Exceptional Circumstances in Bayh-Dole, 10

Posted on September 11, 2018 by Gerald Barnett

We have been circling around the central problem of “exceptional circumstances” in Bayh-Dole. The law works to allow organizations to make decisions about patent monopolies that preempt other statutes–ones that “require a disposition of rights inconsistent” with Bayh-Dole’s arbitrary preemption of all public purposes in favor of what nonfederal invention owners decide–with the expectation in practice that these nonfederal invention owners will have wrested ownership away from individual inventors in the name of the public good (or in the name of the law). Bayh-Dole’s arbitrary premise is that the default public good must be whatever organizations that gain ownership of inventions do.

These organizations’ decisions can be all over the place–from self-interest to non-interest, seeking profit or declining any financial interest, competent to incompetent, sharing to monopolist. Nothing about the organizations’ decisions, once they come to own any invention made in a project deemed worthy of public support, is uniform–or even reported. Bayh-Dole associates this arbitrary default with a list of policy objectives that on the face of it have nothing to do with whether an inventor, an organization, the federal government, or no one owns any patentable invention. One has to supply a weird logic for each, with absolutely no indication that any organization’s patent administrators–or the companies they deal with–will accept or follow that same weird logic. There is absolutely no connection between allowing organizations to gain ownership of inventions made with federal support and the policy and objective stated by Bayh-Dole. Whatever private ownership of patent monopolies might do, the only difference between having bureaucrats own and inventors own is that inventor ownership is established federal law and public policy, and bureaucrats owning is not.

Again: the standing policy that Bayh-Dole preempts is that the federal government should own inventions made with its funding except when the contractor is a company with an established commercial position in a non-governmental market. The federal government can relax its claims for specific contracts and on a case-by-case basis once an invention has been made and reported. The standard of review is what will best serve the public interest. When the federal government takes ownership, it is expected to dedicate the invention to the public–not use the patent system, or if it does use the patent system, to license in the US royalty-free, nonexclusively. That is, don’t play favorites. Don’t exploit monopolies for money. Don’t encourage others to do so on behalf of the federal government. Don’t set up to sue citizens for practicing what citizens have supported. If contractors and investigators don’t like this deal, then don’t seek out federal support for projects.  Continue reading →

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Who Owns Digital Learning Resources?–6

Posted on September 10, 2018 by Gerald Barnett

Let’s come back around to Hal Plotkin’s question–who owns digital learning resources? Plotkin wants the answer to be: certainly not the university bureaucrats aiming to “commercialize” everything and therefore putting everything behind a paywall. That makes sense. Bureaucrats don’t have a great track record when they appropriate research results–and haven’t since 1968 when the NIH revived its Institutional Patent Agreement program, and haven’t under Bayh-Dole, which replaced the IPA program after it was shut down for being ineffective. But the alternative to “not university bureaucrats” is not the Department of Education requiring everyone to license openly final versions of digital learning resources.

The best roles for federal regulations pertaining to rights in grant deliverables (data, compounds, software, protocols, documentation, inventions, methods, know-how, whatever) made with federal support is

(i) to prevent administrators, speculators, corporations, and governments from forcing their bureaucratic thumbs into every new thing, and

(ii) to limit the incentives for those who do work with federal grants to bounce from one federal grant to the next, dropping the development and support of each thing created in order to gain the benefit of the next year’s federal funding.

For (i)–prevent university administrators from asserting ownership or control over work prepared by faculty, students, and staff unless the university administrators proposed the funded work and assigned the personnel and sought the grant. Limit the ability for companies to buy up all the rights to such works as well–they might get an exclusive right to sell a particular version of the work, but not a right to exclude all others from working with each work.

For (ii)–include what people have done to make prior federally supported work available in any review of proposals for further government funding. If more federal funding is easier to get than continuing to work on whatever was funded last year that was so very important that it beat out nine other applications, then the federal agencies are taming the bears and feeding them from cars, creating their own versions of Yogi Bear–more interested in navigating the federal funding landscape for picnic baskets than being faculty working on what they would otherwise work on. Continue reading →

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Who Owns Digital Learning Resources?–5

Posted on September 7, 2018 by Gerald Barnett

There’s a basic problem with federal grant support for research. I don’t know if the Department of Education has avoided this problem, but I will put it out there. If a federal agency supports both research and maintenance of contract deliverables, then over time the agency has to shift resources from research to maintenance or decide what things to stop maintaining. No one writes press releases about how this year’s grants include support for the good work done in 1995 or 2006 to keep things up to date and ensure people are properly trained, stuff is widely accessible, and the like. “Fund and abandon” is a general practice.

