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September 9, 2008

Educational Savvy

From a public-interest standpoint, the blessing of blogging has been to demonstrate how the mainstream press is filled with hacks on assignment. While bloggers live and breathe their subject matter, "professional" media do topical cameos, resulting in nicely wrapped provocative stories, at a slanted angle, but with a garnish from "the other side" for the illusion of a "fair and balanced" perspective. This week we have Janet Rae-Dupree for the New York Times, wistful in "When Academia Puts Profit Ahead of Wonder:" "In academia's continuing pursuit of profit, the wonder of simple serendipitous discovery has been left on the curb."

In typical rigging of the playing field by the U.S. government, the 1980 Bayh-Dole Act let universities profit by patenting federally funded research. Naturally, universities responded in fumbling, grasping fashion. Good thing, bad thing, you make the call. Ms. Rae-Dupree fudges history to dangle the angle of the bad thing.

In the past, discovery for its own sake provided academic motivation, but today's universities function more like corporate research laboratories. Rather than freely sharing techniques and results, researchers increasingly keep new findings under wraps to maintain a competitive edge. What used to be peer-reviewed is now proprietary. "Share and share alike" has devolved into "every laboratory for itself."

Then Rae-Dupree does a 180, deflating her bucolic view of the past with the anecdote of DNA finders Watson and Crick, who "zealously guarded their work from prying eyes until they could publish their findings."

Coming to the nub, Rae-Dupree laments the profit motive.

Perhaps the most troublesome aspect of campus commercialization is that research decisions are now being based on possible profits, not on the inherent value of knowledge. "Blue sky" research -- the kind of basic experimentation that leads to a greater understanding of how the world works -- has largely been set aside in favor of projects considered to have more immediate market potential.

Kevin E. Noonan over at Patent Docs takes exception to the deception of Rae-Dupre's sloppy research.

Similarly wrong are the purported consequences of the infiltration of filthy lucre into the ivory towers of academe. The piece bemoans that "[b]lue sky" research... has largely been set aside in favor of projects considered to have more immediate market potential." Perhaps a quick perusal of the grant proposals to the National Institutes of Health or the National Science Foundation would have helped, since these are replete, even today, with exactly this kind of "blue sky" research. The reason is simple, and well understood by those who actually do the science: technology is when you know the answer, and the important and exciting work in science comes when you not only don't know the answer, you aren't really sure about the question. Grant proposals, while needing to convince the funding agency that the proposal has a chance of providing useful information, are not geared towards technological applications; perhaps Ms. Rae-Dupree is confusing this type of grant with applications for Small Business Innovation Research (SBIR) grants, which resemble the types of non-"blue sky" research she mentions.

Ultimately, the gripe comes down to who profits. Rae-Dupree takes the slant that universities haven't structured their licensing deals to suit the taste of corporations. So much for lamenting the profit motive.

Exclusive licensing of a discovery to a single company thwarts that innovation's use in any number of other fields. R. Stanley Williams, a nanotechnologist from Hewlett-Packard, testified to Congress in 2002 that much of the academic research to which H.P. has had difficulty gaining access could be licensed to several companies without eroding its intellectual property value.

Noonan:

Many of the critics cited in the article represent industry, and they recite how the current state of affairs -- where universities can patent their inventions -- has stymied commercial application of these inventions. This is undoubtedly the case; it is always easier just to take the fruits of another's labor than to pay for them. Uncritical reproductions of these types of complaints from industry can serve only one purpose, to persuade policymakers to rethink the Bayh-Dole scheme. While this might be good for those industries who have recently shown disdain for any innovation other than their own, it would not be good for the rest of us.

There are certainly some inefficiencies in the current system that are mentioned in the article, for example that only a few major universities have reaped the greatest benefits of licensing patented technology. Rather than damning the effort, however, this data merely confirms that invention, and profitable commercial exploitation of invention, is unpredictable, serendipitous and a lot harder than most of us (including, perhaps, some tech transfer managers) contemplate. The fact is that permitting university patenting over the past quarter century has fostered wide innovation, new products including new drugs and therapies, and promoted U.S. jobs and the economy. We would be foolish indeed to go back to having U.S. academia let corporations free-ride on the innovations produced as the fruits of their research.

