Exceptional Circumstances in Bayh-Dole, 7

Posted on August 27, 2018 by Gerald Barnett

The 2013 version of the PHS Technology Transfer Manual 607.1 on exceptional circumstances lists a set of questions that ought to be considered by those in an NIH institute or center (IC) in preparing a determination of exceptional circumstances. These questions have been taken over pretty much unchanged from the 1999 version of the 607. I won’t go through all of them, but we can review a few to give the gist of the thinking. Again, this is the “technology transfer” folks at the NIH writing policy to rein in anyone else at NIH that might have thoughts of starting with the public interest and working down to invention ownership issues rather than starting with private interest in federally supported work and trying to explain how any other interest might possibly be a better public interest than that private interest. Sigh.

Here’s the first set of questions:

Why is a change to the standard Bayh-Dole invention rights essential to achieve programmatic objectives? What alternative means of achieving programmatic objectives have been considered?

The questions here lead to nonsense. The objectives that matter are Bayh-Dole’s objectives, not “programmatic” objectives–utilization, small companies, collaboration, free competition, United States industry and labor. Those objectives (and Bayh-Dole’s policy) matter in research contracting only when a contractor owns a patentable invention made within scope of a funding agreement. The PHS then has things reversed. Although Bayh-Dole states a default, that default is suited to commercial contractors with established commercial positions in non-governmental markets. The federal government contracts with them to obtain goods and services (and access to inventions along with) that the government wishes to acquire rather than make for itself. For grants to nonprofits, the purpose is to benefit the public–not specifically to benefit the investors in a given company holding a monopoly over key research results. Thus, the burden of the question must be reversed: why would it not always be an exceptional circumstance when the programmatic objective is to benefit the public–and including industry, and including the research community–and not just one organization or company? Continue reading →

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Exceptional Circumstances in Bayh-Dole, 6

Posted on August 24, 2018 by Gerald Barnett

You may think it’s mean of me to pick on Dr. Thomas for a talk that’s a decade old, and presented before the Stanford v Roche case was decided. If so, then you might want to consider the Public Health Services Technology Transfer Procedure Manual, Chapter 607.  That’s the version in effect when Dr. Thomas gave his talk in 2008. That version has been superseded by “Technology Transfer Procedure Manual” 607.1, revised 3/14/2013. Here we will find much of what was presented by Dr. Thomas still baked into PHS policy. And if you want to invoke the general rule that courts should defer to federal agencies’ interpretation of laws, then you might also toss into the mix the idea that federal agencies should defer to the Supreme Court’s interpretation of federal law–and the PHS apparently still refuses to do so.

Behind all of this is a more general matter: what interpretation ought we use to best support the use of federally supported research inventions? Is it really sufficient to presume that Bayh-Dole’s arbitrary default works fine for nearly everything, whether a procurement contract, a grant-in-aid, a cooperative agreement, whether the recipient is a for-profit company, a contract research organization, a mission-oriented non-profit, or a university hosting faculty-led research projects, regardless of the form of invention–research tool, basic scientific discovery, a method such as a disease diagnostic assay or a software-based algorithm, or a bit piece in a complex technology that might involve fifty such inventions; and regardless of the nature of the industry that might have an interest in the invention, ranging from industries in which patents are avoided to industries in which many patents are cross-licensed or used to form standards, to industries that compete to create patent monopolies? It’s difficult to believe that anyone’s contracting on such a scale would best be served by a single arrangement by which contractors could take ownership of inventions so long as each invention is disclosed and the commissioning party gets a royalty-free, non-exclusive license.

And in within that consideration of “best,” to what extent do we impose a system of management, and how firm should that system be? If we are after practice that in each instance leads to utilization of research inventions made with federal support, should we expect–or demand–that all instances will be alike? Should we expect that all instances, or even most, will benefit from being placed in an administrative process? Should we make it difficult for administrators to vary from a default process, even when we know that the default process is inadequate for all sorts of contracted research or development work?

