Bayh-Dole–six parts real, one part faux

Posted on January 11, 2018 by Gerald Barnett

Bayh-Dole is a law in six real parts and one faux part. There’s

  1. a policy part (35 USC 200, 201, 206, 210-212);
  2. requirements for contractor owned inventions (35 USC 202(a, b), 203, 204, 205);
  3. requirements for federally owned inventions (35 USC 207-09);
  4. requirements for standard patent rights clauses (35 USC 202(c));
  5. standard patent rights clauses (37 CFR 401.14(a, b), 37 CFR 401.9)
  6. implementing regulations (37 CFR 401)

Despite all this apparatus, there is also a seventh part to Bayh-Dole, the faux part. It’s the account of Bayh-Dole that’s fake and deceptive, the part that never gets implemented, complied with, never used. Faux Bayh-Dole dominates practice and dominates as well not only public accounts of Bayh-Dole but also academic articles–even ones critical of Bayh-Dole. There is significant cognitive dissonance involved in watching an academic argue that a faux practice under Bayh-Dole is the fault of Bayh-Dole and suggest some (generally silly) policy remedy. Continue reading →

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Bayh-Dole’s only purpose is to exploit public suffering for profit

Posted on January 10, 2018 by Gerald Barnett

The Bayh-Dole Act was created to permit the pharmaceutical industry to gain patent monopolies over inventions in medicinal chemistry made with federal government support. I have been through the history. I have worked through law for a decade. I practiced for fifteen years under the standard patent license. I have listened to the shop talk of university licensing officials, having been one. I have listened to the talks at AUTM meetings and read the “guidance.” I dealt with these issues in the Stanford v Roche proceedings, helping to shape the amicus briefs that the Supreme Court followed in its decision. The outline of this conclusion is clear from the evidence.

Disregard the bluster about national competitiveness, the market failure of American innovation, or the mythic 28,000 unused government patents. Disregard the bluster about the cost to develop publicly supported inventions for public use, or that inventions available to all will be used by none, or that the government is ineffective at promoting use of the inventions it owns. Disregard the bluster about reversing a presumption of title, or implementing a uniform patent policy. Disregard the bluster that no drugs were developed from federally supported inventions before Bayh-Dole. Disregard the bluster about the wild success of Bayh-Dole. All of this bluster is demonstrable rot. Some of it is usual political posturing. Some is outright lies. Some of it is self-serving illusion. Some is theatrical hand-waving. All of it is intended to deceive.

There was and is only one purpose behind Bayh-Dole: to feed patent monopolies created with public subsidies to pharmaceutical companies who then exploit public suffering as a market using monopoly pricing on new prescription drugs.

The bluster is to rationalize this outcome, to distract from it, and to make it appear that there are public protections in place to limit any problems. To make it appear virtuous, desirable. But it is rot. Bayh-Dole is a dismal failure with regard to research progress, innovation, collaboration, competition, and public benefit. It has failed on its premise of practical application. Its side effects are even worse, blocking the use and development of many research discoveries behind incompetent or barely competent university-created patent paywalls.  Continue reading →

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On Not Crossing Donner Pass

Posted on January 9, 2018 by Gerald Barnett

Turn anywhere in university technology transfer and you will find the “Valley of Death.” This Valley of Death, goes the argument, is the reason why it is so difficult to license patents to industry to create commercial products. There’s just not enough money (in the rhetoric, money = water, apparently, though in the Psalm, the valley is of the “shadow of death,” at least in the old King James translation, and one is accompanied by the Shepherd, who keeps one safe from evil).

There are numerous depictions of the Valley of Death. Here is an ugly simple one:

Continue reading →

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Helge Holst’s 1963 Argument for Institutional Control of Government Inventions

Posted on January 8, 2018 by Gerald Barnett

In 1963, Helge Holst, an attorney for Arthur D. Little and member of the U.S. Chamber of Commerce’s National Defense Committee, published a report titled “Government Patent Policy: Its Impact on Contractor Cooperation with the Government and Widespread Use of Government Sponsored Technology.” The report was republished in 1976 with other materials on patenting by a subcommittee of the House Committee on Science and Technology.