Why not "damn the effort"? It remains unclear what justifies Noonan's position, the very premise behind Bayh-Dole: that universities should be able to profit from government (theoretically public) funds in such a manner. To hell with the patent sovereign immunity of state universities, that can have their cake and eat it too. Equitably, state university patenting is a game of dirty pool. If the public paid for the research, put it in the public domain, and let the conglomerates run with it, if only because the government is too stupid to make money with patents, and Joe Sixpack taxpayer can't use it, but might get a job with Mega-Tech Corporation, shipping the box out that holds the patented invention.

Posted by Patent Hawk at September 9, 2008 1:06 PM | Patents In Business

Comments

PH,

Consider the source (The New York Times), and it's no wonder you see an article like this one. Rae-Dupree loses sight of Bayh-Dole as being used to stimulate commercialization of technology that would otherwise not happen (as was the sad case before Bayh-Dole). Also, the view that Bayh-Dole will impede a professor's research won't hold up under scrutiny. Given how many biotech applications filings there are I see no diminishment in biotech research. And as Noonan correctly pointed out, who is going to sue a professor who has no money to provide damages for?

What I found particularly interesting is the statement by Rae-Dupree that "that fewer than half of the 300 research universities actively seeking patents have managed to break even from technology transfer efforts." Rae-Dupree probably didn't interview someone from the Association of University of Technology Managers (AUTM), but she should have to get her facts straight. As many of these tech transfer offices will tell you, making money is not the only reason for doing tech transfer, and may not even be the primary reason. In fact, Rae-Dupree neglected to mention a prime reason for unversities/non-profit research using Bayh-Dole, namely to help get start up companies underway for those professors who choose (not forced) to be entrepreneurial. And where, pray tell, does Rae-Dupree expect this country to get new business growth if commercialization of technology isn't encouraged, even in our universities/non-profit research organizations?

Posted by: EG at September 9, 2008 1:22 PM

EG,

Thanks for the comments and observations.

A lot about Bayh-Dole is unknown to me, but what was abundantly clear from the NYT article is that the same could be said for Janet Rae-Dupree. While I may be excused as a blathering blogger when I slip from lack of research for one of my entries, Ms. Rae-Dupree forfeited her professional responsibility. Not to mention the New York Times.

Posted by: Patent Hawk at September 9, 2008 1:45 PM

Dear PH:

Let me clarify. I think the public gets the benefits, and exactly the benefit intended - the advance of knowledge. That's true if we are talking about a grant to study diseases or French literature. And knowledge isn't patentable - inventions are.

Bayh-Dole recognizes the effects of the tragedy of the commons - if there is no way to protect an invention, no one will take the risk of commercialization. There is huge gap between a laboratory discovery and a commercial product, and living in a capitalist society that risk is borne by investors.

Now, there are other ways - the government could take title to anything made using grant money, and in some ways they do. All government-supported patents are subject to "march-in" rights, to prevent having inventions in the public interest, such as life-saving drugs, off the market. But we could have a system where the government received title to everything patented that was developed using government funds.

But is that what you want? We don't trust the government to do much (think of health care), and now we should have the government involved in commercial decvelopment of inventions? If a camel is a horse designed by a committee, what would it be if the government was responsible?

Because we're never going to have a system where we each get a check for the inventions developed with government money. What will happen under your scheme is that there will be no protection for these inventions, and the captialists (of the venture or other type) will have no expected ROI that will justify development. We could have the worst of both worlds - overseas companies freely using inventions developed using American taxpayer money, and having us pay them for the privilege of buying the products they have made using our technology (like it was pre-Bayh-Dole), or we can have a system where we use each player in the system to do what it does best: inventors to invent, investors to invest, companies to make products and the rest of us to support basic research, with the added bonus that we get the benefits of research AND promote innovation, jobs and the economy.

