{"id":291159,"date":"2021-08-29T10:00:02","date_gmt":"2021-08-29T10:00:02","guid":{"rendered":"https:\/\/theintercept.com\/?p=367794"},"modified":"2021-08-29T10:00:02","modified_gmt":"2021-08-29T10:00:02","slug":"how-the-bayh-dole-act-wrested-public-science-from-the-peoples-hands","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2021\/08\/29\/how-the-bayh-dole-act-wrested-public-science-from-the-peoples-hands\/","title":{"rendered":"How the Bayh-Dole Act Wrested Public Science From the People’s Hands"},"content":{"rendered":"
O<\/span>n the morning<\/u> of June 6, 1979, Navy Adm. Hyman G. Rickover, the longest-serving officer in the history of the U.S. armed services, sat down before a Senate subcommittee on the Constitution. Famous as the father of the nuclear submarine program, Rickover had recently emerged as that rarest of Washington breeds: a top-brass crusader against waste and corruption in defense contracting. On this day, he deployed his reputation and characteristic bluntness to stop a bill called the University and Small Business Patent Procedures Act.<\/p>\n At stake was the government\u2019s long-standing proprietorship of patents on inventions resulting from the research it underwrote. The proposed legislation would hand patents over to the private contractors\u00a0that conducted research at government expense, essentially gutting the government\u2019s ownership stake and paving the way for monopolization. The bill\u2019s supporters \u2014 those in favor of removing this block \u2014 included drug companies, venture capital firms, university patent offices, and the nascent biotech industry. Those opposed to this sweeping change in federal patent policy were led by a fading Democratic coalition committed to New Deal ideas about antitrust regulation, patents, and public science controlled in the public interest. Rickover was a lone but strong military voice for this coalition: a war hero with the authority of having overseen the construction of the first nuclear propulsion systems, one of the most complex government science programs since the Manhattan Project.<\/p>\n Speaking before the subcommittee, Rickover railed against the proposed policy changes. \u201cGovernment contractors should not be given title to inventions developed at government expense,\u201d he said. \u201cThese inventions are paid for by the public and therefore should be available for any citizen to use or not as he sees fit.\u201d<\/p>\n This seemed self-evident to Rickover. After all, he noted, \u201ccompanies generally claim title to the inventions of their employees on the basis that the company pays their wages.\u201d It befuddled and angered him that the U.S. government would consider giving up its own shop rights to industries that would never do the same. In his decades managing the development of nuclear reactors, Rickover had witnessed the very contest between public interest and private greed so clearly anticipated by mid-century advocates for keeping public science under public control.<\/p>\n In the final months of the Carter administration, this position, advocated most forcefully during the wartime birth of today\u2019s federal research establishment, was fading as a Democratic faith.<\/p>\n Since 1963, the contest to control government patent policy had centered on an executive order issued by President John F. Kennedy one month before his assassination. The order ended what had been a confusing, ad hoc approach toward patents underwritten with public money by directing agency chiefs to maintain a default policy of government patent ownership \u2014 especially on inventions related to public health.<\/p>\n\n If contractors could muster a strong case that they required the patent to bring an invention to market, the Kennedy policy allowed some wiggle room. But as a general rule, it disciplined federal agencies to be stingy in granting private monopolies on public science. And the stingiest agency of them all \u2014 to the postwar pharmaceutical industry\u2019s displeasure \u2014 was the Department of Health, Education and Welfare, or HEW. (In 1979, it was split up into the Department of Education and the Department of Health and Human Services). For 16 years, the drug and patent lobbies had backed Republican bills to overturn the Kennedy policy. Not one had ever come close to passing.<\/p>\n In the summer of 1979, the latest such bill was entering its sixth month of hearings on the merits of pulling the Kennedy policy inside-out. Sponsored by Sen. Bob Dole, R-Kan., and Sen. Birch Bayh, D-Ind., it would shift the burden onto government to prove that its ownership of a patent better served the public than a private monopoly, rather than the other way around. The bill was considered a long shot to get past the dens of liberal lions in the Senate and President Jimmy Carter, but it was gaining traction among Democrats.<\/p>\n As the bill\u2019s chances of passage grew, Rickover stepped up his warnings to lawmakers not to fall for \u201cthe age-old arguments of the patent lobby\u201d and pass legislation that \u201cpromotes greater concentration of economic power [and] impedes the development and dissemination of technology.