Faculty Strategies for Getting Their IP Back

Posted on May 4, 2023 by Gerald Barnett

If you are a faculty member at an American university, you will get a lot of twisted advice from your university technology transfer office about intellectual property, Bayh-Dole, and patent policy. The advice (and descriptions about technology transfer) is mostly wrong or ill-conceived but it might sound plausible if you don’t know practice, and to contest it will cost you somewhere over $200,000 in attorney fees. You may win, in a pyrrhic way, but even then you won’t be better off for it. They will just double down, change their policy to try to cover for whatever you forced them to admit, and continue on. It will cost the next person another $200,000 five or ten years on when the next opportunity arises.

Anyhows, there are ways to navigate university technology transfer without the big fight. Here are some thoughts on strategy. Your situation may be different. Your circumstances may be different. You may not have the interest or connections or time. But maybe these thoughts give you some ideas about how to work the system to your advantage, and to that of the stuff you create, make, collect, discover, invent, realize, cultivate, and compose.

Most university IP policies now demand that all inventions must be assigned to the university. Invention is defined broadly to mean all patentable and non-patentable inventions, software, know-how, improvements (what are those?), and anything that might have “commercial value.” What’s a non-patentable invention? Anything that a university administrator calls an invention. Essentially, anything that doesn’t have an ownership theory in patent law. So, if you make something or think something or realize something, you are at risk that a university administrator will call it an invention and bring it under their policy of demanding to own it. There’s really nothing you can do once you report it to them. Continue reading →

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AUTM arguments for not complying with Bayh-Dole

Posted on April 20, 2023 by Gerald Barnett

Just a quick note here on AUTM arguments are for not complying with Bayh-Dole. Just off a meeting that paid attention to AUTM’s position. I’ll summarize the main arguments here.

  1. Access in the form of commercial products is more important than compliance.
  2. Exclusive licenses are more difficult to close without the incentive of monopoly pricing.
  3. Without exclusive licensing, commercial products won’t be made.
  4. Bayh-Dole’s “reasonable terms” requirement would mean fewer exclusive licenses.
  5. “Reasonable terms” don’t include reasonable price because price isn’t mentioned.
  6. Senators Bayh and Dole claimed they never intended Bayh-Dole to be used for price controls (which they did).

In short, the argument goes–if we were to comply with Bayh-Dole, then we could not grant as many exclusive licenses–but rather than own up to our noncompliance, we claim that we are complying with Bayh-Dole and ignore the parts that we aren’t complying with. They don’t bother pointing out how few exclusive licenses they actually grant compared to the size of their patent holdings, or how few of those exclusive licenses that they do grant result in actual commercial products. It’s really hard, the way they do it, obviously.

Put another way, Bayh-Dole must be ignored to the extent that it expects reasonable pricing or the promotion of competitive use of subject inventions–even though these are express objectives of the law. Another way, AUTM argues that Congress intended patent monopoly pricing and suppression of competitive use of inventions made in federal work as necessary incentives for the commercial development of those inventions. Or, bluntly, the only way that new medicines get developed is if pharma companies have the freedom to screw the US public on pricing, and since that is just how it is, it makes sense for universities to get a share–however miniscule–of this price gouging of the sick and the federal government. The royalty paid to the university in a small way lightens the pain of the price gouging by giving the public a “return” on the federal payment of research funding. There is no point in finding other ways to develop new medicines–all other ways will fail. Continue reading →

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Government Funding For Research, 1

Posted on March 30, 2023 by Gerald Barnett

Out in Twitterland, I saw this tweet by Brett Blackham:

Arguably, research and development is so important that government should have nothing to do with it. However since 1980 a company or university could get government money to do research & still be issued patent monopolies.

It’s easy enough to dismiss the tweet as silly or ignorant. Government letting companies deal in patent monopolies goes back to at least the 1963 Kennedy patent policy, and letting universities deal in patent monopolies for health inventions started in earnest with the NIH’s Institutional Patent Agreement program restarted in 1968.

