Invention, subject invention, and the clever scheme of Bayh-Dole

Here is the definition of invention in the Kennedy executive branch patent policy, 1963 (Section 4(b)):

Invention or Invention or discovery–includes any art, machine, manufacture, design, or composition of matter, or any new and useful improvement thereof, or any variety of plant, which is or may be patentable under the Patent Laws of the United States of America or any foreign country.

Essentially, an invention is what is patentable. Note “variety of plant which is or may be patentable”–not plant variety protection. This is the definition that operates across government, other than in specific statutes:

The following basic policy is established for all government agencies with respect to inventions or discoveries made in the course of or under any contract of any government agency, subject to specific statutes governing the disposition of patent rights of certain government agencies.

“Made” is given its own definition:

Made — when used in relation to any invention or discovery means the conception or first actual reduction to practice of such invention in the course of or under the contract.

These same definitions are used in Nixon’s revision of the Kennedy patent policy in 1971.

The definition of subject invention, however, is somewhat different. Here is the definition of subject invention in the IPA template, 1968: Continue reading

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Nonsense about Bayh-Dole from Bio, 2018 edition–2

We are working through the 2018 version of Bio’s misinfographic about Bayh-Dole and its relationship to drug prices. Bio report metrics from an AUTM report as if they are facts. But these are not facts–they are estimates from an unvalidated model, without the ranges and without indicating that these figures are estimates for 20 years of activity, and without indicating that this activity is not at all restricted to Bayh-Dole related inventions.

Here, look:

AUTM doesn’t collect data on jobs or economic output and doesn’t even collect information specific to inventions made in federally supported research. The graphic doesn’t have anything specific to do with Bayh-Dole. The graphic depicts the output of an economic “model” that estimates “contribution” and “jobs” from things like royalties reported by universities. As far as I can tell, the actual model has not been published–just its “results.” Someone could go into a back room and come out an hour later with “results.”

Here’s the AUTM “report” that Bio appears to be using.

the total contribution of these academic licensors to industry gross output ranges from $320 billion to $1.33 trillion, in 2009 U.S. dollars; and contributions to gross domestic product (GDP) range from $148 billion to $591 billion, in 2009 U.S. dollars

So there’s a range to the “model.” $320 billion doesn’t look so hot, so Bio goes with the upper limit. No error bars in any of it. And that’s just an estimate of the “industry gross output”–whatever that means. Continue reading

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Nonsense about Bayh-Dole from Bio, 2018 edition–1

Let’s look at a new infographic from Bio about Bayh-Dole. It’s largely the same as the old infographics. The point of the infographic is to create the impression that the Bayh-Dole Act has been wildly successful and that any effort to use the law to reduce drug prices will destroy medical innovation and hurt our military. It’s nuts. Bayh-Dole could disappear tomorrow and nothing would change. Why? No one complies with Bayh-Dole. Bayh-Dole therefore cannot be at all responsible for high drug prices. But university administrators and federal grants officers and “technology transfer” officers can be responsible at least for some drug prices being higher than they ought–for failing to comply with Bayh-Dole or to enforce the standard patent rights clause and for putting the interests of big companies and wealthy investors ahead of other interests–ahem, public interests.

Meanwhile, we can work through yet again more Bio misinformation about Bayh-Dole. If you already know it’s nonsense, don’t bother reading on. If you feel some wonder, then here’s the commentary that calls out the misinformation.

Nope on “empowers.” Bayh-Dole requires contractors to disclose inventions that they acquire and allows contractors to keep those inventions that they disclose against any claim that might be made by a federal agency. See 35 USC 202(a). Bayh-Dole does no “empowering” of anyone to “take ownership.” See the Supreme Court decision in Stanford v Roche.

Bio makes it appear that universities are given ownership of inventions “so they can license these basic inventions.” It would be nice if universities and others would license anything. Mostly, they don’t licensing much at all. Notice–Bio doesn’t report that. Further, not all university-hosted inventions are “basic.” That’s just a clever transfer from the idea that university faculty conduct “basic” research. Yes, of course they do. But they also conduct “applied” research and they even “develop” stuff for their use–as research tools, in clinics, and to demonstrate functions. Even “basic” research can result in “well developed” inventions–for instance, the needs of observational astronomy (a “basic” science) have resulted in the development (by university faculty and technicians) of a fully operational adaptive optics system (“well developed” to the point of implementation. Bio must take folks for fools to make it appear that because universities host some research that’s “basic,” then all inventions at universities are also somehow “basic.” Or that Bayh-Dole applies only to those inventions that are “basic.” No, Bayh-Dole applies to any patentable invention that a university acquires and which was made in work supported by federal funds.  Continue reading

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IP Laws for Dragons

On Quora, I was asked to answer this question:

Do US intellectual property laws stills serve society or just corporations and countries that are large and rich?

