Every so often I make an effort to show graphically how Bayh-Dole operates.
The Bayh-Dole Act authorizes (arrow 1) the Department of Commerce to create regulations governing the disposition of patentable inventions made in the performance of work supported by the federal government at nonprofits and small businesses, including standard patent rights clauses to be used in all funding agreements. Let’s focus on universities. Continue reading
I have been working on some ideas regarding scope, but each time I go to university patent policies to illustrate the issues, I find totally crazy stuff. Here’s a bit from the “General Comments” section of Florida Atlantic University’s patent policy [the FAU patent policy web page has been taken down, or moved, as of May 27, 2016–so I’ve linked to the Wayback Machine’s copy]:
Under the Bayh-Dole Act of 1980 and subsequent amendments, universities are granted the ownership of intellectual property created under government-funded work and charged with commercializing those inventions for the public good.
This is wrong many ways.
First, Bayh-Dole does not apply to universities. Bayh-Dole authorizes the government to create standard patent rights clauses to be included in funding agreements. Those clauses control the disposition of inventions made with federal funds.
Second, the US Supreme Court in 2011 made it clear to universities in Stanford v Roche that Bayh-Dole does not grant them ownership of anything. Continue reading
John Gruber at Daring Fireball points out the following clause in the new Amazon Web Services agreement:
57.10 Acceptable Use; Safety-Critical Systems. Your use of the Lumberyard Materials must comply with the AWS Acceptable Use Policy. The Lumberyard Materials are not intended for use with life-critical or safety-critical systems, such as use in operation of medical equipment, automated transportation systems, autonomous vehicles, aircraft or air traffic control, nuclear facilities, manned spacecraft, or military use in connection with live combat. However, this restriction will not apply in the event of the occurrence (certified by the United States Centers for Disease Control or successor body) of a widespread viral infection transmitted via bites or contact with bodily fluids that causes human corpses to reanimate and seek to consume living human flesh, blood, brain or nerve tissue and is likely to result in the fall of organized civilization.
Here is a simple question: Can a university sue for infringement of a patent on a subject invention? Clearly, one answer is “of course”–universities do so all the time, often playing the troll or the jilted lover. Let’s put the question another way: Does a university have an unconstrained right to sue for infringement of a patent on a subject invention? This answer is “absolutely not.” Let me explain.
Keep in mind the fundamentals of federal funding. Federal agencies award grants to universities to support the work of faculty-proposed and -led projects. These federal funding agreements follow the form set out in 2 CFR 215. A university agrees to the terms and conditions of each grant as a condition of receiving the grant. The money in the grant award goes to cover the direct costs of the proposed research budget as well as the indirect costs (called “Facilities and Administration”) incurred by the university itself. Each grant is made to the university on behalf of the work of the faculty investigators. A university hosts this work, but does not support it–the university is, according to a negotiated F&A agreement with the federal government, fully reimbursed for its involvement in the federal grant.
A university formally releases its faculty members from “official duties” to work on such grants. The faculty members are almost never “employees” of the university to start with–and for federal grant work they are even less so. Add in the required (f)(2) written agreement in the standard patent rights clause, and faculty (and others) involved in federal grant work at a university are parties to the agreement–in essences private contractors for federal grant purposes affiliated with their university.
Again:
Now, let’s look at the answer to the question regarding a right to sue for infringement. Continue reading
Prior to 1912, university faculty generally did not seek patents. Cottrell at the University of California created Research Corporation to act as an external agent to present his and other faculty members’ inventions to industry. The Board of Research Corporation included many key industry people, so the prospect of forming working relationships was good. Royalties earned by Research Corporation would be shared with inventors as part of the deal to assign patent rights to Research Corporation, and the remainder after costs would be used as grants to support research in America, with the Smithsonian Institution as a primary designee to manage the research grants.
This approach kept patenting out of the university, and put a buffer between faculty and industry. It was an insightful approach that was soon imitated with variations that were not so insightful. First came local “research foundations” focused on only one university campus–inventions from that campus, and money going back only to that campus. Immediately, the idea became one of being provincial, that an invention made at one university should not benefit researchers at any other university. Not Cottrell’s vision. But further, these new research foundations were staffed by university alumni and other affiliated people, not with senior industry representatives, so these provincial research foundations set up a different opening relationship–more about a power move in licensing and less about distribution of opportunity.
Before World War 2, what research that was done at American universities was funded by companies and by foundations. Only a handful of universities did significant work with federal funding. At the end of the war, Vannevar Bush, based on his experience leading federally funded research with specific goals in mind, envisioned a similar approach for civilian objectives, led by funding that expanded basic research at universities. Continue reading
A number of university licensing officers have made a big deal about exclusive patent licenses. The exclusive license, they argue, is the key advantage they have over the federal government’s typical approach to invention management. The purpose of the Bayh-Dole Act, in their way of thinking, was to enable the private creation of monopolies based on faculty-proposed research supported by the federal government. Once, I was talking with other directors of university licensing offices about this. One said, “If I was told that I could only license a new invention non-exclusively, I would refuse to accept it for management.” The second director agreed. In their minds, the value proposition for a new invention ran to the monopoly power of the patent, not the potential utility of the invention or the prospect of improvements brought by further research or the public benefit of broad access to practice the new invention.