But let’s not dismiss this tweet. Instead, let’s consider it as an interesting proposition. After all, if something that’s happening is a really great thing, like government funding for research, then there should be a good case to be made reciting the fundamentals that shows just how it is a great thing. So, let’s at it.

First, let’s add a few things to the potential problems with government funding, just to make its defense not merely facile. Continue reading →

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Xtandi, Bayh-Dole, and how Pfizer might stop worrying and love the march in

Posted on March 23, 2023 by Gerald Barnett

The American Prospect has an interesting piece (“A Big Miss on Drug Prices”) on the NIH yet again defying the Bayh-Dole Act and refusing to launch an investigation into whether UCLA and Pfizer have met Bayh-Dole’s standard (35 USC 201(f)) to make the benefits of using a subject invention available to the public on “reasonable” terms. As Dayan points out, the NIH in its rejection of a petition to start march in proceedings, happily leaves out the “reasonable terms” part of the 35 USC 203(a)(1) condition for march in.

NIH refuses not only not to march in but also not to even conduct an inquiry to ascertain whether UCLA and Pfizer have met the requirement of “on reasonable terms.” The “reasonable” in 35 USC 201(f), given the remedy is licensing to introduce more independent use of a given subject invention, carries an effective meaning of “competitive.” Reasonable terms are those that would be reasonably expected if there were competitive use of the subject invention. NIH just ignores the law and also ignores its responsibility to the public under the law. The effect of NIH’s refusal to even start a march in procedure to evaluate the situation surrounding Xtandi is to claim that Congress passed Bayh-Dole with public protections delegated to federal agencies but did not expect federal agencies to protect the public by using any of them.

In all of this, it is important to understand that the Bayh-Dole march in right is not the first line of public protection in Bayh-Dole. March in is, like, number three. Not that it appears to matter much to the NIH, which is not about to use any of the rights Congress secured for the federal government to protect the public from patent abuse, especially in matters of public health and safety. Continue reading →

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Inventors would own more, were it not for noncompliant Bayh-Dole practice

Posted on March 10, 2023 by Gerald Barnett

I saw this tweet this morning:

I agree Inventors should own more, but institutions were/are the heart of Bayh-Dole that (arguably) enables IP-driven startups… this is bc many/most PI inventions would go into a black hole without tech transfer officer asking them for invention disclosures…

It was a reply to someone suggesting inventors ought to own their inventions at universities. The idea behind this response is that if it were not for university ownership and tech transfer services, these inventions would all go to waste in a “black hole.” Inventors at universities are unworthy to own the inventions they make. University administrators are so much more worthy. Certainly the black hole imagery is richer than merely gathering dust on a shelf. But there’s somewhat more to it, so I thought I would discuss.

In my over 20 years in tech transfer, inventions of any use don’t go “into a black hole” if a university fails to demand ownership. Sure, they may not get used–but 95% of patented inventions don’t get used anyway. One should not have a shocked face. But even in this context, the university demand to own everything is an even bigger, blacker black hole.

Continue reading →

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Why not let’s try, Frank?

Posted on March 9, 2023 by Gerald Barnett

Frank Cullen, writing at the “Council for Innovation Promotion” has posted a hand-wringing response to a letter from members of Congress to the Secretary of Health and Human Services requesting that the government use Bayh-Dole’s march-in provisions to address price gouging of the prostate cancer drug Xtandi. Cullen writes that march-in “would chill innovation and disincentivize the launch of new startups and inventions.” That’s nonsense–er, an unsupported claim–but if it were true, then it would be a chilling indictment of Bayh-Dole, since Bayh-Dole has march-in baked into its public bargain on retention by contractors of inventions they acquire made in federally funded work.

Cullen goes on to recite a fictitious account of Bayh-Dole and its effects, using this account as evidence for the chilling he predicts from march in. Let’s walk through this mess.

To understand why, just consider the status quo before Congress passed the Bayh-Dole Act in 1980.