Historically, patents have been the domain of countries (and city states) and the trades. That is, patents are something of an arrangement—part deal and part truce—between governments and trades regarding inventions and trade secrets. Similarly, early copyright laws were largely arrangements between governments and publishers. Authors were ancillary. Trademark—much more ancient, and much more rooted in commercial mores—appears to have always been different, being a means to manage various forms of fraud in the selling of product.

We might expect that U.S. patent and copyright laws, at least, might be made to serve both “society” and government—and also serve corporations and also serve inventors or authors. But that’s just nice theory. We might also expect that over time, as conditions change and law changes and the interpretation of law changes, the nature of the arrangement also changes. Some things in the law will lag changed conditions, and some things in the law will get exploited in ways that weren’t originally anticipated. The result is that some people who thought things in IP law were once great now complain, and some that used to complain have now got their way and are happier for it. Continue reading

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Two Published Accounts of University Licensing: WARF and Stanford

Universities generally keep secret their licensing metrics. Yes, they report the number of inventions, patents, licenses, and startups in a given year–but they don’t report how those numbers relate to one another. The inventions reported in a given year have something to do with patents–but only in later years, since it takes about three years for a patent to issue, and a single invention can result in patents issuing for years thereafter through clever use of divisionals, continuations, and continuations in part, not to mention foreign counterparts of any and all of these. Similarly, licenses granted in a given year are generally for inventions disclosed in previous years. One invention might involve scores of licenses, and that might obscure the fact that many other inventions have not been licensed at all.

Given all that, here are two accounts of licensing practice that have made it into public view, along with some commentary that might help you understand what it means and doesn’t mean.

Wisconsin

From Rima D. Apple, “Patenting University Research: Harry Steenbock and the Wisconsin Alumni Research Foundation.” At the time of the article, Professor Apple was a fellow in the University of Wisconsin department of History of Medicine. She is now professor emerita:

By 1985, the latest year for which statistics are available, WARF had seen the granting of 448 patents, of which 203 had been licensed. These have not all been financially successful: only 100 have produced income greater than expenses, and 10 alone have generated 90 percent of WARF’s royalty earnings. Yet patents, which by 1986 had brought WARF more than $30 million, account for only 20 percent of the foundation’s income. Of even more significance in the development of WARF’s substantial endowment was the skill of its trustees in investment. Under an early policy decision, WARF did not use the royalties themselves to fund research; instead, monies paid WARF were invested, and research was funded from the interest.

Dr. Apple does not provide the number of inventions WARF reviewed for management or inventions under management for which patents did not issue. According to early WARF documents–and consistent with University of Wisconsin policies until recently–inventors submitted inventions to WARF voluntarily. Instead of total inventions under management, we get the number of patents–without indication for how those patents relate to inventions. For instance, Steenbock received four patents on his Vitamin D invention(s). A similar situation involves the compounds behind warfarin, also handled by WARF. Continue reading

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WARF, Vitamin D, and the Public Interest, 3

The appeals court in Vitamin Technologists sets up the case for compulsory licensing of inventions owned by public universities as instruments of state governments. That is, the appeals court establishes the basis for public march-in when a state owns a patent on an invention relating to public health and refuses to license that invention generally and instead uses the patent monopoly to create an advantage for a preferred industry, even an industry that has influence with state government or that could be construed as providing a benefit to people in the state. That industry’s benefit is not the only public benefit in play.

The benefit of the use of the invention by the public takes priority over the financial advantage for a company or industry created by suppressing other use by the public. In the case of Vitamin Technologists, the industry was the dairy industry. Today, it could be the pharma industry.

When a public university takes ownership of an invention “in the public interest,” the university necessarily invokes this principle. The principle derives from the reality that the university is itself an interest of the state. Things like Bayh-Dole and federal patent law don’t change the obligations that a state has to its public. Whatever public university administrators do with the invention, and whoever comes later to own the invention by way of assignment or exclusive license from the state, must answer to the principle that public benefit from invention use comes ahead of any financial benefit by suppressing use.

This principle drives first at the monopoly meme. The benefits that may arise by excluding use or by excluding competition do not outweigh the public’s beneficial access to the invention, once an instrument of government–of the public–takes ownership of the invention. The monopoly meme is just that–an assertion. In practice it does not hold generally true, and a better characterization is that it is *rarely* true. But this principle drives even deeper. When a public university insists that it has a right of ownership of such an invention–especially one directed at public health–then the university’s has no authority to assert a property “right” by which to suppress public benefit from the invention by partnering for a financial stake in the “upside” of such suppression. Continue reading

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WARF, Vitamin D, and the Public Interest, 2

We have worked through a 1945 appeals court reasoning about the University of Wisconsin’s president’s refusal to allow the licensing of an invention beneficial to public health for use in food products that might compete with State of Wisconsin dairy products. The court found that the opportunity to bolster the state’s dairy industry and make money for the university is outweighed by the public interest in having broad access to the invention.

