University of Utah’s Mount Stupid Disclosure Claim, 2

Posted on February 7, 2018 by Gerald Barnett

We are working through a statement by the University of Utah regarding disclosure. We have got through one paragraph, and now are headed to the second. Unfortunately, the snark restrictor on my WordPress editor has failed and snark keeps popping out–more than usual. I’ve tried to strike through most of it. Gosh, it’s just hard to catch it all.

Thus, the shallow pool of the first paragraph. Now for deeper waters of the second paragraph of the university’s guidance. Snark controls have become entirely unreliable at this point.

Invention disclosure is critically important for all projects, especially where any portion of the funding comes from the federal government, private foundation, or commercial sponsor. Federal law requires prompt disclosure and the University, investigators, and involved companies could lose very significant rights if disclosures are not promptly made.

The first sentence is mildly incoherent. Invention disclosure is “critically important.” Okay. Obviously, since all inventions must pass through the “portal” (Per me si va ne la città dolenta, per me si va ne l’etterno dolore, per me si va tra la perduta gente… lasciate ogne speranza, voi ch’intrate–Inferno, Canto III), it’s important that they do so. But look at the construction–“critically important” for everything… especially…. How can something that’s critically important in general be especially important on top of that for anything? Only if “critically” doesn’t mean “critically.” It is especially important to disclose inventions if funding comes from federal, private, or commercial sponsors. Not so much for, say, state government or foreign government (not federal) or from donations or the university’s own funds–for those sources of support, invention disclosure is merely “critical.”

The point that is being attempted, perhaps, is that when a research funding agreement requires all inventions made in a project to be reported, then it’s a really sporting move to comply. Why is that point so difficult to express at Utah?

Now for the zinger: “Federal law requires prompt disclosure.” Continue reading →

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University of Utah’s Mount Stupid Disclosure Claim, 1

Posted on February 6, 2018 by Gerald Barnett

Here is a bit from the University of Utah’s web site. The general topic is final invention reporting for grant close out. Here’s the statement of interest (bold in the original, links removed):

All University employees are responsible to disclose all intellectual property that could constitute inventions or copyrighted works to Technology & Venture Commercialization (TVC). Beginning July 1, 2013, this is done through the Inventor Portal. Log-in or apply for an account here.

Invention disclosure is critically important for all projects, especially where any portion of the funding comes from the federal government, private foundation, or commercial sponsor. Federal law requires prompt disclosure and the University, investigators, and involved companies could lose very significant rights if disclosures are not promptly made.

The first paragraph is just plain silly. “All intellectual property” is general-sounding and therefore to an administrator sounds comprehensive. But put it into its grammatical context and we get “all intellectual property that could constitute copyrighted works.” Much goofiness. A work is not “copyrighted”–copyright vests in original works of authorship fixed in a tangible medium of expression. And in any case, if a work were “copyrighted,” then it obviously does constitute something that could constitute copyrighted work–it could not be a matter of “could.” But that’s just the start of the stupid. Copyright vests in every email. Every research note. Every slide presentation. Every poster session. Every data set in which an original selection and arrangement of the items has taken place. Every draft article. The Utah policy demands that every one of these things–we are talking millions of instances per year–must be disclosed to the Utah commercialization office. Mount stupid! Er, sorry. The snark settings sometime slip when stuff is this awful. No doubt there will be more problems with snark as we go. Continue reading →

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Bayh-Dole–enforce or repeal the patent rights clause?

Posted on February 5, 2018 by Gerald Barnett

Bayh-Dole is such a strange law. Consider:

After 35 years, there is no public data supporting the claim that the Bayh-Dole Act has been successful. Bayh-Dole makes that data a government secret. Universities don’t report it. AUTM licensing surveys do not report it and don’t even break out government funded inventions. What gets reported is proxy metrics that don’t address Bayh-Dole’s requirement for the use of inventions arising in federally supported research. These metrics, even when bloated for effect, represent activity, not outcomes.

Bayh-Dole does not operate. Universities refuse to comply with the standard patent rights clause in most of its substantial elements; federal agencies are allowed to waive many public protections, and beyond that, federal agencies routinely do not enforce the patent rights clause and have never “marched-in” in response to nonuse or unreasonable use; and furthermore, federal agencies routinely make no use of their non-exclusive royalty-free license to make, use, and sell (and have made, have used, and have sold) subject inventions. And beyond that, universities ignore Bayh-Dole’s policy limitations on patent property rights in subject inventions–they use their patents to exclude use rather than promote it, and to suppress free competition and enterprise.

Whatever data anyone might produce claiming Bayh-Dole is a success (or failure!) has be taken with a pint of beer. If Bayh-Dole doesn’t operate, then the data is about something else, not Bayh-Dole.

