A Bayh-Dole FAQ with One Question Only and Multiple Answers

Posted on January 25, 2017 by Gerald Barnett

Q. Has Bayh-Dole been successful?

A. Yes! It’s the legacy of important people. How can anyone call it a disaster? To do so is to smirch the reputations of decent people who have done a heroic thing with the best interests of the American public and industry at heart. Only ignorant and deviant people would call Bayh-Dole unsuccessful. Don’t you dare be one of them, or you will be called all sorts of names, too, or worse. Capiche?

A. No! Bayh-Dole states as its objective to use the patent system to promote the use of inventions made with federal support, so that benefits of that use are available to the public on reasonable terms. On this standard, Bayh-Dole has been a failure. Bayh-Dole makes it easy for people to take inventions away from their inventors, to withhold inventions from public use, and to trade on speculation that one day a patent on an invention will become valuable–doesn’t much matter how: use of the underlying invention, speculation on the value of such inventions, used to attract investment to a company that then makes something else, or suing anyone who happens to use the invention without a license. Much of this other activity is included in claims that Bayh-Dole has been successful. But as for practical application, the numbers aren’t pretty. Only 1 in 200 university inventions appears to become a commercial product. The rest are sequestered behind university ownership claims and go unlicensed or if licensed are tied up with companies that fail to develop them or simply fail. On its own terms, Bayh-Dole has failed.

A. Yes! Bayh-Dole was passed to give university administrators a financial incentive to build technology transfer offices and employ patent brokers and attorneys to seek financial returns from licensing inventions, especially exclusively. Although Bayh-Dole does not mandate university ownership of inventions or require technology licensing offices or efforts, clearly as a result of Bayh-Dole, many universities have invested in patenting and licensing activities. Continue reading →

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Sooner or later, Oklahoma IP counsel might get it right about inventions

Posted on January 23, 2017 by Gerald Barnett

[expanded to include further discussion of the OU policy claim to inventions]

In a talk last fall (archived here), the IP counsel for the University of Oklahoma, presented this slide on the university’s patent policy:

stubble1

It appears to be a quote from the university’s patent policy, and as far as it goes, it is. We have the usual messes–a policy on ownership that claims to own unpatentable inventions, the odd use of “made or conceived” which appears to conflate “discoveries” (which are “made”) and inventions (which are also “made” but, to be patentable, with two steps–“conceived” and “reduced to practice”). Of course if an invention is unpatentable, then who knows what is meant by “invention.” And what does it mean to “conceive” of an unpatentable invention? An unpatentable invention could be anything–an idea, an insight, a gizmo, a piece of software–and it doesn’t have to be new, or useful, or non-obvious. It just has to be called an invention, apparently. And how does anything get “conceived” through the use of university facilities or funds?

The claim made by the policy is indifferently vague, intended to be understood, perhaps, as authoritatively general. It would be much more direct to focus a university patent policy on “inventions which are or may be patentable” and get on with matters of ownership of those. But this is the usual mess of garbled policy. Next to impossible to read for an objective meaning. It does not have to be this way, but it is. Let’s press on.

There’s more to the Oklahoma policy than the part the IP counsel quotes in her slide. Here’s the rest of the sentence–the part she doesn’t include: Continue reading →

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Bayh-Dole reduced to its basics [warning: none of this ever happens]

Posted on January 20, 2017 by Gerald Barnett

Bayh-Dole stripped of contingencies, for universities, reduces to this:

Use the patent system to promote the practical application of inventions.

A federal agency is an agency, department, corporation, or other entity of the federal government. A contractor is any party to a funding agreement. A funding agreement is any grant, contract, or cooperative agreement for research, development, or experimental work, including any subcontract, substitution of parties, or assignment. A subject invention is a patentable invention owned by a contractor.

Each funding agreement with a contractor shall contain provisions that 

requires the contractor to disclose subject inventions to the federal agency within a reasonable time.

permits the federal government to receive title to any subject invention not disclosed to it within a reasonable time.

The federal agency may, after consultation with the contractor, permit inventors to retain title to their inventions, subject to the regulations authorized by this Act. 

Federal agencies are authorized to withhold for a reasonable time from public disclosure reports of subject inventions to allow patent applications to be filed. 

That’s about it for universities. Continue reading →

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What happens if a contractor fails to report a subject invention?