Let me make an analogy: intercollegiate sports, specifically football and basketball. What big schools get from these programs is money (all the tradition and spirit and etc. are important, but the programs get money, and lots of it, from sponsors and boosters and alumni). What do the "major leagues" get? Players, with a great deal of training and experience (compare these sports with baseball, where even talented college prospects need years in the minor leagues to make the majors). Now, many of these universities are "supported" by grants and scholarships and loan programs and the like for these students. My analogy would be the if the students were "free," then the major leagues would get all the money now made by the universities associated with sports. After all, why should the university "profit" from sports, since they get all the other benefits (spirit and alumni and etc.).

My point is that we can have the US taxpayer pay for corporate R&D or we can have corporations pay for it. I know which side of that debate I come down on.

Posted by: Kevin E. Noonan at September 9, 2008 7:03 PM

PH,

Glad to be informative about Bayh-Dole, given that there's lots of misinformation in the media about it. One thing I forgot to mention which is important for why universities/non-profit research organizations have TTOs is the obligations imposed by Bayh-Dole to not only commercialize the technology, but also to take title to it and patent it, or basically forgoe these rights. What Rae-Dupree also neglects to point out is that many, many universities/non-profit research organizations get research funding through NIH (I believe funding from NIH is second behind DOD); NIH grants are subject to Bayh-Dole, so TTOs (or similar departments) are necessary to manage these obligations and comply with them. Put it this way, how do you explain to your Board of Regents/Trustees that you lost your patent rights (and thuse the potential revenue) in a valuable technology because you failed or were unwilling to comply with your Bayh-Dole obligations? Hope this is helpful.

Posted by: EG at September 10, 2008 4:27 AM

Back in 2005, Fortune had an article on Bayh-Dole which used the words "litigious scrum." Noonan notes -- if there is no way to protect an invention, no one will take the risk of commercialization. --, but does not observe that allowing a federal grantee to obtain patent rights does not imply that someone will advance the money for commercialization. The University of Rochester case on COX-2 illustrates a situation in which the federal grantee sued a private entity (Searle) the day the patent issued. No money was spent by the grantee (or its agents) for commercialization. Madey v. Duke University is a case in which the Bayh-Dole Act was used to settle an academic turf war. Noelle v. Lederman was a battle between grantees. The patent in the recent Carnegie Mellon case was invalidated on summary judgment, evidence of supreme academic patent overreaching. And, recall, academics were behind the Metabolite case.

Posted by: Lawrence B. Ebert at September 10, 2008 5:25 AM

Dear LBE:

The fact that the Bayh-Dole scheme doesn't always work is not the same as saying it never works, which was the point of the article. In view of the thousands of patents and universities filing them, the fact that you can come up with four cases of "overreaching" (particularly since that determination was only made in hindsight) actually refutes the point that Bayh-Dole is bad for academic research.

Thanks for your thoughts.

Posted by: Kevin E. Noonan at September 10, 2008 6:58 AM

Of --the fact that you can come up with four cases of "overreaching" (particularly since that determination was only made in hindsight) actually refutes the point that Bayh-Dole is bad for academic research.--

#1. I mentioned five (I don't want to fill up PatentHawk's blog), and can come up with many more (Columbia and the Axel patents is a good one)

#2. In your response, you are acting as if "overreaching" is the only problem; it isn't. There's other discussion at IPBiz.

#3. The problem of taxpayers having to pay for the results of research they fund comes up with Proposition 71. It's certainly a good model to have taxpayers assume the risk and the licensees get the benefits.

Posted by: Lawrence B. Ebert at September 10, 2008 8:07 AM

LBE:

You ignore the benefits the public gets from the basis research, which is the point. You also ignore the benefits the public gets from corporations funding universities rather than the federal government.

