Looking at this paper from 2002: “Academia, Industry, and the Bayh-Dole Act: An Implied Duty to Commercialize”. I’ve seen it before and always shied away from commenting, but with all the buzz about Bayh-Dole around things like Stanford v. Roche, maybe there needs to be some close look at this kind of article. In general, I have to say that a lot of this stuff is sloppy. The peers reviewing this kind of work need to be something other than sloppy themselves. Indeed, they need extra vigilance. Until the peers are experts, and therefore are competent judges of their own expertise and that of others, peer review is another property of a bozonet. That is, peers of an author, given standing but lacking expertise, just as the author lacks expertise, are just as likely to let through badness and demand the removal of goodness as offer comments for improvement of the article. And they won’t know it. I saw this all the time teaching writing, where in group work students asked to edit were routinely handing out really bad advice about other students’ work. So in the absence of a working peer review function, reviews have to be done in the wild and later. Here goes.
The first sentence [with my annotations]: The Bayh-Dole Act “fundamentally altered [standardized] the ownership paradigm [policies] of [regarding] intellectual property [patents] developed [on inventions made] with [within the planned and committed activities supported by] federal research dollars, transferring [giving a standard first option to elect title, with conditions] that ownership [that first option, absent a patent administration agreement] from the federal government to grant recipients (grantees) and organizations that are parties to government funding agreements (contractors) [the Act does not distinguish these--all are contractors], in an effort to enhance [normalize] the public’s [contractors'] access to technology [patent rights arising from inventions] developed with federal funds.”
That should be enough. The rest of it is wrong. There’s not an implied duty to commercialize in Bayh-Dole. Universities when they take ownership under protocols of Bayh-Dole undertake an express duty to use the patent system to promote use of the invention. There’s no secret implied meaning that promoting use means commercializing. If a university asserts this is their goal, then fine, that’s an assertion. But don’t pin it on the law, and certainly not as the secret unstated desire of the law. Hmpf.
Let’s be clear. Bayh-Dole doesn’t transfer ownership to grant recipients. Grant recipients obtain ownership when they exercise protocols available to them under Bayh-Dole, and only then when they choose to become the owners. The transfer of ownership in inventions is from the inventors to the grant recipients or to whomever the grant recipients may designate. That happens by assignment. Bayh-Dole allows grant recipients to step ahead of the Federal agency and have standing to require the assignment of patent rights from the inventors. Huge difference. It’s not the law that does this, it is an administrative choice.
Furthermore, the effort of the Act is not to move research technology to the public domain, but rather to use the patent system to promote the use of federally supported inventions. That’s not a policy of the public domain but of the patent system. In the case of medical technology, those doing the development may be especially well trained and equipped to teach and enable the use of what they develop. How could one say otherwise in general? That the surgeon who develops a new stent isn’t qualified? No, there’s a difference between mass production and regulatory approvals and being ill equipped to provide the public with access. But these are nits, perhaps. I don’t see in Bayh-Dole a goal of *increasing* public access. Check for yourself: here. It may be that an argument used to pass the law was that there would be more public use, but it’s not in the law. There’s a difference between arguments used to pass a law, and what the law itself sets out as the law. Hmpf.
The upshot of this paper is that federal contractors have an implied duty to partner with industry to commercialize “promising federally funded research”. They don’t. They have a choice about it, not a duty. They don’t have to commercialize at all. They can hand stuff off to others that do this. That’s not commercializing, it’s protecting the government’s interest. Or they can use the patent system to promote utilization. That’s not commercializing. Companies can just use the inventions, making not products at all. Methods to improve safety or production. Not commercialization. Use by companies. Not the same thing. Not required. It’s a choice.
The paper has many flaws. It’s not my place to work through them all. The central flaw, however, is the displacement of practical application with commercialization, and then a selective slog through the law to find support for this reading. Badly reasoned, poorly annotated, not persuasive. I’m sorry.
The objectives of Bayh-Dole list a number of objectives. Commercialization is mentioned but it is given little room in the law or its implementing regulations. Practical application plays a much greater role, is given a definition, and tracks the overall goal of promoting use. The law also encourages nonprofit-industry collaboration, especially through small companies, and support for US manufacturing. But commercialization is not the same as practical application. And collaboration isn’t secretly and implicitly licensing for product development. Practical application encompasses all sorts of beneficial uses, and does not require that products be made and sold. A company might self-implement an invention, realize benefits, and pass these along to the public, without any product being made whatsoever. And companies might collaborate with nonprofits to do this. The internet is an example, with many inventive technologies federally supported and deployed without commercialization. That’s because they became standards, not products.