In this we get down to the nub of the “exceptional circumstances” policy–how does it come about that a person hired as a grants officer at a federal agency can know in advance how inventive newness ought to be “managed”? Faux Bayh-Dole’s policy default is that a contractor’s managers always know better than federal managers, and that both contractor and federal managers always know better than faculty investigators or federal grants officers or inventors or industry scientists and engineers. This policy default, however one might want to wordsmith it, is a crappy default. Continue reading →

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Exceptional Circumstances in Bayh-Dole, 5

Posted on August 23, 2018 by Gerald Barnett

Despite the recognition that there are all sorts of federal research programs primarily directed at nonprofit-hosted research that would benefit from a determination that Bayh-Dole’s default provisions do not do a good job of promoting Bayh-Dole’s stated policy and objectives, federal agencies rarely use exceptional circumstance. Here’s a recent DOE proposal to use exceptional circumstances for energy efficiency research. Makes a lot of sense. What’s strange is how much effort Bayh-Dole requires a federal agency to go through to articulate the obvious. And that’s with Bayh-Dole claiming as a policy and objective that the law “minimize the cost of administering policies in this area”–one would think that this policy objective would apply equally to the overhead of stating pubic policy objectives that required invention ownership handling that varied from Bayh-Dole’s default.

One would have to believe that Bayh-Dole’s default was generally the best possible disposition of ownership of inventions in all circumstances and for all purposes once a contractor had acquired ownership–otherwise, the arbitrary default creates a huge administrative burden on federal agencies seeking to act in the public interest across all of the policy and objectives set forth in Bayh-Dole.

Bayh-Dole creates its own awfulness–it “reduces” the costs of administrating good public policy by making those costs so high that federal agencies don’t bother trying–and therefore there’s no cost at all! Continue reading →

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Exceptional Circumstances in Bayh-Dole, 4

Posted on August 22, 2018 by Gerald Barnett

In more plain language, even with regard to outcomes, Bayh-Dole is crappy public policy. At best, Bayh-Dole has enabled a betting parlor managed by nonprofits for the future value of patent rights, especially those patents directed at controlling the “market” for public suffering from disease and injury. There, Bayh-Dole’s effective public policy is that both the federal government and university faculty should stand down from having any thought about how to respond to disease and injury in favor of the development of a private “market” for exploiting patent rights to create products to sell at whatever price that this “market” will bear. That’s what “commercialization” means when used by advocates for Bayh-Dole.

The only way such a situation becomes “uniform” is if all contractors, for some reason, collude to force such an outcome by adopting the same polices and making such a fuss that federal agencies refrain from using any of the processes set out in Bayh-Dole to improve upon the default contractor ownership provision and contractor performance under those provisions. That is the role adopted by the Association of University Technology Managers –AUTM, along with the various “higher education associations” that front for AUTM’s agenda.

The “uniform” regulations referenced in 35 USC 206, then, are procedures to vary from the default provisions. The default provisions themselves are specified in 35 USC 202(c). What’s referenced as “uniform” by Bayh-Dole, for federal contracting, is both a “standard funding agreement” and the procedures by which federal agencies may vary from that funding agreement or exercise their rights under the standard funding agreement.

Interestingly, for federally owned inventions, Bayh-Dole does not label the implementing regulations as “uniform” (see 35 USC 208). Continue reading →

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Exceptional Circumstances in Bayh-Dole, 3

Posted on August 21, 2018 by Gerald Barnett

“Exceptional” circumstances are not stated by Bayh-Dole to be rare or unusual ones–they could be common. Exceptional circumstances are those circumstances in which Bayh-Dole’s arbitrary default at 35 USC 202(a) is not the best thing for promoting the policy and objectives of the law. As such, an exceptional circumstance is a policy and objective not a condition existing out in the world some place, like a storm or really loud band. And it is a federal agency policy and objective that does a better job of promoting Bayh-Dole’s policy and objective than does Bayh-Dole’s default–arbitrary–disposition of rights, which is not based on any circumstances–Bayh-Dole’s default applies arbitrarily–without regard to circumstances–whatever is within scope of the law. Any exceptional circumstance then will necessarily take the form of a federal agency policy and objective directed at modifying or preempting Bayh-Dole’s default disposition of rights with the claim that this new disposition of rights better promotes Bayh-Dole’s policy and objective at 35 USC 200.