It isn't perfect, and no one is saying it is. But remember, all this comes up in the context of the NYT article, advocating that Bayh-Dole was a mistake. If you require perfection, you're in the wrong profession

Posted by: Kevin E. Noonan at September 10, 2008 8:20 AM

Lawrence,

You comment about "taxpayers having to pay for the results of research they fund" is reminiscent of the "giveaway" argument I often hear in connection with federal funding of this type. Bayh-Dole isn't a "giveaway." First, the recipient of the funding must comply with their Bayh-Dole obligations (e.g., file disclosures, take title, file patents, etc.) or those rights can be taken by the federal government (this is in addition to the federal government's nonexclusive paid-up royalty free liecense and "march-in rights"); compliance with these obligations will require the organization to expend significant effort and especially money. Second, and more importantly, the organization getting funding from the federal government that is subject to Bayh-Dole will have to spend significant, and necessarily money, to commercialize that technology, whether on their own, or through a licensee (which Bayh-Dole encourages to be a domestic "small business"). Commercialization simply won't happen on its own. As Kevin Noonan correctly observes, you won't get the money (or licensees) necessary to make that commericialization happen (and thus comply with the purpose of Bayh-Dole) without letting organization that receives the federal funding have the opportunity to retain the invention rights. The experience of receiving federal funding with no retained invention rights (pre-Bayh-Dole) has proven that already.

Posted by: EG at September 10, 2008 10:39 AM

Lawrence,

You comment about "taxpayers having to pay for the results of research they fund" is reminiscent of the "giveaway" argument I often hear in connection with federal funding of this type. Bayh-Dole isn't a "giveaway." First, the recipient of the funding must comply with their Bayh-Dole obligations (e.g., file disclosures, take title, file patents, etc.) or those rights can be taken by the federal government (this is in addition to the federal government's nonexclusive paid-up royalty free liecense and "march-in rights"); compliance with these obligations will require the organization to expend significant effort and especially money. Second, and more importantly, the organization getting funding from the federal government that is subject to Bayh-Dole will have to spend significant, and necessarily money, to commercialize that technology, whether on their own, or through a licensee (which Bayh-Dole encourages to be a domestic "small business"). Commercialization simply won't happen on its own. As Kevin Noonan correctly observes, you won't get the money (or licensees) necessary to make that commericialization happen (and thus comply with the purpose of Bayh-Dole) without letting organization that receives the federal funding have the opportunity to retain the invention rights. The experience of receiving federal funding with no retained invention rights (pre-Bayh-Dole) has proven that already.

Posted by: EG at September 10, 2008 10:40 AM

Lawrence,

My apologies for the typos. Here is my cleaned up response:


You comment about "taxpayers having to pay for the results of research they fund" is reminiscent of the "giveaway" argument I often hear in connection with federal funding of this type. Bayh-Dole isn't a "giveaway." First, the recipient of the funding must comply with their Bayh-Dole obligations (e.g., file invention disclosures, take title, file patents, etc.) or those rights can be taken by the federal government (this is in addition to the federal government's nonexclusive worldwide, paid-up, royalty free license and "march-in rights"); compliance with these obligations will require the organization to expend significant effort and especially money. Second, and more importantly, the organization getting funding from the federal government that is subject to Bayh-Dole will have to spend significant effort, and necessarily money, to commercialize that technology, whether on their own, or through a licensee (which Bayh-Dole encourages to be a domestic "small business"). Commercialization simply won't happen on its own. As Kevin Noonan correctly observes, you won't get the money (or licensees) necessary to make that commericialization happen (and thus comply with the purpose of Bayh-Dole) without letting organization that receives the federal funding have the opportunity to retain the invention rights. The experience of receiving federal funding with no retained invention rights (pre-Bayh-Dole) has proven that already.

Posted by: EG at September 10, 2008 10:45 AM

Of --You ignore the benefits the public gets from the basis [sic: basic] research, which is the point--, the public would get the basic research, whether Bayh-Dole existed or not. The Cohen-Boyer patents came pre-Bayh-Dole and the public benefitted.
Of --You also ignore the benefits the public gets from corporations funding universities rather than the federal government--, whatever deal is between universities and corporations does not involve the public as a party. The public may benefit from useful products, but that's simply capitalism, not Bayh-Dole. You seem to ignore that in University of Rochester v. Searle, the university, which had no product and which had not spent any money trying to commercialize, was suing a company that had spent money to commercialize and which had a product on the market. Rochester was willing to spend millions of dollars on a lawsuit which failed on summary judgment. Rochester is not the only case with that fact pattern.
The Supreme Court case Merck v. Integra was a proxy for a dispute between Scripps and Burnham, with the ultimate (named) winner, Merck, neither a small company nor American. The Metabolite case is not the only case wherein academics were trying to patent what some say amount to laws of nature, and wherein there has been no money spent on commercializing a real product.
"Commercialization simply won't happen on its own," but in many of the "litigious scrum" cases, there was no attempt at commercialization.

