Why Bayh-Dole . . . should go down

Posted on December 16, 2016 by Gerald Barnett

Here’s an even shorter response to Brian O’Shaughnessy’s inventor-loathing, Bayh-Dole-misrepresenting puff piece, “Why Bayh-Dole?”

If individual rights are so important, then why do universities take institutional control of inventions? Locke and Madison argue for individual ownership. Universities use Bayh-Dole to strip individuals of their property rights. That’s bassackwards, and wrong, and bad for innovation.

Look at the results. Nonprofit-managed commercialization rates under Bayh-Dole are 1/10th the rates under a commons-first regime, and 1/80th the rates for non-federal invention management before Bayh-Dole and outside the IPA program. It’s just that no-one is willing to announce the fact. The word trickles out, though. 1 in 200 inventions commercialized, or maybe only 1 in 1000. For non-federal university-hosted inventions, the claimed rate was 1 in 3 to 1 in 4. Even in the SBIR program commercialization rates stink. The NSF can’t figure out how to get small businesses past repeat Phase I and Phase II grants. Wonder! Continue reading →

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LES undermines Bayh-Dole for Congressional staffers

Posted on December 16, 2016 by Gerald Barnett

Brian P. O’Shaughnessy, the president of LES, has a little puff piece out purporting to defend Bayh-Dole–“Why Bayh-Dole?” In the piece, O’Shaughnessy sets up a straw man argument about open innovation and anti-patent advocacy and then strings together more logical fallacies about Bayh-Dole to, as one commentator has put it, “deftly refute” any contention that Bayh-Dole isn’t a good law.

It’s a bad sign when the leading advocates for a position can’t read the law they so admire, can’t cite evidence, and can’t work with higher order thinking such as basic reasoning. I know, I know–they think it’s all politics, and lying, bluffing, and bullshitting is all to be expected. There is a method to O’Shaughnessy’s madness. But it is madness.

Let’s take this thing apart and see what it has been eating recently. Half-digested nonsense, mostly, along with some dangerous toxins.

O’Shaughnessy is in bold:

“nascent technologies rarely find their way to market without incentives”

Under Bayh-Dole, nascent technologies even more rarely find their way to market. The university commercialization rate is under 0.5%, 1/10th of the federal rate before Bayh-Dole. A technology is not an invention but rather a collection of materials and methods. Bayh-Dole prevents these collections from forming, fragments rights across universities, which then cannot find a way to collaborate to put the fragments back together. Continue reading →

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Would lowering drug prices really reduce research on cures and remedies?

Posted on December 16, 2016 by Gerald Barnett

Vox recently published an article on the high price of drugs, “The true story of America’s sky-high prescription drug prices.” Here are three sentences that make a claim worth considering:

What’s harder to see is that if we did lower drug prices, we would be making a trade-off. Lowering drug profits would make pharmaceuticals a less desirable industry for investors. And less investment in drugs would mean less research toward new and innovative cures.

There’s a great deal going on in these few sentences. Is there really such a “trade-off” as is breezily asserted here? That lower drug prices would result in less research? Or even that lower drug prices would result in less investment? Or even that lower drug prices would make pharmaceuticals “a less desirable industry” for “investors”? And what sort of “investors” are these that would turn away? Perhaps “a less desirable investor”?

The “trade-off” makes the claim that federal policy must subsidize an industry’s profits in order to attract a particular kind of investor who otherwise would not invest and justifies this policy with the rationalization that everything would be worse without this particular kind of investor. That is, innovation in beneficial drugs depends on just this particular kind of investor. Wow. It would be good to know who these folks are. I’m betting that these special investors are pension fund and university endowment investment managers. Those are the folks with a moralizing mandate to look out only for the money. They don’t invest for fun and they don’t invest to see something good happen in the world as a result of their investment. They don’t even invest their own money. They have a fiduciary obligation  to make as much money as they can. And they can wrap that mandate around a “worthy cause”–making money for pensions and endowments. And if investing in drugs won’t make as much money as possible, then they will invest in something else.

Why not then the claim that without the money of this kind of investor, drug research would collapse into nothing? What’s your bet? Other candidates for this special investor?  Continue reading →

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An Outline of Bayh-Dole for Universities (with comments)

Posted on December 14, 2016 by Gerald Barnett

Here is a simple outline of Bayh-Dole for universities. I’ve cut out a bunch of technical apparatus and highlighted particulars that walk back or alter things in odd ways. Bayh-Dole is part of federal patent law.