In particular, universities routinely

  • do not comply with the (f)(2) written agreement;
  • misconstrue what constitutes a subject invention;
  • misrepresent their rights to inventions made with federal support;
  • do not prefer small businesses in licensing;
  • assign inventions without getting federal approval; and
  • misspend royalties and income relating to subject inventions.

Continue reading →

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Available to one, developed by none, 2

Posted on February 2, 2018 by Gerald Barnett

We are working through the political argument that without a patent monopoly, federally supported research will never get used or developed into commercial products or ever benefit the public. It’s flowery language meant to lead those who hear or read it to believe it’s true, while the particulars of the argument end up being rather more along the lines of “without a patent monopoly, those speculators who are fixated on exclusive control as a condition of their investment won’t put their money toward commercial product development and so will refuse to participate, but federal law should be structured not only so that they will invest but moreover so that they will have first access.”

For the pharmaceutical industry, the basic pattern of research funding, development costs, and “return” is even more dramatic–what appears to be a tiny research allocation of public money discovers a class of compounds that will require a decade of screening, synthesis, animal testing, formulation, and human testing, and maybe after that time, if the patent claims one of the lucky compounds out of 10,000, then there will be a product, and that product may well generate billions in profits. In that case, the figure with rectangles looks more like this:

This pattern converges to the idea of “winning the lottery.” Continue reading →

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Available to one, developed by none, 1

Posted on February 1, 2018 by Gerald Barnett

A repeated argument regarding inventions made with federal support was that the public would benefit from these inventions only if companies invested substantial amounts of private capital in developing the inventions as commercial products. Without commercial development at private expense, the public would not benefit from these inventions. They would “sit on the shelf.” And if these inventions sat on the shelf, America would lose its leadership in technological innovation.

The argument went further. The cost to develop commercial products was greater by far than the cost to do the research that led to any particular invention. For any company to commit that sort of money to commercial development, the company had to have a patent monopoly to ensure that it could recover its vast investment and make a profit. Without a monopoly, no investment would be made, no product would be developed, the public would not benefit, and America would lose its leadership position.

As writers repeatedly put it, as if stating a general truth: “What is available to all will be developed by none.” Thus, the federal government’s practice of releasing freely the inventions it owned (“dedication”) or licensing the inventions non-exclusively, royalty-free where the government obtained patents destroyed the opportunity for a patent monopoly and with it the reason to invest in developing the government’s inventions. Continue reading →

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Bayh-Dole in one simple diagram

Posted on January 31, 2018 by Gerald Barnett

Let’s put Bayh-Dole in simple, coarse terms. Here’s a diagram of how Bayh-Dole works:

Now here are two thousand words that say roughly the same thing, with the addition of a cesspool that I didn’t find a good way to draw.  Continue reading →

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Bayh-Dole’s Public Covenant, 5

Posted on January 30, 2018 by Gerald Barnett

The Necessity of Government Action Under Its Non-exclusive Licenses

Let’s look at two arguments why the government must act on its licensed rights in subject inventions. The first argument has to do with the rhetoric of Bayh-Dole. If the government does not practice under its license, then the license is an empty gesture. The second argument has to do with the nature of competition in the public interest. The government does not compete with private industry in matters of private markets; but the government’s use of inventions it supports in the public’s interest does create a competition with regard to the speed and efficiency with which private industry provides services to government “markets”–to those purposes that the federal government has the authority and obligation to serve. Only if the private sector can deliver goods and services for government purposes more quickly and at less expense and at higher quality than can the government and its own contractors should the private sector have the ability to deliver those goods and services.

For each subject invention for which a contractor elects to retain rights , Bayh-Dole requires that the federal government receive an amazingly broad non-exclusive license to make, use, and sell, and to authorize others to make, use, and sell the subject invention (see 35 USC 202(c)(4)). Subject inventions, in turn, are defined to be any patentable invention (or not patentable plant variety) arising in work supported at least in part by federal funding under a funding agreement and owned by a party to the funding agreement. Funding agreements are defined such that any contractor may add parties to the funding agreement by assignment, substitution, and subcontract of any type–so, assignment of the funding agreement, say, or assignment of obligations with regard to subject inventions, say, or assignment of subject inventions. Just saying.

An invention made in university research that is made part of a larger project to develop a commercial product announced by university formal policy and implemented when the university assigns the invention and delegates obligations to a company develop that product then supports the rest of the development project. Any inventions made in the development portion of the project–“arising in federally supported research or development” are also subject inventions, by the definitions introduced into federal patent law by Bayh-Dole. It simply does not matter what university administrators say or what they agree in contracts with their monopoly-taking company partners. Private agreement does not change the operation of these federal law definitions. Continue reading →

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Bayh-Dole’s Public Covenant, 4

Posted on January 29, 2018 by Gerald Barnett

The Faux Public Covenant in Bayh-Dole

The government license forms an essential part of the public covenant on inventions arising from research or development supported in part by government funding. For the other parts of the public covenant, the patent owner must take action–must work the invention, must promote free competition and enterprise, must manufacture in the United States for any exclusive use or sale in the United States. In each case, the patent owner must do something. For the government license part of the public covenant, the patent owner must grant the license to the government–but that part means nothing unless the government acts on the rights it has obtained. We explore this idea in two ways. First we look at the policy argument of Bayh-Dole for the importance of the private marketplace. Then we look at how this argument is political cover for providing patent monopolies in areas of public health (or suffering) to the pharmaceutical industry, with the claim that only through commercial products sold with monopoly protection and pricing to reward investors (or speculators) could the public benefit from publicly funded research.