Posted on January 19, 2017 by Gerald Barnett

James Love and Knowledge Ecology International have made a request to the Office of the Inspector General at Health & Human Services to examine whether Cold Spring Harbor Laboratory and Isis Pharmaceuticals failed to disclose two inventions as required by the Bayh-Dole Act. Their request is well documented and it will take some work for Cold Spring Harbor and Isis to explain the situation. “Facts, facts, facts,” said Thomas Gradgrind–and that’s what will matter here, too.

The definition of subject invention is a place to start. Bayh-Dole defines subject invention–a new class of invention in patent law–and these definitions are repeated in the implementing regulations and standard patent rights clause:

The term “subject invention” means any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement

The term “invention” means any invention or discovery which is or may be patentable or otherwise protectable under this title

The term “funding agreement” means any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government. Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.

First off, for an invention to be a subject invention, it must be owned by a contractor. That’s the meaning of “of the contractor” in the definition. If a contractor does not own an invention, then it is not a subject invention and there is no reporting obligation under Bayh-Dole’s standard patent rights clause. Only if a contractor owns an invention can it possibly be also a subject invention. (See the Supreme Court opinion in Stanford v Roche).

Further, an invention has to be patentable (“is or may be”) and must be made “in the performance of work” under a funding agreement. Once there is a patentable invention, then either the “conception” or the “first actual reduction to practice” must have been made in the performance of work. That is, the statement of work for which the funding agreement provides at least a part of the funding must anticipate one or both of these actions.  Continue reading →

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Institutional Patent Licensing–One of the least “direct” ways to obtain new technology

Posted on January 18, 2017 by Gerald Barnett

A few weeks ago I was involved in a discussion about how a region might import new technology developed at distant universities. One of the participants, with a background in AUTM-style technology transfer, made the off-hand comment that if we wanted to acquire technology, licenses were “the most direct way” to do it. I’ve been thinking about that comment. On the face of it, one might think it makes a lot of sense. But the more I thought about it, the more it bothered me. I could think of many more “direct” ways to acquire new technology and not a lot of less “direct” ways.

Consider:

A really direct way is to be given a new technology. “Here, have at it.” That’s much more direct than licensing patents. Or read an article that describes clearly how to use it, and then just use it. Or work with someone who knows the technology cold and teaches it to you. “Here, let me show you.” That’s direct. Even adding, “If you want to use what I’ve showed you how to do, I’ll send you a note confirming that I’ve given you permission to do whatever you want. Will that work?” is more direct than licensing–even if that permission is something like a license. Continue reading →

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Government and non-government markets and federal government waste under Bayh-Dole

Posted on January 16, 2017 by Gerald Barnett

Bayh-Dole requires that when a contractor retains title to a subject invention, the contractor must grant to the government a non-exclusive license. Here’s Bayh-Dole on that government license (35 USC 202(c)(4)):

(4) With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world

Let’s look at the boldfaced phrases. First, what does “practice or have practiced” mean? There’s no definition provided in Bayh-Dole, and “practice and have practiced” is not among the rights set out in federal patent law. But the phrase has a long history of use in federal patent policy. Here’s the Kennedy patent policy, defining “Governmental purpose” license:

The right of the Government of the United States (including any agency thereof, state, or domestic municipal government) to practice and have practiced (made or have made, used or have used, sold or have sold) throughout the world by or on behalf of the Government of the United States.

Continue reading →

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Ten Years After 25 Years After Bayh-Dole, Part 8

Posted on January 15, 2017 by Gerald Barnett

While the patent system might give freedom to just any inventor and patent owner, the federal Government is not any ordinary patent owner, but has particular purposes and interests and expectations–and those may be present in federal patent policy, in government funding agreements, and in stipulations on government-issued patent licenses. Don’t like those? Don’t play. There’s a flip side to the pharmaceutical industry boycott of promising medicinal compounds discovered with federal funding–the government could ignore the industry and build a new one based on a different funding and product development model. It’s possible. There’s plenty of room at the low end of the market, as generic (i.e., off-patent) drug manufacturers have made clear. Why does the federal government then choose not only to favor the monopoly version of the industry, but to subsidize it and act as if it is a virtue for universities to play to the monopoly version of the industry? Why is that? Preference, I guess. We may as well state the policy directly.