The court finds the patents are invalid–and these are the anchor patents with which WARF was started–but along the way the court also argues that the University of Wisconsin’s president has acted against the public interest by refusing to direct WARF to license the inventions for use in all food. Dairy industry profits–even to the extent that these profits provide a benefit to dairy owners and dairy workers–don’t outweigh the public interest in having access to inventions that treat or prevent disease. The benefit of the invention takes precedence over a benefit of exploiting a monopoly on the invention that excludes public access.

Now consider the situation we have with Bayh-Dole. Public university administrators insist that they must own inventions made by personnel at their institutions. When a university takes ownership of an invention made in a project receiving federal support, the invention becomes a “subject” invention and Bayh-Dole preempts any requirements of ownership that may otherwise be made by any other law (but for Stevenson-Wydler and any later law that recites Bayh-Dole). Bayh-Dole substitutes instead its own public covenant that constrains the patent property rights for owners of subject inventions. It’s just that nearly all of this public covenant is wrapped up in a standard patent rights clause–a part of a federal contract–and delegated to the federal agency that provided the research funding to waive, enforce, ignore, or otherwise not act upon.

But the federal enforcement of the standard patent rights clause is not the only basis for enforcing Bayh-Dole–there’s also Bayh-Dole’s statement of policy at 35 USC 200, and that statement does more than just recite the Congressional intent for Bayh-Dole–it also provides the statutory policy that constrains patent property rights. Bayh-Dole is after all part of federal patent law, and 35 USC 200 states the scope of patent property rights for inventions made in projects receiving federal support, regardless of who might own the patent rights, regardless of whether an invention becomes a subject invention or is owned by the federal government. That portion of the law is not delegated to federal agencies for enforcement, or even to the Department of Commerce–that’s for the Attorney General.

There’s more. Federal patent law is not the only law applicable to the actions of university presidents in the deployment of inventions. Universities are also subject to their charters, the declarations by which they obtain non-profit standing, and in the case of public universities, laws pertaining to the proper conduct of instruments of state government. There’s no law that provides that when a university president has control of a patent, the university may do anything it wants, just as any private owner of a patent might do. The outer constraint is not antitrust law. The outer constraint is the law of public interest.

In this, the monopoly meme has no life. Continue reading

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WARF, Vitamin D, and the Public Interest, 1

In the 1940s, WARF was basking in the income from licensing its flagship patents–on a way to irradiate food products to produce in them vitamin D. (For an interesting account with lots of details, see Rima D. Apple, a University of Wisconsin historian who mostly ignores the lawsuit discussed  here and provides a soothing alternative explanation that Steenbock had decided on his ownsome to grant licenses for margarine, “Patenting University Research: Harry Steenbock and the Wisconsin Alumni Research Foundation.”)  The University of Wisconsin had introduced the concept of “vitamins” into the popular imagination, and vitamin D was one of the elixir compounds that prevented a “vitamin deficiency disease”–rickets. But things weren’t quite right. WARF refused to license its patents to permit, using its process, the introduction of vitamin D into margarine. A company, Vitamin Technologists, sued, and the case ended up as a matter of antitrust, with WARF losing on appeal in 1945.

In essence, Vitamin Technologists used a form of “march-in” to break the monopoly of a patent that was not being licensed in the public interest. The court decision is worth the read. The decision gets even more interesting if we consider what Bayh-Dole is up to with its version of “march-in” (35 USC 203), preemption of all other federal statutes but for Stevenson-Wydler (35 USC 210), and disclaimer with regard to antitrust (35 USC 211). Keep firmly in mind that Howard Bremer from WARF worked closely with Norman Latker at the NIH first on the IPA program–the University of Wisconsin got the first revived IPA deal in 1968–and then to draft Bayh-Dole and its implementing regulations. Bremer more than anything would be mindful of what happened to WARF in 1945 (and again in 1965, with 5-FU). This is not some random bounce through a law case. We are at ground zero for the revenge of WARF via Bayh-Dole on federal agency action to promote the public interest with regard to inventions made in federally funded research. Continue reading

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Shaping Science

A short version of a Research Enterprise article on Daniel Sarewitz’s “Saving Science” is posted as correspondence at The New Atlantis, where Sarewitz also responds to various comments on his paper. In part, Sarewitz gathers some of those comments into a quote attributed to scientist Michael Polanyi to the effect that science cannot be shaped. Sarewitz disagrees:

Yet the recent history of the complex U.S. science enterprise, which I sought in part to portray in my article, is a flat-out contradiction of Polanyi’s position: We consciously shaped science with the intent and result of capturing practical benefits.

