Recently the feds ripped apart the contents of the Bayh Dole Act to figure out whether the Act’s mandates permit universities to try new technology licensing strategies based on e-commerce or other creative approaches. Henry Wixen, Chief Counsel for the National Institute of Standards and Technology (NIST), wrote an open letter to Thomas Kalil, the Deputy Director for the Office of Science and Technology Policy (OSTP). In the letter, Wixen combs thru Bayh Dole’s legal underpinnings to conclude that “Neither Bayh Dole nor its implementing regulations imposes upon contractors [including universities] any particular approach to be used in licensing subject inventions…whether through e-commerce or other creative approaches.“
Here’s NIST’s definitive read of the Bayh Dole Act. My comments are in italics.
Universities that receive federal research funding must:
1. Require that university employees disclose in writing each invention they create while under contract
- This is a big point of confusion on campus: it’s mandatory for the university to require *disclosure* of the invention, but it’s not mandatory that the university *own* the invention. Alternative license approaches are entirely possible if the university gives up the traditional ownership —> commercial license model for some technologies.
2. Disclose each resulting invention to the funding Federal agency within two months after the inventor informs the university about it
3. Notify the Federal government within two years of receiving the invention disclosure whether or not the university wants to retain title to any subject invention
- So universities ARE NOT required to take title; they just get first crack at it. In a perfect world, university tech transfer offices would quickly give up rights (in a specified time period) to technologies they don’t want to patent. Tech transfer staff would be supported in this, and assured that they will not be punished if a refused technology hits the marketplace some other way. Non-patented inventions should be open sourced and offered up online to anyone who wants them. An ecommerce-style click-thru, non-exclusive license could document university consent and help track high-level trends in public uptake.
4. File an initial patent application if the university chooses to retain title within a year after disclosure
- In the same perfect world, if a university did elect to take title and file a patent application, the faculty member should have the option to choose to lead the patenting process. Most may not want to, but for the ones who really care about the outcome, they could do a better job than overworked licensing staff who routinely handle brutal case loads of over 200 active inventions. And the faculty would be less likely to complain about the outcome.
5. Notify the Federal agency of any decision not to continue the prosecution of a patent application
6. In any patent applied for or issued on an invention, state that the invention was made with government support
7. Permit the government to exercise “march in rights” in which the university, if requested by the Federal government, must agree to grant a license to an appropriate applicant
In addition, universities must, in licenses for federally funded technologies must require that:
1. The licensee submit periodic reports on the utilization of an invention and efforts towards that utilization
- This Bayh Dole mandate this isn’t fair to the tech transfer office, nor the licensee. Licensees hate the reporting burden that universities impose on them. For small companies, detailed, multi-page reports have a real impact on their staff time. In an ecommerce approach, reporting would have to be non-mandatory or extremely streamlined and automated.
2. If the licensee wants the exclusive right to use or sell any inventions, a substantial amount of their product must be manufactured in the U.S.
- This is another unfair burden imposed on the tech transfer staff. Most products are made in many different locations and later assembled; biotech research is also worldwide. The tech transfer office shouldn’t have to do the policing on this. They don’t have the time or training. Nor should companies have to spend time putting together manufacturing roadmaps of complicated products.
Finally, universities must:
1. Share royalties with inventors
2. Utilize resulting royalties to support scientific research or education
- Most universities give about 30-40% of royalties to fund the costs of running the tech transfer office and the research division adminstration, neither of which count as research or education.
3. Make reasonable efforts to attract licensees that are small businesses
The fact that NIST is taking the trouble to examine Bayh Dole in the context of new licensing strategies indicates future effort should be directed towards:
1) Exploring new licensing strategies: we’re going to see federal agencies supporting initiatives that push the boundaries of new ways to commercialize university technology, particularly with an eye to the tools used in e-commerce such as good online catalogs, easy click-thru license templates, transparent license terms and so on.
2) Clarifying IP policy: university stakeholders and policy makers need to find the correct balance between university IP policy and tech transfer process vs. the federal law; it’s not innately a bad thing for universities to write their own rules, but in order for universities to offer effective radical new licensing models, there needs to be a clear understanding of where federal mandates stop and where local policy begins.
3) Thinking outside the box: The current university technology transfer model is shaped by received wisdom that’s neither based on real law, nor solid data. Bayh Dole leaves a lot more space than many people think in which to brainstorm alternative university technology transfer licensing strategies. In addition, universities should aggressively lighten the required reporting requirements on businesses.
Melba Kurman writes and speaks about innovative tech transfer from university research labs to the commercial marketplace. Melba is the president of Triple Helix Innovation, a consulting firm dedicated to improving innovation partnerships between companies and universities.