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March 31, 2016

Inventor rights under Bayh-Dole discussed

A key architect of the Bayh-Dole Act offered a nutshell version of inventors’ rights and responsibilities under the law and fielded some spirited questions on its requirements in a recent talk hosted by the University of Pittsburgh Innovation Institute and the Office of the Provost.

“If you’re taking federal funding, you have obligations: one of which under Bayh-Dole is you will report the invention, and you will assign the invention to the University, the contractor. And if the University doesn’t want the invention and the federal government doesn’t want it, then the inventor can get it back,” said Joe Allen in his March 22 talk, “Patent Ownership Under Bayh-Dole,” in the University Club.

Now a consultant, Allen was a staffer for U.S. Sen. Birch Bayh (D-IN) during the development of the Bayh-Dole Act and went on to direct the U.S. Department of Commerce’s Office of Technology Commercialization.

He traced the impact of the Bayh-Dole Act in the 35 years since the landmark tech transfer law was implemented in 1980 and shed light on why many universities sought more immediate assignments of intellectual property rights in the wake of Supreme Court action in the related 2011 Stanford v. Roche case.

Bayh-Dole provided incentives for commercializing federally funded research by streamlining federal agencies’ patent policies and enabling universities and small companies, rather than the government, to own the inventions that are created.

In the decades following World War II, the U.S. government became the chief funder of most basic research in the world, Allen said. However, because patent policies gave ownership of the ensuing innovations to the government, very little was being commercialized.

Without patent protection, companies had no incentive to invest time and risk large sums of money to develop early-stage research into products. Likewise, there was little incentive for inventors or institutions to pursue their development.

“As early as the Kennedy administration, it became obvious these old patent policies were not taking new products to market because there was no incentive,” Allen said. The Kennedy administration devised a waiver policy under which an inventor could petition to keep the rights — but the process was slow and there was no guarantee that the waiver would be granted.

More changes ensued in the Johnson administration, under which the National Institutes of Health (NIH) developed institutional patent agreements that awarded patent ownership to a small number of universities that had technology transfer capability, Allen said. “Almost immediately, technology started getting licensed,” he said.

When the progress was at risk of being reversed under the Carter administration, liberal Democrat Birch Bayh and conservative Republican Bob Dole found common ground in agreeing it made no sense to invest billions in funding university research only to have potentially important technologies languish.

“If universities own the technology, as opposed to government, the record shows that actually things will be commercialized,” Allen said.

As an example, he noted that much of the U.S. biotechnology industry arose from licensed university research or startup firms spun out from universities.

“Universities are commercializing two new technologies and starting up two new companies a day … because of the Bayh-Dole Act,” he said. NIH estimates that between 1996 and 2013, academic patent licensing added $1.18 trillion to the economy and supported 4 million jobs, and that each additional $10 million in research funding leads to 3.1 new patents, he said.

Allen clarified that it was the courts’ opinion in Stanford v. Roche, rather than Bayh-Dole itself, that prompted many universities to revisit their policies on assigning intellectual property rights.

Sparks flew at Pitt when some faculty balked at signing blanket IP-rights assignment agreements in 2014. (See Oct. 23, 2014, University Times.)

The Stanford v. Roche decision made a distinction between an immediate assignment of rights and a prospective assignment in determining IP rights in the case of a Stanford researcher who conceived intellectual property under a visiting research agreement with a company, Cetus, which later was acquired by Roche. The IP was reduced to practice in conjunction with other researchers at Stanford. “The courts ruled it was a jointly owned invention,” he said.

“What makes it confusing is the courts basically said it’s a jump ball between Cetus and Stanford,” Allen said. “And Cetus got there first because it had an immediate assignment.” That decision prompted many universities to ensure their assignment agreements were immediate, rather than prospective.

Either way, Allen said in response to questions from faculty in the audience, the IP did not belong to the researcher.

“Bayh-Dole says the subject invention will be owned by the contractor,” which is the institution that received the grant, Allen said.

“If you’re taking federal funding, there’s the agreement that you will assign it to the university.”

—Kimberly K. Barlow

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