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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The Bayh-Dole Public Bargain, 2

Posted on January 20, 2023 by Gerald Barnett

Baked into Bayh-Dole is the policy expectation that a holder of a patent on a subject invention will offer products based on that invention as if there were competition, even if a patent is used to suppress that competition. In the case of medicines, this policy reduces to: offer products as if they were generics.

The logic becomes evident: if one doesn’t offer products as if they were generics, then the terms are “unreasonable” and the federal government is authorized–expected–to protect the public by requiring licensing to introduce “free competition.” It actually works. You just have to get over all the nonsense you hear from people who have a vested interest in making sure Bayh-Dole’s public bargain never operates. To timely achieve practical application then means to provide patented product, or benefit from using a patented process, to the public on terms, including price, as if what’s offered has competition from others also practicing the invention. It’s not just that there’s competition from other companies that hold their own patents and charge what amounts to a patent monopoly price–their pain killer, say, uses a different compound, but you both have patents to stifle competition for each of our compounds (and any analogues), so you both can charge monopoly prices. Bayh-Dole’s licensing remedy only indirectly addresses such competition. No, the remedy of licensing works only if the patent holder (or ilk) or the federal government breaks up the patent monopoly and, in the case of the patent holder, at least, receives compensation for use by others, who then are in competition with the patent holder and with each other (and potentially in competition with the federal government). Continue reading →

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The Bayh-Dole Public Bargain, 1

Posted on January 19, 2023 by Gerald Barnett

Bayh-Dole is directed at federal agencies contracting for research or development with small businesses and nonprofits. The law requires agencies to use a default patent rights clause in every funding agreement unless an agency can justify a different clause. The heart of the public bargain is 35 USC 202(a):

Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to any subject invention . . .

The rights of the nonprofit organization or small business firm shall be subject to the provisions of paragraph (c) of this section and the other provisions of this chapter.

There are two parts to this bargain. Continue reading →

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An Open Letter to Senator Warren Regarding Xtandi

Posted on January 16, 2023 by Gerald Barnett

Dear Senator Warren:

You have called repeatedly for the federal government to use regulatory tools available to it to address the high prices charged for drugs. Your attention to this matter is much appreciated!

I write with specific reference to the present situation involving the prostate cancer drug enzalutamide, which is sold under the brand name Xtandi. Xtandi’s price in the United States is more than ten times the price for which a generic drug manufacturer has offered to produce enzalutamide. The University of California first identified enzalutamide under federal grants from the NIH and the Department of Defense, which are cited in three patents (7,709,517, 8,183,724, and 9,126,941). UCLA exclusively licensed rights in these subject inventions to Medivation, which having developed the compound as a prescription medicine with its business partners, then merged with a subsidiary of Pfizer. At about the same time, UCLA sold its rights to future royalties to Royalty Pharma.

The Bayh-Dole Act sets out its policy and objectives at 35 USC 200. Among these are the use of the patent system “to promote free competition and enterprise.” Attention to free competition lies at the heart of Bayh-Dole’s requirements pertaining to exploitation of patent property rights in inventions within the scope of Bayh-Dole’s patent rights clauses. I will explain, and show you how there is a third regulatory tool in Bayh-Dole by which to achieve reasonable prices for medicines developed from inventions made in work receiving federal support. Continue reading →

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Smells Like Bayh-Dole Spirit

Posted on January 9, 2023 by Gerald Barnett

Bayh-Dole has two main concerns: contractor patent rights (35 USC 202-204) and federal agency disposition of patents (35 USC 207-209). These two sets of provisions work together in odd but let’s say intended ways. For instance, 35 USC 207(a)(2) authorizes federal agencies to deal in exclusive licenses, take a money interest in licenses, and sue for infringement or do so by a commercial proxy. These are huge changes, repudiating the 1947 AG’s recommendations that had long been the basis for executive branch patent policy. So if a contractor, having obtained ownership of an invention made in federal work, decides not to continue owning it, or decides not to file a patent application, or not to continue prosecution of a filed application, and the like, then the federal agency has the right to request assignment of the invention. Once the government owns the invention, 207(a)(2) applies, and the federal agency can license the invention exclusively to whomever. Continue reading →

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The Bluntly Essence of Bayh-Dole’s Contracting Provisions

Posted on January 8, 2023 by Gerald Barnett

Let’s be super bluntly. The essence of Bayh-Dole’s contracting provisions is:

Make new product available promptly, and at a competitive price.