The report in its way repeats the most repeated claims about research, innovation, and government practices. It is a compendium of the vocabulary used by corporate pundits of the time–especially attorneys–to frame the discussion of government-sponsored inventions to address their interests. There’s really nothing in the report from inventors, or from the random general public, or from research scientists who might have inventors on their teams. The report is a missive of institutional concerns. We might expect as much, given the authorship. What’s lacking are statements from other angles. There appears to be little institutional representation of the interests of inventors, lab directors, members of various professions (doctors, engineers, mechanics), or members of the general public. Who is willing to make an argument for the benefit of anyone other than institutions? Perhaps that’s Research Enterprise’s role these days.

Continue reading →

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The Biddle Report’s Perfectly Fine Assumptions

Posted on January 5, 2018 by Gerald Barnett

From time to time, I revisit territory. I wrote about this issue almost two years ago, now. I provide here a different angle that gets at the same point.

Here’s Sean O’Connor proposing that a flawed assumption in the U.S. Attorney General’s 1947 report on government patent practices  led to the Stanford v Roche dispute and Supreme Court ruling (footnotes removed):

The Biddle Report not only framed the debates over government patent policy for both intramural and extramural R&D for decades to come, but it also introduced a crucial mistaken assumption that all government contractors were routinely securing patent assignments from their employees.

[I don’t know why O’Connor calls it the Biddle Report, since Truman fired Francis Biddle in 1945 and appointed Tom Clark as Attorney General. Biddle had prepared a draft report, and Assistant Attorney General John F. Sonnett, Surely the report should be called the Sonnett Report or the Clark Report. Here, I will refer to it as the Report.] Almost all government work at the time involved for-profit contractors, primarily in the defense industry. It appears only a couple of handfuls of universities were involved in government contracting. The report’s assumption is reasonably accurate that all the government contractors that mattered in 1947 were securing patent assignments. Continue reading →

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The National Patent Planning Commission argument for government-created private patent monopolies, 3

Posted on January 4, 2018 by Gerald Barnett

The National Patent Planning Commission quotes administration officials repeating this same argument. Here’s the Under Secretary of Agriculture (1941):

The commercial exploitation of new inventions requires, in many cases, the expenditure of large sums of money. In such a case, unless some protection or some advantage is given to enable a particular manufacturer to reap a reward as the result of the risk taken by him in investing capital in the new endeavor, he will usually refuse to enter a competitive field.

We can take apart this assertion as we have the others. Note the qualifications– “commercial exploitation,” “in many cases,” “some protection or some advantage,” “reap a reward as the result of the risk,” “usually refuse,” “competitive field.” Nothing here holds up. For some reason, the fixation is on mass production of product based on patentable inventions held by the government. If companies refuse to make product from these inventions, then, why, it must because the government hasn’t given them a monopoly, and the reason they must have a monopoly is because it’s not worth it otherwise. But if most anyone can use a given invention without having to wait for a commercial product version, then the purpose of the monopoly is to prevent all use that doesn’t involve the commercial product. The government-endorsed monopoly creates a “market” where there was no need for one. Is the motivation simply to make a big splash that justifies federal agencies having research programs to invent new products–you know, like mechanical tomato pickers to put field workers out of jobs and to create the need for a new, hardened, de-flavorized tomato? Continue reading →

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The National Patent Planning Commission argument for government-created private patent monopolies, 2

Posted on January 3, 2018 by Gerald Barnett

We are looking at the National Patent Planning Commission argument that the government should be permitted to grant exclusive patent licenses on inventions that it acquires. The basic position is that it is a good thing that the government should make its inventions available to all. But now we reach a walk back of this initial position:

While it is the conviction of the Commission that the Government should continue to adhere to its traditional policy of not engaging in activities which can adequately be conducted by private enterprise, it nevertheless believes that in suitable cases the Government should have the authority and the power to depart from the general policy hitherto followed and, recommended above and take steps to insure the proper commercial development of an invention covered by any of its patents whenever this course is necessary and in the public interest.

