Posts Tagged: "university technology"

Hopefully, you’ve been fortunate enough—at least once in your life—to work for someone you really admired. That happened to me as a Senate Judiciary Committee staffer for Senator Birch Bayh (D-IN), who gave me the opportunity that changed my life. He turns 91 today… Bayh-Dole not only cut through the bureaucratic red tape strangling the development of federally-funded R&D; it marked a turning point in how patents were viewed in Congress. When I first joined the Committee, patents were considered tools for big business to stifle competition. Intellectual property fell under the jurisdiction of the Subcommittee on Antitrust and Monopolies. The Senate Small Business Committee was a hot bed of anti-patent sentiment.

The Trump Administration’s Return on Investment (ROI) Initiative, which is geared toward increasing the American taxpayer’s benefits from federally-supported R&D, is potentially a big step forward. The draft recommendations were contained in a “Green Paper” open for public comment until January 9, 2019. The paper acknowledges the importance of a strong, dependable patent system and lauds the Bayh-Dole Act as the cornerstone of the U.S. technology transfer system, which leads the world in turning federally-funded inventions into new products, companies, jobs and even entirely new industries. Review of the 122-page paper confirms its overall value but also reveals some concerns.

Concerns about the ability of academic institutions to keep contributing to the U.S. innovation economy go well beyond federal funding stagnation according to the recent AUTM survey. In an executive summary section entitled The Perils of Eroding Patent Rights, AUTM notes that a slight decrease in options and exclusive license agreements compared to the number of non-exclusive license agreements could be due to fears that licensing companies have over protecting the intellectual property under the current iteration of the U.S. patent system. In 2016, option agreements were down year-over-year by 7 percent while exclusive licenses dropped 2.1 percent. Non-exclusive license totals, however, rose by 2.1 percent to 4,201 such license agreements in 2016. A sharp increase in startups ceasing business activity, up 37.4 percent to a total of 331 such startups, is another “ominous trend” which AUTM notes is likely attributable to eroding patent rights.

Today (TTOs) are increasingly being run by professionals who are experienced in startups, licensing, monetizing and have tremendous depth of technical knowledge in a variety of fields. But they are all waging a losing battle in an industry where 73% of the offices are losing money and an additional 16% just breakeven. It is not because of the efficiency of these offices, it is because of the underlying business model… But the impact of technology transfer on the US economy has been enormous. Since 1980 more than 5,000 startups have been created. From 1996-2013 technology transfer has contributed $518 billion on the US gross domestic product, and $1.1 trillion on the US gross industrial output.

Most assaults on public/private sector R&D partnerships are launched by those who believe patents are inherently bad and that through some undefined magic publicly funded inventions will be developed if they were only made freely available.  However, every couple of years attacks come from another, more threatening direction — claims by well placed, but inexperienced “experts” that if their pet theories were adopted technology transfer from the public sector would sky rocket. One idea being promoted is that universities should double or triple the number of their inventions to justify continued federal funding, thus triggering a spike in commercialization rates. In reality the only  spike would be in patenting dubious inventions to pad the numbers, leading to depressed licensing rates as portfolios were filled with junk.

Though aimed at certain pharmaceutical products, Sens. Angus King’s and Bernie Sanders’ potential amendments would throw the key to the Bayh-Dole Act’s success —certainty and exclusivity of the intellectual property associated with technology transfer in order to agree to attempt commercialization in the first place — into disarray beyond a single product or sector, the signatories contend.

Sen. Bernie Sanders (I-VT) introduced legislation requiring every agency and non-profit entity to include a “reasonable pricing” provision based on King’s formula for any life science invention made with government support. Apparently the colossal failure of a similar requirement forced on the National Institutes of Health (NIH) in the 1990’s which led to the collapse of industry partnerships without any reduction in drug prices is either unknown, or made no impression on Sen. Sanders. Or perhaps like his trust in socialism, he thinks that what failed in the past will somehow work by some weird magic if trotted out again.

What’s even more impressive is the impacts on gross industry output and GDP are up 14% while  the number of U.S. jobs supported rose 12% since the previous report issued two years ago. That’s remarkable at a time when the overall U.S. economy has been treading water… While the attacks on Bayh-Dole (and the patent system) are largely driven by emotion, here’s some additional data BIO cited that’s worth considering: over the past 25 years academic inventions led to the formation of 11,000 startups and the commercialization of more than 10,000 new products.

Being an entrepreneur isn’t easy. While it is a tough road for anyone, it’s particularly tough if you’re in the public sector and threatened by politicians… Rather, the march in provision is intended to insure that good faith efforts are being made towards commercialization and that sufficient quantities of resulting products are available to meet public health or safety needs. If the government is ever pressured to misapply the law for price control, the bottom would fall out of our public technology transfer system. Such a change would not be restricted to drugs but to any product commercialized under Bayh-Dole. What company would commercialize a federally funded invention if an agency could retroactively apply a completely arbitrary standard of fair pricing to justify taking the technology away through compulsory licensing? The answer is easy to guess.

Universities in particular must explain to their congressional delegations why R&D must continue to be funded and why its Bayh-Dole based commercialization bridge must be protected so federal funds already in the pipeline can produce the future jobs, growth and beneficial scientific progress they expected when they voted formerly to support R&D… Unless universities actively justify their commercialization of federally-funded R&D, other influential interests on the Hill who care little about future scientific study, but care a lot about their own survival, will now perceive R&D’s annual funding as a bridge to their own survival. This is no time to wait and watch from the sidelines.

Bayh-Dole is running on autopilot without Executive branch oversight and U.S. patents are no longer the world’s gold standard. Without a course correction, we could be headed back to the bad old days… Bayh-Dole has become a driver of the U.S. economy. Every day of the year universities form two new companies and two new products from their inventions are commercialized. University spin out companies tend to stay in state becoming significant contributors to the regional economy… Bayh-Dole is a recognized best practice. The Chinese have adopted it while strengthening their patent system to better compete with us.

EFF’s Reclaim Invention Act, Draft Model Statute may seem an odd approach to folks in DC but when lined up with a state-level lobby of IP-uninformed and angry local businesses lobby, state legislators will be impressed. So notwithstanding EFF’s effectiveness on the Hill weakened by its issue multitasking, it will have stronger standing in state legislatures. Its research university troll-targeted sanctions proposal therefor must not be taken lightly. Beyond the law’s ironic fiscal resemblance to patent troll “do what I say or pay” troll conduct, the Model Law’s enactment will add even more uncertainty to private sector investment in early stage innovation. Worse, because of its open-man-hole patent nullification mechanism stationed at costly commercialization’s successful endpoint, pure licensing firms like Qualcomm, and research universities will be exposed to expanded freeloader accessibility as another nail of uncertainty is pounded into the coffin of patent exclusivity.

It’s a fundamental principal of economics that the secure ownership of personal property is essential for prosperity. Walk through any public park and see how seldomly people bother to pick up trash thrown so thoughtlessly about by a few. But if someone throws trash on your lawn, it will quickly be made clear that this nonsense better stop, including calling the police if necessary. But what happens when the police won’t protect the rights of homeowners? Neighborhoods deteriorate, crime flourishes and investors move their money to other markets. That’s what’s happening to patent owners as “effective infringement” becomes an accepted business practice. However, we’ve been down this road before and have a good roadmap of the way out.