Let’s do that. Before Bayh-Dole, the NIH, NSF, and Department of Commerce all operated Institutional Patent Agreement programs. Under an IPA, a nonprofit was required to take ownership of any invention made in agency-funded work that the nonprofit decided to patent. For other nonprofits not in an IPA program and for-profits without product-making capacity, such as contract research organizations, executive branch patent policy (Kennedy 1963, modified by Nixon 1971) allowed contractors to retain invention rights when they could show that their private exploitation of patent exclusivity would more likely serve the public interest than would open access to the invention by way of federal ownership. If they couldn’t show the public would be better off, then, well, what would be the point of letting them mess around with patents? The IPA programs were built by federal attorneys whose aim was to circumvent executive branch patent policy, making an exception (private exploitation of patents on inventions made in public-directed work) into their general rule. Continue reading →

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March-in rights, Xtandi, and Bayh-Dole’s patent rights clause

Posted on March 3, 2023 by Gerald Barnett

Senator Bernie Sanders just tweeted about Xtandi, asking patients taking Xtandi to share their stories.

The prostate cancer drug Xtandi was invented by taxpayer-funded scientists at UCLA, but now costs Americans nearly $190,000 — or up to six times the price in other wealthy countries. If you are taking Xtandi and would like to share your story, click below.

Yes, federal agencies should march in on Xtandi, among other actions they have a duty to take to enforce Bayh-Dole’s patent rights clause, under which a contractor retaining title to a subject invention grants the government rights sufficient to protect the public from nonuse and unreasonable use, including unreasonable, non-competitive pricing.

Senator Sanders is right to call out Pfizer for unreasonable pricing. But his standard is not the standard set forth in Bayh-Dole. Bayh-Dole is not concerned with either affordability or the patent monopoly prices charged in other countries–Bayh-Dole rather is concerned with free competition and enterprise and requires either a competitive price or licensing that creates competition. I’ll show you how it works. Bayh-Dole is a messy, dismal law, and as a consequence, the pain you feel is having to read 4,000 words for what ought to be straightforward. I’m sorry. Not my fault. I feel the hurt, too.

Bayh-Dole expects federal agencies to review utilization reports (35 USC 202(c)(5)) and determine if the benefits of a subject invention are available to the public on reasonable terms (35 USC 203(a)(1) and 201(f)). If the terms are not reasonable, then, as already agreed to by the contractor, a federal agency is to require licensing to introduce competition. But NIH won’t even conduct a review! NIH refuses to do its duty under Bayh-Dole. Continue reading →

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NIAID Breezily Repudiates Supreme Court Ruling

Posted on February 22, 2023 by Gerald Barnett

Perhaps you wanted a short version.

NIAID puts this in guidance to inventors regarding inventions made in NIH-funded work:

Under the Bayh-Dole Act, your institution as the grant recipient owns rights to the NIH-funded invention and has the right and obligation to pursue patent protection.

The Supreme Court in Stanford v Roche ruled directly on this matter in 2011. The Court held that Bayh-Dole does not vest title to inventions made in federal work with the grant recipient. Rights are with the inventor. Bayh-Dole applies only after a grant recipient has acquired title to an otherwise conforming invention in some conventional, non-Bayh-Dole related way.

The NIAID here pointedly refuses to comply with the decision of the Supreme Court. Smells like contempt.

The botch job on Bayh-Dole continues:

As we mentioned above, the Bayh-Dole Act requires that all government-funded inventions be reported to the awarding federal agency; in your case, NIH.

First, they don’t mention this above. Careless. The Supreme Court made very clear that inventions that otherwise conform to Bayh-Dole’s definition of scope do not become subject inventions unless they are owned by a party to the federal funding agreement–a contractor.

Bayh-Dole’s requirement to disclose is expressly limited to subject inventions, not all inventions made in federally funded work. See 35 USC 202(c)(1). NIAID is just wrong. Further, Bayh-Dole’s scope is inventions made in the performance of work under a funding agreement. The definition of funding agreement at 35 USC 201(b) provides that funding may be “in part”; that is, the proper scope of interest is any invention (when acquired by a contractor) arising within the scope of work for which the federal government provides funding for any part of that work.