There are other ways to manage inventions–ways aligned with a university’s public mission, with academic freedom and scholarly exchange–but these ways get suppressed when people get fixated on the value of monopoly. The problem these folks have, however, is that they mistake patent licensing for technology transfer. While a patent license might be included in the transfer of technology, a patent license is almost never sufficient. A bare naked exclusive patent license is a game based on a threat to deny access.
With an invention comes a cluster of both intellectual property rights and NIPIA–non-IP intangible assets. And it’s often the NIPIA that have the most value that’s aligned with a university’s mission and social standing. What is NIPIA? Continue reading
Although the Bayh-Dole Act is placed in US patent law, it actually makes few changes to patent law, as the US Supreme Court made clear in the Stanford v. Roche decision. Bayh-Dole largely forces federal agencies to adopt a uniform approach to claims they can make on inventions made in federally sponsored projects. In doing so, Bayh-Dole replaced the previous approach, which was based on flexibility, but which in practice meant that agencies might putter and fuss around a decision whether to allow a private party to obtain a patent on a federally supported invention.
Some agencies, such as the NSF and the DoD, worked well with flexible arrangements, and others, such as the DOE and PHS, weren’t so sure that allowing private parties to create monopolies around energy and health inventions was all that great a thing. And the DOE and PHS may have had a good point there. After all, for many years, university faculty were deeply opposed to the idea of patenting health care inventions–university discoveries should be free to all. That’s still the de facto case with surgery techniques. Pity that almost everything else has been offered to be sold off to private monopoly-seeking organizations, merely by the government agreeing to fund research in an area of interest.
Bayh-Dole itself does not require monopoly licensing of federally supported inventions, but it was a cleverly drafted scheme to make it appear that exclusive licensing–monopoly creation–was the way to go. Continue reading
Dear Vice Provost for Research,
I said I’d write again and explain how your technology transfer office is still hugely important. If you remember, in my first letter I discussed how the prevailing approach to university research innovation has failed, and the problem is not lack of funds or a need to change the culture, or just the wrong organizational structure or office name–but rather a fundamental misconception of how innovation happens and how the institutions that host and help research benefit when innovation does happen. In my second letter, I outlined four steps to make the change to a freedom to innovation environment:
If your technology transfer office is not having to manage hundreds of inventions per year (“and every day the paper boy brings more”), it can focus on doing a few things really, really well–and at much lower cost. Continue reading
Dear Vice Provost for Research,
In my last letter I pointed out how the aggregate-patent-license model for university technology transfer has failed. It is a seductive model. It sounds so reasonable, so clear. And yet it has failed to deliver. You can throw more good money after bad and try to avoid responsibility for the decision, or you can make changes that will open up innovation opportunities for your university, for your faculty, and for companies and foundations that would benefit from the creative work undertaken by your faculty, students, and staff.
That last letter dwelt on the downside, that the aggregate-patent-license model is failed prophecy that persists through rationalization, blame-shifting, and that eternal human desire to choose the known and consistent over the unknown, the forgotten, the marginalized. Yet innovation is a creature of just these things–the unknown, the forgotten, the marginalized. In this letter, I will suggest some ways to change your institution, to escape from the failed model–even though everyone is doing it–and build a program that matches what your university can (and should) do to support the use of research findings–and put your most motivated, creative people in positions to have an impact on the directions that communities, companies, and governments take.
1. Renounce the idea that the university should own and have central control over the work of faculty, students, and staff.
This is the most difficult step. You must play the Gorbachev and break up what a band of patent administrators has worked to conquer. Create a “freedom to innovate” environment. Abandon the idea that central control of intellectual property leads to “economies of scale” in innovation. Central control almost always leads to inefficiencies, to bureaucracy, to barriers to entry. Say good-bye to all that. This step will take some courage, but this is where everything good starts. And, to help you with that courage, remember that fifty years ago, many universities did not assert central control over intellectual property–and that was in the golden era of university technology transfer, when commercialization rates were over 25%. Continue reading
Dear Vice Provost for Research,
An insightful vice provost for research once told me that the director of technology transfer had the second most difficult job in the university, after the dean of medicine. Having served as a director of a campus technology transfer office, I believe he was right.
A director of technology transfer has to be at least a five-skills player, and play each of those skills every day at game speed. She (or he) has to know intellectual property law and practice–and even patent practice alone has enough detail to keep one going for years learning the fine points. She also has to know research administration, contracting, and policy; know how to work collaboratively with research personnel working across a broad spectrum of areas of inquiry, from biomedical to computer networks to language learning; be adept at marketing and market strategies pertaining to new technology and ideas; know finances and handle large budgets, often with larger risk exposure than is immediately evident; be able to negotiate with large companies, startups, foundations, other universities, government officials, and venture investors; know and contribute to university and public policy on innovation and economic development; and be capable of making articulate presentations to the university, to industry, to the venture community, and to the public–and dealing with a multitude of competing interests. I guess that’s seven skills, but you get the point.
Dealing with new technology is no easy matter. Continue reading
