NYTimes: Universities, Patents, & Profits

The New York Times today published an editorial about the problems created by the Bayh-Dole Act that promotes the patenting and licensing of university inventions that arise from federally supported research. [Read the editorial] The author – Janet Rae-Dupree – is concerned that the focusing on patenting and business development has “distorted the fundamental mission of universities.”

‘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.”‘

Dupree’s recollection of the golden era where labs shared everything is admittedly wrong. As she explains: “When James Watson and Francis Crick were homing in on DNA’s double-helix structure in the 1950s, they zealously guarded their work from prying eyes until they could publish their findings, to be certain that they would get the credit for making the discovery.”

The important bit of truth comes from Jennifer Washburn‘s findings that most university technology transfer offices lose money:

“To date, Ms. Washburn says, data gathered by the Association of University Technology Managers, a trade group, show that fewer than half of the 300 research universities actively seeking patents have managed to break even from technology transfer efforts. Instead, two-thirds of the revenue tracked by the association has gone to only 13 institutions.”

This problem may well be the result of growing pains – it is expensive to start from scratch and build a patent and licensing department. Many universities are actually turning to other directions: finding that local economic development – regardless of immediate licensing returns – is one of the most effective ways to ensure a continued supply of future research funding.

Notes:

  • Read Kevin Noonan’s take [LINK]
  • The NYTimes note that many corporations are beginning to cooperate with foreign universities – essentially because US schools have become too complex and greedy.

34 thoughts on “NYTimes: Universities, Patents, & Profits

  1. Paul,

    Your points about unversities letting “ownership of rights” dominate their thinking to the exclusion of other factors (your point (5) is especially insightful about “joint ownership” being very troublesome) is certainly true. Some of this may be driven by forces which are outside the university TTO officer’s control.

    For example, in Ohio, there is a requirement under ORC 3345.14 that “All rights to and interests in discoveries, inventions, or patents which result from research or investigation conducted in any experiment station, bureau, laboratory, research facility, or other facility of any state college or university, or by employees of any state college or university acting within the scope of their employment or with funding, equipment, or infrastructure provided by or through any state college or university, shall be the sole property of that college or university.” In addition, only the “board of trustees” of an Ohio state college or university has the authority to “assign, license, transfer, sell, or otherwise dispose of” such rights to third parties. With this legal “strait jacket” in place, you can imagine how difficult it can be to get any sort of “deal” concluded between a corporation and an Ohio state university or college.

  2. Add to the above: (5) universities demanding “jont ownership” of patents, clueless to the disasterous legal consequences of doing so. See, my article published in the AUTM* Newsletter of December 1997, and, for example, Israel Bio-Engineering Project v. Amgen, Inc. (Fed. Cir. 2007).

    *the “Association of University Technology Managers”

  3. The problems with university patents are far more complex [and worse] than the issues only slightly mangled by this New York Times article. Starting with, all too frequently: (1) universities not being willing to pay the kind of salaries needed to get sufficiently competent patent prosecution and patent licensing qualified in-house patent atorneys; (2) inadequate and/or ambiguous employment agreements as to patent ownership rights and limited term confidentiality agreements between universities and their professors and graduate students; (3) the frequent inability of either university R&D contract staff or academic staff to understand that a private company that is paying almost all of the costs of a particular university R&D project is obligated to its stockholders to get something back – at least a licence for what it has paid for; and (4) the misguided arrogance of some professors thinking that they know a lot about patents, patent law, and what is patentable [an exhibit A is in this NYT article]. E.g., thinking that scientific descoveries are patentable without technically enabled specific commercial applications, or thinking that the selection of names of inventors to be listed on patents can be like the selection of names on technical publications, when in fact that can have fatal consequences for the patent.

  4. “Well, let’s be honest, it’s not just the cash, the cash is a fringe benefit.”

    When people say it’s not about the money, you can bet it’s about the money.

    Glad to hear that you find the law interesting. I’m sure it’s going to find you interesting too.

    Good luck. We’ll see you after your conversion.