It’s in this claim that I differ from Sarewitz. Where does Sarewitz get his “we”–how is it possible that he can make a general claim that we have “consciously shaped science” with any intent at all? What is this thing science, that can be shaped? Sarewitz asserts as a fact the thing we are debating. It’s not that science cannot be shaped–the question is whether doing science on the frontier operates so well if it is shaped by anyone other than those at the frontier. At the frontiers, I suggest, we don’t know the shape of science until people recognize what they are doing is science.

Sarewitz asserts that we shape science consciously to “capture practical benefits” and that if we substituted elite opinions about that shaping we would do a better conscious job not only of shaping science but also capturing practical benefits from science so shaped. For that, Sarewitz argues, scientists have to “get out of the lab” and “into the real world.” The real world, then, like the we, is a technical term that means roughly, “obeying someone else, an elite.”

By contrast, Vannevar Bush argues that at the frontiers of science, we need the free play of free intellects–not obeying anyone, but accountable for what they find and bring back for the rest of us. Bush’s argument is that John von Neumann or Richard Feynman does not do better science because he is made to obey an ex-general or a celebrity advocate or a tech billionaire or a government official. That’s Bush’s argument from experience. Sarewitz simply contradicts Bush. As Monty Python has it, contradiction is not a good argument. Bush argues that to expand the frontiers of science–that is, to learn to see new observables and provide for those observables new explanations for underlying physical principles, we cannot rely on managers to dictate the problems, the projects, the observations, the analysis, or the publication. Free play of free intellects is a decidedly anti-management argument about how we discover. It has nothing to do with we consciously shaping science to capture practical benefits. At the frontier, at the unknown, scientists must shape their science. We must not–cannot–do it for them.  Continue reading

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The monopoly meme, 5

Now let’s turn to the Bayh-Dole Act and see how it works with the monopoly meme. Short form, if you don’t want to bother, is that Bayh-Dole doesn’t follow the monopoly meme in its gestures, but because these gestures never get used, in effect Bayh-Dole enables the monopoly meme. Here’s how.

The monopoly meme argues that the true purpose of the patent system is to enable the exploitation of patent monopolies–the right, for limited times, to exclude others from practicing an invention. Crucially, the monopoly meme argues that without such exclusion, new inventions will not be used, will not be developed, and the public will not benefit from them. If the public has to pay high prices for inventions for a period of time as a result, that is the price that must be paid. The alternative, according to the monopoly meme, is not to have any new products at all. This, then, is what university administrators mean by “commercialization.” If each invention made in university-hosted research and is not patented for the purpose of excluding all others in favor of a company willing to develop the invention into a commercial product–but only on the condition of exclusivity–then the public will not benefit from federally supported research. In this way, the monopoly meme insists that federal support of faculty research must necessarily be to create patent monopolies for companies. There’s no other point, then, to Bayh-Dole but to enable such monopolies, with their pricing and suppression of competition and suppression of research and professional use.

On the face of it, however, excluding others from practicing a university research-based invention runs counter to the public purpose of supporting research in which such inventions may be made. What’s the point, even, of publishing that research in the academic literature if the use of the results depends on the freedom to practice inventions, but that practice is nearly always excluded by a patent held by administrators looking for a single “commercialization” partner? An academic publication becomes a kind of propaganda, a nah-nah-nah about something new that’s been done that no one else can use. Perhaps the point of publishing research results that no one else can practice is so that others can quickly find ways to design around, obsolesce, undermine, block, fragment, and avoid using those research results. Otherwise, whatever the advocates assert is the “true” purpose of the patent system, in the area of research publication, the use of the patent system to exclude others from the immediate use of published research runs against pretty much everything we expect from university scholarship and the public role of the university.

All that aside, we might counter the “true purpose” of the patent system argument by pointing out that the express purpose of the patent system is to promote the progress of the useful arts–and “progress” here means “dissemination.” The grant of exclusive rights for limited times is the consideration for publishing what otherwise might remain unknown or held as a trade secret. Given that universities don’t generally hold trade secrets and university faculty gain much of their standing by publishing new results with priority, the right to exclude all others is a rather awkward right for university faculty and administrators to seek out or to be stimulated by.

The monopoly meme, however, argues that whatever the mores of the university might be, the creation of patent monopolies to stimulate profit-seeking is the primary public purpose that should displace all others–whenever an invention is owned by a federal contractor. Universities, the meme argues implicitly and many technology licensing officials argue openly, must change its mores. Porsches in the faculty parking lots should inspire other faculty to pursue inventions, desire the money that comes from patent licensing, and especially to temper these inspirations and desires to accept what a university’s technology licensing program might be able to deliver.  Continue reading

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