Our authors, however, argue for a different policy for Bayh-Dole. Perhaps. But they don’t need Bayh-Dole to dictate such a policy. If it did, it would cease to be Bayh-Dole and would revert to something closer to the failed IPA program, but now with requirements on the nature of exclusive licenses–it’s not enough that a patent license is differentiated by territory and “field of use”–it also must be differentiated by segmentation of the market. Is a product using the subject invention “upmarket” or targeting the “general public”? What pricing is “reasonable”? What features can be tied with the subject invention that are “reasonable”–and what features constitute a “tie” to drive up the price (and perhaps the profit)? Continue reading →

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Ten Years After 25 Years After Bayh-Dole, Part 7

Posted on January 14, 2017 by Gerald Barnett

We are working through Boettiger and Bennett on changes they would like to see in Bayh-Dole practice. Here’s the fourth change:

access to patented, publicly funded technologies for humanitarian purposes

We now reach a deeply ironic portion of our authors’ discussion. Boettiger and Bennett started with a worry about research rights and research tools–both of which require apparently some degree of compulsory licensing or limitations on exclusivity or limitation on the property right in patents on subject inventions. These are perfectly legitimate concerns, especially for research that’s conducted to advance research.

The moves proposed by Boettiger and Bennett, if done at the federal level, correspond to a substantial reversal of Bayh-Dole and a return to the Kennedy patent policy, in which a portion of the patent right is held by the government, for non-exclusive access, and any monopoly portion of the patent had better act promptly to “call forth private capital” and disseminate an invention more rapidly and with better results than could the federal government.

As our authors examine the anticommons created by university administrators, they are led to repudiate Bayh-Dole–without coming out and saying so–for a range of publicly funded projects. Continue reading →

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Ten Years After 25 Years After Bayh-Dole, Part 6

Posted on January 13, 2017 by Gerald Barnett

We have worked through the set up to a review article on the Bayh-Dole Act from the perspective of a couple of university licensing office practitioners. It’s a fascinating exercise in repeating the conventional vocabulary of university licensing offices but ignoring the Act itself in setting up what needs to change. Clearly university licensing practices are (in general, but not everywhere) a mess, and Bayh-Dole has created the opportunity for that mess to grow. Changing Bayh-Dole–tweaking the law as it twerks–won’t do much to get at that university licensing practice, which is now reinforced by new university patent and research policies.

But our authors Boettiger and Bennett have some suggestions for changes in Bayh-Dole, and these come despite the efforts of stalwart Bayh-Dole advocates to control the changes to the law. While it was, apparently, according to Bayh-Dole advocates, good to make secret all reports of subject invention use, and to remove the restrictions on exclusive licensing, and to remove the conflict of interest provisions for nonprofit assignments of subject inventions to invention management organizations, and would make it acceptable if patent positions “encumber” future discovery and research–just so long as the encumberment isn’t “undue”–most anything that would actually promote the use of subject inventions has been resisted, if not openly mocked by AUTM and other organizations.

Let’s look then at these suggestions for changes to Bayh-Dole. There are four. Let’s take them one at a time. Continue reading →

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Ten Years After 25 Years After Bayh-Dole, Part 5

Posted on January 12, 2017 by Gerald Barnett

We have been considering an article reviewing the Bayh-Dole Act published in Nature Biotechnology ten years ago. The purpose in working through the article is to show just how deeply the rhetoric of university “technology transfer” has gained a life of its own, detached both from Bayh-Dole itself (and its standard patent rights clause) and from discussion of what leads to public benefits from projects funded to advance science or public welfare–or what leads to the use of inventions made in such projects–or even, somewhat aloof from pesky purposes of funding projects to help the public, of what leads to a lot of money from the exploitation of patents on these inventions. Strangely, these things aren’t up for discussion among university patent managers. Other than a few enlightened folks, the discussion is about how to defend current practice from any outside changes–that is, how to preclude accountability, enforcement of the law or patent rights clause, or changes in the law that might improve outcomes, starting with the public purpose of the projects, and moving to the use of inventions made in such projects.

What’s fascinating about the article by Boettiger and Bennett is that it proposes changes to Bayh-Dole from within the university technology transfer community. This is, in its way, a breaking of ranks, a violation of the code of silence. For that, there’s some respect due the authors for their efforts, despite their inability to characterize Bayh-Dole accurately.

We now take up a statement regarding the experience of university patent administrators. It’s a few sentences long. We will take it a clause or two at a time:

Over time, universities have come to a more subtle understanding of the benefits and the limitations of technology transfer.

That is, their approach doesn’t work. Continue reading →

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