Posted by: Lawrence B. Ebert at September 10, 2008 11:20 AM

Yes, Larry, Cohen-Boyer's work was patented. Which is the point, is it not?

The Rochester patent was invalidated (properly)in part under an interpretation of written description law not developed until long after the patent was filed. And the recent Carnegie-Mellon patent was invalidated on the same basis.

If there wasn't a real "product" what was being licensed in the Metabolite case? My recollection was that it was a kit.

The basic question remains: do we let corporations take the fruits of academic research for free or do we promote university patenting to provide payback for commercialization? Setting aside post hoc arguments, that was the question I was discussing. What's your answer?

Thanks for correcting the typo.

Posted by: Kevin E. Noonan at September 10, 2008 3:13 PM

I believe that the CAFC would take issue with the assertion --The Rochester patent was invalidated (properly) in part under an interpretation of written description law not developed until long after the patent was filed. -- One line of the Rochester case noted: Rochester's suggestion in its brief that Lilly "compounded Ruschig's error" by "invoking the written descrip-tion requirement in a case without priority issues" is similarly deficient. Neither Wm. Moore nor Sus, for example, involved any priority issues. Moore and Sus were decided BEFORE Rochester's patent application was filed. But let's go to the claim: A method for selectively inhibiting PGHS-2 activity in a human host, comprising administering a non-steroidal compound that selectively inhibits activity of the PGHS-2 gene product to a human host in need of such treatment. As the CAFC noted: it is undisputed that the '850 patent does not disclose any compounds that can be used in its claimed methods. A method claim that requires the use of an undisclosed and untaught compound is invalid under patent law of 2000 or or 1790. Nevertheless, the University of Rochester, who had created nothing, sued Searle, who had brought such a compound to the marketplace without the help of Rochester. What "fruits of academic research" or commercialization is Kevin Noonan thinking of? In the short time since this thread developed, the University of Iowa sued Amgen AND Forbes ran a story on the "highest yielding" Bayh-Dole universities, which showed partnerships of universities with large corporations, not small ones.

For additional information:
http://ipbiz.blogspot.com/2008/09/urochesters-patent-was-invalidated-by.html

Posted by: Lawrence B. Ebert at September 16, 2008 3:56 PM

Of Rae-Dupree's 2008 text about Bayh-Dole --In the past, discovery for its own sake provided academic motivation, but today's universities function more like corporate research laboratories. Rather than freely sharing techniques and results, researchers increasingly keep new findings under wraps to maintain a competitive edge. What used to be peer-reviewed is now proprietary. "Share and share alike" has devolved into "every laboratory for itself."--, I had written nine years earlier about Bayh-Dole several points, including the text Further, the same alignment issue will exist when department members go to scientific meetings outside the department. Professors A, B, C aligned with Company Z will not be predisposed to talk to Professors A', B', C' aligned with Company Z'. Not only will the timing of information exchange be altered, but the extent of exchange will differ. Furthermore, the interaction with visitors to the department will change. The cross-pollination activity of traveling professors will be curbed, for proprietary activities will not be discussed. Thus, the "free information exchange" traditionally entrusted to academics might be diminished.
[Implicitly Zurko; The Need For Fact-finding As Plain As The Nose On Your Face, IPT (July 1999)]. In August 2005, I wrote: The Federal Circuit, rather than academics, may be closer to the reality that the status of universities as patent holders has trumped the status of universities as ivory towers when one sees a University of Texas official state: "This is not about getting a big win and grabbing some money. It's about keeping things fair in the business world." University of Rochester v. Searle WAS about getting a big win and grabbing money from non-academic people who actually created a product. University development of real products is one thing, but Bayh-Dole is now supporting a litigious scrum, as Fortune pointed out long before Rae Dupree.


Posted by: Lawrence B. Ebert at September 18, 2008 11:51 AM