\u201d<\/p>\n B<\/span>eginning in the<\/u> early 1970s, the enemies of government patent ownership embraced a trendy new phrase in the nation\u2019s political and economic lexicons: “global competitiveness.” To compete against Europe and Asia, the argument went, Washington had to incentivize innovation by relinquishing control of inventions made under government contract and hand them over to the private sector to handle them as they saw fit.<\/p>\n The argument was always a scrambled one. To start, it rested on the falsehood that government inventions were being purposefully withheld from industry, when public science was, by definition, readily available for licensing and use. During the contentious hearings held on one of the failed bills that preceded the Bayh-Dole Act, Michael Pertschuk, Federal Trade Commission chair under President Richard Nixon, testified that there was \u201cno factual basis\u201d for claims that government ownership of patents was slowing or obstructing commercialization. He told a room of red-faced Republican lawmakers, \u201cThe available evidence shows just the opposite.\u201d<\/p>\n The argument related to so-called global competition also dissolved under scrutiny. \u201cThe most formidable new rival to U.S. technological leadership at the time, Japan, maintained a much weaker patent system, and among other things required wide licensing of patents,\u201d F.M. Scherer, the FTC\u2019s chief economist between 1974 and 1976, told The Intercept. Meanwhile, the key technologies behind the rising Silicon Valley-based high-tech industry of the era \u2014 integrated circuits, computers, lasers, fiber optics \u2014 had been diffused not by private monopolies but by a 1954 Justice Department consent decree that crow-barred open Bell Labs\u2019 vault of federally funded patents. According to the best available evidence, it was the private sector that hoarded patents, slowed development, and hurt national \u201ccompetitiveness\u201d \u2014 not the government.<\/p>\n But the anxiety of the \u201970s was real, and the patent lobby held a keen appreciation for its uses in overcoming deep political and public suspicions of monopolies and the drug companies. The March 1973 issue of Newsweek introduced Americans to a British term, \u201cstagflation<\/a>,\u201d to describe the double whammy of high inflation and unemployment. By 1975, the country was in the first full-blown recession in recent memory. It was during this time, just before Carter\u2019s election, that a former patent lawyer-turned-assistant secretary of commerce named Howard Forman came up with an idea to drive a stake through Kennedy\u2019s 1963 executive order. As neoconservatives outside government planned their full-court press against the Soviet Union, old-line conservatives inside government hatched a plan to destroy, at long last, the New Deal vision of public science under public control.<\/p>\n I<\/span>n 1976, Forman,<\/u> a lifelong Republican, referenced Kennedy\u2019s famous Cold War claim of an emerging \u201cmissile gap\u201d between the United States and the Soviet Union. In Forman\u2019s view, Democrats now invited an \u201cinventions gap\u201d to undermine the country\u2019s public health and economic \u201ccompetitiveness.\u201d<\/p>\n Speaking before the House Committee on Science and Technology in September 1976, Forman made the sensational claim that 28,000 patents were languishing unused on the dusty shelves of government agencies. (In his written statement, the number was 26,000). Each of these patents, Forman argued, represented another piece of potential progress lost to dogmatic statism. By refusing contractors the right to claim them as their own, the government was actively suppressing their diffusion and development and thus failing its constitutional mandate to \u201cpromote the progress of Science and the Useful Arts.\u201d<\/p>\n \u201cOnly about\u00a05 percent of those 28,000 patents have been the subject of some kind of licensing action,\u201d Forman testified. \u201cThe greater majority of those patents are not getting into use, and they are doing no good to anyone.\u201d<\/p>\n This notion struck a chord with many Democrats and drew positive attention in the press. Three years later, Forman\u2019s \u201cinventions gap\u201d reappeared early in Bayh\u2019s Senate speech introducing his patent reform bill for debate.<\/p>\n As with \u201ccompetitiveness,\u201d the power of the alleged \u201cgap\u201d relied on lawmakers\u2019 shallow understanding of how patents work. The great majority of inventions, patented or not, interest no one and are never licensed. The U.S. Patent Office issues thousands of patents every day; only a tiny fraction of those\u00a0are ever applied or developed into new products. Even accounting for this number was difficult, because the purpose of government research is diffusion, not legal action in defense of patent infringement. Rickover was especially irked by this sleight of hand, telling senators in 1979, \u201cIt is almost impossible to tell the extent to which government-owned patents are being used, because the government, unlike private parties, does not have reason to search for infringement [and] generally has no desire to prevent others from using its inventions.