Another “march-in petition” has been filed recently as part of the on-going implementation of the Bayh-Dole system. The attached web page provides access to the petition, cover letter, and broader context. Now, several groups are seeking march-in against a series of AIDS/HIV related drug patents. Funding for the underlying inventions was provided by the NIH.
No march-in petition has ever been granted during the 32 years of the Bayh-Dole system. If one were granted, the grant would likely have a major impact on the Bayh-Dole system, extending beyond the particular case at hand. Best I can tell, the last march-in petition was filed about two years ago, but the petition failed (see our prior blog entry).
Review of the patent literature confirms that many nanotechnology and clean tech inventions arise from federal funding and invoke the Bayh-Dole system. Funding comes from the NNI and Department of Energy, for example. However, it is not unusual to find investors and executives in these areas to be relatively unaware of the Bayh-Dole system and its legal implications.
I will note briefly that I found the petition dialog interesting for attempting to legally separate out what appears to be (1) a primary use of the patented invention, from (2) secondary uses of the patented invention, or what is called a “dependent technology.”
Patent filing data are suggesting (if not confirming) that nanotechnology is an increasingly important technology sector in the U.S. For example, in 2004, the US PTO created the 977 nanotechnology class which provides a useful metric. In 2011, the 10,000th nanotechnology 977 patent publication published. The current patent publication count stands at 10,735 (as of December 8, 2011). Of these, 3,223 were published in 2011 which is about 30%. About 70% of the 10,735 have published in the past three years (2009-2011). An explosion this is.
Patent publications are a leading indicator for current trends in patenting. Because patents can take 2-6 years to grant, typically, patent publications are a more sensitive measure for the trends. Moreover, not every patent application is granted, which further skews the analysis if one focuses only on granted patents.
Investors need to be aware of the Bayh-Dole Act and the risks and requirements that the Act presents. This is true whether investors are U.S.-based or based outside the U.S.
Reports are emerging, for example, that the Department of Energy is taking title to several solar patents previously owned by Evergreen Solar, which filed for bankruptcy earlier this year. An October 7, 2011 letter from the DOE to Evergreen has been reported on web in which the government asserts its rights. One report indicated that an auction of assets, including patent assets, was to be held November 1, 2011. Another bankrupt solar company, Solyndra, apparently is also holding an auction for sale of assets. Concern particularly is present about whether the patents, technology, jobs, and other benefits will be moved to China.
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The Supreme Court on June 6, 2011 rejected Stanford University’s argument that it owned important patents. See, Stanford v. Roche, 563 U. S. ____ (2011). This case is complicated and subtly important, as noted in my prior blogs from December 11 and November 1, 2010. The impact will be felt for all high technology including cleantech and nanotech, as well as life sciences.
The trouble arose, in essence, when Stanford started working with Roche on PCR technology, and conflicting contractual claims to patent ownership arose. In the modern economy, university patenting is vital to innovation, and university-corporate cooperation and partnering is even more vital to innovation. The Bayh-Dole system, now 30 years old, helps control the patent title and licensing issues at play for government funded inventions which are licensed to the private sector. In this ruling, Stanford lost despite its assertion that the Bayh-Dole Act provided it with patent title despite competing contractual claims from Roche. In resolving the issue, the Supreme Court analyzed the issue cautiously and narrowly and did not pursue a more aggressive, creative policy approach in favor of Stanford.
The case is also important because the Supreme Court flatly rejected the Amicus Curiae filed by the Solicitor General’s office in supporting Stanford’s position. In the brief, the Solicitor General argued that Stanford’s position was supporting the purposes of the Bayh-Dole Act. Hence, Congress (with Presidential blessing) now faces the option to amend the Bayh-Dole Act to better control the types of situations that can arise as Stanford found itself in. Allegedly, this would better align the words of the statute with the purpose.
In the meantime, universities and similar institutions will need to be ever vigilant about their assignment contracts until such amendment to Bayh-Dole is passed. Technicalities can count in patent assignment.
Agreed… seven years later, it is time to remember FilmTec. But that may be too late for this Stanford case? Note: in the context of this blog, FilmTec related to nanotech filtration membranes for water treatment.
In view of Bayh-Dole’s ("B-D") thirty year anniversary celebration on December 12, 2010, we offer a "Top Ten" list of leading Bayh-Dole issues. The B-D system is critical to federal priorities such as nanotech and cleantech.
- Stanford v. Roche now to be heard at the Supreme Court. e.g., How are patent ownership issues impacted when university researchers collaborate with the private sector.
- Recent march-in challenge against Genzyme. If it succeedes, what will the larger impact be? e.g., investor confidence.
- Job creation. How do we measure the amount of job creation and economic impact caused by Bayh-Dole? Need to move beyond anecdotes and occasional (if not rare) examples of block buster success stories. Who is measuring?
- Will the Kauffman Foundation proposal gain steam, advocating that university professors have more control over their patents vis-a-vis the technology transfer office?
- Will the government respond to industry complaints about licensing from universities and federal labs? Many of these complaints have driven the search outside of the US. More particularly, is the government tuned into the needs of venture capital and small business?
- How to balance the tension between desire for US job creation and economic health, and companies’ needs and desires for international freedom to move and deal with whom they want, apart from nationality. What has been the impact of the B-D territoriality restrictions?