That’s it. That’s what all the apparatus and fuss is about, and what federal agencies refuse to recognize or enforce. We can expand this requirement in various ways. Continue reading →

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Cornboard, Part 2

Posted on January 5, 2023 by Gerald Barnett

Despite various announcements about possible products and manufacturing, Cornboard Manufacturing appears not to have manufactured much of anything by the time the Illinois patent expired in 2016. Although the company did not “disappear” like Illinois’s first exclusive licensee, it did manage to not make product for six years.

But other things were cooking. In 2015, Segerstrom filed a design patent application for a “Maintainable pallet.” A few months later, he files a provisional patent application for a utility patent version of the same pallet. Interesting–a shipping pallet design. Then, as the cornboard patent expired, Segerstrom converts the provisional application into a utility patent application–“Maintainable Pallet,” which issued in 2018 as US Patent 10,1118,732, to be followed by two continuations, issuing in 2018 and 2020. Another design patent–for a pallet “corner,” a continuation of the initial design patent application (issued 2019). In the ‘732 patent, we find claim 8 is:

8. The maintainable pallet of claim 1, wherein the at least two side supports, the central support, the plurality of top transverse supports, and the at least two bottom transverse supports all comprise composites made from biomass material embedded in a polymer matrix.

And that’s our old friend, the cornboard invention, now showing up as a dependent claim on an actual inventive product, a “maintainable” pallet. Continue reading →

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Cornboard, Part 1

Posted on January 4, 2023 by Gerald Barnett

The Bayh-Dole Coalition, an evidence-free lobbying organization in support of not enforcing Bayh-Dole’s public protections, tweeted today a “success” story:

Success Story! @UofIllinois 3 Researchers developed a product known as “CornBoard”, a way to make composite materials from corn to build items, such as skateboards. It was ultimately commercialized under the #BayhDole framework! Read more @AUTM: buff.ly/300KRoP

The link provided is to a story in AUTM’s “Better World Project” publication from 2011, “From Tamales to Skateboards: A Green Idea Harvested from the Corn Belt.”

There’s a lot going on in this simple tweet. Let’s contest a few things:

*the invention did not come from “research”

*the invention wasn’t Bayh-Dole

*the invention has not been “commercialized”

But still, there may be a success here somewhere, even (especially) if Bayh-Dole is not involved.

Here’s a synopsis of what has happened. Continue reading →

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A little expansion on varieties of exclusive license in university tech transfer

Posted on January 3, 2023 by Gerald Barnett

[I’ve added some additional comments, and some light editing for clarity (I hope)]

I expanded a discussion of the odd wording of Bayh-Dole’s 35 USC 204, which restricts the US manufacturing requirement to exclusive licenses “to use or to sell” in the United States. If the holder of patent rights on a subject invention does not license at all–a small company makes and sells product that practices the subject invention, say–then there is no US manufacturing requirement. Similarly, if the holder of patent rights on a subject invention grants non-exclusive licenses, still no US manufacturing requirement. If the holder of rights exclusively grants all substantial rights (make, use, sell), then the transaction is in effect an assignment and a different part of Bayh-Dole controls–35 USC 201(b), having to do with what happens when a contractor makes an assignment, and 35 USC 202(c)(7)(A) when that contractor is a nonprofit. This stuff may sound hairy, but really it isn’t, except that a whole lot of people who should know better (and worse, some do) have mucked everything up by chronically misrepresenting Bayh-Dole so that in addition to following things clearly, anyone who has happened to listen to these folks has to also unlearn what they thought they knew. Like finding out your elementary teachers really didn’t know squat about science or literature and you had the misfortune to be their really good student.

Anyway, here’s the expansion, given its very own post.

As a point of practice, there are multiple ways for a university to set a company up with exclusive commercial rights to practice an invention. One can expressly assign the invention and patent rights (and patents) and be rid of it all. The company runs with it, and provides whatever compensation has been agreed to. Another term for this sort of transaction is “sale.” Or, one can grant an exclusive license to all substantial rights–to make, to use, to sell–and in effect transfer ownership of the invention to the company, even if title to any patent does not formally change. Such a deal still assigns ownership of the invention. Continue reading →

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