  5. Well, let’s be honest, it’s not just the cash, the cash is a fringe benefit. To be honest I do find the law to be interesting. If I didn’t I wouldn’t think of going to school for it. Oh, and one other thing, I don’t really find the prospect of grad school in my art to be an attractive option so that pretty much leaves me with this. What can I say? The path is so clear if god reached down and wrote on a stone tablet it wouldn’t be any more clear.

  6. the article misses a salient point that less and less incentives exist for pure research (agree with M. Slonecker) – whether private or public entity – especially when copyists & infringers are emboldened by the current anti-inventor climate & the years of neglect over basic research by our Federal Gov’t …

    would love to hear comments about apple in it’s admitted art in the burst.com litigation … an ipod made by an Englishman in the late 1970s … wow – attribution – say it isn’t so … where is the news from the main stream media?

    related question: who owns the following freddie mac patent (and any related applications – we know the lobbyists have been sent packing) now that we have increased the national debt by about 5 trillion …

    on a serious note , did they get the basic research right in “determining the value of assets”? oh the intersection between real property & intellectual property in a Freddie Mac patent !!! lobbyists, anti-patent financial service firms, Bilski, Desktop Underwriter, convergence !!!

    US Pat 7,340,431 Systems and methods for determining the value of assets
    Assignee: Federal Home Loan Mortgage Corporation (Freddie Mac) (McLean, VA)

    link to patft.uspto.gov

  7. “What’s the matter did I make someone cry so they had to leave for awhile? Must be VA in disguise.”

    I’ve actually been missing you. Now that you’re just another examiner looking to cash in at a private sector job, you’re not nearly as interesting.

    Sigh.

  8. “I’m not big on ebay, the one thing I did order on there never arrived and I had to get my money back.”

    probably seized by customs

  9. Chemist — why don’t you send Janet Rae-Dupree (the author) an e-mail letting her know about the ACS charges.

  10. For an example of how university research has been exploited for profit long before the BDA, check out the American Chemical Society and Chemical Abstracts Service. This is a congressionally chartered organization supposed to promote research in the chemical sciences. What have they done? Made anyone publishing in their journals surrender the copyright. Then they used the copyrighted material to control access to the majority of publicly-funded research in chemistry in the USA. Want to search Chemical Abstracts?–get out your checkbook. Even a simple search is a couple hundred dollars. They run into the thousands. And their executive officers pay themselves fat 6- and 7-figure salaries.

    So patenting is just a drop in the bucket compared to the way the public has been ripped off by the American Chemical Society.

  11. You rang?

    What’s the matter did I make someone cry so they had to leave for awhile? Must be VA in disguise.

    Who has a VHS player anymore? I’m not big on ebay, the one thing I did order on there never arrived and I had to get my money back.

  12. “… who is going to sue a professor who has no money to provide damages for?”

    That makes sense. Just as it’s obvious that nobody would sue a deceased grandmother over filesharing… link to betanews.com .

  13. 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?

  14. Historically, the US government was taking title to inventions – that’s one of the reasons for the B-D act. The US government still gets rights under any inventions. The US Gov’t also has “March-In” rights (compulsory license) but the Gov’t has never done that.

    The real problem is just that, because a few Universities have developed valuable portfolios, all universities are feeling pressured to develop money-making patent portfolios. Many private universities are in the same bind because many states have conditioned bonds, waivers, or other special treatment on the University complying with State rules on ownership/licensing.

    I am not going to comment on the value of the underlying idea of University owning the outcome of the research. However, what I do see is that the unrealistic demands on University Tech transfer offices (make money or else) has just led to a lot of researh being done with foreign universities instead.

  15. Besley — some random thoughts — if the university owns rights, the contract price may be cheaper and the IP may more likely be commercialized

  16. Good question – and to tell the truth, I don’t actually know since I have not seen an actual check.

    But it is the case that the contract specifies that we own the intellectual rights to the work. Why shouldn’t the government’s grants come with the same provision? Sort of “The people paid for it, so the people own it?” sort of argument?

    There are some parallels with things such as maps and charts. In the US the electronic data that was collected using taxpayer money is in the public domain, and free to download. While in Canada, even though the public pays for their chart and map data, the government does not give the information away online.

  17. Besley:

    When you hire the academic (e.g., Professor), are you hiring the Professor individually or are you hiring the University? Is your check made out to the Professor or the University?