Look at from a university faculty member’s perspective. If next year’s grants are for more new work, then the authors of this year’s final versions of work have to decide between staying with the unfunded maintenance of those works or applying for grants to do new things, publishable things. University faculty don’t generally get promoted for maintaining stuff. They get promoted for publishing discoveries. They get promoted for obtaining competitive federal grants.

I’ve helped with a number of cases involving “digital learning resources”–in nursing, medicine, psychology, education–and in my experience, federal funding counter-indicates widespread dissemination. It’s not about federal regulations or policies, not about whether something is open or proprietary. It’s something about federal funding itself that makes people focus on making things without worrying about widespread dissemination. In most cases, if there’s federal funding involved, I expect that nothing much will happen. Oh, yes, there will be invention disclosures and publications and events at which the number of attendees are counted. But actual production of a distributable final work? Not so much. But there will be more grants to do more development work, make more “inventions.”

The same thing has happened in the National Science Foundation’s SBIR and STTR programs. Why don’t these small companies ever get past Phase II and produce commercial products? Perhaps it is because companies that are happy waiting nine months to get a $100,000 grant with audit strings attached aren’t the kind of companies that generally get to commercial sales. Perhaps companies started on a business model of getting SBIR and STTR grants find that getting grants is easier than producing commercial product. Next year there will be more grants, and grants are the thing that the company is good at getting. It’s like feeding the bears in Yellowstone Park. It’s becomes easier to steal picnic baskets than to hunt up real food. Everyone becomes a Yogi Bear.  Continue reading →

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Who Owns Digital Learning Resources?–4

Posted on September 6, 2018 by Gerald Barnett

Now let’s deal with “digital” educational works in the context of university intellectual property claims. This is something I’ve spent a couple of decades dealing with.

The Department of Education published its final rule in January 2017, requiring open licensing of final versions of works prepared in the Department’s competitive grant programs, with some exceptions and an opportunity for appeals. The implementation of the final rule is at 2 CFR 3474.20.

There are a couple of big observations to make at the outset. First, if someone doesn’t like the idea of open licensing of final work prepared with the support of the Department of Education, then he or she (or it, in the case of organizations) can seek elsewhere for funding. No one is forced to take Department of Education funding. Just move on. In my experience working with university-hosted research of digital media and other works of authorship, most of the effective dissemination programs I have seen have been ones that have not received federal funding.

Federal funding counter indicates “technology transfer.” Nothing in the federal regulations appears to matter one way or another. Folks that seek out federal funding are not the folks that are primed to do much of anything else but seek out more federal funding. The same is true of the SBIR and STTR programs. The National Science Foundation cannot figure out why its SBIR grantee companies don’t create commercial product. Well–it’s easier to get another SBIR grant! And SBIR grant proposals only have to look better than other SBIR grant proposals. If one really did have a great product idea, then being happy to spend nine months waiting for $100,000 with a bunch of audit strings attached is often  a bad sign. Just saying.

Second, the Department of Education open licensing requirements are simple to work around. Prepare a final version of a work under grant, release it as required via an open license, and then prepare a new, revised version not using Department of Education funding–add a user interface, correct bugs, add useful extensions, give the new version a distinctive name and put it out on a web site or distribute through a major publisher. The new version will swamp out the open version. It would take a determined group to develop the open version in competition with a revised, corrected, and extended version. Department of Education open licensing requirements make this workaround express. Continue reading →

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Who Owns Digital Learning Resources?–3

Posted on September 5, 2018 by Gerald Barnett

Plotkin moves on to make another good point–that “Big Pharma is the Model.” And it is–but the model is something other than the Cohen-Boyer patents that Plotkin launches into. Plotkin does not appear to recognize that Cohen-Boyer gene-splicing inventions were not made under Bayh-Dole. Or that the patents were licensed non-exclusively to everyone at very low cost. Or that Stanford consulted with industry representatives before filing patent applications. Stanford did not “lock down” the inventions and (as far as I know) did not even bother with requiring universities to take a license. Whatever the pace of genetic medicine based drug approvals, that pace had nothing to do with patents on Cohen-Boyer inventions. Gene splicing and “accurate genetic information” are, other than the common use of “gene,” worlds apart, technologically speaking.

a transition that has many rent-and royalty seeking university technology managers and investors sensing a potentially lucrative new opportunity.