\u201d<\/p>\n What data existed only undermined the case for making private monopolies of publicly funded science.\u00a0From 1968 to 1978, HEW licensed a full quarter of roughly 350 patents emerging from federal research. Meanwhile, the universities and firms that were allowed to claim patents on federal research \u2014 that is, those that were granted exceptions to the Kennedy policy during the same period \u2014 licensed their patent monopolies at less than half the government rate, producing a total of four commercial products.<\/p>\n But the alliance behind Bayh-Dole pushed on with these arguments, backed by the university patent industry and a raft of trade associations, including the National Patent Council, the Chamber of Commerce, and the National Association of Manufacturers. The bill\u2019s biggest beneficiaries\u00a0\u2014 the drug companies \u2014 were careful to keep a low lobbying profile.<\/p>\n Following Carter\u2019s election in 1976, Forman began to coordinate strategy with a rogue group of bureaucrats inside the Department of Commerce and HEW that called themselves the Government Patent Policy Committee. They were united by ideology and a loathing of Carter\u2019s HEW secretary, Joseph Califano, a liberal Democrat who helped President Lyndon B. Johnson steer the passage of Medicare and Medicaid. Living up to his reputation, Califano did not grant a single exception to the Kennedy policy during his first two years at HEW.<\/p>\n Between Carter, Califano, and the Democratic Congress, the Kennedy patent legacy seemed secure moving into the 1980 election. But the Government Patent Policy Committee was a determined and creative bunch. They struck upon a simple and brilliant idea: Rather than passing a bill that openly slipped patents to drug companies, why not write one that offered them to other actors and let the drug companies in later?<\/p>\n O<\/span>n February 9, 1979,<\/u> Bayh and Dole introduced S. 414, the University and Small Business Patent Procedure Act. The bill proposed what amounted to a default policy of transferring titles on government-supported inventions to small businesses and nonprofit contractors, including universities. It left out drug companies \u2014 until the law could be expanded to include them \u2014 as a ploy to win Democratic support and provide political cover. \u201cThe perceived halos over universities lit the path to passage of the Bayh-Dole Act,\u201d Rebecca Eisenberg wrote in a 2018 article<\/a> for the academic journal D\u00e6dalus.<\/p>\n To further mollify skeptical Democrats, the bill included a provision granting the government \u201cmarch-in\u201d rights to break private monopolies in the event that the contractor fails to make the invention available to the public on \u201creasonable terms.\u201d<\/p>\n The ruses worked. Even Louisiana\u2019s Russell Long, one of the Senate\u2019s last links to New Deal liberalism, turned on his lifelong commitment to defending public science from monopolistic industry hands. In the final days of the lame-duck session following the 1980 election, Bayh-Dole emerged intact from a Democratic-controlled Congress and was signed into law by Carter on December 12.<\/p>\n Exactly how the bill got through the Democratic majorities in Congress and the White House remains a mystery.<\/p>\n \u201cThere’s no good explanation for Sen. Long flipping his position,\u201d said Gerald Barnett, the former\u00a0director of the Research Technology Enterprise Initiative at the University of Washington, who now runs the blog Research Enterprise<\/a>. \u201cIf Long thought it was wrong for the federal government to allow big companies doing federal work to retain exclusive patent rights, then how could he possibly think that allowing nonprofits to retain patent rights which they then tried to pass exclusively to big companies would be any less wrong?\u201d<\/p>\n Whatever Democrats\u2019 understanding of this, the extra step required by Bayh-Dole was short-lived. In 1983, President Ronald Reagan issued an executive order expanding Bayh-Dole to include corporations of all sizes. Having served its purpose, Bayh-Dole\u2019s stage-prop halo was removed and tossed to the wind.<\/p>\n On January 4, 2021, two days before the Capitol riot, the Federal Register, the U.S. government\u2019s daily trade paper, announced a proposal by an obscure agency called the National Institute of Standards and Technology. Nestled within the Commerce Department, NIST is not known as a political agency. But along with standardizing weights and measurements, its mandate includes advising the\u00a0secretary of commerce on patent policy, putting it squarely at the center of debates over drug patents and monopoly pricing. On his way out of office, NIST Director Walter Copan, who was appointed by President Donald Trump, issued a raft of proposals to nullify the \u201cmarch-in\u201d rights that were added to Bayh-Dole in 1979 to allay Democratic concerns of price-gouging and patent-squatting. Together the rule changes represent an attempt to close the corporate circle begun by Howard Forman nearly 50 years ago.