Today's Date: April 20, 2014 Search | Home | Contact | Services | Patent Attorney | Patent Search | Provisional Patent Application | Patent Application | Software Patent | Confidentiality Agreements

Taking Directions from the Lost


Written by Joseph Allen
Allen & Associates
Posted: Jan 7, 2013 @ 6:30 am

Tell A Friend!
Do you have a question about Bayh-Dole or IP/Tech management policies?

CLICK to contact Joe Allen


 

That fellow seems to me to possess but one idea; and that is a wrong one. — Dr. Samuel Johnson

The Brookings Institution’s new report Building an Innovation-Based Economy draws on “two dozen innovation leaders” for its findings. Only one section, “Increasing Commercialization and Technology Transfer,” names no leaders backing its recommendations, perhaps with good reason.

Brookings wants new regulations imposed on university and federal laboratory patent licensing, presenting theoretical problems with no supporting facts.  Brookings lightly brushes aside the Bayh-Dole Act’s thirty-two year record of success. The Act believes that technology creators, not the bureaucracy, best understand how to manage resulting inventions.  Those recommending sweeping changes face a high burden of proof that Brookings doesn’t attempt to meet.

The report accurately describes Bayh-Dole as “streamlining the translation of research into new products.” Then the kicker: “It is less clear, however, whether this act has always been effective in directing public research into the public interest.”

“Rather, it is quite possible that one unforeseen consequence of Bayh-Dole allows for modes of commercialization that have and (sic) inflationary effect on the whole healthcare system, not just new products.”

The report alleges that “established pharmaceutical companies can outbid smaller firms seeking to license a promising university patent. New companies will not rise to replace old established ones, and any new technological platform in biomedicine will not produce the creative destruction that infects markets with dynamism.  As a result, global pharmaceutical industry can set prices for final products above what would otherwise be competitive prices.”

The lack of any evidence supporting these claims is striking.

Brookings continues:

 “If tax dollars fund an important part of biomedical innovation, it is not altogether unreasonable for the government to exercise some degree of control over pricing excesses. Yet, no such measures are currently in effect.”

Further:

“Congress should amend Bayh-Dole to promote the formation of competitive as opposed to monopolistic markets. A step in that direction is for the letter of the law to explicitly encourage the use of non-exclusive licenses. Without banning the use of exclusive licenses an explicit government preference for non-exclusive licenses would increase the power of federal agencies to promote wider use of patents, regulate monopolistic practices with the products that result from them, and shift the weight-of-proof from the bureaucracy to the licensees to justify an exclusive patent.”

Brookings wants an Executive Order requiring the federal labs to adopt “responsible licensing programs” without documenting any existing problems.

They urge preferential funding of federal grants coercing the formation of patent pools.  Their reason: patenting research tools inhibits innovation, while patent pools increase “the likelihood that patents will be used to create competitive markets of innovation rather than strengthening monopolies.” Again, no facts, just theory.

The report ignores actual practice. Universities rarely have multiple companies fighting to license their inventions. They’re lucky to find one. The rule of thumb is that a promising university technology requires 5-7 years of private sector development to turn into a product. For a drug, double the time and add a billion dollars in costs. Exclusive licenses are often essential to justify such risks.

Brookings underestimates how hard it is to spot breakthrough discoveries when they first appear.  Dominant companies are unlikely to immediately recognize them.  That’s why IBM threw Bill Gates out of their office.  The formation of the US biotechnology industry is another example.  Big drug companies didn’t scoop up early academic inventions preventing competition.  The exact opposite happened: small companies spun off campus leading to the American dominance of a revolutionary new industry.

Imposing government oversight in the name of “reasonable pricing,” or artificially requiring non-exclusive licenses to be “more fair” harms innovative small businesses, undermining their ability to secure funding and market position.

Luckily, a report by The President’s Council of Advisors on Science and Technology (PCAST) just issued with a far wiser approach in the Report to the President titled Transformation and Opportunity: The Future of the U.S. Research Enterprise.  After describing the importance of industry-university partnerships, it says: “The Federal Government’s primary role is not to participate directly in these relationships but to establish the policy environment in which they can flourish, through the Bayh-Dole Act… and other legislation.”