Now this is an area I know well. Most university technology managers couldn’t find lucre in software or digital media if it bit them in their nerveless tails. They are friggin’ clueless. No, the lucre is not what motivates them. What they are concerned with is having their administrative power undermined by research work that is not required to move through their hands. They put a thumb in every innovation pie “as a service.” Yes, they insist on such things. Continue reading →

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Who Owns Digital Learning Resources?–2

Posted on September 4, 2018 by Gerald Barnett

We are looking at an article by Hal Plotkin, published a couple of years ago, that argues against the extension of Bayh-Dole to cover educational materials. Plotkin creates a dichotomy between universities wanting to play at being, or pandering to, venture capitalists on the one hand, and open innovation on the other. That’s a worthwhile distinction, to the extent that one sees venture opportunities and open innovation to be mutually exclusive. Plotkin also moralizes this dichotomy by making it appear that venture opportunists are conservatives or Republicans and open innovation folks are Obama-loving modernizers of federal contracting. The policy issues are difficult enough without such surface dichotomies.

Now Plotkin gets into Bayh-Dole:

In practical terms, what the university administrators seek is an extension of the Bayh-Dole Act, . . .

That’s pretty much it. Look at how university administrators–with help from their lawyers–have defined “invention” to include almost anything, even to the point of including non-inventions (“software,” for instance, or “technology” or “know-how”). In many cases, university administrators have already attempted to extend their faux version of Bayh-Dole to apply to everything–and what they object to is that a federal agency might refuse to go along with their grab for intangible assets of all sorts.

. . . a Reagan-era law . . .

Here, Plotkin has things backwards. Continue reading →

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Who Owns Digital Learning Resources?–1

Posted on September 3, 2018 by Gerald Barnett

In March 2016, Hal Plotkin published “Who Owns Digital Learning Resources Funded by Taxpayers,” an article on the Department of Education’s proposal to require open licensing of works created with Department funding. Plotkin notes the objections of AAU and APLU to this proposal, compares the situation with that of Bayh-Dole, and argues that if university administrators want educational materials to go the way of pharmaceuticals, then we should first have a public accounting:

Before universities are permitted to expand the financial incentives they enjoy to also claim ownership of copyrightable works produced at their schools that are paid for by taxpayers they should first be required to accurately report the opportunity costs associated with the last wave of federal research privatization.

That’s spot on. Plotkin concludes:

The outcome will determine whether Department of Education grants create public educational resources that everyone everywhere can immediately use and build on, or whether the fruits of those investments will be bottled up for decades by academic institutions and administrators hoping to charge rent on new digital educational products, tools and resources the public already paid for.

That’s also a fair assessment.

Along the way, however, the article has issues. It’s worth addressing these issues to get at something beyond the dichotomy that Plotkin establishes–between a private venture capital approach and a government forced open approach. I get the feeling that we are reprising the Spanish civil war, when the fascist nationalists fought the communist progressives for control of the government, and a citizen that didn’t like either option ended up being the enemy of both.

Let’s have a look, then, at some of the moves made by Plotkin’s article, and by doing so raise the visibility of other concerns that might change the nature of the policy choices we have–and at least ought to consider. Continue reading →

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Bayh-Dole preempts NIH policy on improper financial gain

Posted on September 1, 2018 by Gerald Barnett

Here’s a passage from the NIH Grants Policy Statement (Part I, Chapter 4):

NIH grants are subject to requirements intended to ensure that recipient organizations handle their Federal awards responsibly. Recipients are required to adopt and enforce policies that minimize the opportunity for improper financial gain on the part of the organization, its employees, and organizations and individuals whom they may collaborate, and that limit the potential for research results to be tainted by possible financial or other gain. In addition, NIH recipients are expected to provide safe and healthful working conditions for their employees and foster work environments conducive to high-quality research.

Now consider the application of Bayh-Dole. Bayh-Dole applies to subject inventions. A subject invention is an invention (i) owned by a federal contractor and (ii) is or may be patentable and (iii) was made in performance of work in a federally supported (even in part) project. When a contractor acquires an invention and by doing so makes it a subject invention, then Bayh-Dole preempts all other statutes that would require any handling of inventions at odds with Bayh-Dole (35 USC 210):

This chapter shall take precedence over any other Act which would require a disposition of rights in subject inventions of  small business firms or nonprofit organizations contractors in a manner that is inconsistent with this chapter . . .

It is very fine for the NIH to make policy regarding “improper financial gain” and “tainted by possible financial or other gain” (whether improper or not), but Bayh-Dole makes such policy mere handwaving by preempting any requirements that would limit ownership rights in an invention. [Or consider, if mere regulations may supersede Bayh-Dole, then there’s an easy workaround to Bayh-Dole–just change executive branch policy and regulations. But wouldn’t that be contrary to the apparent intent of Congress?]