So, an exception to policy–“in suitable cases” to “insure proper” “commercial development” “whenever necessary” and “in the public interest.” There are plenty of qualifiers here–suitable, proper, necessary, public interest. The assertion is similar to an argument for sole source purchase contracts–no bidding, no one else need apply. Here, the assertion is that sometimes it is in the public interest that a commercial product be developed from an invention, and that for this to happen it is necessary that the manufacturer have a monopoly or no one will justify the cost relative to the possible profit. Continue reading →

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The National Patent Planning Commission argument for government-created private patent monopolies, 1

Posted on January 2, 2018 by Gerald Barnett

I have been working through reports from the mid 1940s on government ownership of patents. There are a number of arguments against government exploitation of patents, but these arguments clearly failed. What arguments won out? Here’s one, from the National Patent Planning Commission:

Since the Government can grant only revocable nonexclusive licenses under patents which it owns, it is for all practical purposes restricted to (a) publication, (b) the procurement of a patent which is in terms dedicated to the public and (c) the acquisition of a patent under which nonexclusive licenses may subsequently be granted. It often happens, however, particularly in new fields, that what is available for exploitation by everyone is undertaken by no one.

The sentence I have highlighted is a simple assertion. There are multiple claims. (1) If something is available to everyone, then no one will “exploit” it; (2) especially in “new fields”; and (3) this happens “often.” We have to get at, as well, the use of “exploitation” rather than “use” or “practice.”

There’s a fundamental problem with trying to evaluate this assertion, because every invention that’s never patented and never used, or patented and offered non-exclusively and never used might be offered as “evidence” of the truth of the statement. Yet, just because a given invention is freely available to all does not mean that this availability is the cause of no one using the invention. That’s just an assertion. Continue reading →

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Optimism for a New Year

Posted on January 1, 2018 by Gerald Barnett

It’s a whole new year, rather than just December 32. In 2017, Research Enterprise published over 250 articles on various aspects of invention policy and innovation, with lots of attention on the Bayh-Dole Act and on universities that cannot seem to get their policy act together. We also chased down misinformation campaigns by APLU, BIO, AUTM, and others, with their faux history of Bayh-Dole and their goofball proxy statistics. We also got snarky and called Bayh-Dole the love monster of patent attorneys and pharma firms, and it is just that.

Every so often, I rebuild the Guide to Bayh-Dole. I’m in the process of doing that now. The simple version is that Bayh-Dole is the next effort by the pharma industry to capture federal research subsidies for private patent monopolies. Before that, it was the IPA program. Before that, there was the boycott. Before that, pharma offered its screening services in exchange for monopoly rights to any compound identified. The repeated theme is that no invention can benefit the public unless it is developed at great expense into mass produced commercial product. For that, inventions must be taken from their inventors and provided to entrepreneurs with the expertise and funding to develop those products. And entrepreneurs won’t participate unless they have patent monopolies. Bayh-Dole’s variation is that such monopolies are virtuous because nonprofits (and even the federal government) get a share of the monopoly pricing through exclusive licensing deals that function as assignments.

Too bad the idea doesn’t work in practice for 99% of all university inventive work.  Continue reading →

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The loss of public information in Bayh-Dole’s allocation of principal rights, 2

Posted on December 30, 2017 by Gerald Barnett

The effort to deal with government favoritism in handing out patent monopolies in areas of public welfare of direct interest to government requires a socially acceptable rationale. That rationale takes the form of a public covenant that runs with the private management of the patent monopoly. While an ordinary patent may be used to troll industry, prevent all practice of the invention (such as in favor of another product), charge monopoly prices, or to create false scarcity to run up the price, these are practices that the government has sought to preclude, especially in areas of public welfare where the patent monopoly has been created in the service of the government.

The public covenant that was originally adopted insisted that a private monopoly, properly limited, could serve government interests if it had the characteristics outlined above, with regard to a request for a determination of greater rights:

(i) an invention would be developed for public benfit

(ii) faster than if the government allowed everyone to have access

(iii) and made available to everyone who wanted access

(iv) and on terms (including price) that were reasonable

(v) and after the company had recovered its investment, the invention would be made available to all, as the government originally intended.

None of these things, by the way, is featured in any account of the wild success of Bayh-Dole. Yes, rarely an invention is developed, but it’s a big jump from “developed for corporate benefit” or “developed for speculator benefit” to “developed for public benefit” unless the public benefit that’s desired is for corporations and speculators to benefit, and public subsidies for research and public policies to separate researchers from the practice of their inventions are crucial to that goal. It’s all pretty keen if one is a corporate “investor” needing public help to be “successful.”

This pattern is, essentially, the idea of the toll road applied to inventions. Continue reading →

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