PCAST recommends that the US: “Embrace more fully the additional role of universities as hubs of the innovation ecosystem” citing the Economist Technology Quarterly:

Possibly the most inspired piece of legislation to be enacted in America over the past half century was the Bayh-Dole Act of 1980… this unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money.  More than anything, this single policy measure helped to reverse America’s precipitous slide into industrial irrelevance…

Hopefully we are wise enough to recognize which report points the way forward—and which points back into the swamp.   Two clues: (1) PCAST lists the names of its experts; and (2) It has facts backing its findings.


About the Author

Joe Allen is a 30-year veteran of national efforts to foster public/private sector commercialization partnerships, and author of numerous articles on technology management for national publications. Joe served as a Professional Staff Member on the U.S. Senate Judiciary Committee with former Senator Birch Bayh (D-IN), and was instrumental in working behind the scenes to ensure passage of the historic Bayh-Dole Act. Joe has served as the Executive Director of Intellectual Property Owners, Inc., a trade association representing major R&D companies, he was involved in the creation of the Court of Appeals for the Federal Circuit, and he also served at the U.S. Department of Commerce as the Director of the Office of Technology Commercialization. From 1992 until 2004, Allen was with the National Technology Transfer Center (NTTC), becoming President in 1997. Clients included NASA, the Department of Defense, EPA, the Department of Veterans Affairs, and the Department of Commerce. Between 2004 until 2007, Allen was the Vice President and General Manager of the West Virginia High Technology Consortium Foundation. In 2008, Joe founded Allen & Associates to continue to facilitate public/private partnerships between universities, federal laboratories and industry.

8 comments
Leave a comment »

  1. Joseph,

    We live in an age of extreme ADD (**)

    What is your point?
    (In two tweet words or less please.)

    (** ADD= Attention Deficit Disorder)

  2. Step-

    You can’t be serious? You want Joe to summarize his article into 1 or 2 words? If ADD is that high and complex issues have to be summarized into 1 word or 2 words then god help us all.

    -Gene

  3. Gene,

    In summary: Yes.

  4. The point is moot – with $2.5 billion in cuts to NIH, you can forget any new technology coming from universities.

  5. mike,

    I would whole-heartedly disagree with you.

    Take a look at the behemoth that is the California university system and its cash generation through innovation to see that any cuts to NIH (no matter how large in the aggregate) will not deter university programs.

    Plain and simple: there is too much money to be made.

    Then go back and review the AIA and see the additional benefits bestowed on universities in the form of micro-entity status and Prior User Right exceptions.

    If I were a betting man, my money would be on the universities.

  6. @Gene (comment #2)

    Of course I’m not being serious.

    But it got your ADD attention, didn’t it?

    My real point is that the above post is overly obtuse.

    Get to the point: When it comes to the inventing process, people (i.e. those who wrote the mentioned Brookings Institute article) just make stuff up. They have no first hand experience and knowledge. Yet somehow they are 101% certain that a patent-less “free” market system will inherently produce this “innovation” stuff if only we “unleash” the hounds of unbounded competition.

    On that point, I am serious.

  7. p.s. This is an opportunity point for real inventors (if any are reading this thread)

    to chime in with their first hand experiences

    in the real world

    as opposed to the theoretical, free-for-all competition world

    that Brookings Institute and the like wish to reincarnate.

  8. > “established pharmaceutical companies can outbid smaller firms seeking to license a promising university patent. New companies will not rise to replace old established ones, and any new technological platform in biomedicine will not produce the creative destruction that infects markets with dynamism.”

    maybe Brookings needs to be explained the brand-new concept of “capitalism” and “free markets”.

    > Their reason: patenting research tools inhibits innovation, while patent pools increase “the likelihood that patents will be used to create competitive markets of innovation rather than strengthening monopolies.”

    I mean, where does one begin with this? Patent pools don’t create competition or more importantly innovation and advancements for society.

    > Brookings underestimates how hard it is to spot breakthrough discoveries when they first appear.

    …and further, the carrot for the small inventor/company to develop the technological advancement after spotting the discovery. Same inventor in large company doesn’t have this incentive (a few $thousand for patent issuance pales in comparison).

    Is Brookings sent forward in time from 1980′s eastern Europe to today? Maybe Brookings could study the contrast between East and West Germany – same people, completely different systems, the one with the innovative system prospered while the other went impoverished.

Leave Comment