  18. I am a former academic presently working in industrial R&D.

    If my company hires an academic to do some work for us, then we own the rights to the work. If the US Government “hires” an academic by giving him grant money to do research (the usual practice), then why doesn’t the US Government own the work?

  19. What’s really interesting is the manner in which Bayh-Dole has seeped into standard university practices for engaging in corporate-sponsored research. The contractual limitations on ownership of i.p. (whether patents, copyrights, trade secret) are quite complex, and are assertedly there to provide compliance with tax exempt status requirements under Bayh-Dole ?? Interesting interface of i.p. and tax law.

  20. So now universities are patent trolls due to their efforts solely to make money off product they will never produce themselves? Give me a break. And “Rather than freely sharing techniques and results, researchers increasingly keep new findings under wraps to maintain a competitive edge.” Lady, WTF do you think is contained in a patent, chopped liver? Just because someone can put words together doesn’t mean they also have an ability to think, even if they have the New York Times behind them.

  21. “So who of you would be willing to step forward and invest your lofty ideals in this promising treatment?”

    One problem is that the public assumes that “Public Funds” would be used to invest in such lofty ideals. This is a poster child for what the public assumes federal funds are used for. The fact that Bayh-Dole has contributed to funds not being used for such research seems to be the point of the article. B-D directs research towards patentable areas, at the expense of non-patentable. As others have pointed out, there is still a lot of non-patent related research being done, but nonetheless funding decisions appear to be influenced by the availability of patent protection.

  22. “Universities should just hire some high schoolers to sit around and think up new ways to describe standard business methods and methods for navigating through computer menus and toolbars. There’s apparently a lot of interest in those sorts of “inventions.” And you don’t have to worry about stuff like enablement and written description. Just let your imagination be your guide, write up some claims and file away! If you’re lucky, you’ll get one of those braindead Examiners who spends his downtime hunting for “rare” anime VHS tapes on eBay and voila! another patentee is born.”

    Trying for another thread hijack MM? No recently decided 101 case for you to blather about?

    You are pathetic … let it rest.

  23. What happened to e6k? I stayed away for a while because of him. I guess I must have missed something? What happened?

  24. “If you’re lucky, you’ll get one of those braindead Examiners who spends his downtime hunting for “rare” anime VHS tapes on eBay and voila! another patentee is born.”

    hey, this is not fair because e6k can’t post anymore to defend himself

  25. The problem comes from the de facto funding model for research, at least in the biomedical fields. Unless a measure of exclusivity can be guaranteed, no one is going to pump money into anything so tenuous as a new therapeutice. Is the public served when promising research is not developed and brought to the public? In medicine this means new treatments and new drugs. The complete perversion of this basic reality is exemplified by a talk I recently attended by a prominent researcher at a major university. The researcher’s lab discovered a correlation between administration of a common generic drug and a very high percentage prevention rate of heart disease in animal models, with few side effects. The research was published, and is available for anyone to exploit. However, the researcher noted that it was not a “valuable treatment” because the drug had long been off patent. The researcher’s answer to the problem: form a company to screen for new, patentable drugs of the same class that would have the same effect (but no doubt cost many fold more that the existing generic). Perhaps you will say “greedy researcher” but the bottom line is that the promising 4 cent a dose therapy will never be made available to the general public because no one is going to promote it and do the clinical trials necessary to prove efficacy in humans – Not without some guarantee of a return on the investment. Physicians reading the report aren’t going to grab their prescription pads unless they have human data to back up the inidcation. The researcher’s role is not to raise money, run the trial or bring the drug to market for a new indication, but merely to share the data in an open way. So who of you would be willing to step forward and invest your lofty ideals in this promising treatment?

  26. Universities should just hire some high schoolers to sit around and think up new ways to describe standard business methods and methods for navigating through computer menus and toolbars. There’s apparently a lot of interest in those sorts of “inventions.” And you don’t have to worry about stuff like enablement and written description. Just let your imagination be your guide, write up some claims and file away! If you’re lucky, you’ll get one of those braindead Examiners who spends his downtime hunting for “rare” anime VHS tapes on eBay and voila! another patentee is born.

