Article Defending Bayh-Dole

[Seth Johnson <seth.johnson@RealMeasures.dyndns.org>]

Oh sheesh, can we PLEASE get going with *repealing* Bayh-Dole?

Repeal Bayh-Dole because it's a massive bribe to keep academia from standing
up for the utter falsity of the very notion of "intellectual property."

This article, written by a man whose job depends on Bayh-Dole (Bayh-Dole
created the "technology transfer office" that employs him), presents a very
unfortunate analysis predicated on an article by Seth Shulman that itself
has the wrong analysis.

There would be nothing more definitive for the cause of information freedom,
than a direct attack on Bayh-Dole in the United States, based on the correct
reasons: that academic research produces knowledge that is intrinsically
free, to which exclusive rights cannot apply; that publicly funded research
is publicly funded exactly for this reason.

Academic research is *the* key example.  Bayh-Dole was truly "inspired" as
this author says -- it stopped the most natural source of criticism of
expansive exclusive rights policy, by allowing academic institutions to make
publicly funded research private "property" -- bribing them with the
prospect of hugely lucrative private deals (as in sealed from public view)
with pharmaceuticals and software companies.

WIPO made up the term "intellectual property" in the mid 60's, but the term
was used with scare quotes in academia until Bayh-Dole passed, because its
internally contradictory implications were well-understood there.  1980 is
also roughly when the personal computing phenomenon started taking wing. 
It's also roughly when Richard Stallman saw the writing on the wall.

Seth Johnson

-------- Original Message --------
Subject: In Defense of University Patent Licensing(04.23.2003)
   Date: Wed, 23 Apr 2003 03:18:00 -0700
   From: Dave Farber <dave@farber.net>
     To: ip <ip@v2.listbox.com>

Guest Essay: In Defense of University Patent Licensing

There's nothing wrong with the way academia licenses its intellectual
property, says Boston University's technology  transfer director. 

> http://www.technologyreview.com/articles/wo_stevens042303.asp ;


By Ashley J. Stevens
April 23, 2003

Technology Review columnist Seth Shulman recently wrote a deceptively
appealing essay advocating radical changes in the licensing practices of
U.S. universities. As the head of technology licensing at a major research
university, I think it is important not to let Shulman’s arguments stand
unchallenged.

Shulman equates the collective U.S. academic innovation enterprise with IBM,
based solely on the similarity of their royalty incomes. He labels academia
“Big Ivory,” corresponding of course to the more familiar “Big Blue.” He
praises  IBM's habit of granting non-exclusive licenses to its patents, and
concludes that universities should not grant  exclusive licenses to the
patents they create.

There are some staggering leaps from mountaintop to mountaintop in this
analysis, and some key facts are omitted.

First let’s examine how similar the inventive enterprises of “Big Ivory” and
“Big Blue” in fact are. IBM is a single,  cohesive, coordinated for-profit
corporation; almost all of its research is carried out with commercial
purposes in  mind, its Nobel Prizes in 1973, 1986 and 1987 notwithstanding.
Big Ivory consists of scores of independent research  universities, plus
another couple of dozen independent research institutes and teaching
hospitals. Its research is  overwhelmingly basic enquiry—science for
science’s sake—funded by the government after having been reviewed for 
scientific merit by peer groups. The research programs are planned, the
funds are raised and the work is carried out  by individual investigators
pursuing their own scientific agendas completely independently of the group
in the next  lab down the corridor. Less than 9 percent of their work is
paid for by companies, which presumably have a  commercial objective.

And what about the quantity of research? According to the most recent survey
conducted by the Association of  University Technology Managers, Big Ivory
spent $28.1 billion on research in 2000—more than five times the $5.1 
billion that IBM reported spending on R&D in the same year. Unsurprisingly,
given the different purposes of the  enterprises, IBM’s research is
considerably more productive commercially. Big Blue was awarded 2,886 U.S.
patents in  2000: one for every $1.8 million of R&D expenditures, while Big
Ivory received only 3,598 U.S. patents, or one for  every $7.8 million of
R&D expenditures. Royalty income is similarly skewed. Big Blue earned $1.4
billion from  licensing, or $1 for every $3.53 of R&D; Big Ivory earned $1.2
billion, a return of $1 in royalty income for every $23.3  in R&D
expenditures.

Shulman ignores facts that interfere with his thesis. He neglects to point
out, for example, that Big Blue started its  nonexclusive licensing policy
only as part of a 1956 settlement of an antitrust lawsuit by the U.S.
government. In  other words, IBM embraced this practice not because of any
particular wisdom about how best to promote the  development of technology,
but because it had no choice. Nor are universities as completely in
opposition to this  policy as Shulman suggests. In fact, half of licenses
executed by Big Ivory in 2000 were nonexclusive.

Shulman’s claim that license deals struck by universities are closely
guarded secrets is manifestly untrue. Many  academic license agreements
enter the public domain when the licensee goes public and has to file its
license  agreements with the Securities and Exchange Commission. The details
of these licenses are sitting in the SEC’s  publicly accessible EDGAR
database.

Most serious of the fallacies in Shulman’s article is his statement that
exclusive licenses run counter to the tradition  of openness of U.S.
academia. Academic patents have nothing to do with preventing openness. By
definition, a  patent is an open document available to teach the world what
its inventor has learned, so that others can build on  the discovery.
Academic scientists who hold patents continue to teach, to publish, to give
lectures, and to consult for  companies—including companies who haven’t
licensed their patents. Patents allow control over commercial use of the 
discovery. They provide an incentive to invest in a technology by providing
exclusivity if the outcome is successful. 

It is a sad fact that those who ignore history are destined to repeat it.
For 30 years after World War II, the United  States had precisely the policy
of nonexclusive licensing of federally funded inventions that Shulman
advocates. The  government owned the patents and would license them only on
a nonexclusive basis. Under this system, no drug that  the government owned
rights to was ever developed and became available to the public. The
government did its best  to prevent the commercialization of Gatorade. As a
result, scientists didn’t bother to disclose their inventions to the 
government. In the rare instances that the government did allow the
developer of the technology to own the patents,  studies showed that the
invention was 10 times more likely to be developed than if the government
owned the  patent and applied its inflexible, nonexclusive licensing policy. 

Howard Bremer has worked for the University of Wisconsin’s technology
transfer arm for over 40 years and helped  shape the current paradigm.
Reviewing the history of how policy evolved, he observed that “the
experience of  licensing government-owned patent had without question been
one of non-use of the technology.”

It took a concerted effort by universities, small businesses, and a group of
visionaries within the U.S. government,  led by Senators Birch Bayh and
Robert Dole, to pass legislation that finally allowed the creators of
technology to  control how it was developed. Academic research is too broad,
too diverse, and too fast-moving to be micromanaged  by the government.  The
Bayh-Dole Act of 1980—which the Economist recently dubbed “the most inspired
piece of  legislation to be enacted in America over the last half
century”—contributed massively to the revitalization of the U.S.  economy
and the rise of the knowledge economy.

Let’s not return to the dark ages.

------------------------------------------------------------------------

Ashley J. Stevens is Director of the Office of Technology Transfer at Boston
University. 

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