One way Bayh-Dole destroys innovation opportunity in the U.S.

Posted on June 17, 2020 by Gerald Barnett

When Bayh-Dole came into effect in 1981, it had this requirement for subject inventions retained by contractors (35 USC 202(c)(3)) (my bold):

(3) A requirement that a contractor electing rights file patent applications within reasonable times and that the Federal Government may receive title to any subject inventions in the United States or other countries in which the contractor has not
filed patent applications on the subject invention within such times.

Three years later, in 1984, Bayh-Dole was amended by PL 98-620, which made significant changes throughout. At 202(c)(3), the requirement to file patent applications was changed:

(3) That a contractor electing rights in a subject invention
agrees to file a patent application prior to any statutory bar
date that may occur under this title due to publication, on sale,
or public use, and shall thereafter file corresponding patent
applications in other countries in which it wishes to retain title
within reasonable times, and that the Federal Government may
receive title to any subject inventions in the United States or
other countries in which the contractor has not filed patent
applications on the subject invention within such times.

The “reasonable times” requirement then was interpreted by the implementing regulations finalized in 1987 thus (37 CFR 401.14(a)(c)(3)): Continue reading →

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Harbridge House on university exclusive licensing, 2

Posted on June 16, 2020 by Gerald Barnett

There’s one more thing raised by the Harbridge House report–the metrics on those patent development firms.

Patent applications are filed on approximately 10 to 15 percent of the disclosures submitted and, if present circumstances continue, only one-quarter of these patents will ever be licensed.

In this approach, patent development firms were highly selective. Most university inventions were rejected for management. That meant those inventions were published and entered the public domain or were acquired by the federal government and made available through “dedication or licensing”–open access, without a patent or with. Thus, most results were not constrained by patent monopoly withholdings. By contrast, universities now report filing patent applications on about half of the reported inventions, and licensing rates are 20% at the best of university licensing offices.

It should be pointed out that licensing has little to do with eventual use of an invention. If an invention is licensed exclusively–so that it may be “developed” by a single organization–that invention is necessarily unavailable to anyone else for adoption, research, in-house use, or commercial use. The use is suppressed. If of course no one could ever use the invention without “development,” then there’s no particular reason for exclusivity anyway. The IP that will exclude others will be generated in that “development” work. And if “development” does not involve anything else inventive, then one might wonder exactly what all the big bucks are spent on. Other than expensive clinical trials–themselves a result of government regulation–what other areas of commercial activity are there in which “development” of an invention that otherwise cannot be used at all does not result in additional inventive activity? Continue reading →

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Harbridge House on university exclusive licensing, 1

Posted on June 15, 2020 by Gerald Barnett

The Harbridge House report on government patent policy in 1968 laid the foundation for Bayh-Dole. Or, rather, federal officials selectively used portions of the report to change federal policy to conform to the wishes of patent development firms affiliated with universities.

Here’s Harbridge House on university inventions (vi):

Today, however, schools with large government research programs are taking greater interest in their patent portfolios and are seeking through a variety of means to promote them through licenses with industry. Nonprofit research firms also view their patents as a potentially useful source of income and actively seek to license others.

The driver appears to be the money.

In both cases, the inventions must frequently arise from basic research and require substantial private development before reaching the stage where they are commercially useful.

This is a report of survey responses. There is nothing to support the repeated claim that inventions arise from basic research, that these inventions require “substantial” development before use, that that funding must be “private,” or that there is some future stage at which the invention will become “commercially useful.” Certainly, it is reasonable to expect some inventions will meet all these conditions. But very rarely. Continue reading →

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Federal agency patent enforcement: Gilead, 3

Posted on June 14, 2020 by Gerald Barnett

If you turn off all logic, then Bayh-Dole is whatever it is. But with logic on, the compelling public interest reason for the federal government to claim inventions made by federal employees (or even by the employees of federal contractors) is to do something with those inventions other than what the ordinary patent system would permit inventors (or contractors taking assignment from their inventors) to do with patent rights in those inventions.