We see the authors of our paper at hand conflating commercialization and practical application: “In addition, the Act mandates that contractors take necessary steps to commercialize any discoveries or inventions resulting from federally-funded research….” This mandate is not in the Act. It is an objective but the mandate does not fall on the contractors to commercialize, but rather makes a condition of taking title to use the patent system to promote use.
The Act: “to promote the commercialization and public availability of inventions made in the United States by United States industry and labor”. This is one of eight or so objectives, along side: “to promote the utilization of inventions arising from federally supported research” and “to ensure inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery” and this: “to…protect the public against nonuse or unreasonable use of inventions.”
There is an express duty to meet the conditions of the law. The law is implemented by means of the standard patent clause at 37 CFR 401.14. It is placed in the context of federal research policy by OMB Circular A-110. A university comes within the scope of the law when it accepts federal funding carrying the obligations of 37 CFR 401.14 as a federal contract. At that point, the university has a good faith obligation to comply with the contract to achieve its objectives. The law creates the foundation for regulations that establish standard federal contract clauses. Still not finding something implied. Forward. If the contractor elects to retain title in a subject invention, then the contractor as a condition accepts additional, express duties with regard to reporting on utilization, filing patent applications, and the like. Apparently the authors want it to be that regardless of the express statements of the Act, including a set of objectives, the implied duty is that only one of these matters objectives really matters–to “commercialize” inventions.
The authors want march-in rights to be more fodder for the implied duty to commercialize, but even in their development they use “practical application” which is a different, broader thing, of which commercialization is only one way. But march-in rights are much more directly dealt with in the Act, to protect the public from non-use or unreasonable use. If there is use, and it is reasonable, we are done. But not if there’s an implied duty to commercialize, or, that the law hints at something it doesn’t come out and say but that anyone reading this paper would realize is also part of the law. The authors call this “use it or lose it” policy. Yes, but they never can connect up use and commercialization.
We can see how different use and commercialization are in the Act by looking at the chain of decisions that result in the inventors retaining title to their inventions. If the contractor waives the right to retain title, and the federal agency chooses not to require assignment of title, then title stays where it always was, with the inventors. Under the Act, the inventors are required to elect title and file, including in patent applications a statement of federal funding, report on utilization, prefer US industry in exclusive licenses, and accept march-in provisions in the event of non-use, unmet health or safety needs, public use specified in federal regulations, or to deal with exclusive licensees not manufacturing in the United States. If the inventors fail use, the remedy is a compulsory license required by the government with “terms that are reasonable under the circumstances”, not a loss of title. If the inventors fail to file, that’s a different matter, but that is not “use it or lose it”–it is “file it or waive it”. Failure to commercialization does not cause a loss of title, but may create an obligation to accept a government imposed license (with reasonable terms, including one might infer consideration). The difference is pretty clear.
The authors argue that that “ultimate goal” of Congress is that “federally funded inventions are made available to the public, for the public’s benefit.” By “ultimate” we must infer “not stated in the law, but sure helps our argument if you pretend it’s there.” Again: the Act says that the objective is to use the patent system to promote the use of inventions made with federal funds, with some things that follow from that. If the government wanted the public to have access to the inventions, it would have required publication of all invention reports and access to the inventive labs for a period of time so the public could come and gawk and fill their pockets with as much access as they could carry. No need for patents. No, patents serve a national interest–inventions made in the US result in US jobs. That’s what’s clear in the language of the Act, whatever purposes we wish to assign to the Congress that passed it into law.
The authors conflate invention, technology, patents, and products. Making it simple like this gives them a plausible argument to discover implications. But the conflation does a disservice to the Act and to technology transfer practice. Where it may take a lot of specialized resources to get a new drug approved, it may take very little to implement a new disease assay, and in fact, we find that university lab medicine personnel are just as good if not better at doing so than their industry counterparts. While the lab medicine doctors might not be able to come up with branding, or restrict the invention to a particular product form easy to manufacture and designed to maximize profits, they are way better at practical application and are much the better route to public benefit.