Think of it this way. Bayh-Dole states a disposition of rights–if an organization acquires a publicly supported invention, then it may keep that invention and exploit it privately without supervision and without public reporting. There’s nothing that connects this default with anything in Bayh-Dole’s statement of policy and objective. Nothing that provides any clue how it is that private acquisition of inventions made in work dedicated to public interest leads to utilization, small business involvement, collaboration, free competition and enterprise, or the use of American manufacturing and labor. It’s a big arbitrary non-connection. Talk about a gap in Bayh-Dole. An exceptional circumstance, then, is any federal agency policy and objective for any allocation of federal funds for research or development. If a federal agency acquiesces in Bayh-Dole’s arbitrary default, as the NIH has largely done, then the agency is stating the position that whatever it says is its objective is really nothing, because that objective is nothing if a private party takes ownership of any invention made in a agency-funded project. The private party’s objectives–whatever administrative whims it may have–preempt the federal agency’s rhetoric about why it funds the research in the first place.

Let’s restate the basic structure of the law, focusing on disposition of rights:

[any invention arising in federally supported research or development for which title is not acquired by a nonprofit organization or small business firm (i) is not a subject invention, (ii) Bayh-Dole does not preempt other federal statutes, and (iii) those statutes control the disposition of rights]

[if a nonprofit organization or small business firm obtains title to any invention arising in federally supported research or development]

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

[exceptions to the above, among them “exceptional circumstances”]

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

Notice that here Bayh-Dole does not use “contractor” or “party to a funding agreement” in its statement of scope of rights. Continue reading →

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Exceptional Circumstances in Bayh-Dole, 2

Posted on August 20, 2018 by Gerald Barnett

Here’s the slide from Dr. Thomas that starts our descent into darkness. Part of the slide contents is accurate. Part is slipped.

Let’s take up the slipped. First, Bayh-Dole does not say the federal government “retains patent rights” when the exceptions apply–it stipulates only that exemptions from the specified requirements apply and in those exemptions the government may require provisions for the disposition of ownership other than those Bayh-Dole’s default provisions.

Second, the “exceptional circumstances” are those in which different handling would “better promote the policy and objectives of this chapter.” Dr. Thomas drops the “policy” part in his account, as if  “policy and objective” is really just “objectives” and it’s just so much fluff to have both terms in a statutory text. But 35 USC 202(a) here clearly references 35 USC 200–the statement of Bayh-Dole’s “Policy and objective”–yes, “objective” in the singular. Everything about Bayh-Dole is a slopfest. We are not dealing with just any fantasy objectives imagined by just anyone and not even what Senator Bayh may have written later–we are dealing with the framework established by 35 USC 200 as part of federal patent law. In that framework, policy is operative, if not crucial.

Third, nowhere does Bayh-Dole indicate that “exceptional” circumstances are rare or unusual ones–they are just any circumstances for which the default right of the owner of a subject invention to elect to retain title subject to the provisions of the law is not the best way for Bayh-Dole to carry out its policy and objective. Or in short, exceptional circumstances are any circumstances in which Bayh-Dole doesn’t do so well what Bayh-Dole by default permits. Continue reading →

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Exceptional Circumstances in Bayh-Dole, 1

Posted on August 17, 2018 by Gerald Barnett

In 2008, Dr. Jeffrey W. Thomas, then a senior advisor to the Technology Transfer Center at the National Cancer Institute, gave a talk on Bayh-Dole’s exceptional circumstances. The slide deck is still up at a federal laboratory consortium web site. The talk comes three years before the Stanford v Roche decision, so it’s a given that it will be wrong about some things, but it is useful (especially since it is still up on the web) as another insight into NIH thinking about Bayh-Dole.

The purpose of Thomas’s talk is to discuss NIH’s protocols for invoking “exceptional circumstances” under Bayh-Dole. The “exceptional circumstances” provision is one of the chinks in the claim that Bayh-Dole establishes a “uniform” treatment of inventions by federal agencies. In that regard, Thomas’s talk will be most informative.

