A Bayh-Dole Quickest Read–Ha! Ha! Ha!

Posted on January 25, 2021 by Gerald Barnett

Here’s an even shorter version of Bayh-Dole, with some paraphrasing.

Use the patent system to promote the use of inventions.

A nonprofit or small business firm may elect to retain title to any subject invention.

A subject invention is a patentable invention the contractor has acquired and that has been made under a funding agreement.

Federal agencies have a nonexclusive license to practice or have practiced any subject invention.

Federal agencies may require reporting on utilization, but any such information shall be treated as privileged and confidential and will not be disclosed to the public.

Nonprofits cannot assign subject inventions without federal agency approval except to an organization that manages inventions and is subject to the same provisions as the nonprofit contractor.

Nonprofits must use any royalties and income earned with respect to subject inventions for scientific research or education.

Federal agencies may grant exclusive licenses, including for royalties, and including granting the right to enforce patents.

A federal agency cannot grant a license unless it has received a plan for development or marketing of the invention.

Federal agencies may require licensing of a subject invention or grant the license themselves if a subject invention has not achieved timely practical application or is not reasonably satisfying health or safety needs.

Practical application means an invention is being used and its benefits are available to the public on reasonable terms.

Almost now a quick read.

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A Bayh-Dole Quicker Read–Ha! Ha!

Posted on January 25, 2021 by Gerald Barnett

A Twitterer admonished another Twitterer to give Bayh-Dole a quick read. Sigh. But then I thought that I could help out. Here’s a even really shorter version of Bayh-Dole, extracted from the bog puddle of the last post:

use the patent system to promote the utilization of inventions arising from federally supported research or development; [35 USC 200]

Each nonprofit organization or small business firm may elect to retain title to any subject invention: [35 USC 202(a)]

The term “subject invention” means any invention of the contractor [35 USC 201(e)]

the Federal agency shall have a nonexclusive license to practice or have practiced for or on behalf of the United States any subject invention [35 USC 202(c)(4)] Continue reading →

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A Bayh-Dole Quick Read–Ha!

Posted on January 25, 2021 by Gerald Barnett

A Twitterer admonished another Twitterer to give Bayh-Dole a quick read. Sigh. But then I thought that I could help out. Here’s a really short version of Bayh-Dole, extracted from the swamp of muddy drafting that is Bayh-Dole, with bold added.

It is the policy and objective of the Congress to use the patent system

to promote the utilization of inventions arising from federally supported research or development;

to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery;

to promote the commercialization and public availability of inventions made in the United States by United States industry and labor;

to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions; Continue reading →

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The VPR Letters, No. 4

Posted on January 24, 2021 by Gerald Barnett

Dear Vice Provost for Research,

It’s been a while, and I thought I would drop you another note to help you with your management of university-hosted intellectual property. I once was contacted by a vice provost of research at a major research university. The gist of the conversation was that the VPR confessed that their current approach to IP, licensing, and commercialization wasn’t working. The VPR wanted to know if I had written a white paper outlining a better approach. I suggested that no formal approach would be a better approach, but that said the VPR wouldn’t do–what was needed was a better approach that looked like (I paraphrase) an administrative process. When I had that, I was to let the VPR know. I put the white paper on my list of things to do, where it has sat for a few years, while I wondered over it.

This won’t be that white paper, either. But it may help you see how difficult the administrative problem is. From the administrative perspective there are a limited number of ways to change the policy path one is on.

One way is to identify changed circumstances. If the circumstances assumed by a policy no longer pertain, then the policy and practice should be changed to address the new circumstances. But if policy is written to be “flexible,” then there’s a great temptation to attempt to deal with the new circumstances within the framework of the existing policy and using the usual practices. If there’s state investment funding available, rather than making inventions available at no charge to anyone based in the state (a sea change in practice), the administrative objective will be to start new university companies to compete for those funds, giving each new company the usual exclusive license that’s really an assignment of the invention. The administrative problem then becomes how to start so many companies–answer, make them shell companies that exist only to mop up money that otherwise would go to support existing private business and to run up one’s licensing bean count (look at all our startups!). Administrators typically see changed circumstances as a challenge to expand the use of current practices rather than drop them. Continue reading →

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UW’s Fast Start template, another bad bureaucratic idea gone bad, 7

Posted on December 19, 2020 by Gerald Barnett

We have been working through the arguments for universities implementing one-size-fits-all licensing templates for their spinout companies, so that all spinouts are treated the same–as if university spinouts are all the same, or should be made to become all the same through a process that university administrators call “negotiation.”

