one, even if our licensee is screwing over the public with outrageous pricing–because doing more deals that screw over the public is more important than protecting the public from unreasonable terms.” Of course, the Public Citizen court found the NIH argument persuasive, so it’s good of Reimers to try it in his op/ed.

But for anyone with their head on right, Reimers’s opinions are unfounded, deceptive, and have their moral compass–and their innovation compass–all wrong.

The core of Reimers’s argument is that if companies are exploiting patent positions on inventions made in federally funded work–charging unreasonable prices, limiting supply, suppressing alternative versions, and the like–the federal government should not use rights it has under Bayh-Dole to address those behaviors because doing so will “chill” the opportunities for other companies to take exclusive licenses with the intent of doing much the same thing.

Companies taking exclusive licenses to inventions made in federally supported work often screw over the public, but that screw over is an essential “incentive” to the effort to get companies to invest in the development of new products based on such inventions. Relying on Bayh-Dole’s public protections to introduce competition ruins the screw-over incentives and everything that’s good in the world will melt away and fail–or at least technology transfer will fail, private investment in developing inventions made in federal research will fail, the federal research itself will be wasted, and so science will stop, and we will fall into a dark age.

One does not have to run around looking for empirical evidence to critique Reimers’s basic argument. Bayh-Dole, according to Reimers, gives companies that aim to screw over the public an inside track to take exclusive licenses. The public benefit that then arises must necessarily include the screw-over incentives. The only way the public will benefit from federally supported research is if companies are free to screw over the public, and a good way to do that is to have patent positions that suppress competition, multiple suppliers, variations on product features, and the like.

Reimers’s position becomes a self-fulfilling prophecy. If university patent administrators insist on licensing only exclusively and only to companies that will license only if they have the right to screw over the public, then it must follow that if university patent administrators cannot assure companies that no one will rely on Bayh-Dole to introduce competition when the companies fail to meet public needs or offer products on unreasonable terms, then the patent administrators will not be able to those sorts of deals with those sorts of companies. One might respond–exactly. Congress did not intend for Bayh-Dole to be used to select for those sorts of companies, doing those sorts of things. Go ahead, try to find any shred of evidence in Bayh-Dole that Congress intended the thing Reimers argues for. Yup. Not there.

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