35 USC 200 Statement of policy and objective

Use the patent system to promote the use of subject inventions.

The policy statement uses “utilization of inventions arising from federally supported research or development.” This is a fundamental limitation of the patent property rights in a subject invention. How can one use the patent system to exclude use by others if the mandate is to promote use? That’s a basic, serious question. The answer is not “ha ha–we can sue anyone anytime.” 

35 USC 201 Definitions

Contractor is any party to a federal funding agreement.

Inventors can be contractors, and the implementing regulations require universities to make them parties to each funding agreement for invention purposes.

Subject invention is a patentable invention owned by a contractor and made within the scope of a federal funding agreement for research.

This is the great goof, among many other goofs, in Bayh-Dole. Or perhaps it is one of Bayh-Dole’s unexpected pleasures. A subject invention is one owned by a contractor. But Bayh-Dole does not require nonprofits or small businesses to require assignment of inventions. The Supreme Court confirmed this in its decision in Stanford v Roche. 

To address the problem, the implementing regulations at 37 CFR 401.14(f)(2) require contractors to make all potential inventors parties to the funding agreement and thus make them also become contractors. But then the inventors’ obligation is to the federal government, not to the university that hosts their research. Inventors are then subject to their own patent rights clause at 37 CFR 401.9. Blast! 

Universities uniformly refuse to comply with the (f)(2) requirement of the standard patent rights clause. Even NIST’s attempt to add an assignment clause in the regulations is limited because it requires contractors to require inventors to assign subject inventions–those would be inventions that the contractors already own. Still doesn’t matter–universities still don’t comply with (f)(2) and substitute their own invention assignment requirements–many of which Bayh-Dole and its standard patent rights clause appear to override.  Continue reading →

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The Dole/Bayh Bill and Commercialization Rates

Posted on December 12, 2016 by Gerald Barnett

In 1983 Senator Bob Dole wrote a letter to Senator Charles Mathias, Jr. regarding a bill Sen. Dole intended to introduce to extend the “Dole/Bayh bill” (as Sen. Dole called it) to large businesses. I rather like the construction Dole/Bayh. Perhaps we should use Dole/Bayh when we mean the statutory version of the law and Bayh-Dole Act when we mean the faux version of the law, the version concocted by university administrators, along with Bremer, Latker, Allen, and Bayh.

It’s the faux version that gets promoted by AUTM, COGR, and others, and it’s the faux version that has killed the research commons, stifled collaboration, and stripped university inventors of access to their inventions (which they would have, at least, if the federal government obtained title and dedicated the inventions to the public or licensed non-exclusively and royalty free; and which they would have if university patent administrators did not deliberately overclaim which inventions came within the scope of, um, Dole/Bayh). The statutory version of the law–Dole/Bayh–does not mandate university ownership, does not require commercialization, does prohibit assignments masked as exclusive licenses and does forbid university administrators siphoning off licensing income to pay for non-subject invention management. But Bayh-Dole, in its faux glory, rejects these things and makes up its own version of the law. That’s the version the Eagle Forum has just finished presenting to legislative staffers on Capitol Hill. No one asks for briefings on Dole/Bayh these days. Post-truth, fake news and all.

Anyway, here’s Sen. Dole discussing the licensing problems before Dole/Bayh: Continue reading →

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Establishment–Why Bayh-Dole Has Failed

Posted on December 10, 2016 by Gerald Barnett

The primary thrust of Bayh-Dole, its big public splash, is that the patent system will be used to promote the use of inventions made with federal support, so there’s public benefit on reasonable terms.

35 USC 200

It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally supported research or development . . . .