- Reducing the burden of reporting requirements, particularly when it appears the government does not currently do too much with all the reported information. The government should manage this more than any other organization including, for example, AUTM.
- Making technology transfer with the federal labs easier. Is it easy or possible to spin out companies from a federal lab?
- How does Bayh-Dole impact particular economic sectors which may have different needs and moral contexts, e.g., defense, versus health, versus energy?
- Avoiding "arrogance" (or complacency) and learning from other systems. The US system seems to work to a certain degree and offer an improvement over the pre-1980 scene. Other countries have sought to emulate US B-D. However, other countries such as Taiwan, Singapore, and Israel, for example, have had successes in the area of government support for research and economic growth. The US should study these systems and adapt as appropriate.
These are only ten of many. For example, another includes understanding better the balance between exclusivity and non-exclusivity in licensing, as well as exclusivity based on field of use. Another example is better understanding how B-D impacts federal priorities like nanotechnology and the NNI. More to come, and comments welcome on what issues you see!
Today’s conference in Washington D.C. on the "NNI at Ten" theme continued into a second day, attracting hundreds (likely well over 500 persons). One main theme linking together many inputs was that nanotech is advancing steadily following a hype and bubble bursting phase which often plagues technical innovation. Over twenty speakers presented on what they believe is important about nanotech and the NNI, with speakers ranging from academic, to the government, to startup companies, and to large behemoth companies. Many noted that public perception of nanotechnology is important for allowing this technology to continue to advance.
Last year, Josh Lerner published another provocative book, Boulevard of Broken Dreams, Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It (Princeton University Press, 2009). Why bring this up now? Two reasons include:
- The ten year anniversary of the National Nanotechnology Initiative (NNI) is at hand, and
- The thirty year anniversary of the Bayh-Dole Act is also at hand. Both are subject to “celebrations” in Washington DC in coming days and weeks. Both involve government playing strong roles in innovation and jobs.
In addition, the recent election further makes for important political debate about the role of the government in stimulating job creation. Will the new Congress continue to fund nanotech? How long will cleantech be a ”darling” of politicians and venture capitalists (or flavor of the month)?
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You may have heard that the celebrated Bayh-Dole Act is coming up to its 30 year anniversary in December, 2010. How to celebrate? Here is an idea: the US PTO can (should) provide the option for patent applications which are covering federally funded inventions to experience accelerated examination. More than a celebration, this could be a job creator?
Why do this? First, the Kappos-run PTO seems to like accelerated examination programs and (whether right or wrong) links the concept with stimulation of investment and jobs. Bayh-Dole is all about just that: stimulating investment and jobs. Hence, it makes sense to align accelerated examination and Bayh-Dole. The theory is a granted patent will better be able to attract investment currencies (not just dollars these days) than a mere pending application.
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Because federal funding via the NNI is a major force in nanotech and cleantech, this case has many implications. Also, the era of government and private sector joint development is here, further making this case important. Perhaps Stanford’s locale in Silicon Valley adds further spice to the case and high tech research. Indeed, one client in the area sent an email as soon as the decision to grant cert was announced.
Going back to the start of litigation, Stanford sued pharmacutical giant Roche, alleging infringement of technology for detecting HIV levels in a patient’s blood. However, the university said it owns the technology because its discoverer worked at Stanford. Complicating this "mess": Roche says Stanford researcher Mark Holodniy also signed a contract that gave the company the patent to anything that resulted from their collaboration.
See, Stanford University v. Roche, 09-1159. The 1980 Bayh-Dole Act allows universities to retain the rights to research funded by federal grants.
This is not a simple case. To the extent the Supreme Court likes to soar to the heights of complicated legal and policy analysis, it has found a nice case to chew on!
A new report just issued which, in 129 pages, provides the latest analysis and commentary on university patenting and technology transfer under the Bayh-Dole Act.
The report is generally positive about the Bayh-Dole Act, now about 30 years old, and confirms that most do not want to return to the pre-1980 era. The report did not get into much specificity with respect to nanotechnology or cleantech, but the report is very important to these fields. The NNI ten year anniversary is here, and NNI strategy for its second decade is crucial.
Ironically, Allen J. Bard (University of Texas) also recently provided a guest editorial to C&EN (October 11, 2010) in which he expressed concern that young people may not want to become university professors if the university pushes them to generate IP and funding through IP. Per Bard, money has become too important at the university, and use of patents to generate funding is part of the problem (and a growing part).
In the 09-742 GAO report addressing the government’s right to assert ownership over federal funded inventions, the government produced an important survey on the current understanding among leading federal research agencies about march-in rights under the Bayh-Dole system. This report has considerable implications for cutting edge nano and clean technologies, which often are based on cutting-edge research stemming from universities and federal agencies.
In a march-in situation, the government can force a compulsory license to a patent which stemmed from federally funded research dollars. However, a march-in had never been completed in the thirty or so years of Bayh-Dole, although several attempts have been started (three march-in petitions were filed with the NIH, one in 1997 and two in 2004). Organizations such as PUBPAT, which tend to attack the patent system for "undeserved patents," undoubtedly will continue to monitor the potential use of march-in rights.