Continue reading →

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Exceptional Circumstances in Bayh-Dole, 9

Posted on August 29, 2018 by Gerald Barnett

We are working through the idea of exceptional circumstances in Bayh-Dole. There’s a problem here that lies at the root of the federal policy. Bayh-Dole states an arbitrary default–if a federal contractor acquires a patentable invention made in a project receiving federal funding, then the federal contractor may keep that ownership. This arbitrary default then expressly (35 USC 210) preempts all other public purposes–including the statutory authorization by which federal agencies are formed and authorized to fund research, the justifications that motivate federal agencies to fund specific projects, the motivations by which university faculty seek federal funding to support their projects proposed in the public interest. Instead, Bayh-Dole substitutes its own statement of policy and objective–arbitrary things not obviously related to the exploitation of patent monopolies. An exceptional circumstance then is any variation from the arbitrary default of invention ownership to better promote the arbitrary things Bayh-Dole aims to promote using the patent system.

No matter the reasons why research is funded by the federal government, once a contractor owns the patentable results of that research, the contractor gets to decide how to deploy any patent monopoly over those results. Result for public policy: the federal government funds research to subsidize the private exploitation of patent monopolies.

A federal agency can determine there are exceptional circumstances and thus alter Bayh-Dole’s arbitrary default, but only if the alterations better promote Bayh-Dole’s policy and objective, which depend on use of the patent system and so on ownership of an invention by someone (35 USC 202(a)). Not better promote a federal agency’s mandate or mission. Not better promote the public welfare. Not contribute to the public domain. Everything gets funneled into policy on ownership of inventions that better promotes the use of the patent system to promote Bayh-Dole’s list of purposes. Since Bayh-Dole states no ordinary circumstances that justify its default, any circumstances at all are necessarily exceptional circumstances. Bayh-Dole makes a federal agency’s own founding legislation an exceptional circumstance.  Continue reading →

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Exceptional Circumstances in Bayh-Dole, 8

Posted on August 28, 2018 by Gerald Barnett

We  have looked at the NIH’s views on exceptional circumstances. We started with Dr. Thomas’s 2008 talk, with a discussion about how his talk fundamentally misrepresented Bayh-Dole. We then checked out the PHS Technology Transfer Manual’s statements of policy and procedures from 1999 and 2013 to see that the NIH has been consistent in misrepresenting Bayh-Dole, even after the Supreme Court decision in Stanford v Roche, which refuted the NIH account of Bayh-Dole.

The NIH views determinations of exceptional circumstances (DECs) to be rare events, made difficult to obtain, with the presumption that Bayh-Dole’s default disposition of rights is mostly spot-on. That’s an agency prerogative, of course–one more way that Bayh-Dole is not a “uniform” approach to most everything that Bayh-Dole’s policy is concerned with.

The only “uniform” part of Bayh-Dole is that if a university (or other non-federal entity) acquires a patentable invention made in a project with federal support, it can preempt the public purposes of the federal government, the faculty investigators, and the inventors. That’s the only uniform bit in the law. And even this uniform bit is only an arbitrary default. It’s the exceptional circumstances procedures of Bayh-Dole that allow federal agencies to vary from the default. That is, the exceptional circumstances procedures  in Bayh-Dole are the apparatus that permits federal agencies and nonprofit investigators to re-establish public purposes so that they will take precedence over whatever purposes that institutional patent policies permit university administrators to have instead.

Do you see how this works? It’s essential to understanding Bayh-Dole. Bayh-Dole’s arbitrary default is that any private purpose in exploiting a patent monopoly takes precedence over any public purpose in providing funding for research–so long as a private party gains ownership of a patentable invention made in that research. What a strange default. In effect, the federal statutes that Bayh-Dole expressly preempts (when a contractor acquires ownership of an invention made in federally supported work) what are Congress’s statements of exceptional circumstances–exceptional circumstances that provided a basis for federal funding and for federal control of inventive results and federal release of those results for public use–regardless of executive branch defaults to allow contractors that got ownership of such inventions to retain exploit patent rights.

By contrast, Bayh-Dole’s exceptional circumstances are not “exceptional” at all–they are the circumstances that ordinarily justify the use of public money for privately conducted research. Under Bayh-Dole, federal agencies (and university investigators) have to justify federal research funding twice–first to allocate the funding, and then to overcome the preemption of that justification by Bayh-Dole’s arbitrary default.

To call “exceptional” circumstances exceptional is to engage in political doublespeak. It’s impossible to read such a text casually–just as one cannot listen to a liar and expect to get the truth. It’s just that in politics, if the liar believes that listeners should not expect the truth, then the liar considers everything to be a bluff, a political tool, all fair. Continue reading →

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