Bayh-Dole’s statement of policy makes it clear that the law is intended to benefit the public. The benefits of the use of subject inventions must be made available to the public, and on reasonable terms. The government is provided with the right to march-in and defend the public from nonuse and unreasonable use (quite separate from any antitrust or patent misuse actions already available to the government). Advocates of Bayh-Dole argued that the law would help American regain its leadership in technological innovation, would provide the public with the benefits of inventions that otherwise would “sit on the shelf” in federal government warehouses, doing nothing.

The foundation of Bayh-Dole, then, is that the law serves the public interest, and that institutional owners of patents on subject inventions will provide better service to the public than will federal agencies (this foundation, of course, is empirically not true, but no matter). The argument for allowing institutional ownership of inventions made in research projects receiving federal support has been based, since Francis Biddle’s Attorney General Tom Clark’s report in 1947, on the concept that patent rights in those inventions is necessarily restricted. One of the key restrictions is that the federal government has a license to inventions made in any research or development project that the federal government supports financially. So far, so good. Continue reading →

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University of Manitoba’s Transformational Partnerships, 5 Years On

Posted on January 28, 2018 by Gerald Barnett

Five years ago on this date I posted an article about the University of Manitoba’s bold new venture to transfer inventions made in sponsored research without charging anything but a running royalty on actual sales. There’s all sorts of things to say about such an approach–and that’s what the article was about. On the one hand, it turns a “sponsored” research relationship into a contract research organization. That’s a standard method of operation, but it usually takes some work for a university to separate such work from the general run of open academic research to be able to provide clear title to IP.

On the other hand, receiving a running royalty only on actual product sales should get everyone at the university interested in helping a company research sponsor develop an invention so that there are indeed sales–since that’s the only way the university recovers its patenting costs, among other things.

On a yet third hand, if a company with an exclusive license (or outright ownership) doesn’t have to pay anything until there are sales, then the company might just be happy to sit on things for a while and see if it is really necessary to develop product under the licensed patent–perhaps there’s a design-around, or perhaps the market changes, or perhaps it is good to keep the invention off the market. No problem–nothing to pay until there’s product.

And on the fourth hand, negotiating a running royalty on sales can be just as complicated, if not more so, if the company owns the IP. What is the basis for the royalty, if the company owns the IP? What is the royalty base? The royalty rate? What happens if the company doesn’t pay? Can the university still demand an audit? Does the university still demand indemnification? insurance? repayment of patenting expenses? Does the university still control patent prosecution for that matter? What if the company doesn’t produce a product? What if the product is designed outside of the university invention assigned to the company? Is it is made all simple just by eliminating up-front fees? The fourth hand thinks the university’s approach is silly nonsense.

I took a look at the University of Manitoba web site to see if there was an update on the program. A university “Facts and Figures” report gives the following information: Continue reading →

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Bayh-Dole’s Public Covenant, 3

Posted on January 26, 2018 by Gerald Barnett

Government Rights

We turn finally to the government’s rights in inventions arising in federally supported research and development. We will consider both the scope of these rights and the effect these rights should have on the development of new technology in the public interest.

Patents on subject inventions are not ordinary patents. We have seen how Bayh-Dole’s public covenant transforms the property rights in such patents. There’s a working requirement not otherwise in patent law. There’s a requirement to promote free competition and enterprise that’s more demanding than antitrust law. There’s a requirement to promote American manufacturing. All very nice, were these property rights acknowledged by nonprofits, their non-conforming practices challenged, and Bayh-Dole’s requirements enforced.

Of course, this is Bayh-Dole, the do WTF you want Franken-monster law. There are no public protections operating. But even in its written form, Bayh-Dole lacks protections for inventors and third parties (anyone other than institutional owners and their commercialization favorites), and the Supreme Court noted that it would find that lack “deeply troubling” if it were not that Bayh-Dole governs only the relationship between the government and an institutional contractor after the contractor acquires ownership of an invention made in research supported by the federal government.

What then about the government’s rights? There are multiple elements here. First, there is the government’s license. Then there is the government’s right to obtain title to inventions. And finally there’s the government’s march-in rights on a patent owner’s patent rights. Continue reading →

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