Regulatory guidance at 37 CFR 401.1 stipulates that merely “funding” an invention is not determinative. Federal funding may be used outside the scope of the funded project to make an invention, and if that use of funds does not “diminish or distract” from the project, it’s not within Bayh-Dole’s scope. So “government-funded invention” is doubly wrong. Not just imprecise. Wrong.

There should be a rule that no law governing a federal agency can be made more complicated than federal agency administrators can comprehend. On that basis, Bayh-Dole should be repealed. It has attracted a whole cadre, a bozonet as it were, of people incapable of reading the law and providing guidance. They just make stuff up that sounds good to them, and ignore even the US Supreme Court ruling on exactly the issues that they are responsible for.

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NIAID botches Bayh-Dole

Posted on February 22, 2023 by Gerald Barnett

This will be a bit of a long ride. Buckle up.

In 2011, the US Supreme Court ruled in Stanford v Roche that the Bayh-Dole Act does not vest title to inventions made in federally supported work with the nonprofit organization that receives the money.

Nowhere in the Act is title expressly vested in contractors or anyone else; nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions.

An “invention of the contractor” is one that the contractor has acquired:

And “invention owned by the contractor” or “invention belonging to the contractor” are natural readings of the phrase “invention of the contractor.” As we have explained, “[t]he use of the word ‘of’ denotes ownership.”

Bayh-Dole is limited to inventions contractors acquire:

The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have. Such a provision makes sense in a statute specifying the respective rights and responsibilities of federal contractors and the Government.

Congress signals its intent to make major changes by addressing those changes expressly:

We are confident that if Congress had intended such a sea change in intellectual property rights it would have said so clearly—not obliquely through an ambiguous definition of “subject invention” and an idiosyncratic use of the word “retain.”

In 2021, the NIH’s National Institute of Allergy and Infectious Diseases published an article in its Funding News newsletter, “Insights Into Inventions–Reporting, Bayh-Dole, and More.” In a breezy style, the article encourages inventors working with NIH funding to disclose their inventions to their institution’s technology transfer office. Inventors are encouraged to “familiarize” themselves with Bayh-Dole. Fine, so far–but here’s what they write:

In a nutshell, it [Bayh-Dole] states that federal funding recipients (i.e., those receiving grants, cooperative agreements, or contracts) have the right to retain title to inventions made under federally funded research but must comply with regulations (37 CFR 401 et seq.) to ensure the timely transfer of the technology to the public sector.

This nutshell is broken. Continue reading →

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A university technology transfer annotated reading list

Posted on February 20, 2023 by Gerald Barnett

So you want to tell heaven from hell, blue skies from pain. Got it! Here is a basic reading list of documents that frame the history of university technology transfer. I’ve put it in chronological order and provide links to documents wherever I have found them. There’s much more on the theory and practice of university IP management and strategies of technology transfer. This list covers the broader regulatory context, and as such, it reflects muchly a sort of administrative mindset, where playing with policy is thought to result in actual outcomes in practice. Whulp, perhaps but not necessarily in the expected, claimed ways.

1789 U.S. Constitution Article 1, Section 8, Clause 8. 

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

The copyright and patent clause. I’ve linked to a helpful site with commentary. This clause provides Congress with authority to create patent and copyright statutes. Notably, the clause is specific to authors and inventors–it’s almost as if it is the zeroth article of the Bill of Rights. If one wants Bayh-Dole to secure exclusive rights to inventions to organizations that contract with the government to conduct research or development, then there’s this problem of whether Congress has that authority, or at least with whether Congress can be clever enough to figure out how to make that happen anyway. The Supreme Court in Stanford v Roche chose instead to limit its interpretation of the scope of Bayh-Dole so that they would not not worry the constitutionality of the law.

1912. F. G. Cottrell, The Research Corporation, An Experiment in Public Administration of Patent Rights 

Cottrell was a professor at the University of California who developed the electrostatic precipatator, a device for removing soot from industrial exhaust. The University did not have a means to support patenting, so Cottrell started his own company, and as well started Research Corporation to manage a set of patent rights, with an industry board of directors, and with royalties going to the Smithsonian Institution to support research nationwide. Continue reading →

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