That “something other” in the public interest was “dedication” of the invention to the public, whether by using the patent system or just fully publishing the invention. The effect of this approach was clear: regardless of the opportunities to exploit the patent system to exclude all others from the use of an invention made in work judged by the federal government to be in the public interest and thus publicly funded, inventions made in such work should be freely available, even if patented. Such an invention must be published–not held as a trade secret, not unpublished through indifference or some inappropriate pressure to conceal. Such an invention may be patented–use of the patent system is not itself the issue. But in the hands of the federal government, any such patent is not to be used as an ordinary patent holder might use it–to exclude all others or to sell or license the claimed invention to another who would exclude all others.

But here’s Bayh-Dole saying just the opposite. Federal agencies are expressly authorized to convey an invention out of the hands of the government to permit someone else to exclude all others. The force of the implied argument is that it is in the public interest for the federal government, with regard to any particular invention made in work worthy of public support, to choose who is authorized to exclude all others. Implied: the company the federal government chooses will better serve the public interest in excluding all others than would the federal government in excluding all others. Further: that such a company will better serve the public interest in excluding all others than would any federal employee inventor or contractor. Also implied: the public is better served by someone excluding all others, chosen by the government and on secret terms, than in everyone having access to the invention.

This is a very strange argument for the public interest. Continue reading →

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Federal agency patent enforcement: Gilead, 2

Posted on June 13, 2020 by Gerald Barnett

Now let’s look at how Bayh-Dole deals with federal agency patent dealings with regard to licensing. 35 USC 207 authorizes patent dealing and 35 USC 209 stipulates the conditions under which exclusive licenses may be granted and the terms and conditions that must be (or should be) included in any licenses, exclusive or otherwise, and the requirements on potential licensees if they hope to obtain a license.

35 USC 207(a) authorizes federal agencies:

(1) to apply for, obtain, and maintain patents

(2) to grant nonexclusive, exclusive, or partially exclusive licenses

(3) to undertake all other suitable and necessary steps to protect and administer rights

(4) to transfer custody and administration to another federal agency

What’s left out is anything having to do with enforcing patent rights. Or, almost. Let’s work through this 207(a) authorization more closely. Continue reading →

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Federal agency patent enforcement: Gilead, 1

Posted on June 12, 2020 by Gerald Barnett

Set aside for the moment the standing of a contractor or contractor’s assignee for such stuff. Consider a federal agency. Does a federal agency have standing under Bayh-Dole’s extension of patent law–and especially 35 USC 200 and 207–to seek injunctive relief (stop use) or to demand financial compensation (that it has been damaged or deserves a royalty)?

Clearly, the Department of Health and Human Services believes it does have the authority to do so, because it did file an infringement action in 2019 against Gilead Sciences for infringement of four CDC patents covering the methods to use drugs pre-exposure to prevent HIV. A blog commentator, Daniel Boehnen, links to the HHS complaint and writes about how rare it is for the US to sue:

The lawsuit is highly noteworthy for many reasons.  It is very unusual — not unheard of, but very unusual — for the U.S. government, acting as a patent owner, to sue a company for patent infringement.  Second, the Complaint is extremely detailed in explaining the history of events leading to the invention as well as the history of interaction between HHS and Gilead leading to the filing of the Complaint.  Third, it does not take much reading between the lines to see that one of the government’s goals is to make the PrEP regimen as readily available and cost effective in the U.S. as it already is in many European and other countries, with Gilead being alleged as a primary roadblock in that path.

The HHS complaint asserts that the CDC developed and patented a treatment regimen (PrEP) involving two drugs to prevent the development of AIDS, and Gilead infringes by selling versions of the two drugs involved in that regimen:

The United States Patent and Trademark Office (PTO) granted CDC four patents that protect its innovative regimens and the taxpayers’ investment. These patents entitle CDC to license its PrEP regimens and receive a reasonable royalty for their use

Here we see that term “protect” PrEP regimens combined with the right to license the inventions and receive a royalty. But it’s not at all obvious that the patents “entitle” CDC to license its inventions or receive compensation for their use or to sue for infringement. Continue reading →

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Bayh-Dole Nutshell 1: Use it or lose it

Posted on June 11, 2020 by Gerald Barnett

If you don’t achieve practical application in a reasonable time, you lose the right to enforce your patent. 

Bayh-Dole’s fundamental policy is that the patent system must be used to promote the utilization of inventions arising from federally supported research or development. 35 USC 200. This is a working requirement added to federal patent law for Bayh-Dole inventions. These inventions are not ordinary inventions, and patents on these inventions are not ordinary patents.