35 USC 201(f)

(f) The term “practical application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

This is the fundamental gesture of Bayh-Dole, the express reason the law exists at all. Everything else is apparatus to do the job–stuff about patent rights clauses, reporting, ownership, patenting, government rights notices, exclusive licenses, assignment, royalties, march-in, reporting, favoring small companies. That’s all apparatus to the primary effort, which is to get publicly supported inventions to the point of practical application. Cut through everything else, and Bayh-Dole should reduce to: Continue reading →

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Working through an old op/ed on university ownership of inventions

Posted on December 6, 2016 by Gerald Barnett

I was out browsing the web and came across an op/ed from 2011 published in the Baylor University magazine Lariat. The anonymous author was opining about the Stanford v Roche case and the title makes clear the position: “Patents should belong to universities, not professors.” The proposition itself involves a number of implied claims–that inventions made by faculty should be owned at all, and if owned, should be owned by universities rather than by a sponsor of research or a trustee acting on behalf of the public; that university administrators should control faculty work, rather than, say, the faculty member who proposes the work and decides to do the work at the university; that patents should be used to create private monopolies rather than to encourage public use and industry competition.

The op/ed comes with a campy, sexist cartoon showing a greedy, bald-headed man (I think) labeled “corporation” grabbing at the arm of a distraught faculty member (apparently female, labeled “professor”) clutching something urn-like (labeled “invention” but perhaps containing the ashes of a good idea) while a concerned university administrator (male, I think) touches her other shoulder as if offering an escape from the corporate evil that might come next. Continue reading →

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How I got into this mess

Posted on December 4, 2016 by Gerald Barnett

I got my start in university technology transfer as a graduate student at the University of Washington. I was working toward a doctorate in literature and interpretation. My dissertation dealt with the representation of text, using medieval manuscripts as a base to show how different representations–facsimile, transcription, critical edition, modernization, translation–led to different patterns of reading and interpretation. A key portion of my work involved developing an in-line markup system similar to SGML that allowed a text to be presented on a display screen various ways just by changing a few settings–this was all before HTML and the Web. Three events in succession caused me to tumble down the rabbit hole of technology transfer, IP, Bayh-Dole, and all the rest.

The first event happened when I was working at the Humanities and Arts Computing Center as a graduate student programmer and coordinator for operations. I was the first employee of the new Center, and dealt with most everything that had to happen–set up computers, manage scheduling, write software, help people learn how to use computers and software, and manage that new Kurzweil trainable optical character reader. One project I took on was designing fonts for specialized alphabets. I had done a Middle English font extension on my own (Apple II based, using the ACE programming environment, to drive my Apple dot matrix printer). Now I developed fonts for Old Church Slavonic, Cyrillic, Turkic, Amharic, and an IPA-based version of Lushootseed. For that–this was before Metafont was widely available–I wrote my own font editor for 24-pin dot matrix printers (the latest thing) and EGA graphic boards (also so cutting edge for consumer computers like the IBM XT and AT). I also wrote code for language drilling (a program called Flash) and developed custom menus for a partially open text editor called PC-Write. Continue reading →

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Bayh-Dole has dropped commercialization rates from 25% to 0.5%: what more can we expect?

Posted on December 2, 2016 by Gerald Barnett

University licensing programs appear to have about a 0.5% commercialization rate. That is, of all the assets reported to them which they claim, only 1 in 200 (or less) actually results in a commercial product (without regard to the “success” of that product). This commercialization rate appears to be consistent across the last forty to fifty years of effort, despite changing laws and policies, a huge increase in budget, and a specific focus on “commercialization.” One might say that in terms of commercialization rates, Bayh-Dole has done nothing at all. One might also say that in light of all the other consequences of Bayh-Dole, it has failed as innovation policy, unless the purpose of such a policy is to create new opportunities for patent administrators and patent attorneys. Then Bayh-Dole has been a grand success.

In the late 1960s, Harbridge House, Inc. did an extensive study of federal agency patent practices. It’s well worth the read. One of the issues that the study considered was commercialization rates for contractors with various backgrounds. Here’s the money table, so to speak: Continue reading →

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Documented and undocumented technology transfer programs

Posted on November 30, 2016 by Gerald Barnett

Recently, the University of California, in an internal report on its technology transfer program, indicated that its commercialization rate was 0.5%–1 invention in 200 got to the point of a commercial product. There was no indication whether those commercial products were “successful”–that is, became broadly available to the public on reasonable terms. That 0.5% rate is an order of magnitude lower than what was reported for both federal government licensing and for licensing under the IPA program before Bayh-Dole.

In 1969, Willard Marcy of Research Corporation participated in a workshop looking at federal patent policy. Here is his take on Research Corporation’s experience, in response to the question why his organization does not pay a royalty to the government on its licensing of federally supported inventions: Continue reading →

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