Consider these different university spinout situations.

(1) university employees expressly hired to invent by the university and working under university direction. Under patent law, any inventions produced in such an arrangement are equitably the university’s. Why should these inventors get the same terms as others if they choose to spin out a company?

(2) faculty or student envisions a business idea that has nothing directly to do with any invention they have made at the university. They spin out a company. Why should the university assert any interest in anything they have done that they place in that company?

(3) inventions are made in work that’s been identified by the researchers and the university as for the public. Why should the results of that work be sequestered for the exclusive benefit of any spinout company? And why should the university be complicit in helping the company secure exclusive control?

(4) researchers want to spin out a company that provides public services related to their research that are easier to provide as a company than as a project within the university. Why should the university demand an equity stake in such a company, or a royalty?–all these demands do is raise the cost of providing the service.

(5) researchers spin out a company based on work that they have done with other university researchers who object to the spin out company getting exclusive rights. Why should the university take title to the rights of all researchers and then offer the standard deal via template to the ones wanting the spinout?

(6) researchers want to gain access to SBIR or STTR funding and so they create a company to apply for these grants and subcontract work back to their university lab. Should the university even allow such a spinout (many do)? and if so, why should such a deal look just like any other?

You get the idea–there are all sorts of situations that call for special treatment rather than a single template agreement that makes all spinouts the same, makes a virtue of doing so, and gives as the “intention” to decrease costs, speed up deals (because no review is necessary), and somehow make things better. One imagines then beat down researchers giving up to accept administrative dictates. Continue reading →

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UW’s Fast Start template, another bad bureaucratic idea gone bad, 6

Posted on December 18, 2020 by Gerald Barnett

The University of Washington recently “rolled out” a “FAST start” template license agreement for university spinout companies–companies started by inventive researchers at the university to develop their inventions as commercial products. For spinout companies, the UW’s practice is to demand that the researchers give over their rights in their inventions so the university can license those rights back to their company. The university then will go off and patent the inventions (whether the researchers want that or not) and as part of the license deal require the startup to reimburse the university for its patenting expenditures.

Beyond this encumbrance on the spinout, the university packs in all sorts of provisions on payment, an equity stake, audit, indemnification, insurance for the university, sublicensing, and infringement. Most of this UW licensing baggage would not be necessary if the inventors placed their inventions directly in their spinout company. The university would have no ownership interest in the invention or the company, and so would not have any basis for worrying money, equity, risk, or contract. If the university wanted to encourage and support spinout efforts, this would be the route it would take. If, conversely, the university’s purpose was to be parasitic on spinouts for the money, or to serve some administrative shoelace ironing so that all spinouts were proper by institutional standards, then a FAST start template might be just the thing to formalize the parasitism–allowing no spinout to avoid the requirements placed on any spinout, regardless of circumstances. Well now. Continue reading →

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UW’s Fast Start template, another bad bureaucratic idea gone bad, 5

Posted on December 18, 2020 by Gerald Barnett

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. Continue reading →

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UW’s Fast Start template, another bad bureaucratic idea gone bad, 4

Posted on December 17, 2020 by Gerald Barnett

H. Holden Thorp, editor in chief at Science magazine and formerly chancellor at Washington University and before that the University of North Carolina, published an editorial in Science, “An opportunity to improve innovation” that provides insight on the UW FAST start scheme. The thrust of the editorial is that Bayh-Dole has been successful, won’t be repealed or amended, and so the new administration should change policy in some unspecified way so that university research does not depend “on the marketplace to spur the kind of research that benefits society–a stated rationale for passing the act.” Thorp’s editorial is garbled in places, but it might best be viewed as a plea for help from a former university leader. We will look first at Thorp’s main argument about technology transfer and then look at what Thorp has to say about FAST start schemes.