Bayh-Dole defines practical application as the use of an invention such that the benefits of the invention are available to the public on reasonable terms 35 USC 201(f). 

If the invention is not used, or if used there’s no benefit available to the public, or if that benefit is not available on reasonable terms, then you lose the monopoly right of your patent. This condition is not just nonuse but also unreasonable use–that is, use without benefits available to the public on reasonable terms. “Available to the public” means available to all, not selectively. On reasonable terms means, especially but not only, reasonable price, not a monopoly price. Reasonable terms does not–to be blunt about it–mean “on any terms that a patent holder decides” or “on the terms that other patent holders have decided when not subject to this requirement.” Reasonable terms for the public are terms that the public finds reasonable. Simple enough. Continue reading →

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Federal agency patent enforcement under Bayh-Dole, 6

Posted on June 11, 2020 by Gerald Barnett

Bayh-Dole devotes two sections to federal disposition of patents, 35 USC 207 and 209. These sections are then codified at 37 CFR 404. There, the regulations limit the scope of Bayh-Dole (37 CFR 404.2):

It is the policy and objective of this subpart to use the patent system to promote the utilization of inventions arising from federally supported research or development.

In Bayh-Dole, the policy and objective are that of Congress, but here, the regulations are scoped to what the regulations themselves assert. Oddness. It is the policy and objective of the codification of Bayh-Dole for federal licensing of inventions to select only a portion of the policy and objective set forth by Congress. Or, another way, the other policy and objectives of Bayh-Dole are not implemented for federal agencies (though they are, in a half-assed way, implemented anyway). Continue reading →

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Federal agency patent enforcement under Bayh-Dole, 5

Posted on June 10, 2020 by Gerald Barnett

Let’s work through the situation on federal ownership of inventions outside of Bayh-Dole protocols for acquiring inventions from contractors that screw up their patenting of subject inventions. Again, we are looking for any indication that federal agencies, in acquiring patents, or having the federal government issue patents to itself, has any right to enforce those patents other than as provided by Bayh-Dole–that is, by assigning the patent to a non-federal party, and only then when compliant with the conditions for exclusive licenses in Bayh-Dole.

Authority for a federal agency to acquire ownership of inventions made by federal employees is not within the scope of Bayh-Dole, just as Bayh-Dole gives no such authority to federal agencies to pass along to contractors, as the Supreme Court made clear in Stanford v Roche–Bayh-Dole is not a vesting statute for federal agencies or for contractors.

For federal ownership of inventions, we turn to an Executive Order, federal law, and executive branch patent policy. The outline is this: the Dubilier decision in 1933 confirmed that the federal government could own inventions but that Congress must provide the authorization to do so. The Attorney General (first Biddle, then Wolf, but really Sonnett but in practice probably Kreeger) produced a report in 1947 that assumes the federal government has the right to enforce patents it holds, but represents that the federal government has never done so, should not do so, and should adopt uniform practices that make doing so impossible, but for to support other controls on the use of inventions to protect the public. Truman’s executive order (1950) then takes up these issues to address federal ownership of inventions made by federal employees. Continue reading →

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More NIH Bayh-Dole Slop

Posted on June 9, 2020 by Gerald Barnett

The NIH cannot get Bayh-Dole right. Or maybe the NIH doesn’t want to get Bayh-Dole right.

Here’s an NIH announcement from 2018 about policy changes, “Notice Regarding 2018 Bayh-Dole Act Final Rule – Rights to Federally Funded Inventions and Licensing of Government Owned Inventions.”

It’s an official document, given a tracking number and all–NOT-OD-18-233. One would think someone would check it over. Hey–guess that has to be us:

Recipients of NIH funded research awards are required to report all inventions that result from NIH funded projects.

See the Bayh-Dole Act  at 35 U.S.C. § 200-212 (https://www.gpo.gov/fdsys/granule/USCODE-2011-title35/USCODE-2011-title35-partII-chap18-sec200/content-detail.html ) and the implementing regulations at 37 C.F.R. 401. https://www.federalregister.gov/documents/2018/04/13/2018-07532/rights-to-federally-funded-inventions-and-licensing-of-government-owned-inventions

Bayh-Dole does not require the reporting of all inventions. Continue reading →

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