<\/p>\n The fuzziness of Bayh-Dole\u2019s \u201creasonable terms\u201d clause has always been a subject of intense debate. Simply put, the term sounds like it should cover \u201creasonable cost,\u201d and a number of civil society groups have embraced this reading, petitioning the government to break up monopolies on federally funded research in the public interest. To date, all of these petitions have been denied, but the mere threat has on rare occasions successfully pressured companies into reducing monopoly prices.<\/p>\n Offering a different interpretation of Bayh-Dole\u2019s march-in clause are the drug and biotech industries, the university patent and technology transfer lobbies, and the bill\u2019s original sponsors, Bayh and Dole, who both went on to work for corporate law firms and lobby shops with drug industry clients. When march-in petitions-based \u201creasonable pricing\u201d interpretations of the law have been granted hearings, all have insisted that march-in power was never meant as lever to reduce \u201cunreasonable\u201d prices.<\/p>\n Copan\u2019s NIST proposals would settle the matter\u00a0in industry\u2019s favor not only by formally eliminating price as a basis for march-in, but also by banning civil society groups from the march-in administrative process altogether. If adopted, only competing firms would enjoy the right to challenge the legitimacy of a federally financed monopoly.<\/p>\n Like Forman and other Department of Commerce officials who devised the strategy behind the passage of Bayh-Dole, Copan spent decades working in corporate patents and tech transfer before joining the Department of Energy in 2011. As chief of technology transfer, he oversaw a program called the Agreement for Commercializing Technology that drastically restricted what the government could do with the nonexclusive licenses on its own inventions allowed under Bayh-Dole. (Essentially, the program limits the government to in-house research.) In 2017, then-Energy Secretary Rick Perry made the ACT permanent policy at the agency; Copan\u2019s proposals and a GOP bill based on them would institute it governmentwide.<\/p>\n Taken together, the NIST proposals would strip Bayh-Dole of the public interest safeguards that its sponsors touted in order to pass the bill. They would result in a conveyer belt of federally subsidized monopolies shielded from the slightest threat of interruption by the public that pays for the underlying research. But the cynicism on display goes even deeper. In an April 2019 NIST green paper titled \u201cUnleashing American Innovation<\/a>,\u201d the agency proposed edits to Bayh-Dole \u2014 a law sold on claims that the government was not commercializing its patents \u2014 that define down industry\u2019s obligation to achieve \u201cpractical application\u201d of federally funded inventions. The arguments being pushed to justify these changes may sound familiar: Innovation and national \u201ccompetitiveness,\u201d it seems, are once again at stake. The Republican House bill based on the paper is called the Securing American Leadership in Science and Technology Act of 2020.<\/p>\n A<\/span>s during the \u201970s,<\/u> the drug and biotech industries have studiously kept themselves in the background of the NIST debate. Taking a public stand and reprising their 1979 roles is a crew of familiar faces in the university patenting and technology transfer industries, led by the Wisconsin Alumni Research Foundation and AUTM (formerly the Association of University Technology Managers). Pharma and biotech are present at one remove in the form of industry-funded front groups such as the Information Technology and Innovation Foundation and a new outfit called the Bayh-Dole Coalition.<\/p>\n These groups dominated a virtual public hearing on the changes organized by NIST in March. Although a record number of comments were submitted opposing the reforms, participants say the event was designed to exclude critical voices. Following\u00a020 speakers from groups supporting the changes, just one critic was allowed to speak before NIST officials abruptly ended the event. \u201cIt was farcical,\u201d Public Citizen\u2019s Steve Knievel told The Intercept.<\/p>\n Whether the NIST proposals make a further farce of the government\u2019s duty to protect the public interest falls to the White House and Commerce Secretary Gina Raimondo, the former governor of Rhode Island and a career venture capitalist. Based on Biden\u2019s July 9 executive order, \u201cPromoting Competition in the American Economy,\u201d Raimondo will not only reject the NIST changes, but she may also yet play a part in reversing the course of the humiliating 40-year public science giveaway known as Bayh-Dole.<\/p>\nAs with \u201ccompetitiveness,\u201d the power of the alleged \u201cgap\u201d relied on lawmakers\u2019 shallow understanding of how patents work.<\/blockquote>\n
2021: Kicking March-In Rights<\/h3>\n