Thomas starts his talk with the popular faux version Bayh-Dole Act and some fake history. Stanford v Roche won’t excuse the fake history. Let’s examine the faux and the fake first, and then look at how Thomas shows how the NIH exploits the faux and fake to preserve a patent monopoly pipeline from public funding laundered through university patent brokers for the benefit of private pharma. Continue reading →

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AAU, APLU, and others aim to “bolster” federal technology transfer, 7

Posted on August 16, 2018 by Gerald Barnett

Frankly, I am weary of working through the HEAs’ nonsense advice to NIST. I expect you are too. Bullshit is so much more difficult to pin down than carefully reasoned discussion. It’s worth respecting carefully reasoned discussion, even if one takes issue with it, if the discussion operates on a willingness to get at the truth of things. Debate can strengthen alternative approaches to research-related innovation. But if folks are just bullshitting for political advantage, then they don’t care about the truth of things, about actual practice–they care about bluffing to whatever they see as their political goals. They might even be successful with their bluffing, but that doesn’t mean they are not prigs. And their bluffing makes it all the more difficult to have a reasoned discussion on matters of public policy.

If all you need to know is that the HEAs are engaged in political bluffery and write bullshit about Bayh-Dole and technology transfer sentence after sentence, then save your time. Go do something with your family.

The HEAs respond to NIST’s request for ideas to improve federal technology transfer with a stump speech about university technology transfer. The HEAs don’t bother even to separate out federally supported work from the rest of their member universities’ activities. Then, after crowing about how great they have been doing and how Bayh-Dole is working as intended and must not be changed, the HEAs bitch and moan about just about everything else–the patent system doesn’t provide them with absolute power to beat down everyone, there’s not enough of other people’s money available to finance their expensive, complicated, and ineffectual system. This is supposed to be helpful advice for the feds regarding federal technology transfer programs?

Someone at NIST will read the HEA missive, I’m sure, and I send them a dose of empathy. Let’s finish up. Continue reading →

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AAU, APLU, and others aim to “bolster” federal technology transfer, 6

Posted on August 15, 2018 by Gerald Barnett

We are working through the advice that AAU, APLU, and other “higher education associations” have provided to NIST on how to improve federal laboratory technology transfer. Do you expect that these associations thoroughly vetted their draft response with all their members? Is it even a good assumption that the senior leadership of all these universities are behind this effort to help NIST? The HEAs’ position is that the way to improve federal laboratory technology transfer efforts is to ponder deeply the complaints that the HEAs have with regard to their own members’ technology transfer efforts–which of course are working out just as Bayh-Dole intends, except for the lack of a clear mission, an uncertain relationship to the public interest, problems with the patent system, the tax code, administrative overhead, confusion about software, and, oh, this:

No funding was provided for patent costs or other costs associated with the operation of university technology transfer offices established to implement Bayh-Dole…

Gracious me. Someone doesn’t understand Bayh-Dole. Bayh-Dole’s requirements are easy to comply with and easily may be accommodated with a tiny part of the administrative indirect cost payment that comes with each federal grant. Bayh-Dole implementation does not require the establishment of technology transfer offices and does not require universities to incur patent costs. Whatever university administrators decide to spend because of Bayh-Dole is because of their own choices–if not their cluelessness about Bayh-Dole and their cluelessness about how research technology comes to be used.  Continue reading →

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AAU, APLU, and others aim to “bolster” federal technology transfer, 5

Posted on August 14, 2018 by Gerald Barnett

Higher education associations, led by AAU and APLU, give advice to NIST about ways to bolster federal technology transfer by telling NIST about non-federal university technology transfer. The HEAs have insisted that Bayh-Dole has been working as intended, which we may take to mean that the HEAs are pleased with most inventions faltering behind university patent paywalls, sky high prices for those few university inventions that become successful prescription drugs, and metrics on patents, startups, and jobs creation that are presented to look impressive but on closer inspection are unvalidated, paltry, and not specific to federally supported inventions. But it’s all good if one is bluffing for political ends. No one should expect the truth, even from HEAs.

The AAU and APLU convened working groups to study university technology transfer. They found, after extensive study, that university technology transfer should serve the public interest. We were astounded. But there was more–the AAU and APLU went on to offer suggestions to their university members:

The two associations urged university leaders to embrace the role of university technology transfer in promoting innovation and economic prosperity. These recommendations included: . . .

Wait for it…

  1. write better mission statements
  2. restrict university licensing inventions to patent trolls
  3. create new metrics that focus on economic and societal impact

Well now, that’s work well done. A new mission statement will help bolster those flagging, under funded, but wildly successful university licensing operations. Bayh-Dole should be “tweaked” to require better TLO mission statements. NIST should make sure all federal laboratories have a clear mission statement that embraces promoting innovation and prosperity. That should do it. We are all set. Continue reading →

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