I will be critical of Dr. Thorp’s premises but I am sympathetic to the core point that Thorp makes–that there should be some public alternative to the patent-licensing-for-commercial-development-profit-seeking model.

My point in response is that universities don’t need any change in federal law or policy to pursue public alternatives. They need administrators with brains and spines, however, and that’s proven to be more difficult to come by. Instead, administrators compensate for a lack of ability by changing organizational structures, rebranding tired old licensing operations with sparkly new names, and creating dopey things like “express” patent licenses for startups so that administrators don’t have to think and don’t have to have any capability to be responsive to the particulars of any given startup.

Dr. Thorp treats as fact that Bayh-Dole has been “successful.” But Bayh-Dole has not produced such “economic success and progress”–there’s no evidence for that. Bayh-Dole keeps any such evidence secret, and universities report bogus model output as fact and metrics that do not track either economic success or innovation. Universities think so little of Bayh-Dole that they don’t even report their outcomes with Bayh-Dole subject inventions separately from other inventions–even though Bayh-Dole’s standard patent rights clause requires separate accounting.

Dr. Thorp claims that “spurring” research that benefited the public was a “stated rationale for passing” Bayh-Dole. Dr. Thorp doesn’t bother with who did all that stating, but it’s not in Bayh-Dole. Benefiting the public might be said to be a necessary rationale for all federal legislation, but Dr. Thorp’s implication is that Bayh-Dole was intended (by Congress, or by someone else who at this point is secret and doesn’t matter) to alter the direction of university research rather than to disrupt federal open access to inventions made in research or development judged worthy of public subvention.

There’s nothing to support Dr. Thorp’s assertions. Continue reading →

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UW’s Fast Start template, another bad bureaucratic idea gone bad, 3

Posted on December 16, 2020 by Gerald Barnett

GeekWire published an article about what UW calls its new scheme to shorten negotiations with its spinout teams–UW personnel who have invented in their research labs and want to start a company to develop applications and products for their inventions. UW labels this scheme FAST Start and the GeekWire makes it sound like faster negotiations at lower cost is the primary driver. The idea is, according to this scheme, that a template license agreement that takes an equity position and expects royalty payments, milestone payments, and patenting cost reimbursements in exchange for licensing back to the inventors their rights will make things easier. In other words, if you hammer folks with an agreement they don’t have a chance to negotiate, then no one really has to do any more thinking about it. It’s the bureaucrat’s dream and the entrepreneur’s nightmare.

An odd thing about it. A template assumes a high volume of transactions that cannot be bothered with or that, even with a low volume, somehow administrators must be kept from being responsive to each situation involving a spinout effort. We are not talking here about having base-form agreements that can be modified to reflect discussions about how to set up a given spin out company for success. We are talking about a kind of adhesion contract, a take-it-or-screw-you kind of offer from your nonprofit employer, who cannot be bothered with differences among situations and fears the use of administrative judgment. Continue reading →

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UW’s Fast Start template, a bad bureaucratic idea gone bad, 2

Posted on December 15, 2020 by Gerald Barnett

We are working through a GeekWire article about the University of Washington’s “new” template-based deal for startups, so that all startups are treated alike, and doing so the university claims will shorten negotiations and reduce costs–as if these are the big program goals for university technology transfer.

Here’s what UW says about its FAST process:

In keeping with University of Washington’s mission as a public university, CoMotion is committed to a fair and transparent process that treats all UW startup teams* equally, whether founding teams are comprised of new students or award-winning senior professors, and independent of their business or legal experience and resources.

This is bureaucratic fantasy. Nothing in UW’s standing as a public university means that all “startup teams” must be treated “equally.” Such “equally” is the stuff of the greatest unfairness, blind to circumstances, ignoring unique opportunities, and unable to move resources where they might make a great impact. Startup teams without experience might need more help than those who have plenty of experience. Efforts that are capital intensive might need a different deal structure than efforts that can flip product almost immediately. And on and on. It’s one thing to say, “we don’t play favorites” and quite another to say “we ignore differences among startup teams.” The former statement is one that asserts that merit of the opportunity is the driver, however it might be addressed. The latter statement is one of bureaucratic fastidiousness, not to be bothered by differences in situation and opportunity. One template to rule them all. Convenient, but not responsive. Continue reading →

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