  27. “When the public paid for the research, the public should not be paying again to use the results of the research. This is a bad way to compensate researchers.”

    The public is going to pay the price for X product based market demand, etc. The question resolves upon who gets y% of the profits … either the manufacturer either gets 100% of the profits or some portion of it, with the rest going to the university. Importantly, the researchers aren’t being compensated, it is the university being compensated. These funds will either be plowed back into research or used to fund the general opeartions of the university. Either way, the public wins.

    On the other hand, profits that go 100% to the manufacturer end up eventually flowing to the shareholders (a very small minority of the public).

    Licensing is simply a tool used by certain universities as a source of additional funds. Nothing wrong with that.

    “Indeed, patent filings include a limited element of disclosure. But a much simpler and effective method of ensuring public access to the results is to require it as a condition of funding.”
    You don’t know much about the academia either, do you? The phrase “publish or perish” doesn’t just apply to law school professors. There is already plenty of incentive for people to publish … namely, their jobs.

  28. I really feel sorry for anyone who thinks they can get an unbiased and accurate story from the New York Times these days. It’s just pathetic and sad to see.

  29. When the public paid for the research, the public should not be paying again to use the results of the research. This is a bad way to compensate researchers. When the public pays for scientific studies, the results should disclosed in their entirety and be free for all to use. This does not mean immediate disclosure of the raw data — the primary researchers should get first dibs on mining it before others get to play with it — but it should mean that publicly-funded research should not be patentable, or only published in expensive closed journals. If requiring openness lead universities to prefer private money, then industry would be paying more for the running of the universities, which is not a bad thing.

    Indeed, patent filings include a limited element of disclosure. But a much simpler and effective method of ensuring public access to the results is to require it as a condition of funding. When research is privately funded we do not limit the funding agency’s rights to own the results, access them, or use them however they see fit. The general public should have the same rights when the public is the entity paying for the research. If researchers had to make their papers and their data freely accessible on a clear schedule (say: papers at most a year after publication; data at most three years after publication), this disclosure would be greater than that guaranteed by patents (most research doesn’t lead to patents anyway), and any member of the public could “practice the invention” and benefit from the results.

    As far as I can see, since patenting doesn’t promote disclosure more than the alternatives, the main argument for it is compensation of the researcher for the investment he made in the research. But in this case the investment was made by the public — not by the researcher. The public compensating the researcher for risks taken by the public simply doesn’t make sense. We don’t ask people to give back their grant money if their research doesn’t produce results!

  30. I am biased, since I get work from these selfsame tech transfer offices, but it seems to me that way more pure research is done than anything that could possibly be patented. Like orders of magnitude more. Compare papers published to patent applications filed, for example.

  31. “The NYTimes note that many corporations are beginning to cooperate with foreign universities – essentially because US schools have become too complex and greedy.”

    Hmmmm, who is the greedy one …
    The ones who want to be paid for their discoveries?
    or
    The ones who want to leverage the discoveries of others on the cheap?

    Sounds to me like a classic case of the pot calling out the kettle for being black.

  32. I’d like to point out that Bayh-Dole does not apply to corporate research. Bayh-Dole applies whenever federal funds are in the mix, and, if anything, it ENCOURAGES sharing of information and generally disfavors hoarding of technology.

    And, to some extent, most research institutions have always been corporate research laboratories. A big chunk of money comes from corporate funds.

    What Bayh-Dole has done, if anything, is encourage universities to establish tech transfer offices and intellectual property guidelines. These guidelines apply regardless of whether Federal funds are involved. This has somewhat fueled the drive to patent everything.

    However, the private funding concern is more directly related to changes in funding for public institutions in general. Less and less money (per capita) is coming from state and federal coffers. To offset these changes, the money has to come from somewhere: students? private entities? I tend to blame republicans in my state for constantly cutting funds for our public universities.

  33. “The primary concern is that its original intent — to infuse the American marketplace with the fruits of academic innovation — has also distorted the fundamental mission of universities.”

    Having seen this first hand, I do have to agree that the above comment from the NYT article is a very legitimate concern, and particularly when I note various public universities openly soliciting R%D contracts from the private sector.

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